G.R. No. L-41001 September 30, 1976 - MANILA LODGE NO. 761, ET AL. v.

COURT OF APPEALS, ET AL.:

FIRST DIVISION

[G.R. No. L-41001. September 30, 1976.]

MANILA LODGE NO. 761, BENEVOLENT AND PROTECTIVE ORDER OF

THE ELKS, INC., Petitioner, v. THE HONORABLE COURT OF APPEALS,
CITY OF MANILA, and TARLAC DEVELOPMENT
CORPORATION, Respondents.

[G.R. No. L-41012. September 30, 1976.]

TARLAC DEVELOPMENT CORPORATION, Petitioner, v. HONORABLE

COURT OF APPEALS, CITY OF MANILA, LODGE NO. 761, BENEVOLENT
AND PROTECTIVE ORDER OF ELKS, INC., Respondents.

Quasha, Asperilla, Zafra, Tayag & Ancheta, for Manila Lodge No. 761,
Benevolent and Protective Order of the ELKS, Inc.

Jose P. Bengzon, Villegas, Zarraga, Narciso & Cudala and Emmanuel

G. Cochico, for Tarlac Development Corporation.

S.M. Artiaga Jr. and Restituto R. Villanueva, Office of the City Legal
Officer for City of Manila.

DECISION

CASTRO, J.:

STATEMENT OF THE CASE AND STATEMENT

OF THE FACTS
These two cases are petitions on certiorari to review the decision dated June
30, 1975 of the Court of Appeals in CA-G.R. No. 51590-R entitled "Tarlac
Development Corporation v. City of Manila, and Manila Lodge No. 761,
Benevolent and Protective Order of Elks, Inc.," affirming the trial court’s
finding in Civil Case No. 83009 that the property subject of the decision a quo
is a "public park or plaza."  chanrobles.com:cralaw:red

On June 26, 1905 the Philippine Commission enacted Act No. 1.360 which
authorized the City of Manila to reclaim a portion of Manila Bay. The
reclaimed area was to form part of the Luneta extension. The Act provided
that the reclaimed area "shall be the property of the City of Manila" and that
"the City of Manila is hereby authorized to set aside a tract of the reclaimed
land formed by the Luneta extension . . . at the north end not to exceed five
hundred feet by six hundred feet in size, for a hotel site, and to lease the
same, with the approval of the Governor General, to a responsible person or
corporation for a term not to exceed ninety-ninety years." cralaw virtua1aw library

Subsequently, the Philippine Commission passed on May 18, 1907 Act No.
1657, amending Act No. 1360, so as to authorize the City of Manila either to
lease or to sell the portion set aside as a hotel site.

The total area reclaimed was a little over 25 hectares. The City of Manila
applied for the registration of the reclaimed area, and on January 20, 1911,
O.C.T. No. 1909 was issued in the name of the City of Manila. The title
described the registered land as "un terreno conocido con el nombre de
Luneta Extension, situado en el distrito de la Ermita . . .." The registration
was "subject, however, to such of the incumbrances mentioned in Article 39
or said law (Land Registration Act) as may be subsisting" and "sujeto a las
disposiciones y condiciones impuestas en la Ley No. 1360; y sujeto tambien a
los contratos de venta. celebrados y otorgados por la Ciudad de Manila a
favor del Army and Navy Club y la Manila Lodge No. 761, Benevolent and
Protective Order of Elks, fechados respectivamente, en 29 de Diciembre de
1908 y 16 de Enero de 1909." 1

On July 13, 1911 the City of Manila, affirming a prior sale dated January 16,
1909, conveyed 5,543.07 square meters of the reclaimed area to the Manila
Lodge No. 761, Benevolent and Protective Order of Elks of the U.S.A. (BPOE,
for short) on the basis of which TCT No. 2195 2 was issued to the latter over
the "parcela de terreno que es parte de la Luneta Extension, Situada en el
Distrito de la Ermita . . .." At the back of this title was annotated document
4608/T-1635, which in part reads as follows: "que la citada Ciudad de Manila
tendra derecho a su opcion, de recomprar la expresada propiedad para fines
publicos solamente, en cualquier tiempo despues de cincuenta anos desde el
13 de Julio de 1911, previo pago a la entidad compradora, o a sus sucesores
del precio de la venta de la misma propiedad, mas el valor que entonces
tengan las mejoras."cralaw virtua1aw library

For the remainder of the Luneta Extension, that is, after segregating
therefrom the portion sold to the Manila Lodge No. 761, BPOE, a new
Certificate of Title No. 2196 3 was issued on July 17, 1911 to the City of
Manila.

Manila Lodge No. 761, BPOE, subsequently sold the said 5,543.07 square
meters to the Elks Club, Inc., to which was issued TCT No. 67488. 4 The
registered owner, "The Elks Club, Inc.," was later changed by court order to
"Manila Lodge No. 761, Benevolent and Protective Order of Elks, Inc." cralaw virtua1aw library

In January 1963 the BPOE petitioned the Court of First Instance of Manila,
Branch IV, for the cancellation of the right of the City of Manila to repurchase
the property. This petition was granted on February 15, 1963.

On November 19, 1963 the BPOE sold for the sum of P4,700,000 the land
together with all the improvements thereon to the Tarlac Development
Corporation (TDC, for short) which paid P1,700,000 as down payment and
mortgaged to the vendor the same realty to secure the payment of the
balance to be paid in quarterly installments. 5 At the time of the sale, there
was no annotation of any subsisting lien on the title to the property. On
December 12, 1963 TCT No. 73444 as issued to TDC over the subject land
still described as "UNA PARCELA DE TERRENO, que es parte de la Luneta
Extension, situada en el Distrito de Ermita . . .."
cralaw virtua1aw library

In June 1964 the City of Manila filed with the Court of First Instance of Manila
a petition for the reannotation of its right to repurchase; the court, after
hearing, issued an order, dated November 19, 1964, directing the Register of
Deeds of the City of Manila to reannotate in toto the entry regarding the right
of the City of Manila to repurchase the property after fifty years. From this
order TDC and BPOE appealed to this Court which on July 31, 1968 affirmed
in G.R. Nos. L-24557 and L-24469 the trial court’s order of reannotation, but
reserved to TDC the right to bring another action for the clarification of its
rights.
chanrobles law library

As a consequence of such reservation, TDC filed on April 28, 1971 against the
City of Manila and the Manila Lodge No. 761, BPOE, a complaint, docketed as
Civil Case No. 83009 of the Court of First Instance of Manila, containing three
causes of action and praying —

"a) On the first cause of action, that the plaintiff TDC be declared to have
purchased the parcel of land now in question with the buildings and
improvements thereon from the defendant BPOE for value and in good faith,
and accordingly ordering the cancellation of Entry No. 4608/T-1635 on
Transfer Certificate of Title No. 73444 in the name of the Plaintiff.

"b) On the second cause of action, ordering the defendant of Manila to pay
the plaintiff TDC damages in the sum of not less than one hundred thousand
pesos (P100,000.00);

"c) on the third cause of action, reserving to the plaintiff TDC the right to
recover from the defendant BPOE the amounts mentioned in par. XVI of the
complaint in accordance with Art. 1555 of the Civil Code, in the remote event
that the final judgment in this case should be that the parcel of land now in
question is a public park; and

"d) For costs, and for such other and further relief as the Court may deem
just and equitable." 6

Therein defendant City of Manila, in its answer dated May 19, 1971, admitted
all the facts alleged in the first cause of action except the allegation that TDC
purchased said property "for value and in good faith," but denied for lack of
knowledge or information the allegations in the second and third causes of
action. As special and affirmative defense, the City of Manila claimed that TDC
was not a purchaser in good faith for it had actual notice of the City’s right to
repurchase which was annotated at the back of the title prior to its
cancellation, and that, assuming arguendo that TDC had no notice of the right
to repurchase, it was, nevertheless, under obligation to investigate inasmuch
as its title recites that the property is a part of the Luneta extension. 7

The Manila Lodge No. 761, BPOE, in its answer dated June 7, 1971, admitted
having sold the land together with the improvements thereon for value to
therein plaintiff which was in good faith, but denied for lack of knowledge as
to their veracity the allegations under the second cause of action. It
furthermore admitted that TDC had paid the quarterly installments until
October 15, 1964 but claimed that the latter failed without justifiable cause to
pay the subsequent installments. It also asserted that it was a seller for value
in good faith without having misrepresented or concealed facts relative to the
title on the property. As counterclaim, Manila Lodge No. 761 (BPOE) sought
to recover the balance of the purchase price plus interest and costs. 8

On June 15, 1971 TDC answered the aforesaid counterclaim, alleging that its
refusal to make further payments was fully justified. 9

After due trial the court a quo rendered on July 14, 1972 its decision finding
the subject land to be part of the "public park or plaza" and, therefore, part of
the public domain. The court consequently declared that the sale of the
subject land by the City of Manila to Manila Lodge No. 761, BPOE, was null
and void; that plaintiff TDC was a purchaser thereof in good faith and for
value from BPOE and can enforce its rights against the latter; and that BPOE
is entitled to recover from the City of Manila whatever consideration it had
paid the latter. The dispositive part of the decision reads:
jgc:chanrobles.com.ph

"WHEREFORE, the Court hereby declares that the parcel of land formerly
covered by Transfer Certificate of Title Nos. 2195 and 67488 in the name of
BPOE and now by Transfer Certificate of Title No. 73444 in the name of Tarlac
Development Corporation is a public park or plaza, and, consequently, instant
complaint is dismissed, without pronouncement as to costs.

"In view of the reservation made by plaintiff Tarlac Development Corporation

to recover from defendant BPOE the amounts mentioned in paragraph XVI of
the complaint in accordance with Article 1555 of the Civil Code, the Court
makes no pronouncement on this point." 10
From said decision the therein plaintiff TDC as well as the defendant Manila
Lodge No. 761, BPOE, appealed to the Court of Appeals.

In its appeal docketed as CA-G.R. No. 51590-R, the Manila Lodge No. 761,
BPOE, avers that the trial court committed the following errors, namely:chanrob1es virtual 1aw library

1. In holding that the property subject of the action is not patrimonial

property of the City of Manila; and

2. In holding that the Tarlac Development Corporation may recover and

enforce its right against the defendant BPOE. 11

The Tarlac Development Corporation, on the other hand, asserts that the trial
court erred:chanrob1es virtual 1aw library

(1) In finding that the property in question is or was a public park and in
consequently nullifying the sale thereof by the City of Manila to BPOE;

(2) In applying the cases of Municipality of Cavite v. Rojas, 30 Phil. 602, and
Government v. Cabangis, 53 Phil. 112, to the case at bar; and

(3) In not holding that the plaintiff-appellant is entitled to recover damages

from the defendant City of Manila. 12

Furthermore, TDC, as appellee regarding the second assignment of error

raised by BPOE, maintained that it can recover and enforce its right against
BPOE in the event that the land in question is declared a public park or part
thereof. 13

In its decision promulgated on June 30, 1975, the Court of Appeals concurred
in the findings and conclusions of the lower court upon the ground that they
are supported by the evidence and are in accordance with law, and
accordingly affirmed the lower court’s judgment.

Hence, the present petitions for review on certiorari.

G.R. No. L-41001

The Manila Lodge No. 761, BPOE, contends, in its petition for review
on certiorari docketed as G.R. No. L-41001, that the Court of Appeals erred in
(1) disregarding the very enabling acts and/or statutes according to which the
subject property was, and still is, patrimonial property of the City of Manila
and could therefore be sold and/or disposed of like any other private
property; and (2) in departing from the accepted and usual course of judicial
proceedings when it simply made a general affirmance of the court a quo’s
findings and conclusions without bothering to discuss or resolve several vital
points stressed by the BPOE in its assigned errors. 14

G.R. No. L-41012

The Tarlac Development Corporation, in its petition for review
on certiorari docketed as G.R. No. L-41012, relies on the following grounds
for the allowance of its petition:
chanrob1es virtual 1aw library

1. that the Court of Appeals did not correctly interpret Act No. 1360, as
amended by Act No. 1657, of the Philippine Commission; and

2. that the Court of Appeals has departed from the accepted and usual course
of judicial proceedings in that it did not make its own findings but simply
recited those of the lower court. 15

ISSUES AND ARGUMENTS

FIRST ISSUE

Upon the first issue, both petitioners claim that the property subject of the
action, pursuant to the provisions of Act No. 1360, as amended by Act No.
1657, was patrimonial property of the City of Manila and not a park or plaza.

Arguments of Petitioners

In G.R. No. L-41001, the Manila Lodge No. 761, BPOE, admits that "there
appears to be some logic in the conclusion" of the Court of Appeals that
"neither Act No. 1360 nor Act No. 1657 could have meant to supply the City
of Manila the authority to sell the subject property which is located at the
south end — not the north — of the reclaimed area." 16 It argues, however,
that when Act No. 1360, as amended, authorized the City of Manila to
undertake the construction of the Luneta extension by reclaiming land from
the Manila Bay, and declared that the reclaimed land shall be the "property of
the City of Manila," the State expressly granted the ownership thereof to the
City of Manila which. consequently, could enter into transactions involving it;
that upon the issuance of O.C.T. No. 1909, there could be no doubt that the
reclaimed area owned by the City was its patrimonial property; 17 that the
south end of the reclaimed area could not be for public use for. as argued by
TDC, a street, park or promenade can be property for public use pursuant to
Article 344 of the Spanish Civil Code only when it has already been so
constructed or laid out, and the subject land, at the time it was sold to the
Elk’s Club, was neither actually constructed as a street, park or promenade
nor laid out as a street, park or promenade; 18 that even assuming that the
subject property was at the beginning property of public dominion, it was
subsequently converted into patrimonial property pursuant to Art. 422 of the
Civil Code, inasmuch as it had never been used, regarded, or utilized since it
was reclaimed in 1905 for purposes other than that of an ordinary real estate
for sale or lease; that the subject property had never been intended for public
use, is further shown by the fact that it was neither included as a part of the
Luneta Park under Plan No. 30 of the National Planning Commission nor
considered a part of the Luneta National Park (now Rizal Park) by
Proclamation No. 234 dated December 19, 1955 of President Ramon
Magsaysay or by Proclamation Order No. 274 dated October 4, 1967 of
President Ferdinand E. Marcos; 19 that, such being the case, there is no
reason why the subject property should not be considered as having been
converted into patrimonial property, pursuant to the ruling in Municipality v.
Roa, 7 Phil. 20, inasmuch as the City of Manila has considered it as its
patrimonial property not only bringing it under the operation of the Land
Registration Act but also by disposing of it; 20 and that to consider now the
subject property as a public plaza or park would not only impair the
obligations of the parties to the contract of sale dated July 13, 1911, but also
authorize deprivation of property without due process of law. 21

G.R. No. L-41012

In L-41012, the petitioner TDC stresses that the principal issue is the
interpretation of Act No. 1360, as amended by Act No. 1657 of the Philippine
Commission, 22 and avers that inasmuch as Section 6 of Act No. 1360, as
amended by Act 1657, provided that the reclamation of the Luneta extension
was to be paid for out of the funds of the City of Manila which was authorized
to borrow P350,000 "to be expended in the construction of Luneta Extension,"
the reclaimed area became "public land" belonging to the City of Manila that
spent for the reclamation, conformably to the holding in Cabangis, 23 and
consequently, said land was subject to sale and other disposition; that the
Insular Government itself considered the reclaimed Luneta extension as
patrimonial property subject to disposition as evidenced by the fact that Sec.
3 of Act 1360 declared that "the land hereby reclaimed shall be the property
of the City of Manila;" that this property cannot be property for public use for,
according to Article 344 of the Civil Code, the character of property for public
use can only attach to roads and squares that have already been constructed
or at least laid out as such, which conditions did not obtain regarding the
subject land; that Sec. 5 of Act 1360 authorized the City of Manila to lease
the northern part of the reclaimed area for hotel purposes; that Act No. 1657
furthermore authorized the City of Manila to sell the same; 24 that the
express statutory authority to lease or sell the northern part of the reclaimed
area cannot be interpreted to mean that the remaining area could not be sold
inasmuch as the purpose of the statute was not merely to confer authority to
sell the northern portion but rather to limit the city’s power of disposition
thereof, to wit: to prevent disposition of the northern portion for any purpose
other than for a hotel site; 25 that the northern and southern ends of the
reclaimed area cannot be considered as extension of the Luneta for they lie
beyond the-sides of the original Luneta when extended in the direction of the
sea, and that is the reason why the law authorized the sale of the northern
portion for hotel purposes, and, for the same reason, it is implied that the
southern portion could likewise be disposed of. 26

TDC argues likewise that there are several items of uncontradicted

circumstantial evidence which may serve as aids in construing the legislative
intent and which demonstrate that the subject property is patrimonial in
nature, to wit: (1) Exhibits "J" and "J-1", or Plan No. 30 of the National
Planning Commission showing the Luneta and its vicinity, do not include the
subject property as part of the Luneta Park; (2) Exhibit "K", which is the plan
of the subject property covered by TCT No. 67488 of BPOE, prepared on
November 11, 1963, indicates that said property is not a public park; (3)
Exhibit "T", which is a certified copy of Proclamation No. 234 issued on
December 15, 1955 by President Magsaysay, and Exhibit "U" which is
Proclamation Order No. 273 issued on October 4, 1967 by President Marcos,
do not include the subject property in the Luneta Park; (4) Exhibit "W", which
is the location plan of the Luneta National Park under Proclamations Nos. 234
and 273, further confirms that the subject property is not a public park; and
(5) Exhibit "y", which is a copy of O.C.T. No. 7333 in the name of the United
States of America covering the land now occupied by the American Embassy,
the boundaries of which were delineated by the Philippine Legislature, states
that the said land is bounded on the northwest by properties of the Army and
Navy Club (Block No. 321) and the Elks Club (Block No. 321), and this
circumstance shows that even the Philippine Legislature recognized the
subject property as private property of the Elks Club. 27

TDC furthermore contends that the City of Manila is estopped from

questioning the validity of the sale of the subject property that it executed on
July 13, 1911 to the Manila Lodge No. 761, BPOE, for several reasons,
namely: (1) the City’s petition for the reannotation of Entry No. 4608/T-1635
was predicated on the validity of said sale; (2) when the property was bought
by the petitioner TDC it was not a public plaza or park as testified to by both
Pedro Cojuangco, treasurer of TDC, and the surveyor, Manuel Añonuevo; (4)
the property was never used as a public park, for, since the issuance of T.C.T.
No. 2165 on July 17, 1911 in the name of the Manila Lodge NO. 761, the
latter used it as private property, and as early as January 16, 1909 the City of
Manila had already executed a deed of sale over the property in favor of the
Manila Lodge No. 761; and (5) the City of Manila has not presented any
evidence to show that the subject property has ever been proclaimed or used
as a public park. 28

TDC, moreover, contends that Sec. 60 of Com. Act No. 141 cannot apply to
the subject land, for Com. Act No. 141 took effect on December 1, 1936 and
at that time the subject land was no longer part of the public domain. 29

TDC also stresses that its rights as a purchaser in good faith cannot be
disregarded, for the mere mention in the certificate of title that the lot it
purchased was "part of the Luneta extension" was not a sufficient warning
that the title of the City of Manila was invalid; and that although the trial
court, in its decision affirmed by the Court of Appeals, found the TDC to have
been an innocent purchaser for value, the court disregarded the petitioner’s
rights as such purchaser that relied on a Torrens certificate of title. 30

The Court, continues the petitioner TDC, erred in not holding that the latter is
entitled to recover from the City of Manila damages in the amount of
P100,000 caused by the City’s petition for reannotation of its right to
repurchase.

DISCUSSION AND RESOLUTION OF FIRST ISSUE

It is a cardinal rule of statutory construction that courts must give effect to

the general legislative intent that can be discovered from or is unraveled by
the four corners of the statute, 31 and in order to discover said intent, the
whole statute, and not only a particular provision thereof, should be
considered. 32 It is, therefore, necessary to analyze all the provisions of Act
No. 1360, as amended, in order to unravel the legislative intent.

Act No. 1360 which was enacted by the Philippine Commission on June 26,
1905, as amended by Act No. 1657 enacted on May 18, 1907, authorized the
"construction of such rock and timber bulkheads or sea walls as may be
necessary for the making of an extension to the Luneta" (Sec. 1[a]), and the
placing of the material dredged from the harbor of Manila "inside the
bulkheads constructed to inclose the Luneta extension above referred to"
(Sec. 1[c]). It likewise provided that the plan of Architect D. H. Burnham as
"a general outline for the extension and improvement of the Luneta in the
City of Manila" be adopted; that "the reclamation from the Bay of Manila of
the land included in said projected Luneta extension . . . is hereby authorized
and the land thereby reclaimed shall be the property of the City of Manila"
(Sec. 3); that "the City of Manila is hereby authorized to set aside a tract of
the reclaimed land formed by the Luneta extension authorized by this Act at
the north end of said tract, not to exceed five hundred feet by six hundred
feet in size, for a hotel site, and to lease the same with the approval of the
Governor General, . . . for a term not exceeding ninety-nine years;" that
"should the Municipal Board . . . deem it advisable it is hereby authorized to
advertise for sale to sell said tract of land . . .;" "that said tract shall be used
for hotel purposes as herein prescribed, and shall not be devoted to any other
purpose or object whatever;" "that should the grantee . . . fail to maintain on
said tract a first-class hotel . . . then the title to said tract of land sold,
conveyed, and transferred to the grantee shall revert to the City of Manila,
and said City of Manila shall thereupon become entitled to the immediate
possession of said tract of land" (Sec. 3); that the construction of the rock
and timber bulkheads or sea wall "shall be paid for out of the funds of the
City of Manila, but the area to be reclaimed by said proposed Luneta
extension shall be filled, without cost to the City of Manila, with material
dredged from Manila Bay at the expense of the Insular Government" (Sec. 6);
and that "the City of Manila is hereby authorized to borrow from the Insular
Government . . . the sum of three hundred thousand pesos, to be expended
in the construction of the Luneta extension provided for by paragraph (a) of
section one hereof" (Sec. 7).

The grant made by Act No. 1360 of the reclaimed land to the City of Manila is
a grant of a "public" nature, the same having been made to a local political
subdivision. Such grants have always been strictly construed against the
grantee. 33 One compelling reason given for the strict interpretation of a
public grant is that there is in such grant a gratuitous donation of, public
money or resources which results in an unfair advantage to the grantee and
for that reason, the grant should be narrowly restricted in favor of the public.
34 This reason for strict interpretation obtains relative to the aforesaid grant
for although the City of Manila was to pay for the construction of such work
and timber bulkheads or sea walls as may be necessary for the making of the
Luneta extension, the area to be reclaimed would be filled at the expense of
the Insular Government and without cost to the City of Manila, with material
dredged from Manila Bay. Hence, the letter of the statute should be narrowed
to exclude matters which if included would defeat the policy of the
legislation.
chanroblesvirtualawlibrary

The reclaimed area, an extension to the Luneta, is declared to be property of

the City of Manila. Property, however, is either of public ownership or of
private ownership. 35 What kind of property of the City is the reclaimed land?
Is it of public ownership (dominion) or of private ownership?

We hold that it is of public dominion, intended for public use.

Firstly, if the reclaimed area was granted to the City of Manila as its
patrimonial property, the City could, by virtue of its ownership, dispose of the
whole reclaimed area without need of authorization to do so from the
lawmaking body. Thus Article 348 of the Civil Code of Spain provides that
"ownership is the right to enjoy and dispose of a thing without further
limitations than those established by law." 36 The right to dispose (jus
disponendi) of one’s property is an attribute of ownership. Act No. 1360, as
amended, however, provides by necessary implication, that the City of Manila
could not dispose of the reclaimed area without being authorized by the
lawmaking body. Thus the statute provides that "the City of Manila is hereby
authorized to set aside a tract . . . at the north end, for a hotel site, and to
lease the same . . . should the municipal board . . . deem it advisable, it is
hereby authorized . . . to sell said tract of land . . ." (Sec. 5). If the reclaimed
area were patrimonial property of the City, the latter could dispose of it
without need of the authorization provided by the statute, and the
authorization to set aside . . . lease . . . or sell . . . given by the statute would
indeed be superfluous. To so construe the statute as to render the term
"authorize," which is repeatedly used by the statute, superfluous would
violate the elementary rule of legal hermeneutics that effect must be given to
every word, clause, and sentence of the statute and that a statute should be
so interpreted that no part thereof becomes inoperative or superflous. 37 To
authorize means to empower, to give a right to act. 38 Act No. 1360
furthermore qualifies the verb "authorize" with the adverb "hereby," which
means "by means of this statue or section." Hence without the authorization
expressly given by Act No. 1360, the City of Manila could not lease or sell
even the northern portion; much less could it dispose of the whole reclaimed
area. Consequently, the reclaimed area was granted to the City of Manila, not
as its patrimonial property. At most, only the northern portion reserved as a
hotel site could be said to be patrimonial property, for, by express statutory
provision it could be disposed of, and the title thereto would revert to the City
should the grantee fail to comply with the terms provided by the statute. chanrobles law library : red

TDC, however, contends that the purpose of the authorization provided in Act
No. 1360 to lease or sell was really to limit the City’s power of disposition. To
sustain such contention is to beg the question. If the purpose of the law was
to limit the City’s power of disposition, then it is necessarily assumed that the
City had already the power to dispose, for if such power did not exist, how
could it be limited? It was precisely Act 1360 that gave the City the power to
dispose — for it was "hereby authorized" — by lease or sale. Hence, the City
of Manila had no power to dispose of the reclaimed land had such power not
been granted by Act No. 1360, and the purpose of the authorization was to
empower the city to sell or lease the northern part and not, as TDC claims, to
limit only the power to dispose. Moreover, it is presumed that when the
lawmaking body enacted the statute, it had full knowledge of prior and
existing laws and legislation on the subject of the statute and acted in
accordance or with respect thereto. 39 If by another previous law, the City of
Manila could already dispose of the reclaimed area, which it could do if such
area were given to it as its patrimonial property, would it then not be a
superfluity for Act No. 1360 to authorize the City to dispose of the reclaimed
land? Neither has petitioner TDC pointed to any other law that authorized the
City to do so, nor have we come across any. What we do know is that if the
reclaimed land were patrimonial property, there would be no need of giving
special authorization to the City to dispose of it. Said authorization was given
because the reclaimed land was not intended to be patrimonial property of
the City of Manila, and without the express authorization to dispose of the
northern portion, the City could not dispose of even that part.chanrobles.com:cralaw:red

Secondly, the reclaimed area is an "extension to the Luneta in the City of

Manila." 40 If the reclaimed area is an extension of the Luneta, then it is of
the same nature or character as the old Luneta. Anent this matter, it has
been said that a power to extend (or continue an act or business) cannot
authorize a transaction that is totally distinct. 41 It is not disputed that the
old Luneta is a public park or plaza and it is so considered by Section 859 of
the Revised Ordinances of the City of Manila. 42 Hence the "extension to the
Luneta" must be also a public park or plaza and for public use.

TDC, however, contends that the subject property cannot be considered an

extension of the old Luneta because it is outside of the limits of the old
Luneta when extended to the sea. This is a strained interpretation of the term
"extension," for an "extension," it has been held, "signifies enlargement in
any direction — in length, breadth, or circumstance." 43

Thirdly, the reclaimed area was formerly a part of the Manila Bay. A by is
nothing more than an inlet of the sea. Pursuant to Article 1 of the Law of
Waters of 1866, bays, roadsteads, coast sea, inlets and shores are parts of
the national domain open to public use. These are also property of public
ownership devoted to public use, according to Article 339 of the Civil Code of
Spain.

When the shore or part of the bay is reclaimed, it does not lose its character
of being property for public use, according to Government of the Philippine
Islands v. Cabangis. 44 The predecessor of the claimants in this case was the
owner of a big tract of land including the lots is question. From 1896 said land
began to wear away due to the action of the water of Manila Bay. In 1901 the
lots in question became completely submerged in water in ordinary tides. It
remained in such a state until 1912 when the Government undertook the
dredging of the Vitas estuary and dumped the sand and silt from estuary on
the low lands completely submerged in water, thereby gradually forming the
lots in question. Tomas Cabangis took possession thereof as soon as they
were reclaimed; hence, the claimants, his successors in interest, claimed that
the lots belonged to them. The trial court found for the claimants and the
Government appealed. This Court held that when the lots became a part of
the shore. As they remained in that condition until reclaimed by the filling
done by the Government, they belonged to the public domain for public use.
45 Hence, a part of the shore, and for that purpose, a part of the bay, did not
lose its character of being for public use after it was reclaimed.

Fourthly, Act 1360, as amended, authorized the lease or sale of the northern
portion of the reclaimed area as a hotel site. The subject property is not that
northern portion authorized to be leased or sold; the subject property is the
southern portion. Hence, applying the rule of expresio unius est exlusio
alterius, the City of Manila was not authorized to sell the subject property.
The application of this principle of statutory construction becomes the more
imperative in the case at bar inasmuch as not only must the public grant of
the reclaimed area to the City of Manila be, as above stated, strictly
construed against the City of Manila, but also because a grant of power to a
municipal corporation, as happens in this case where the city is authorized to
lease or sell the northern portion of the Luneta extension, is strictly limited to
such as are expressly or impliedly authorized or necessarily incidental to the
objectives of the corporation.

Fifthly, Article 344 of the Civil Code of Spain provides that "property of public
use, in provinces and in towns, comprises the provincial and town roads, the
squares, streets, fountains, and public waters, the promenades, and public
works of general service paid for by such towns or provinces." A park or
plaza, such as the extension to the Luneta, is undoubtedly comprised in said
article.

The petitioners, however, argue that, according to said Article 344, in order
that the character of property for public use may be so attached to a plaza,
the latter must be actually constructed or at least laid out as such, and since
the subject property was not yet constructed as a plaza or at least laid out as
a plaza when it was sold by the City, it could not be property for public use. It
should be noted, however, that properties of provinces and towns for public
use are governed by the same principles as properties of the same character
belonging to the public domain. 46 In order to be property of public domain
an intention to devote it to public use is sufficient. 47 The petitioners’
contention is refuted by Manresa himself who said, in his comments 48 on
Article 344, that:
jgc:chanrobles.com.ph

"Las plazas, calles y paseos publicos corresponden, sin duda alguna,

aldominio publico municipal, porque se hallan establecidos sobre suelo
municipal y estan destinadas al uso de todos. Laurent presenta, tratando de
las Plazas, una cuestion relativa a si deben conceptuarse como de dominio
publico los lugares vacios, libres, que se encuentran en los Municipios rurales.
. . . Laurent opina contra Proudhon, que toda vez que estan al servicio de
todos esos lugares, deben considerarse publicos y de dominio publico.
Realmente, para decidir el punto, bastara siempre fijarse en el destino real y
efectivo de los citados lugares, y si este destino entraña un uso comun de
todos, no hay duda que son de dominio municipal si no patrimoniales." cralaw virtua1aw library

It is not necessary, therefore, that a plaza be already construed or laid out as

a plaza in order that it be considered property for public use. It is sufficient
that it be intended to be such. In the case at bar, it has been shown that the
intention of the lawmaking body in giving to the City of Manila the extension
to the Luneta was not a grant to it of patrimonial property but a grant for
public use as a plaza.

We have demonstrated ad satietatem that the Luneta extension was intended

to be property of the City of Manila for public use. But, could not said
property later on be converted, as the petitioners contend, to patrimonial
property? It could be. But this Court has already said, in Ignacio v. The
Director of Lands, 49 that it is only the executive and possibly the legislative
department that has the authority and the power to make the declaration that
said property is no longer required for public use, and until such declaration is
made the property must continue to form part of the public domain. In the
case at bar, there has been no such explicit or unequivocal declaration. It
should be noted, furthermore, anent this matter, that courts are undoubtedly
not primarily called upon, and are not in a position, to determine whether any
public land is still needed for the purposes specified in Article 4 of the Law of
Waters. 50

Having disposed of the petitioners’ principal arguments relative to the main

issue, we now pass to the items of circumstantial evidence which TDC claims
may serve as aids in construing the legislative intent in the enactment of Act
No. 1360, as amended. It is noteworthy that all these items of alleged
circumstantial evidence are acts far removed in time from the date of the
enactment of Act No. 1360 such that they cannot be considered
contemporaneous with its enactment. Moreover, it is not far-fetched that this
mass of circumstantial evidence might have been influenced by the
antecedent series of invalid acts, to wit: the City’s having obtained over the
reclaimed area OCT No. 1909 on January 20, 1911; the sale made by the City
of the subject property to Manila Lodge No. 761; and the issuance to the
latter of T.C.T. No. 2195. It cannot be gainsaid that if the subsequent acts
constituting the circumstantial evidence have been based on, or at least
influenced, by those antecedent invalid acts and Torrens titles, they can
hardly be indicative of the intent of the lawmaking body in enacting Act No.
1360 and its amendatory act. cralawnad

TDC claims that Exhs. "J," "J-1," "K," "T," "U," "W" and "Y" show that the
subject property is not a park.

Exhibits "J" and "J-1," the "Luneta and vicinity showing proposed
development" dated May 14, 1949, were prepared by the National Urban
Planning Commission of the Office of the President. It cannot be reasonably
expected that this plan for development of the Luneta should show that the
subject property occupied by the Elks Club is a public park, for it was made
38 years after the sale to the Elks, and after T.C.T. No. 2195 had been issued
to Elks. It is to be assumed that the Office of the President was cognizant of
the Torrens title of BPOE. That the subject property was not included as a
part of the Luneta only indicates that the National Urban Planning
Commission that made the plan knew that the subject property was occupied
by Elks and that Elks had a Torrens title thereto. But this in no way proves
that the subject property was originally intended to be patrimonial property of
the City of Manila or that the sale to Elks or that the Torrens title of the latter
is valid.

Exhibit "K" is the "Plan of land covered by T.C.T. No. ____, as prepared for
Tarlac Development Company." It was made on November 11, 1963 by Felipe
F. Cruz, private land surveyor. This surveyor is admittedly a surveyor for
TDC. 51 This plan cannot be expected to show that the subject property is a
part of the Luneta Park, for the plan was made to show the lot that "was to
be sold to petitioner" This plan must have also assumed the existence of a
valid title to the land in favor of Elks.

Exhibits "T" and "U" are copies of Presidential Proclamations No. 234 issued
on November 15, 1955 and No. 273 issued on October 4, 1967, respectively.
The purpose of the said Proclamations was to reserve certain parcels of land
situated in the District of Ermita, City of Manila, for park site purposes.
Assuming that the subject property is not within the boundaries of the
reservation, this cannot be interpreted to mean that the subject property was
not originally intended to be for public use or that it has ceased to be such.
Conversely had the subject property been included in the reservation, it
would not mean, if it really were private property, that the rights of the
owners thereof would be extinguished, for the reservations was "subject to
private rights, if any there be." That the subject property was not included in
the reservation only indicates that the President knew of the existence of the
Torrens titles mentioned above. The failure of the Proclamations to include
the subject property in the reservation for park site could not change the
character of the subject property as originally for public use and to form part
of the Luneta Park. What has been said here applies to Exhibits "V", "V-1" to
"V-3," and "W" which also refer to the area and location of the reservation for
the Luneta Park. chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph

Exhibit "Y" is a copy of O.C.T. No. 7333 dated November 13, 1935, covering
the lot where now stands the American Embassy [Chancery]. It states that
the property is "bounded . . . on the Northwest by properties of Army and
Navy Club (Block No. 321) and Elks Club (Block No. 321)." Inasmuch as the
said boundaries were delineated by the Philippine Legislature in Act No. 4269,
the petitioners contend that the Legislature "recognized and conceded the
existence of the Elks Club property as a private property (the property is
question) and not as a public park or plaza. This argument is non sequitur,
plain and simple. Said Original Certificate of Title cannot be considered as an
inconvertible declaration that the Elks Club was in truth and in fact the owner
of such boundary lot. Such mention as boundary owner is not a means of
acquiring title nor can it validate a title that is null and void.

TDC finally claims that the City of Manila is estopped from questioning the
validity of the sale it executed on July 13, 1911 conveying the subject
property to the Manila Lodge No. 761, BPOE. This contention cannot be
seriously defended in the light of the doctrine repeatedly enunciated by this
Court that the Government is never estopped by mistakes or errors on the
part. of its agents, and estoppel does not apply to a municipal corporation to
validate a contract that is prohibited by law or its against public policy, and
the sale of July 13, 1911 executed by the city of Manila to Manila Lodge was
certainly a contract prohibited by law. Moreover, estoppel cannot be urged
even if the City of Manila accepted the benefits of such contract of sale and
the Manila Lodge No. 761 had performed its part of the agreement, for to
apply the doctrine of estoppel against the City of Manila in this case would be
tantamount to enabling it to do indirectly what it could not do directly. 52

The sale of the subject property executed by the City of Manila to the Manila
Lodge No. 761, BPOE, was void and inexistent for lack of subject matter. 53
It suffered from an incurable defect that could not be ratified either by lapse
of time or by express ratification. The Manila Lodge No. 761 therefore
acquired no right by virtue of the said sale. Hence to consider now the
contract inexistent as it always has been, cannot be, as claimed by the Manila
Lodge No. 761, an impairment of the obligations of contracts, for there was in
contemplation of law, no contract at all.
chanrobles virtual lawlibrary

The inexistence of said sale can be set up against anyone who asserts a right
arising from it, not only against the first vendee, the Manila Lodge No. 761,
BPOE, but also against all its successors, including, the TDC, which are not
protected by law. 54 The doctrine of bona fide purchaser without notice,
being claimed by the TDC, does not apply where there is a total absence of
title in the vendor, and the good faith of the purchaser TDC cannot create title
where none exists. 55

The so-called sale of the subject property having been executed, the
restoration or restitution of what has been given is in order. 56

SECOND ISSUE

The second ground alleged in support of the instant petitions for review
on certiorari is that the Court of Appeals has departed from the accepted and
usual course of judicial proceedings as to call for an exercise of the power of
supervision TDC, in L-41012, argues that the respondent Court did not make
its own findings but simply recited those of the lower court and made a
general affirmance, contrary to the requirements of the Constitution; that the
respondent Court made glaring and patent mistakes in recounting even the
copied findings, palpably showing lack of deliberate consideration of the
matters involved, as, for example, when said court said that Act No. 1657
authorized the City of Manila to set aside a portion of the reclaimed land
"formed by the Luneta Extension or to lease or sell the same for park
purposes;" and that respondent Court, furthermore, did not resolve or
dispose of any of the assigned errors contrary to the mandate of the Judiciary
Act. 57
The Manila Lodge No. 761, in L-41001, likewise alleges, as one of the reasons
warranting review, that the Court of Appeals departed from the accepted and
usual course of judicial proceedings by simply making a general affirmance of
the court a quo’s findings without bothering to resolve several vital points
mentioned by the BPOE in its assigned errors. 58

COMMENTS ON SECOND ISSUE

We have shown in our discussion of the first issue that the decision of the trial
court is fully in accordance with law. It follows that when such decision was
affirmed by the Court of Appeals, the affirmance was likewise in accordance
with law. Hence, no useful purpose will be served in further discussing the
second issue.

CONCLUSION

ACCORDINGLY, the petitions in both G.R. Nos. L-41001 and L-41012 are
denied for lack of merit, and the decision of the Court of Appeals of June 30,
1975, is hereby affirmed, at petitioners’ cost.

Makasiar, Muñoz Palma and Martin, JJ., concur.

Teehankee, J., concurs in the result which is wholly consistent with the basic
rulings and judgment of this Court in its decision of July 31, 1968.

Endnotes:

1. Exh. "H," Exh. "13-Elks." cralaw virtua1aw library

2. Exh. "I." cralaw virtua1aw library

3. Exh. "X." cralaw virtua1aw library

4. Exh. "B."

5. Exh. "C." cralaw virtua1aw library

6. Joint Record on Appeal of the Plaintiff

and the Defendant Manila Lodge No. 761,
Benevolent and Protective Order of Elks,
Inc., pp. 33-34.

7. Ibid., pp. 49-63.

8. Ibid., pp. 64-71.

9. Ibid., pp. 87-88.

10. Ibid., pp.92-110.

11. Record, L-41001, p. 7.

12. Record, L-41012, p. 11; Brief for

Plaintiff-Appellant in CA-G.R. No. 51590-R,
pp. 1-2.

13. Brief for the Plaintiff-Appellant Tarlac

Development Corporation in CA-G.R. No. 51590-
R, p. 2.

14. Record, L-41001. pp. 14-16.

15. Record, L-41012, pp. 16, 46.

16. L-41001, Record, p. 17.

17. Ibid., p. 19.

18. Ibid., pp. 19-20.

19. Ibid., p. 21.

20. Ibid., pp. 21-22.

21. Ibid., pp. 22-23.

22. L-41012, Record, pp. 16-17.

23. 53 Phil. 112 (1930).

24. L-41012, Record, pp. 22-23, 25-26.

25. Ibid., pp. 23-25.

26. Ibid., pp. 27-28.

27. Ibid., pp. 28-34.

28. Ibid., pp. 34-41.

29. Ibid., pp. 42-43.

30. Ibid., pp. 44-45.

31. Borromeo v. Mariano, 41 Phil. 322.

32. Aboitiz Shipping Corporation v. The City

of Cebu, L-14526, March 31, 1965, 13 SCRA
449, 453.

33. Sutherland, Statutes and Statutory

Construction, 3rd ed., vol. II, p. 240.

34. Ibid., Vol. III, pp. 204-208.

35. Art. 338, Civil Code of Spain; Art. 419

of the Philippines provides: "Property is
either of public dominion or of private
ownership.."

36. Art. 428, Civil Code.

37. Sutherland, op. cit., p. 339.

38. 4 Words and Phrases, p. 830, citing State

v. Board of Com’rs of Franklin County, 114
p. 247, 248; 24 Kan. 404.

39. Tamiami Trial Tours v. Lee, 194 So. 305,

306.

40. Sec. 1, Act. No. 1360.

41. See 15-A Words and Phrases, p. 602,

citing Clements’ Ex’rs v. Dickey, 5 Fed.
Cas. 1025, 1027.

42. Bureau of Printing, 1908, p. 281.

43. 15-A Words and Phrases, p. 614, citing

Mayor, etc. of Monroe v. Quachita Parish, 17
So. 498, 499, 47 La. Ann. 1061.

44. 53 Phil. 112.

45. Syllabus, citing Aragon v. Insular

Government, 19 Phil. 223; Francisco v.
Government of the Philippine Islands, 28
Phil. 505.
46. Viuda de Tan Toco v. Municipal Council of
Iloilo, 49 Phil. 52, 55.

47. Art. 420, Civil Code.

48. 3 Codigo Civil Español, 6a edicion, p.

106.

49. 108 Phil. 335, 339.

50. Monteverde v. Director of Lands, 93 Phil.

134, cited in Ignacio v. The Director of
Lands, supra.

51. L-41012, Record, p. 29.

52. Republic v. Go Bon Lee, L-11499, April

29, 1961, 1 SCRA 1166, 1170; Go Tian An v.
Republic, L-19833, August 31, 1966, 17 SCRA
1053, 1055; Pechueco Sons Company v.
Provincial Board of Antique, L-27038, January
30, 1970, 31 SCRA 320, 327, citing San Diego
v. Municipality of Naujan, L-9920, 29
February 1960, cited in Favis v. Municipality
of Sabangan, L-26522, 27 February 1969, 27
SCRA 92; see also City of Manila v. Tarlac
Development Corporation, L-24557, L-24469 and
L-24481, 31 July 1968, 24 SCRA 466.

53. Arts. 1409 and 1458, Civil Code.

54. 4 Tolentino, Civil Code, p. 575, citing 1

Von Tuhr, Obligaciones, p. 164.

55. 92 CJS p. 219, citing Chestnut v. Weekes,

188 S.E. 714, 183 Ga. 367; Bradbury v. Green,
351 p. 2d 807, 207 Okl. 586; Noble v. Kahn,
240 P. 2d 757, 206 Okl. 13, 35 A.L.R. 2d 119.

56. 4 Tolentino, Civil Code, p. 576, citing

Perez Gonzales and Alguer; I-II Enneccerus,
Kipp and Wolff, 364-366; 3 Von Tuhr 311; 3
Fabres 231. See also 92 CJS p. 550, citing
Bologna Bros. v. Stephens, 18 So. 2d 944, 206
La. 112; Partlow v. Mulligan, 76 N.Y.S. 2d
181.
57. L-41012, Record pp. 40-49.

58. L-41001, Record, p. 15.