PUBLIC CORPORATIONS THE BIPOLAR NATURE OF PUBLIC CORPORATIONS

Reference Book (Rodriguez, LGC)

1. PUBLIC CORPORATIONS v. PRIVATE CORPORATIONS In Philippine Society for the Prevention of Cruelty to Animals v. COA, the court held: The fact that a certain juridical entity is impressed with public interest does not, by that circumstance alone, make the entity a public corporation, inasmuch as a corporation may be private although its charter contains provisions of a public character, incorporated solely for the public good. This class of corporations may be considered quasi-public corporations, which are private corporations that render public service, supply public wants,[21] or pursue other eleemosynary objectives. While purposely organized for the gain or benefit of its members, they are required by law to discharge functions for the public benefit. Examples of these corporations are utility,[22] railroad, warehouse, telegraph, telephone, water supply corporations and transportation companies.[23] It must be stressed that a quasi-public corporation is a species of private corporations, but the qualifying factor is the type of service the former renders to the public: if it performs a public service, then it becomes a quasi-public corporation.[24] Authorities are of the view that the purpose alone of the corporation cannot be taken as a safe guide, for the fact is that almost all corporations are nowadays created to promote the interest, good, or convenience of the public. A bank, for example, is a private corporation; yet, it is created for a public benefit. Private schools and universities are likewise private corporations; and yet, they are rendering public service. Private hospitals and wards are charged with heavy social responsibilities. More so with all common carriers. On the other hand, there may exist a public corporation even if it is endowed with gifts or donations from private individuals. The true criterion, therefore, to determine whether a corporation is public or private is found in the totality of the relation of the corporation to the State. If the corporation is created by the State as the latters own agency or instrumentality to help it in carrying out its governmental functions, then that corporation is considered public; otherwise, it is private. Applying the above test, provinces, chartered cities, and barangays can best exemplify public corporations.

2. PUBLIC PROPERTY v. PATRIMONIAL PROPERTY Public Property, as defined in Articles 420-424 of the Civil Code can be divided into two categories: a. Property for public use consists public works open and free for public use and enjoyment, including: provincial roads, city streets, municipal streets, squares, fountains, promenades and parks. Additionally, public property also includes: canals,

rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads, and others of similar character. Such property is owned and regulated by the municipal corporation in his governmental capacity. That is to say, he merely acts as an agent of the national government. Therefore, it can neither be alienated nor gained by prescription1. b. Patrimonial Property held by the municipal corporation in its corporate or ministerial capacity. As its corporate self, the municipal corporate holds patrimonial property separate from the national government. The legislature cannot therefore convert patrimonial property into property for public use without due process just compensation. Q: Is it possible to convert property for public use into patrimonial property? A: Yes, property for public use may be converted into patrimonial property by virtue of an official declaration expressly converting public property to patrimonial property. Malabanan v. Republic of the Philippines (2009): 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.

Prescription refers to the mode of acquiring or losing ownership over and other real rights through a lapse of period in time and in the manner and conditions laid down by law (NCC Art. 1155). Additionally, Article 1115 of the new civil code provides that: All things which are within the commerce of men are susceptible of prescription, unless otherwise provided. Property of the State or any of its subdivisions not patrimonial in character shall not be the object of prescription. (1936a) In a number of cases held by the Supreme Court, public property has been held to be among those things which are beyond the commerce of men, as they are property of the state, herself (Doctrina Regaliana). (See: City of Manila v. Garcia, Muyot v. De La Fuente). Public property cannot therefore be the subject of any contract, as provided in Art. 1347 of the Civil Code.

(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. Said ruling was reiterated in Republic of the Philippines v Metro Index Development Corporation (2012), which held that: Simply put, it is not the notorious, exclusive and uninterrupted possession and occupation of an alienable and disposable public land for the mandated periods that converts it to patrimonial. The indispensability of an official declaration that the property is now held by the State in its private capacity or placed within the commerce of man for prescription to have any effect against the State cannot be overemphasized. A mere declaration that public land is alienable and disposable will not suffice, what the law requires is an express declaration of the conversion itself. The reason for this is simple; an alienable and disposable land is not necessarily a patrimonial land for this only means that said property is no longer for public use at a particular moment in time. It may still, however, be intended for public use in the future. In Capitulo v. Aquino, the court held that it does not matter that the property is not actually devoted to public use or for some public service. If the property has been and is intended for use or service, and the city has not devoted it to other uses or adopted any measure amounted to the withdrawal of the said intent, then it is still and it continues to be property for public use. (Said Ruling is in accordance with the Public Land Act, or C.A. 141)

Q: Since public property may be converted to patrimonial property by virtue of an official declaration of expressed conversion, then it follows that all public property may be subjected to an official declaration of conversion? A: No. Article XII, Sec. 2 of the Constitution provides that: All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and

fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. Since only patrimonial lands can be alienated and acquired by prescription, then it follows that these non-alienable lands cannot be converted.