G.R No.

187167
MAGALLONA vs. ERMITA
DECISION
CARPIO, J.:
The Case
This original action for the writs of certiorari and prohibition assails the constitutionality of Republic Act No.
95221(RA 9522) adjusting the countrys archipelagic baselines and classifying the baseline regime of nearby
territories.
The Antecedents
In 1961, Congress passed Republic Act No. 3046 (RA 3046) 2 demarcating the maritime baselines of the
Philippines as an archipelagic State.3 This law followed the framing of the Convention on the Territorial Sea
and the Contiguous Zone in 1958 (UNCLOS I),4 codifying, among others, the sovereign right of States parties
over their "territorial sea," the breadth of which, however, was left undetermined. Attempts to fill this void
during the second round of negotiations in Geneva in 1960 (UNCLOS II) proved futile. Thus, domestically, RA
3046 remained unchanged for nearly five decades, save for legislation passed in 1968 (Republic Act No.
5446 [RA 5446]) correcting typographical errors and reserving the drawing of baselines around Sabah in
North Borneo.
In March 2009, Congress amended RA 3046 by enacting RA 9522, the statute now under scrutiny. The
change was prompted by the need to make RA 3046 compliant with the terms of the United Nations
Convention on the Law of the Sea (UNCLOS III),5 which the Philippines ratified on 27 February 1984. 6 Among
others, UNCLOS III prescribes the water-land ratio, length, and contour of baselines of archipelagic States like
the Philippines7 and sets the deadline for the filing of application for the extended continental
shelf.8 Complying with these requirements, RA 9522 shortened one baseline, optimized the location of some
basepoints around the Philippine archipelago and classified adjacent territories, namely, the Kalayaan Island
Group (KIG) and the Scarborough Shoal, as "regimes of islands" whose islands generate their own applicable
maritime zones.
Petitioners, professors of law, law students and a legislator, in their respective capacities as "citizens,
taxpayers or x x x legislators,"9 as the case may be, assail the constitutionality of RA 9522 on two principal
grounds, namely: (1) RA 9522 reduces Philippine maritime territory, and logically, the reach of the Philippine
states sovereign power, in violation of Article 1 of the 1987 Constitution, 10 embodying the terms of the
Treaty of Paris11 and ancillary treaties,12 and (2) RA 9522 opens the countrys waters landward of the
baselines to maritime passage by all vessels and aircrafts, undermining Philippine sovereignty and national
security, contravening the countrys nuclear-free policy, and damaging marine resources, in violation of
relevant constitutional provisions.13
In addition, petitioners contend that RA 9522s treatment of the KIG as "regime of islands" not only results in
the loss of a large maritime area but also prejudices the livelihood of subsistence fishermen. 14 To buttress
their argument of territorial diminution, petitioners facially attack RA 9522 for what it excluded and included
its failure to reference either the Treaty of Paris or Sabah and its use of UNCLOS IIIs framework of regime
of islands to determine the maritime zones of the KIG and the Scarborough Shoal.
Commenting on the petition, respondent officials raised threshold issues questioning (1) the petitions
compliance with the case or controversy requirement for judicial review grounded on petitioners alleged
lack of locus standi and (2) the propriety of the writs of certiorari and prohibition to assail the
constitutionality of RA 9522. On the merits, respondents defended RA 9522 as the countrys compliance with
the terms of UNCLOS III, preserving Philippine territory over the KIG or Scarborough Shoal. Respondents add
that RA 9522 does not undermine the countrys security, environment and economic interests or relinquish
the Philippines claim over Sabah.
Respondents also question the normative force, under international law, of petitioners assertion that what
Spain ceded to the United States under the Treaty of Paris were the islands and all the waters found within
the boundaries of the rectangular area drawn under the Treaty of Paris.
We left unacted petitioners prayer for an injunctive writ.
The Issues
The petition raises the following issues:
1. Preliminarily
1. Whether petitioners possess locus standi to bring this suit; and
2. Whether the writs of certiorari and prohibition are the proper remedies to assail the
constitutionality of RA 9522.
2. On the merits, whether RA 9522 is unconstitutional.

The Ruling of the Court On the threshold issues, we hold that (1) petitioners possess locus standi to bring
this suit as citizens and (2) the writs of certiorari and prohibition are proper remedies to test the
constitutionality of RA 9522. On the merits, we find no basis to declare RA 9522 unconstitutional.
On the Threshold Issues
Petitioners Possess Locus
Standi as Citizens
Petitioners themselves undermine their assertion of locus standi as legislators and taxpayers because the
petition alleges neither infringement of legislative prerogative15 nor misuse of public funds,16 occasioned by
the passage and implementation of RA 9522. Nonetheless, we recognize petitioners locus standi as citizens
with constitutionally sufficient interest in the resolution of the merits of the case which undoubtedly raises
issues of national significance necessitating urgent resolution. Indeed, owing to the peculiar nature of RA
9522, it is understandably difficult to find other litigants possessing "a more direct and specific interest" to
bring the suit, thus satisfying one of the requirements for granting citizenship standing. 17
The Writs of Certiorari and Prohibition
Are Proper Remedies to Test
the Constitutionality of Statutes
In praying for the dismissal of the petition on preliminary grounds, respondents seek a strict observance of
the offices of the writs of certiorari and prohibition, noting that the writs cannot issue absent any showing of
grave abuse of discretion in the exercise of judicial, quasi-judicial or ministerial powers on the part of
respondents and resulting prejudice on the part of petitioners. 18
Respondents submission holds true in ordinary civil proceedings. When this Court exercises its constitutional
power of judicial review, however, we have, by tradition, viewed the writs of certiorari and prohibition as
proper remedial vehicles to test the constitutionality of statutes,19 and indeed, of acts of other branches of
government.20 Issues of constitutional import are sometimes crafted out of statutes which, while having no
bearing on the personal interests of the petitioners, carry such relevance in the life of this nation that the
Court inevitably finds itself constrained to take cognizance of the case and pass upon the issues raised, noncompliance with the letter of procedural rules notwithstanding. The statute sought to be reviewed here is
one such law.
RA 9522 is Not Unconstitutional
RA 9522 is a Statutory Tool
to Demarcate the Countrys
Maritime Zones and Continental
Shelf Under UNCLOS III, not to
Delineate Philippine Territory
Petitioners submit that RA 9522 "dismembers a large portion of the national territory" 21 because it discards
the pre-UNCLOS III demarcation of Philippine territory under the Treaty of Paris and related treaties,
successively encoded in the definition of national territory under the 1935, 1973 and 1987 Constitutions.
Petitioners theorize that this constitutional definition trumps any treaty or statutory provision denying the
Philippines sovereign control over waters, beyond the territorial sea recognized at the time of the Treaty of
Paris, that Spain supposedly ceded to the United States. Petitioners argue that from the Treaty of Paris
technical description, Philippine sovereignty over territorial waters extends hundreds of nautical miles
around the Philippine archipelago, embracing the rectangular area delineated in the Treaty of Paris. 22
Petitioners theory fails to persuade us.
UNCLOS III has nothing to do with the acquisition (or loss) of territory. It is a multilateral treaty regulating,
among others, sea-use rights over maritime zones (i.e., the territorial waters [12 nautical miles from the
baselines], contiguous zone [24 nautical miles from the baselines], exclusive economic zone [200 nautical
miles from the baselines]), and continental shelves that UNCLOS III delimits. 23 UNCLOS III was the
culmination of decades-long negotiations among United Nations members to codify norms regulating the
conduct of States in the worlds oceans and submarine areas, recognizing coastal and archipelagic States
graduated authority over a limited span of waters and submarine lands along their coasts.
On the other hand, baselines laws such as RA 9522 are enacted by UNCLOS III States parties to mark-out
specific basepoints along their coasts from which baselines are drawn, either straight or contoured, to serve
as geographic starting points to measure the breadth of the maritime zones and continental shelf. Article 48
of UNCLOS III on archipelagic States like ours could not be any clearer:
Article 48. Measurement of the breadth of the territorial sea, the contiguous zone, the exclusive economic
zone and the continental shelf. The breadth of the territorial sea, the contiguous zone, the exclusive
economic zone and the continental shelf shall be measured from archipelagic baselines drawn in
accordance with article 47. (Emphasis supplied)
Thus, baselines laws are nothing but statutory mechanisms for UNCLOS III States parties to delimit with
precision the extent of their maritime zones and continental shelves. In turn, this gives notice to the rest of
the international community of the scope of the maritime space and submarine areas within which States
parties exercise treaty-based rights, namely, the exercise of sovereignty over territorial waters (Article 2),
the jurisdiction to enforce customs, fiscal, immigration, and sanitation laws in the contiguous zone (Article

33), and the right to exploit the living and non-living resources in the exclusive economic zone (Article 56)
and continental shelf (Article 77).
Even under petitioners theory that the Philippine territory embraces the islands and all the waters within
the rectangular area delimited in the Treaty of Paris, the baselines of the Philippines would still have to be
drawn in accordance with RA 9522 because this is the only way to draw the baselines in conformity with
UNCLOS III. The baselines cannot be drawn from the boundaries or other portions of the rectangular area
delineated in the Treaty of Paris, but from the "outermost islands and drying reefs of the archipelago." 24
UNCLOS III and its ancillary baselines laws play no role in the acquisition, enlargement or, as petitioners
claim, diminution of territory. Under traditional international law typology, States acquire (or conversely,
lose) territory through occupation, accretion, cession and prescription,25 not by executing multilateral
treaties on the regulations of sea-use rights or enacting statutes to comply with the treatys terms to delimit
maritime zones and continental shelves. Territorial claims to land features are outside UNCLOS III, and are
instead governed by the rules on general international law. 26
RA 9522s Use of the Framework
of Regime of Islands to Determine the
Maritime Zones of the KIG and the
Scarborough Shoal, not Inconsistent
with the Philippines Claim of Sovereignty
Over these Areas
Petitioners next submit that RA 9522s use of UNCLOS IIIs regime of islands framework to draw the
baselines, and to measure the breadth of the applicable maritime zones of the KIG, "weakens our territorial
claim" over that area.27Petitioners add that the KIGs (and Scarborough Shoals) exclusion from the Philippine
archipelagic baselines results in the loss of "about 15,000 square nautical miles of territorial waters,"
prejudicing the livelihood of subsistence fishermen. 28 A comparison of the configuration of the baselines
drawn under RA 3046 and RA 9522 and the extent of maritime space encompassed by each law, coupled
with a reading of the text of RA 9522 and its congressional deliberations, vis--vis the Philippines obligations
under UNCLOS III, belie this view.
1avvphi1

The configuration of the baselines drawn under RA 3046 and RA 9522 shows that RA 9522 merely followed
the basepoints mapped by RA 3046, save for at least nine basepoints that RA 9522 skipped to optimize the
location of basepoints and adjust the length of one baseline (and thus comply with UNCLOS IIIs limitation on
the maximum length of baselines). Under RA 3046, as under RA 9522, the KIG and the Scarborough Shoal lie
outside of the baselines drawn around the Philippine archipelago. This undeniable cartographic fact takes
the wind out of petitioners argument branding RA 9522 as a statutory renunciation of the Philippines claim
over the KIG, assuming that baselines are relevant for this purpose.
Petitioners assertion of loss of "about 15,000 square nautical miles of territorial waters" under RA 9522 is
similarly unfounded both in fact and law. On the contrary, RA 9522, by optimizing the location of
basepoints, increased the Philippines total maritime space (covering its internal waters, territorial sea and
exclusive economic zone) by 145,216 square nautical miles, as shown in the table below: 29
Extent of maritime area
using RA 3046, as
amended, taking into
account the Treaty of
Paris delimitation (in
square nautical miles)

Extent of maritime area

using RA 9522, taking
into account UNCLOS III
(in square nautical miles)

Internal or
archipelagic waters

166,858

171,435

Territorial Sea

274,136

32,106

Exclusive Economic
Zone
TOTAL

382,669
440,994

586,210

Thus, as the map below shows, the reach of the exclusive economic zone drawn under RA 9522 even
extends way beyond the waters covered by the rectangular demarcation under the Treaty of Paris. Of
course, where there are overlapping exclusive economic zones of opposite or adjacent States, there will
have to be a delineation of maritime boundaries in accordance with UNCLOS III. 30

Further, petitioners argument that the KIG now lies outside Philippine territory because the baselines that
RA 9522 draws do not enclose the KIG is negated by RA 9522 itself. Section 2 of the law commits to text the
Philippines continued claim of sovereignty and jurisdiction over the KIG and the Scarborough Shoal:
SEC. 2. The baselines in the following areas over which the Philippines likewise exercises sovereignty
and jurisdiction shall be determined as "Regime of Islands" under the Republic of the Philippines
consistent with Article 121 of the United Nations Convention on the Law of the Sea (UNCLOS):
a) The Kalayaan Island Group as constituted under Presidential Decree No. 1596 and
b) Bajo de Masinloc, also known as Scarborough Shoal. (Emphasis supplied)
Had Congress in RA 9522 enclosed the KIG and the Scarborough Shoal as part of the Philippine archipelago,
adverse legal effects would have ensued. The Philippines would have committed a breach of two provisions
of UNCLOS III. First, Article 47 (3) of UNCLOS III requires that "[t]he drawing of such baselines shall not
depart to any appreciable extent from the general configuration of the archipelago." Second, Article 47 (2) of
UNCLOS III requires that "the length of the baselines shall not exceed 100 nautical miles," save for three per
cent (3%) of the total number of baselines which can reach up to 125 nautical miles. 31
Although the Philippines has consistently claimed sovereignty over the KIG 32 and the Scarborough Shoal for
several decades, these outlying areas are located at an appreciable distance from the nearest shoreline of
the Philippine archipelago,33 such that any straight baseline loped around them from the nearest basepoint
will inevitably "depart to an appreciable extent from the general configuration of the archipelago."
The principal sponsor of RA 9522 in the Senate, Senator Miriam Defensor-Santiago, took pains to emphasize
the foregoing during the Senate deliberations:
What we call the Kalayaan Island Group or what the rest of the world call[] the Spratlys and the Scarborough
Shoal are outside our archipelagic baseline because if we put them inside our baselines we might be
accused of violating the provision of international law which states: "The drawing of such baseline shall not
depart to any appreciable extent from the general configuration of the archipelago." So sa loob ng ating
baseline, dapat magkalapit ang mga islands. Dahil malayo ang Scarborough Shoal, hindi natin masasabing
malapit sila sa atin although we are still allowed by international law to claim them as our own.
This is called contested islands outside our configuration. We see that our archipelago is defined by the
orange line which [we] call[] archipelagic baseline. Ngayon, tingnan ninyo ang maliit na circle doon sa itaas,
that is Scarborough Shoal, itong malaking circle sa ibaba, that is Kalayaan Group or the Spratlys. Malayo na
sila sa ating archipelago kaya kung ilihis pa natin ang dating archipelagic baselines para lamang masama
itong dalawang circles, hindi na sila magkalapit at baka hindi na tatanggapin ng United Nations because of
the rule that it should follow the natural configuration of the archipelago.34 (Emphasis supplied)
Similarly, the length of one baseline that RA 3046 drew exceeded UNCLOS IIIs limits. The need to shorten
this baseline, and in addition, to optimize the location of basepoints using current maps, became imperative
as discussed by respondents:
1avvphi1

[T]he amendment of the baselines law was necessary to enable the Philippines to draw the outer limits of its
maritime zones including the extended continental shelf in the manner provided by Article 47 of [UNCLOS
III]. As defined by R.A. 3046, as amended by R.A. 5446, the baselines suffer from some technical
deficiencies, to wit:

1. The length of the baseline across Moro Gulf (from Middle of 3 Rock Awash to Tongquil Point) is
140.06 nautical miles x x x. This exceeds the maximum length allowed under Article 47(2) of the
[UNCLOS III], which states that "The length of such baselines shall not exceed 100 nautical miles,
except that up to 3 per cent of the total number of baselines enclosing any archipelago may exceed
that length, up to a maximum length of 125 nautical miles."
2. The selection of basepoints is not optimal. At least 9 basepoints can be skipped or deleted from the
baselines system. This will enclose an additional 2,195 nautical miles of water.
3. Finally, the basepoints were drawn from maps existing in 1968, and not established by geodetic
survey methods. Accordingly, some of the points, particularly along the west coasts of Luzon down to
Palawan were later found to be located either inland or on water, not on low-water line and drying
reefs as prescribed by Article 47.35
Hence, far from surrendering the Philippines claim over the KIG and the Scarborough Shoal, Congress
decision to classify the KIG and the Scarborough Shoal as "Regime[s] of Islands under the Republic of the
Philippines consistent with Article 121"36 of UNCLOS III manifests the Philippine States responsible
observance of its pacta sunt servanda obligation under UNCLOS III. Under Article 121 of UNCLOS III, any
"naturally formed area of land, surrounded by water, which is above water at high tide," such as portions of
the KIG, qualifies under the category of "regime of islands," whose islands generate their own applicable
maritime zones.37
Statutory Claim Over Sabah under
RA 5446 Retained
Petitioners argument for the invalidity of RA 9522 for its failure to textualize the Philippines claim over
Sabah in North Borneo is also untenable. Section 2 of RA 5446, which RA 9522 did not repeal, keeps open
the door for drawing the baselines of Sabah:
Section 2. The definition of the baselines of the territorial sea of the Philippine Archipelago as provided in
this Act is without prejudice to the delineation of the baselines of the territorial sea around the
territory of Sabah, situated in North Borneo, over which the Republic of the Philippines has
acquired dominion and sovereignty. (Emphasis supplied)

UNCLOS III and RA 9522 not

Incompatible with the Constitutions
Delineation of Internal Waters
As their final argument against the validity of RA 9522, petitioners contend that the law unconstitutionally
"converts" internal waters into archipelagic waters, hence subjecting these waters to the right of innocent
and sea lanes passage under UNCLOS III, including overflight. Petitioners extrapolate that these passage
rights indubitably expose Philippine internal waters to nuclear and maritime pollution hazards, in violation of
the Constitution.38
Whether referred to as Philippine "internal waters" under Article I of the Constitution 39 or as "archipelagic
waters" under UNCLOS III (Article 49 [1]), the Philippines exercises sovereignty over the body of water lying
landward of the baselines, including the air space over it and the submarine areas underneath. UNCLOS III
affirms this:
Article 49. Legal status of archipelagic waters, of the air space over archipelagic waters and of their bed and
subsoil.
1. The sovereignty of an archipelagic State extends to the waters enclosed by the
archipelagic baselines drawn in accordance with article 47, described as archipelagic waters,
regardless of their depth or distance from the coast.
2. This sovereignty extends to the air space over the archipelagic waters, as well as to
their bed and subsoil, and the resources contained therein.
xxxx
4. The regime of archipelagic sea lanes passage established in this Part shall not in other respects
affect the status of the archipelagic waters, including the sea lanes, or the exercise by the
archipelagic State of its sovereignty over such waters and their air space, bed and
subsoil, and the resources contained therein. (Emphasis supplied)
The fact of sovereignty, however, does not preclude the operation of municipal and international law norms
subjecting the territorial sea or archipelagic waters to necessary, if not marginal, burdens in the interest of
maintaining unimpeded, expeditious international navigation, consistent with the international law principle
of freedom of navigation. Thus, domestically, the political branches of the Philippine government, in the
competent discharge of their constitutional powers, may pass legislation designating routes within the
archipelagic waters to regulate innocent and sea lanes passage. 40 Indeed, bills drawing nautical highways for
sea lanes passage are now pending in Congress.41

In the absence of municipal legislation, international law norms, now codified in UNCLOS III, operate to grant
innocent passage rights over the territorial sea or archipelagic waters, subject to the treatys limitations and
conditions for their exercise.42 Significantly, the right of innocent passage is a customary international
law,43 thus automatically incorporated in the corpus of Philippine law.44 No modern State can validly invoke its
sovereignty to absolutely forbid innocent passage that is exercised in accordance with customary
international law without risking retaliatory measures from the international community.
The fact that for archipelagic States, their archipelagic waters are subject to both the right of innocent
passage and sea lanes passage45 does not place them in lesser footing vis--vis continental coastal States
which are subject, in their territorial sea, to the right of innocent passage and the right of transit passage
through international straits. The imposition of these passage rights through archipelagic waters under
UNCLOS III was a concession by archipelagic States, in exchange for their right to claim all the waters
landward of their baselines, regardless of their depth or distance from the coast, as archipelagic waters
subject to their territorial sovereignty. More importantly, the recognition of archipelagic States archipelago
and the waters enclosed by their baselines as one cohesive entity prevents the treatment of their islands as
separate islands under UNCLOS III.46 Separate islands generate their own maritime zones, placing the waters
between islands separated by more than 24 nautical miles beyond the States territorial sovereignty,
subjecting these waters to the rights of other States under UNCLOS III. 47
Petitioners invocation of non-executory constitutional provisions in Article II (Declaration of Principles and
State Policies)48 must also fail. Our present state of jurisprudence considers the provisions in Article II as
mere legislative guides, which, absent enabling legislation, "do not embody judicially enforceable
constitutional rights x x x."49 Article II provisions serve as guides in formulating and interpreting
implementing legislation, as well as in interpreting executory provisions of the Constitution. Although Oposa
v. Factoran50 treated the right to a healthful and balanced ecology under Section 16 of Article II as an
exception, the present petition lacks factual basis to substantiate the claimed constitutional violation. The
other provisions petitioners cite, relating to the protection of marine wealth (Article XII, Section 2, paragraph
251 ) and subsistence fishermen (Article XIII, Section 752 ), are not violated by RA 9522.
In fact, the demarcation of the baselines enables the Philippines to delimit its exclusive economic zone,
reserving solely to the Philippines the exploitation of all living and non-living resources within such zone.
Such a maritime delineation binds the international community since the delineation is in strict observance
of UNCLOS III. If the maritime delineation is contrary to UNCLOS III, the international community will of
course reject it and will refuse to be bound by it.
UNCLOS III favors States with a long coastline like the Philippines. UNCLOS III creates a sui generis maritime
space the exclusive economic zone in waters previously part of the high seas. UNCLOS III grants new
rights to coastal States to exclusively exploit the resources found within this zone up to 200 nautical
miles.53 UNCLOS III, however, preserves the traditional freedom of navigation of other States that attached to
this zone beyond the territorial sea before UNCLOS III.

RA 9522 and the Philippines Maritime Zones

Petitioners hold the view that, based on the permissive text of UNCLOS III, Congress was not bound to pass
RA 9522.54 We have looked at the relevant provision of UNCLOS III55 and we find petitioners reading
plausible. Nevertheless, the prerogative of choosing this option belongs to Congress, not to this Court.
Moreover, the luxury of choosing this option comes at a very steep price. Absent an UNCLOS III compliant
baselines law, an archipelagic State like the Philippines will find itself devoid of internationally acceptable
baselines from where the breadth of its maritime zones and continental shelf is measured. This is recipe for
a two-fronted disaster: first, it sends an open invitation to the seafaring powers to freely enter and exploit
the resources in the waters and submarine areas around our archipelago; and second, it weakens the
countrys case in any international dispute over Philippine maritime space. These are consequences
Congress wisely avoided.
The enactment of UNCLOS III compliant baselines law for the Philippine archipelago and adjacent areas, as
embodied in RA 9522, allows an internationally-recognized delimitation of the breadth of the Philippines
maritime zones and continental shelf. RA 9522 is therefore a most vital step on the part of the Philippines in
safeguarding its maritime zones, consistent with the Constitution and our national interest.
WHEREFORE, we DISMISS the petition.
SO ORDERED.

G.R. Nos. 120865-71 December 7, 1995

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,
vs.
COURT OF APPEALS; HON. JUDGE HERCULANO TECH, PRESIDING JUDGE, BRANCH 70, REGIONAL
TRIAL COURT OF BINANGONAN RIZAL; FLEET DEVELOPMENT, INC. and CARLITO ARROYO; THE
MUNICIPALITY OF BINANGONAN and/or MAYOR ISIDRO B. PACIS, respondents.
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,
vs.
COURT OF APPEALS; HON. JUDGE AURELIO C. TRAMPE, PRESIDING JUDGE, BRANCH 163,
REGIONAL TRIAL COURT OF PASIG; MANILA MARINE LIFE BUSINESS RESOURCES, INC.
represented by, MR. TOBIAS REYNALD M. TIANGCO; MUNICIPALITY OF TAGUIG, METRO MANILA
and/or MAYOR RICARDO D. PAPA, JR., respondents.
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,
vs.
COURT OF APPEALS; HON. JUDGE ALEJANDRO A. MARQUEZ, PRESIDING JUDGE, BRANCH 79,
REGIONAL TRIAL COURT OF MORONG, RIZAL; GREENFIELD VENTURES INDUSTRIAL DEVELOPMENT
CORPORATION and R. J. ORION DEVELOPMENT CORPORATION; MUNICIPALITY OF JALA-JALA
and/or MAYOR WALFREDO M. DE LA VEGA, respondents.
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,
vs.
COURT OF APPEALS; HON. JUDGE MANUEL S. PADOLINA, PRESIDING JUDGE, BRANCH 162,
REGIONAL TRIAL COURT OF PASIG, METRO MANILA; IRMA FISHING & TRADING CORP.; ARTM
FISHING CORP.; BDR CORPORATION, MIRT CORPORATION and TRIM CORPORATION; MUNICIPALITY
OF BINANGONAN and/or MAYOR ISIDRO B. PACIS, respondents.
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,
vs.

COURT OF APPEALS; HON. JUDGE ARTURO A. MARAVE, PRESIDING JUDGE, BRANCH 78, REGIONAL
TRIAL COURT OF MORONG, RIZAL; BLUE LAGOON FISHING CORP. and ALCRIS CHICKEN GROWERS,
INC.; MUNICIPALITY OF JALA-JALA and/or MAYOR WALFREDO M. DE LA VEGA, respondents.
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,
vs.
COURT OF APPEALS; HON. JUDGE ARTURO A. MARAVE, PRESIDING JUDGE, BRANCH 78, REGIONAL
TRIAL COURT OF MORONG, RIZAL; AGP FISH VENTURES, INC., represented by its PRESIDENT
ALFONSO PUYAT; MUNICIPALITY OF JALA-JALA and/or MAYOR WALFREDO M. DE LA
VEGA, respondents.
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,
vs.
COURT OF APPEALS; HON. JUDGE EUGENIO S. LABITORIA, PRESIDING JUDGE, BRANCH 161,
REGIONAL TRIAL COURT OF PASIG, METRO MANILA; SEA MAR TRADING CO. INC.; EASTERN
LAGOON FISHING CORP.; MINAMAR FISHING CORP.; MUNICIPALITY OF BINANGONAN and/or
MAYOR ISIDRO B. PACIS,respondents.

HERMOSISIMA, JR., J.:

It is difficult for a man, scavenging on the garbage dump created by affluence and profligate consumption
and extravagance of the rich or fishing in the murky waters of the Pasig River and the Laguna Lake or
making a clearing in the forest so that he can produce food for his family, to understand why protecting
birds, fish, and trees is more important than protecting him and keeping his family alive.
How do we strike a balance between environmental protection, on the one hand, and the individual personal
interests of people, on the other?
Towards environmental protection and ecology, navigational safety, and sustainable development, Republic
Act No. 4850 created the "Laguna Lake Development Authority." This Government Agency is supposed to
carry out and effectuate the aforesaid declared policy, so as to accelerate the development and balanced
growth of the Laguna Lake area and the surrounding provinces, cities and towns, in the act clearly named,
within the context of the national and regional plans and policies for social and economic development.
Presidential Decree No. 813 of former President Ferdinand E. Marcos amended certain sections of Republic
Act No. 4850 because of the concern for the rapid expansion of Metropolitan Manila, the suburbs and the
lakeshore towns of Laguna de Bay, combined with current and prospective uses of the lake for municipalindustrial water supply, irrigation, fisheries, and the like. Concern on the part of the Government and the
general public over: the environment impact of development on the water quality and ecology of the lake
and its related river systems; the inflow of polluted water from the Pasig River, industrial, domestic and
agricultural wastes from developed areas around the lake; the increasing urbanization which induced the
deterioration of the lake, since water quality studies have shown that the lake will deteriorate further if steps
are not taken to check the same; and the floods in Metropolitan Manila area and the lakeshore towns which
will influence the hydraulic system of Laguna de Bay, since any scheme of controlling the floods will
necessarily involve the lake and its river systems, likewise gave impetus to the creation of the Authority.
Section 1 of Republic Act No. 4850 was amended to read as follows:
Sec. 1. Declaration of Policy. It is hereby declared to be the national policy to promote, and
accelerate the development and balanced growth of the Laguna Lake area and the surrounding
provinces, cities and towns hereinafter referred to as the region, within the context of the
national and regional plans and policies for social and economic development and to carry out
the development of the Laguna Lake region with due regard and adequate provisions for
environmental management and control, preservation of the quality of human life and
ecological systems, and the prevention of undue ecological disturbances, deterioration and
pollution. 1
Special powers of the Authority, pertinent to the issues in this case, include:
Sec. 3. Section 4 of the same Act is hereby further amended by adding thereto seven new
paragraphs to be known as paragraphs (j), (k), (l), (m), (n), (o), and (p) which shall read as
follows:
xxx xxx xxx
(j) The provisions of existing laws to the contrary notwithstanding, to engage in
fish production and other aqua-culture projects in Laguna de Bay and other
bodies of water within its jurisdiction and in pursuance thereof to conduct studies
and make experiments, whenever necessary, with the collaboration and
assistance of the Bureau of Fisheries and Aquatic Resources, with the end in view
of improving present techniques and practices.Provided, that until modified,
altered or amended by the procedure provided in the following sub-paragraph,
the present laws, rules and permits or authorizations remain in force;

(k) For the purpose of effectively regulating and monitoring activities in Laguna
de Bay, the Authority shall have exclusive jurisdiction to issue new permit for the
use of the lake waters for any projects or activities in or affecting the said lake
including navigation, construction, and operation of fishpens, fish enclosures, fish
corrals and the like, and to impose necessary safeguards for lake quality control
and management and to collect necessary fees for said activities and
projects: Provided, That the fees collected for fisheries may be shared between
the Authority and other government agencies and political sub-divisions in such
proportion as may be determined by the President of the Philippines upon
recommendation of the Authority's Board: Provided, further, That the Authority's
Board may determine new areas of fishery development or activities which it
may place under the supervision of the Bureau of Fisheries and Aquatic
Resources taking into account the overall development plans and programs for
Laguna de Bay and related bodies of water: Provided, finally, That the Authority
shall subject to the approval of the President of the Philippines promulgate such
rules and regulations which shall govern fisheries development activities in
Laguna de Bay which shall take into consideration among others the following:
socio-economic amelioration of bonafide resident fishermen whether individually
or collectively in the form of cooperatives, lakeshore town development, a master
plan for fishpen construction and operation, communal fishing ground for lake
shore town residents, and preference to lake shore town residents in hiring
laborer for fishery projects;
(l) To require the cities and municipalities embraced within the region to pass
appropriate zoning ordinances and other regulatory measures necessary to carry
out the objectives of the Authority and enforce the same with the assistance of
the Authority;
(m) The provisions of existing laws to the contrary notwithstanding, to exercise
water rights over public waters within the Laguna de Bay region whenever
necessary to carry out the Authority's projects;
(n) To act in coordination with existing governmental agencies in establishing
water quality standards for industrial, agricultural and municipal waste
discharges into the lake and to cooperate with said existing agencies of the
government of the Philippines in enforcing such standards, or to separately
pursue enforcement and penalty actions as provided for in Section 4 (d) and
Section 39-A of this Act: Provided, That in case of conflict on the appropriate
water quality standard to be enforced such conflict shall be resolved thru the
NEDA Board. 2
To more effectively perform the role of the Authority under Republic Act No. 4850, as though Presidential
Decree No. 813 were not thought to be completely effective, the Chief Executive, feeling that the land and
waters of the Laguna Lake Region are limited natural resources requiring judicious management to their
optimal utilization to insure renewability and to preserve the ecological balance, the competing options for
the use of such resources and conflicting jurisdictions over such uses having created undue constraints on
the institutional capabilities of the Authority in the light of the limited powers vested in it by its charter,
Executive Order No. 927 further defined and enlarged the functions and powers of the Authority and named
and enumerated the towns, cities and provinces encompassed by the term "Laguna de Bay Region".
Also, pertinent to the issues in this case are the following provisions of Executive Order No. 927 which
include in particular the sharing of fees:
Sec 2. Water Rights Over Laguna de Bay and Other Bodies of Water within the Lake Region: To
effectively regulate and monitor activities in the Laguna de Bay region, the Authority shall
have exclusive jurisdiction to issue permit for the use of all surface water for any projects or
activities in or affecting the said region including navigation, construction, and operation of
fishpens, fish enclosures, fish corrals and the like.
For the purpose of this Executive Order, the term "Laguna de Bay Region" shall refer to the
Provinces of Rizal and Laguna; the Cities of San Pablo, Pasay, Caloocan, Quezon, Manila and
Tagaytay; the towns of Tanauan, Sto. Tomas and Malvar in Batangas Province; the towns of
Silang and Carmona in Cavite Province; the town of Lucban in Quezon Province; and the towns
of Marikina, Pasig, Taguig, Muntinlupa, and Pateros in Metro Manila.
Sec 3. Collection of Fees. The Authority is hereby empowered to collect fees for the use of the
lake water and its tributaries for all beneficial purposes including but not limited to fisheries,
recreation, municipal, industrial, agricultural, navigation, irrigation, and waste disposal
purpose; Provided, that the rates of the fees to be collected, and the sharing with other
government agencies and political subdivisions, if necessary, shall be subject to the approval
of the President of the Philippines upon recommendation of the Authority's Board, except
fishpen fee, which will be shared in the following manner; 20 percent of the fee shall go to the
lakeshore local governments, 5 percent shall go to the Project Development Fund which shall
be administered by a Council and the remaining 75 percent shall constitute the share of LLDA.
However, after the implementation within the three-year period of the Laguna Lake Fishery
Zoning and Management Plan, the sharing will be modified as follows: 35 percent of the

fishpen fee goes to the lakeshore local governments, 5 percent goes to the Project
Development Fund and the remaining 60 percent shall be retained by LLDA; Provided,
however, that the share of LLDA shall form part of its corporate funds and shall not be remitted
to the National Treasury as an exception to the provisions of Presidential Decree No. 1234.
(Emphasis supplied)
It is important to note that Section 29 of Presidential Decree No. 813 defined the term "Laguna Lake" in this
manner:
Sec 41. Definition of Terms.
(11) Laguna Lake or Lake. Whenever Laguna Lake or lake is used in this Act, the same shall
refer to Laguna de Bay which is that area covered by the lake water when it is at the average
annual maximum lake level of elevation 12.50 meters, as referred to a datum 10.00 meters
below mean lower low water (M.L.L.W). Lands located at and below such elevation are public
lands which form part of the bed of said lake.
Then came Republic Act No. 7160, the Local Government Code of 1991. The municipalities in the Laguna
Lake Region interpreted the provisions of this law to mean that the newly passed law gave municipal
governments the exclusive jurisdiction to issue fishing privileges within their municipal waters because R.A.
7160 provides:
Sec. 149. Fishery Rentals, Fees and Charges.
(a) Municipalities shall have the exclusive authority to grant fishery privileges in the municipal
waters and impose rental fees or charges therefor in accordance with the provisions of this
Section.
(b) The Sangguniang Bayan may:
(1) Grant fishing privileges to erect fish corrals, oyster, mussel or other aquatic
beds or bangus fry areas, within a definite zone of the municipal waters, as
determined by it; . . . .
(2) Grant privilege to gather, take or catch bangus fry, prawn fry or kawagkawag or fry of other species and fish from the municipal waters by nets, traps or
other fishing gears to marginal fishermen free from any rental fee, charges or
any other imposition whatsoever.
xxx xxx xxx
Sec. 447. Power, Duties, Functions and Compensation. . . . .
xxx xxx xxx
(XI) Subject to the provisions of Book II of this Code, grant exclusive privileges of
constructing fish corrals or fishpens, or the taking or catching of bangus fry,
prawn fry orkawag-kawag or fry of any species or fish within the municipal
waters.
xxx xxx xxx
Municipal governments thereupon assumed the authority to issue fishing privileges and fishpen permits. Big
fishpen operators took advantage of the occasion to establish fishpens and fishcages to the consternation of
the Authority. Unregulated fishpens and fishcages, as of July, 1995, occupied almost one-third of the entire
lake water surface area, increasing the occupation drastically from 7,000 hectares in 1990 to almost 21,000
hectares in 1995. The Mayor's permit to construct fishpens and fishcages were all undertaken in violation of
the policies adopted by the Authority on fishpen zoning and the Laguna Lake carrying capacity.
To be sure, the implementation by the lakeshore municipalities of separate independent policies in the
operation of fishpens and fishcages within their claimed territorial municipal waters in the lake and their
indiscriminate grant of fishpen permits have already saturated the lake area with fishpens, thereby
aggravating the current environmental problems and ecological stress of Laguna Lake.
In view of the foregoing circumstances, the Authority served notice to the general public that:
In compliance with the instructions of His Excellency PRESIDENT FIDEL V. RAMOS given on June
23, 1993 at Pila, Laguna pursuant to Republic Act 4850 as amended by Presidential Decree 813
and Executive Order 927 series of 1983 and in line with the policies and programs of the
Presidential Task Force on Illegal Fishpens and Illegal Fishing, the general public is hereby
notified that:
1. All fishpens, fishcages and other aqua-culture structures in the Laguna de Bay Region, which
were not registered or to which no application for registration and/or permit has been filed with

Laguna Lake Development Authority as of March 31, 1993 are hereby declared outrightly as
illegal.
2. All fishpens, fishcages and other aqua-culture structures so declared as illegal shall be
subject to demolition which shall be undertaken by the Presidential Task Force for Illegal
Fishpen and Illegal Fishing.
3. Owners of fishpens, fishcages and other aqua-culture structures declared as illegal shall,
without prejudice to demolition of their structures be criminally charged in accordance with
Section 39-A of Republic Act 4850 as amended by P.D. 813 for violation of the same laws.
Violations of these laws carries a penalty of imprisonment of not exceeding 3 years or a fine
not exceeding Five Thousand Pesos or both at the discretion of the court.
All operators of fishpens, fishcages and other aqua-culture structures declared as illegal in
accordance with the foregoing Notice shall have one (1) month on or before 27 October 1993
to show cause before the LLDA why their said fishpens, fishcages and other aqua-culture
structures should not be demolished/dismantled.
One month, thereafter, the Authority sent notices to the concerned owners of the illegally constructed
fishpens, fishcages and other aqua-culture structures advising them to dismantle their respective structures
within 10 days from receipt thereof, otherwise, demolition shall be effected.
Reacting thereto, the affected fishpen owners filed injunction cases against the Authority before various
regional trial courts, to wit: (a) Civil Case No. 759-B, for Prohibition, Injunction and Damages, Regional Trial
Court, Branch 70, Binangonan, Rizal, filed by Fleet Development, Inc. and Carlito Arroyo; (b) Civil Case No.
64049, for Injunction, Regional Trial Court, Branch 162, Pasig, filed by IRMA Fishing and Trading Corp., ARTM
Fishing Corp., BDR Corp., MIRT Corp. and TRIM Corp.; (c) Civil Case No. 566, for Declaratory Relief and
Injunction, Regional Trial Court, Branch 163, Pasig, filed by Manila Marine Life Business Resources, Inc. and
Tobias Reynaldo M. Tianco; (d) Civil Case No. 556-M, for Prohibition, Injunction and Damages, Regional Trial
Court, Branch 78, Morong, Rizal, filed by AGP Fishing Ventures, Inc.; (e) Civil Case No. 522-M, for Prohibition,
Injunction and Damages, Regional Trial Court, Branch 78, Morong, Rizal, filed by Blue Lagoon and Alcris
Chicken Growers, Inc.; (f) Civil Case No. 554-, forCertiorari and Prohibition, Regional Trial Court, Branch 79,
Morong, Rizal, filed by Greenfields Ventures Industrial Corp. and R.J. Orion Development Corp.; and (g) Civil
Case No. 64124, for Injunction, Regional Trial Court, Branch 15, Pasig, filed by SEA-MAR Trading Co., Inc. and
Eastern Lagoon Fishing Corp. and Minamar Fishing Corporation.
The Authority filed motions to dismiss the cases against it on jurisdictional grounds. The motions to dismiss
were invariably denied. Meanwhile, temporary restraining order/writs of preliminary mandatory injunction
were issued in Civil Cases Nos. 64124, 759 and 566 enjoining the Authority from demolishing the fishpens
and similar structures in question.
Hence, the herein petition for certiorari, prohibition and injunction, G.R. Nos. 120865-71, were filed by the
Authority with this court. Impleaded as parties-respondents are concerned regional trial courts and
respective private parties, and the municipalities and/or respective Mayors of Binangonan, Taguig and Jalajala, who issued permits for the construction and operation of fishpens in Laguna de Bay. The Authority
sought the following reliefs, viz.:
(A) Nullification of the temporary restraining order/writs of preliminary injunction issued in Civil
Cases Nos. 64125, 759 and 566;
(B) Permanent prohibition against the regional trial courts from exercising jurisdiction over
cases involving the Authority which is a co-equal body;
(C) Judicial pronouncement that R.A. 7610 (Local Government Code of 1991) did not repeal,
alter or modify the provisions of R.A. 4850, as amended, empowering the Authority to issue
permits for fishpens, fishcages and other aqua-culture structures in Laguna de Bay and that,
the Authority the government agency vested with exclusive authority to issue said permits.
By this Court's resolution of May 2, 1994, the Authority's consolidated petitions were referred to the Court of
Appeals.
In a Decision, dated June 29, 1995, the Court of Appeals dismissed the Authority's consolidated petitions, the
Court of Appeals holding that: (A) LLDA is not among those quasi-judicial agencies of government whose
decision or order are appealable only to the Court of Appeals; (B) the LLDA charter does vest LLDA with
quasi-judicial functions insofar as fishpens are concerned; (C) the provisions of the LLDA charter insofar as
fishing privileges in Laguna de Bay are concerned had been repealed by the Local Government Code of
1991; (D) in view of the aforesaid repeal, the power to grant permits devolved to and is now vested with
their respective local government units concerned.
Not satisfied with the Court of Appeals decision, the Authority has returned to this Court charging the
following errors:
1. THE HONORABLE COURT OF APPEALS PROBABLY COMMITTED AN ERROR WHEN IT RULED
THAT THE LAGUNA LAKE DEVELOPMENT AUTHORITY IS NOT A QUASI-JUDICIAL AGENCY.

2. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT RULED THAT
R.A. 4850 AS AMENDED BY P.D. 813 AND E.O. 927 SERIES OF 1983 HAS BEEN REPEALED BY
REPUBLIC ACT 7160. THE SAID RULING IS CONTRARY TO ESTABLISHED PRINCIPLES AND
JURISPRUDENCE OF STATUTORY CONSTRUCTION.
3. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT RULED THAT
THE POWER TO ISSUE FISHPEN PERMITS IN LAGUNA DE BAY HAS BEEN DEVOLVED TO
CONCERNED (LAKESHORE) LOCAL GOVERNMENT UNITS.
We take a simplistic view of the controversy. Actually, the main and only issue posed is: Which agency of the
Government the Laguna Lake Development Authority or the towns and municipalities comprising the
region should exercise jurisdiction over the Laguna Lake and its environs insofar as the issuance of
permits for fishery privileges is concerned?
Section 4 (k) of the charter of the Laguna Lake Development Authority, Republic Act No. 4850, the provisions
of Presidential Decree No. 813, and Section 2 of Executive Order No. 927, cited above, specifically provide
that the Laguna Lake Development Authority shall have exclusive jurisdiction to issue permits for the use of
all surface water for any projects or activities in or affecting the said region, including navigation,
construction, and operation of fishpens, fish enclosures, fish corrals and the like. On the other hand, Republic
Act No. 7160, the Local Government Code of 1991, has granted to the municipalities the exclusive authority
to grant fishery privileges in municipal waters. The Sangguniang Bayan may grant fishery privileges to erect
fish corrals, oyster, mussels or other aquatic beds or bangus fry area within a definite zone of the municipal
waters.
We hold that the provisions of Republic Act No. 7160 do not necessarily repeal the aforementioned laws
creating the Laguna Lake Development Authority and granting the latter water rights authority over Laguna
de Bay and the lake region.
The Local Government Code of 1991 does not contain any express provision which categorically expressly
repeal the charter of the Authority. It has to be conceded that there was no intent on the part of the
legislature to repeal Republic Act No. 4850 and its amendments. The repeal of laws should be made clear
and expressed.
It has to be conceded that the charter of the Laguna Lake Development Authority constitutes a special law.
Republic Act No. 7160, the Local Government Code of 1991, is a general law. It is basic in statutory
construction that the enactment of a later legislation which is a general law cannot be construed to have
repealed a special law. It is a well-settled rule in this jurisdiction that "a special statute, provided for a
particular case or class of cases, is not repealed by a subsequent statute, general in its terms, provisions
and application, unless the intent to repeal or alter is manifest, although the terms of the general law are
broad enough to include the cases embraced in the special law." 3
Where there is a conflict between a general law and a special statute, the special statute should prevail
since it evinces the legislative intent more clearly than the general statute. The special law is to be taken as
an exception to the general law in the absence of special circumstances forcing a contrary conclusion. This is
because implied repeals are not favored and as much as possible, effect must be given to all enactments of
the legislature. A special law cannot be repealed, amended or altered by a subsequent general law by mere
implication. 4
Thus, it has to be concluded that the charter of the Authority should prevail over the Local Government Code
of 1991.
Considering the reasons behind the establishment of the Authority, which are environmental protection,
navigational safety, and sustainable development, there is every indication that the legislative intent is for
the Authority to proceed with its mission.
We are on all fours with the manifestation of petitioner Laguna Lake Development Authority that "Laguna de
Bay, like any other single body of water has its own unique natural ecosystem. The 900 km lake surface
water, the eight (8) major river tributaries and several other smaller rivers that drain into the lake, the 2,920
km basin or watershed transcending the boundaries of Laguna and Rizal provinces, greater portion of Metro
Manila, parts of Cavite, Batangas, and Quezon provinces, constitute one integrated delicate natural
ecosystem that needs to be protected with uniform set of policies; if we are to be serious in our aims of
attaining sustainable development. This is an exhaustible natural resource a very limited one which
requires judicious management and optimal utilization to ensure renewability and preserve its ecological
integrity and balance."
"Managing the lake resources would mean the implementation of a national policy geared towards the
protection, conservation, balanced growth and sustainable development of the region with due regard to the
inter-generational use of its resources by the inhabitants in this part of the earth. The authors of Republic Act
4850 have foreseen this need when they passed this LLDA law the special law designed to govern the
management of our Laguna de Bay lake resources."
"Laguna de Bay therefore cannot be subjected to fragmented concepts of management policies where
lakeshore local government units exercise exclusive dominion over specific portions of the lake water. The
garbage thrown or sewage discharged into the lake, abstraction of water therefrom or construction of
fishpens by enclosing its certain area, affect not only that specific portion but the entire 900 km of lake

water. The implementation of a cohesive and integrated lake water resource management policy, therefore,
is necessary to conserve, protect and sustainably develop Laguna de Bay." 5
The power of the local government units to issue fishing privileges was clearly granted for revenue
purposes. This is evident from the fact that Section 149 of the New Local Government Code empowering
local governments to issue fishing permits is embodied in Chapter 2, Book II, of Republic Act No. 7160 under
the heading, "Specific Provisions On The Taxing And Other Revenue Raising Power Of Local Government
Units."
On the other hand, the power of the Authority to grant permits for fishpens, fishcages and other aquaculture structures is for the purpose of effectively regulating and monitoring activities in the Laguna de Bay
region (Section 2, Executive Order No. 927) and for lake quality control and management. 6 It does partake of
the nature of police power which is the most pervasive, the least limitable and the most demanding of all State
powers including the power of taxation. Accordingly, the charter of the Authority which embodies a valid exercise
of police power should prevail over the Local Government Code of 1991 on matters affecting Laguna de Bay.
There should be no quarrel over permit fees for fishpens, fishcages and other aqua-culture structures in the
Laguna de Bay area. Section 3 of Executive Order No. 927 provides for the proper sharing of fees collected.
In respect to the question as to whether the Authority is a quasi-judicial agency or not, it is our holding that,
considering the provisions of Section 4 of Republic Act No. 4850 and Section 4 of Executive Order No. 927,
series of 1983, and the ruling of this Court in Laguna Lake Development Authority vs. Court of Appeals, 231
SCRA 304, 306, which we quote:
xxx xxx xxx
As a general rule, the adjudication of pollution cases generally pertains to the Pollution
Adjudication Board (PAB), except in cases where the special law provides for another forum. It
must be recognized in this regard that the LLDA, as a specialized administrative agency, is
specifically mandated under Republic Act No. 4850 and its amendatory laws to carry out and
make effective the declared national policy of promoting and accelerating the development
and balanced growth of the Laguna Lake area and the surrounding provinces of Rizal and
Laguna and the cities of San Pablo, Manila, Pasay, Quezon and Caloocan with due regard and
adequate provisions for environmental management and control, preservation of the quality of
human life and ecological systems, and the prevention of undue ecological disturbances,
deterioration and pollution. Under such a broad grant of power and authority, the LLDA, by
virtue of its special charter, obviously has the responsibility to protect the inhabitants of the
Laguna Lake region from the deleterious effects of pollutants emanating from the discharge of
wastes from the surrounding areas. In carrying out the aforementioned declared policy, the
LLDA is mandated, among others, to pass upon and approve or disapprove all plans, programs,
and projects proposed by local government offices/agencies within the region, public
corporations, and private persons or enterprises where such plans, programs and/or projects
are related to those of the LLDA for the development of the region.
xxx xxx xxx
. . . . While it is a fundamental rule that an administrative agency has only such powers as are
expressly granted to it by law, it is likewise a settled rule that an administrative agency has
also such powers as are necessarily implied in the exercise of its express powers. In the
exercise, therefore, of its express powers under its charter, as a regulatory and quasi-judicial
body with respect to pollution cases in the Laguna Lake region, the authority of the LLDA to
issue a "cease and desist order" is, perforce, implied. Otherwise, it may well be reduced to a
"toothless" paper agency.
there is no question that the Authority has express powers as a regulatory and quasi-judicial body in
respect to pollution cases with authority to issue a "cease and desist order" and on matters affecting
the construction of illegal fishpens, fishcages and other aqua-culture structures in Laguna de Bay. The
Authority's pretense, however, that it is co-equal to the Regional Trial Courts such that all actions
against it may only be instituted before the Court of Appeals cannot be sustained. On actions
necessitating the resolution of legal questions affecting the powers of the Authority as provided for in
its charter, the Regional Trial Courts have jurisdiction.
In view of the foregoing, this Court holds that Section 149 of Republic Act No. 7160, otherwise known as the
Local Government Code of 1991, has not repealed the provisions of the charter of the Laguna Lake
Development Authority, Republic Act No. 4850, as amended. Thus, the Authority has the exclusive
jurisdiction to issue permits for the enjoyment of fishery privileges in Laguna de Bay to the exclusion of
municipalities situated therein and the authority to exercise such powers as are by its charter vested on it.
Removal from the Authority of the aforesaid licensing authority will render nugatory its avowed purpose of
protecting and developing the Laguna Lake Region. Otherwise stated, the abrogation of this power would
render useless its reason for being and will in effect denigrate, if not abolish, the Laguna Lake Development
Authority. This, the Local Government Code of 1991 had never intended to do.

WHEREFORE, the petitions for prohibition, certiorari and injunction are hereby granted, insofar as they relate
to the authority of the Laguna Lake Development Authority to grant fishing privileges within the Laguna Lake
Region.
The restraining orders and/or writs of injunction issued by Judge Arturo Marave, RTC, Branch 78, Morong,
Rizal; Judge Herculano Tech, RTC, Branch 70, Binangonan, Rizal; and Judge Aurelio Trampe, RTC, Branch 163,
Pasig, Metro Manila, are hereby declared null and void and ordered set aside for having been issued with
grave abuse of discretion.
The Municipal Mayors of the Laguna Lake Region are hereby prohibited from issuing permits to construct and
operate fishpens, fishcages and other aqua-culture structures within the Laguna Lake Region, their previous
issuances being declared null and void. Thus, the fishing permits issued by Mayors Isidro B. Pacis,
Municipality of Binangonan; Ricardo D. Papa, Municipality of Taguig; and Walfredo M. de la Vega, Municipality
of Jala-jala, specifically, are likewise declared null and void and ordered cancelled.
The fishpens, fishcages and other aqua-culture structures put up by operators by virtue of permits issued by
Municipal Mayors within the Laguna Lake Region, specifically, permits issued to Fleet Development, Inc. and
Carlito Arroyo; Manila Marine Life Business Resources, Inc., represented by, Mr. Tobias Reynald M. Tiangco;
Greenfield Ventures Industrial Development Corporation and R.J. Orion Development Corporation; IRMA
Fishing And Trading Corporation, ARTM Fishing Corporation, BDR Corporation, Mirt Corporation and Trim
Corporation; Blue Lagoon Fishing Corporation and ALCRIS Chicken Growers, Inc.; AGP Fish Ventures, Inc.,
represented by its President Alfonso Puyat; SEA MAR Trading Co., Inc., Eastern Lagoon Fishing Corporation,
and MINAMAR Fishing Corporation, are hereby declared illegal structures subject to demolition by the Laguna
Lake Development Authority.
SO ORDERED.

G.R. Nos. 171947-48

February 15, 2011

METROPOLITAN MANILA DEVELOPMENT AUTHORITY vs CONCERNED RESIDENTS OF MANILA BAY

DECISION
VELASCO, JR., J.:
The need to address environmental pollution, as a cause of climate change, has of late gained
the attention of the international community. Media have finally trained their sights on the ill effects of
pollution, the destruction of forests and other critical habitats, oil spills, and the unabated improper
disposal of garbage. And rightly so, for the magnitude of environmental destruction is now on a scale
few ever foresaw and the wound no longer simply heals by itself. [2] But amidst hard evidence and clear
signs of a climate crisis that need bold action, the voice of cynicism, naysayers, and procrastinators
can still be heard.
This case turns on government agencies and their officers who, by the nature of their respective
offices or by direct statutory command, are tasked to protect and preserve, at the first instance, our
internal waters, rivers, shores, and seas polluted by human activities. To most of these agencies and
their official complement, the pollution menace does not seem to carry the high national priority it
deserves, if their track records are to be the norm. Their cavalier attitude towards solving, if not
mitigating, the environmental pollution problem, is a sad commentary on bureaucratic efficiency and
commitment.
At the core of the case is the Manila Bay, a place with a proud historic past, once brimming with
marine life and, for so many decades in the past, a spot for different contact recreation activities, but
now a dirty and slowly dying expanse mainly because of the abject official indifference of people and
institutions that could have otherwise made a difference.

This case started when, on January 29, 1999, respondents Concerned Residents of Manila Bay
filed a complaint before the Regional Trial Court (RTC) in Imus, Cavite against several government
agencies, among them the petitioners, for the cleanup, rehabilitation, and protection of the Manila Bay.
Raffled to Branch 20 and docketed as Civil Case No. 1851-99 of the RTC, the complaint alleged that
the water quality of the Manila Bay had fallen way below the allowable standards set by law,
specifically Presidential Decree No. (PD) 1152 or the Philippine Environment Code. This
environmental aberration, the complaint stated, stemmed from:
x x x [The] reckless, wholesale, accumulated and ongoing acts of omission or commission
[of the defendants] resulting in the clear and present danger to public health and in the
depletion and contamination of the marine life of Manila Bay, [for which reason] ALL
defendants must be held jointly and/or solidarily liable and be collectively ordered to clean
up Manila Bay and to restore its water quality to class B waters fit for swimming, skindiving, and other forms of contact recreation. [3]

In their individual causes of action, respondents alleged that the continued neglect of petitioners
in abating the pollution of the Manila Bay constitutes a violation of, among others:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)

Respondents constitutional right to life, health, and a balanced ecology;

The Environment Code (PD 1152);
The Pollution Control Law (PD 984);
The Water Code (PD 1067);
The Sanitation Code (PD 856);
The Illegal Disposal of Wastes Decree (PD 825);
The Marine Pollution Law (PD 979);
Executive Order No. 192;
The Toxic and Hazardous Wastes Law (Republic Act No. 6969);
Civil Code provisions on nuisance and human relations;
The Trust Doctrine and the Principle of Guardianship; and
International Law

Inter alia, respondents, as plaintiffs a quo, prayed that petitioners be ordered to clean
the Manila Bay and submit to the RTC a concerted concrete plan of action for the purpose.
The trial of the case started off with a hearing at the Manila Yacht Club followed by an ocular
inspection of the Manila Bay. Renato T. Cruz, the Chief of the Water Quality Management Section,
Environmental Management Bureau, Department of Environment and Natural Resources (DENR),
testifying for petitioners, stated that water samples collected from different beaches around the Manila
Bay showed that the amount of fecal coliform content ranged from 50,000 to 80,000 most probable
number (MPN)/ml when what DENR Administrative Order No. 34-90 prescribed as a safe level for
bathing and other forms of contact recreational activities, or the SB level, is one not exceeding 200
MPN/100 ml.[4]
Rebecca de Vera, for Metropolitan Waterworks and Sewerage System (MWSS) and in behalf of
other petitioners, testified about the MWSS efforts to reduce pollution along the Manila Bay through
the Manila Second Sewerage Project. For its part, the Philippine Ports Authority (PPA) presented, as
part of its evidence, its memorandum circulars on the study being conducted on ship-generated waste
treatment and disposal, and its Linis Dagat (Clean the Ocean) project for the cleaning of wastes
accumulated or washed to shore.
The RTC Ordered Petitioners to Clean Up and Rehabilitate Manila Bay

On September 13, 2002, the RTC rendered a Decision[5] in favor of respondents. The dispositive
portion reads:
WHEREFORE, finding merit in the complaint, judgment is hereby rendered ordering the
abovenamed defendant-government agencies, jointly and solidarily, to clean up and
rehabilitate Manila Bay and restore its waters to SB classification to make it fit for
swimming, skin-diving and other forms of contact recreation. To attain this, defendantagencies, with defendant DENR as the lead agency, are directed, within six (6) months from
receipt hereof, to act and perform their respective duties by devising a consolidated,
coordinated and concerted scheme of action for the rehabilitation and restoration of the bay.
In particular:
Defendant MWSS is directed to install, operate and maintain adequate [sewerage] treatment
facilities in strategic places under its jurisdiction and increase their capacities.
Defendant LWUA, to see to it that the water districts under its wings, provide, construct and
operate sewage facilities for the proper disposal of waste.
Defendant DENR, which is the lead agency in cleaning up Manila Bay, to install, operate
and maintain waste facilities to rid the bay of toxic and hazardous substances.
Defendant PPA, to prevent and also to treat the discharge not only of ship-generated wastes
but also of other solid and liquid wastes from docking vessels that contribute to the pollution
of the bay.
Defendant MMDA, to establish, operate and maintain an adequate and appropriate sanitary
landfill and/or adequate solid waste and liquid disposal as well as other alternative garbage
disposal system such as re-use or recycling of wastes.
Defendant DA, through the Bureau of Fisheries and Aquatic Resources, to revitalize the
marine life in Manila Bay and restock its waters with indigenous fish and other aquatic
animals.
Defendant DBM, to provide and set aside an adequate budget solely for the purpose of
cleaning up and rehabilitation of Manila Bay.
Defendant DPWH, to remove and demolish structures and other nuisances that obstruct the
free flow of waters to the bay. These nuisances discharge solid and liquid wastes which
eventually end up in Manila Bay. As the construction and engineering arm of the
government, DPWH is ordered to actively participate in removing debris, such as carcass of
sunken vessels, and other non-biodegradable garbage in the bay.
Defendant DOH, to closely supervise and monitor the operations of septic and sludge
companies and require them to have proper facilities for the treatment and disposal of fecal
sludge and sewage coming from septic tanks.
Defendant DECS, to inculcate in the minds and hearts of the people through education the
importance of preserving and protecting the environment.
Defendant Philippine Coast Guard and the PNP Maritime Group, to protect at all costs
the Manila Bay from all forms of illegal fishing.
No pronouncement as to damages and costs.
SO ORDERED.
The MWSS, Local Water Utilities Administration (LWUA), and PPA filed before the Court of Appeals
(CA) individual Notices of Appeal which were eventually consolidated and docketed as CA-G.R. CV
No. 76528.

On the other hand, the DENR, Department of Public Works and Highways (DPWH),
Metropolitan Manila Development Authority (MMDA), Philippine Coast Guard (PCG), Philippine
National Police (PNP) Maritime Group, and five other executive departments and agencies filed
directly with this Court a petition for reviewunder Rule 45. The Court, in a Resolution of December 9,
2002, sent the said petition to the CA for consolidation with the consolidated appeals of MWSS,
LWUA, and PPA, docketed as CA-G.R. SP No. 74944.
Petitioners, before the CA, were one in arguing in the main that the pertinent provisions of the
Environment Code (PD 1152) relate only to the cleaning of specific pollution incidents and do not
cover cleaning in general. And apart from raising concerns about the lack of funds appropriated for
cleaning purposes, petitioners also asserted that the cleaning of the Manila Bay is not a ministerial act
which can be compelled by mandamus.
The CA Sustained the RTC
By a Decision of September 28, 2005, the CA denied petitioners appeal and affirmed the
Decision of the RTC in toto, stressing that the trial courts decision did not require petitioners to do
tasks outside of their usual basic functions under existing laws.[7]
[6]

Petitioners are now before this Court praying for the allowance of their Rule 45 petition on the
following ground and supporting arguments:
THE [CA] DECIDED A QUESTION OF SUBSTANCE NOT HERETOFORE
PASSED UPON BY THE HONORABLE COURT, I.E., IT AFFIRMED THE TRIAL
COURTS DECISION DECLARING THAT SECTION 20 OF [PD] 1152 REQUIRES
CONCERNED GOVERNMENT AGENCIES TO REMOVE ALL POLLUTANTS
SPILLED AND DISCHARGED IN THE WATER SUCH AS FECAL COLIFORMS.
ARGUMENTS
I
[SECTIONS] 17 AND 20 OF [PD] 1152 RELATE ONLY TO THE CLEANING OF
SPECIFIC POLLUTION INCIDENTS AND [DO] NOT COVER CLEANING IN
GENERAL
II
THE CLEANING OR REHABILITATION OF THE MANILA BAY IS NOT A
MINISTERIAL ACT OF PETITIONERS THAT CAN BE COMPELLED BY
MANDAMUS.

The issues before us are two-fold. First, do Sections 17 and 20 of PD 1152 under the
headings, Upgrading of Water Quality and Clean-up Operations, envisage a cleanup in general or are
they limited only to the cleanup of specific pollution incidents? And second, can petitioners be
compelled by mandamus to clean up and rehabilitate the Manila Bay?
On August 12, 2008, the Court conducted and heard the parties on oral arguments.
Our Ruling
We shall first dwell on the propriety of the issuance of mandamus under the premises.
The Cleaning or Rehabilitation of Manila Bay
Can be Compelled by Mandamus

Generally, the writ of mandamus lies to require the execution of a ministerial duty. [8] A ministerial
duty is one that requires neither the exercise of official discretion nor judgment. [9] It connotes an act in
which nothing is left to the discretion of the person executing it. It is a simple, definite duty arising
under conditions admitted or proved to exist and imposed by law.[10] Mandamus is available to compel
action, when refused, on matters involving discretion, but not to direct the exercise of judgment or
discretion one way or the other.
Petitioners maintain that the MMDAs duty to take measures and maintain adequate solid waste
and liquid disposal systems necessarily involves policy evaluation and the exercise of judgment on the
part of the agency concerned. They argue that the MMDA, in carrying out its mandate, has to make
decisions, including choosing where a landfill should be located by undertaking feasibility studies and
cost estimates, all of which entail the exercise of discretion.
Respondents, on the other hand, counter that the statutory command is clear and that petitioners
duty to comply with and act according to the clear mandate of the law does not require the exercise of
discretion. According to respondents, petitioners, the MMDA in particular, are without discretion, for
example, to choose which bodies of water they are to clean up, or which discharge or spill they are to
contain. By the same token, respondents maintain that petitioners are bereft of discretion on whether
or not to alleviate the problem of solid and liquid waste disposal; in other words, it is the MMDAs
ministerial duty to attend to such services.
We agree with respondents.
First off, we wish to state that petitioners obligation to perform their duties as defined by law,
on one hand, and how they are to carry out such duties, on the other, are two different concepts. While
the implementation of the MMDAs mandated tasks may entail a decision-making process, the
enforcement of the law or the very act of doing what the law exacts to be done is ministerial in nature
and may be compelled by mandamus. We said so in Social Justice Society v. Atienza[11] in which the
Court directed the City of Manila to enforce, as a matter of ministerial duty, its Ordinance No. 8027
directing the three big local oil players to cease and desist from operating their business in the socalled Pandacan Terminals within six months from the effectivity of the ordinance. But to illustrate
with respect to the instant case, the MMDAs duty to put up an adequate and appropriate sanitary
landfill and solid waste and liquid disposal as well as other alternative garbage disposal systems is
ministerial, its duty being a statutory imposition. The MMDAs duty in this regard is spelled out in
Sec. 3(c) of Republic Act No. (RA) 7924 creating the MMDA. This section defines and delineates the
scope of the MMDAs waste disposal services to include:
Solid waste disposal and management which include formulation and implementation
of policies, standards, programs and projects for proper and sanitary waste disposal. It shall
likewise include the establishment and operation of sanitary land fill and related
facilities and the implementation of other alternative programs intended to reduce, reuse and
recycle solid waste. (Emphasis added.)

The MMDA is duty-bound to comply with Sec. 41 of the Ecological Solid Waste Management
Act (RA 9003) which prescribes the minimum criteria for the establishment of sanitary landfills and
Sec. 42 which provides the minimum operating requirements that each site operator shall maintain in
the operation of a sanitary landfill. Complementing Sec. 41 are Secs. 36 and 37 of RA 9003,
[12]
enjoining the MMDA and local government units, among others, after the effectivity of the law on
February 15, 2001, from using and operating open dumps for solid waste and disallowing, five years
after such effectivity, the use of controlled dumps.

The MMDAs duty in the area of solid waste disposal, as may be noted, is set forth not only in
the Environment Code (PD 1152) and RA 9003, but in its charter as well. This duty of putting up a
proper waste disposal system cannot be characterized as discretionary, for, as earlier stated, discretion
presupposes the power or right given by law to public functionaries to act officially according to their
judgment or conscience.[13] A discretionary duty is one that allows a person to exercise judgment and
choose to perform or not to perform.[14] Any suggestion that the MMDA has the option whether or not
to perform its solid waste disposal-related duties ought to be dismissed for want of legal basis.
A perusal of other petitioners respective charters or like enabling statutes and pertinent laws would
yield this conclusion: these government agencies are enjoined, as a matter of statutory obligation, to
perform certain functions relating directly or indirectly to the cleanup, rehabilitation, protection, and
preservation of the Manila Bay. They are precluded from choosing not to perform these duties.
Consider:
(1) The DENR, under Executive Order No. (EO) 192, [15] is the primary agency responsible for the
conservation, management, development, and proper use of the countrys environment and natural
resources. Sec. 19 of the Philippine Clean Water Act of 2004 (RA 9275), on the other hand, designates
the DENR as the primary government agency responsible for its enforcement and implementation,
more particularly over all aspects of water quality management. On water pollution, the DENR, under
the Acts Sec. 19(k), exercises jurisdiction over all aspects of water pollution, determine[s] its location,
magnitude, extent, severity, causes and effects and other pertinent information on pollution, and
[takes] measures, using available methods and technologies, to prevent and abate such pollution.
The DENR, under RA 9275, is also tasked to prepare a National Water Quality Status Report, an
Integrated Water Quality Management Framework, and a 10-year Water Quality Management Area
Action Plan which is nationwide in scope covering the Manila Bay and adjoining areas. Sec. 19 of RA
9275 provides:
Sec. 19 Lead Agency.The [DENR] shall be the primary government agency responsible for
the implementation and enforcement of this Act x x x unless otherwise provided herein. As
such, it shall have the following functions, powers and responsibilities:
a) Prepare a National Water Quality Status report within twenty-four (24) months from the
effectivity of this Act: Provided, That the Department shall thereafter review or revise
and publish annually, or as the need arises, said report;
b) Prepare an Integrated Water Quality Management Framework within twelve (12) months
following the completion of the status report;
c) Prepare a ten (10) year Water Quality Management Area Action Plan within 12 months
following the completion of the framework for each designated water management area.
Such action plan shall be reviewed by the water quality management area governing
board every five (5) years or as need arises.

The DENR has prepared the status report for the period 2001 to 2005 and is in the process of
completing the preparation of the Integrated Water Quality Management Framework. [16] Within twelve
(12) months thereafter, it has to submit a final Water Quality Management Area Action Plan. [17] Again,
like the MMDA, the DENR should be made to accomplish the tasks assigned to it under RA 9275.
Parenthetically, during the oral arguments, the DENR Secretary manifested that the DENR, with the
assistance of and in partnership with various government agencies and non-government organizations,
has completed, as of December 2005, the final draft of a comprehensive action plan with estimated
budget and time frame, denominated as Operation Plan for the Manila Bay Coastal Strategy, for the
rehabilitation, restoration, and rehabilitation of the Manila Bay.

The completion of the said action plan and even the implementation of some of its phases should more
than ever prod the concerned agencies to fast track what are assigned them under existing laws.
(2) The MWSS, under Sec. 3 of RA 6234,[18] is vested with jurisdiction, supervision, and control
over all waterworks and sewerage systems in the territory comprising what is now the cities of Metro
Manila and several towns of the provinces of Rizal and Cavite, and charged with the duty:
(g) To construct, maintain, and operate such sanitary sewerages as may be necessary for the
proper sanitation and other uses of the cities and towns comprising the System; x x x
(3) The LWUA under PD 198 has the power of supervision and control over local water
districts. It can prescribe the minimum standards and regulations for the operations of these districts
and shall monitor and evaluate local water standards. The LWUA can direct these districts to
construct, operate, and furnish facilities and services for the collection, treatment, and disposal of
sewerage, waste, and storm water. Additionally, under RA 9275, the LWUA, as attached agency of the
DPWH, is tasked with providing sewerage and sanitation facilities, inclusive of the setting up of
efficient and safe collection, treatment, and sewage disposal system in the different parts of the
country.[19] In relation to the instant petition, the LWUA is mandated to provide sewerage and
sanitation facilities in Laguna, Cavite, Bulacan, Pampanga, and Bataan to prevent pollution in
the Manila Bay.
(4) The Department of Agriculture (DA), pursuant to the Administrative Code of 1987 (EO 292), [20] is
designated as the agency tasked to promulgate and enforce all laws and issuances respecting the
conservation and proper utilization of agricultural and fishery resources. Furthermore, the DA, under
the Philippine Fisheries Code of 1998 (RA 8550), is, in coordination with local government units
(LGUs) and other concerned sectors, in charge of establishing a monitoring, control, and surveillance
system to ensure that fisheries and aquatic resources in Philippine waters are judiciously utilized and
managed on a sustainable basis.[21] Likewise under RA 9275, the DA is charged with coordinating with
the PCG and DENR for the enforcement of water quality standards in marine waters. [22] More
specifically, its Bureau of Fisheries and Aquatic Resources (BFAR) under Sec. 22(c) of RA 9275 shall
primarily be responsible for the prevention and control of water pollution for the development,
management, and conservation of the fisheries and aquatic resources.
(5) The DPWH, as the engineering and construction arm of the national government, is tasked under
EO 292[23] to provide integrated planning, design, and construction services for, among others, flood
control and water resource development systems in accordance with national development objectives
and approved government plans and specifications.
In Metro Manila, however, the MMDA is authorized by Sec. 3(d), RA 7924 to perform metro-wide
services relating to flood control and sewerage management which include the formulation and
implementation of policies, standards, programs and projects for an integrated flood control, drainage
and sewerage system.
On July 9, 2002, a Memorandum of Agreement was entered into between the DPWH and MMDA,
whereby MMDA was made the agency primarily responsible for flood control in Metro Manila. For
the rest of the country, DPWH shall remain as the implementing agency for flood control
services. The mandate of the MMDA and DPWH on flood control and drainage services shall include
the removal of structures, constructions, and encroachments built along rivers, waterways,
and esteros(drainages) in violation of RA 7279, PD 1067, and other pertinent laws.
(6) The PCG, in accordance with Sec. 5(p) of PD 601, or the Revised Coast Guard Law of
1974, and Sec. 6 of PD 979,[24] or the Marine Pollution Decree of 1976, shall have the primary
responsibility of enforcing laws, rules, and regulations governing marine pollution within the
territorial waters of the Philippines. It shall promulgate its own rules and regulations in accordance

with the national rules and policies set by the National Pollution Control Commission upon
consultation with the latter for the effective implementation and enforcement of PD 979. It shall,
under Sec. 4 of the law, apprehend violators who:
a. discharge, dump x x x harmful substances from or out of any ship, vessel, barge, or any
other floating craft, or other man-made structures at sea, by any method, means or manner,
into or upon the territorial and inland navigable waters of the Philippines;
b. throw, discharge or deposit, dump, or cause, suffer or procure to be thrown, discharged, or
deposited either from or out of any ship, barge, or other floating craft or vessel of any kind,
or from the shore, wharf, manufacturing establishment, or mill of any kind, any refuse matter
of any kind or description whatever other than that flowing from streets and sewers and
passing therefrom in a liquid state into tributary of any navigable water from which the same
shall float or be washed into such navigable water; and
c. deposit x x x material of any kind in any place on the bank of any navigable water or on
the bank of any tributary of any navigable water, where the same shall be liable to be washed
into such navigable water, either by ordinary or high tides, or by storms or floods, or
otherwise, whereby navigation shall or may be impeded or obstructed or increase the level of
pollution of such water.

(7) When RA 6975 or the Department of the Interior and Local Government (DILG) Act of
1990 was signed into law on December 13, 1990, the PNP Maritime Group was tasked to perform all
police functions over the Philippine territorial waters and rivers. Under Sec. 86, RA 6975, the police
functions of the PCG shall be taken over by the PNP when the latter acquires the capability to perform
such functions. Since the PNP Maritime Group has not yet attained the capability to assume and
perform the police functions of PCG over marine pollution, the PCG and PNP Maritime Group shall
coordinate with regard to the enforcement of laws, rules, and regulations governing marine pollution
within the territorial waters of the Philippines. This was made clear in Sec. 124, RA 8550 or the
Philippine Fisheries Code of 1998, in which both the PCG and PNP Maritime Group were authorized
to enforce said law and other fishery laws, rules, and regulations.[25]
(8) In accordance with Sec. 2 of EO 513, the PPA is mandated to establish, develop, regulate,
manage and operate a rationalized national port system in support of trade and national development.
[26]
Moreover, Sec. 6-c of EO 513 states that the PPA has police authority within the
ports administered by it as may be necessary to carry out its powers and functions and attain
its purposes and objectives, without prejudice to the exercise of the functions of the Bureau
of Customs and other law enforcement bodies within the area. Such police authority shall
include the following:
xxxx
b) To regulate the entry to, exit from, and movement within the port, of persons and vehicles,
as well as movement within the port of watercraft. [27]

Lastly, as a member of the International Marine Organization and a signatory to the

International Convention for the Prevention of Pollution from Ships, as amended by MARPOL 73/78,
[28]
the Philippines, through the PPA, must ensure the provision of adequate reception facilities at ports
and terminals for the reception of sewage from the ships docking in Philippine ports. Thus, the PPA is
tasked to adopt such measures as are necessary to prevent the discharge and dumping of solid and
liquid wastes and other ship-generated wastes into the Manila Bay waters from vessels docked at ports
and apprehend the violators. When the vessels are not docked at ports but within Philippine territorial
waters, it is the PCG and PNP Maritime Group that have jurisdiction over said vessels.

(9) The MMDA, as earlier indicated, is duty-bound to put up and maintain adequate sanitary landfill
and solid waste and liquid disposal system as well as other alternative garbage disposal systems. It is
primarily responsible for the implementation and enforcement of the provisions of RA 9003, which
would necessary include its penal provisions, within its area of jurisdiction.[29]
Among the prohibited acts under Sec. 48, Chapter VI of RA 9003 that are frequently violated are
dumping of waste matters in public places, such as roads, canals oresteros, open burning of solid
waste, squatting in open dumps and landfills, open dumping, burying of biodegradable or nonbiodegradable materials in flood-prone areas, establishment or operation of open dumps as enjoined in
RA 9003, and operation of waste management facilities without an environmental compliance
certificate.
Under Sec. 28 of the Urban Development and Housing Act of 1992 (RA 7279), eviction or demolition
may be allowed when persons or entities occupy danger areas such as esteros, railroad tracks, garbage
dumps, riverbanks, shorelines, waterways, and other public places such as sidewalks, roads, parks and
playgrounds. The MMDA, as lead agency, in coordination with the DPWH, LGUs, and concerned
agencies, can dismantle and remove all structures, constructions, and other encroachments built in
breach of RA 7279 and other pertinent laws along the rivers, waterways, and esteros in Metro
Manila. With respect to rivers, waterways, andesteros in Bulacan, Bataan, Pampanga, Cavite, and
Laguna that discharge wastewater directly or eventually into the Manila Bay, the DILG shall direct the
concerned LGUs to implement the demolition and removal of such structures, constructions, and other
encroachments built in violation of RA 7279 and other applicable laws in coordination with the
DPWH and concerned agencies.
(10) The Department of Health (DOH), under Article 76 of PD 1067 (the Water Code), is tasked
to promulgate rules and regulations for the establishment of waste disposal areas that affect the source
of a water supply or a reservoir for domestic or municipal use. And under Sec. 8 of RA 9275, the
DOH, in coordination with the DENR, DPWH, and other concerned agencies, shall formulate
guidelines and standards for the collection, treatment, and disposal of sewage and the establishment
and operation of a centralized sewage treatment system. In areas not considered as highly urbanized
cities, septage or a mix sewerage-septage management system shall be employed.
In accordance with Sec. 72[30] of PD 856, the Code of Sanitation of the Philippines, and Sec.
5.1.1[31] of Chapter XVII of its implementing rules, the DOH is also ordered to ensure the regulation
and monitoring of the proper disposal of wastes by private sludge companies through the strict
enforcement of the requirement to obtain an environmental sanitation clearance of sludge collection
treatment and disposal before these companies are issued their environmental sanitation permit.
(11) The Department of Education (DepEd), under the Philippine Environment Code (PD 1152),
is mandated to integrate subjects on environmental education in its school curricula at all levels.
[32]
Under Sec. 118 of RA 8550, the DepEd, in collaboration with the DA, Commission on Higher
Education, and Philippine Information Agency, shall launch and pursue a nationwide educational
campaign to promote the development, management, conservation, and proper use of the
environment. Under the Ecological Solid Waste Management Act (RA 9003), on the other hand, it is
directed to strengthen the integration of environmental concerns in school curricula at all levels, with
an emphasis on waste management principles.[33]
(12) The Department of Budget and Management (DBM) is tasked under Sec. 2, Title XVII of the
Administrative Code of 1987 to ensure the efficient and sound utilization of government funds and
revenues so as to effectively achieve the countrys development objectives.[34]
One of the countrys development objectives is enshrined in RA 9275 or the Philippine Clean Water
Act of 2004. This law stresses that the State shall pursue a policy of economic growth in a manner

consistent with the protection, preservation, and revival of the quality of our fresh, brackish, and
marine waters. It also provides that it is the policy of the government, among others, to streamline
processes and procedures in the prevention, control, and abatement of pollution mechanisms for the
protection of water resources; to promote environmental strategies and use of appropriate economic
instruments and of control mechanisms for the protection of water resources; to formulate a holistic
national program of water quality management that recognizes that issues related to this management
cannot be separated from concerns about water sources and ecological protection, water supply, public
health, and quality of life; and to provide a comprehensive management program for water pollution
focusing on pollution prevention.
Thus, the DBM shall then endeavor to provide an adequate budget to attain the noble objectives of RA
9275 in line with the countrys development objectives.
All told, the aforementioned enabling laws and issuances are in themselves clear, categorical,
and complete as to what are the obligations and mandate of each agency/petitioner under the law. We
need not belabor the issue that their tasks include the cleanup of the Manila Bay.
Now, as to the crux of the petition. Do Secs. 17 and 20 of the Environment Code encompass the
cleanup of water pollution in general, not just specific pollution incidents?
Secs. 17 and 20 of the Environment Code
Include Cleaning in General
The disputed sections are quoted as follows:
Section 17. Upgrading of Water Quality.Where the quality of water has deteriorated to a degree where its state will adversely
affect its best usage, the government agencies concerned shall take such measures as may be necessary to upgrade the quality
of such water to meet the prescribed water quality standards.
Section 20. Clean-up Operations.It shall be the responsibility of the polluter to contain, remove and clean-up water pollution
incidents at his own expense. In case of his failure to do so, the government agencies concerned shall undertake containment,
removal and clean-up operations and expenses incurred in said operations shall be charged against the persons and/or entities
responsible for such pollution.

When the Clean Water Act (RA 9275) took effect, its Sec. 16 on the subject, Cleanup
Operations, amended the counterpart provision (Sec. 20) of the Environment Code (PD 1152). Sec. 17
of PD 1152 continues, however, to be operational.

The amendatory Sec. 16 of RA 9275 reads:

SEC. 16. Cleanup Operations.Notwithstanding the provisions of Sections 15 and 26
hereof, any person who causes pollution in or pollutes water bodies in excess of the
applicable and prevailing standards shall be responsible to contain, remove and clean up any
pollution incident at his own expense to the extent that the same water bodies have been
rendered unfit for utilization and beneficial use: Provided, That in the event emergency
cleanup operations are necessary and the polluter fails to immediately undertake the same,
the [DENR] in coordination with other government agencies concerned, shall undertake
containment, removal and cleanup operations. Expenses incurred in said operations shall be
reimbursed by the persons found to have caused such pollution under proper administrative
determination x x x. Reimbursements of the cost incurred shall be made to the Water Quality
Management Fund or to such other funds where said disbursements were sourced.

As may be noted, the amendment to Sec. 20 of the Environment Code is more apparent than real since
the amendment, insofar as it is relevant to this case, merely consists in the designation of the DENR as
lead agency in the cleanup operations.

Petitioners contend at every turn that Secs. 17 and 20 of the Environment Code concern
themselves only with the matter of cleaning up in specific pollution incidents, as opposed to cleanup
in general. They aver that the twin provisions would have to be read alongside the succeeding Sec.
62(g) and (h), which defines the terms cleanup operations and accidental spills, as follows:
g. Clean-up Operations [refer] to activities conducted in removing the pollutants discharged or spilled in water to restore it to
pre-spill condition.
h.

Accidental Spills [refer] to spills of oil or other hazardous substances in water that result from accidents such as
collisions and groundings.

Petitioners proffer the argument that Secs. 17 and 20 of PD 1152 merely direct the government
agencies concerned to undertake containment, removal, and cleaning operations of a specific polluted
portion or portions of the body of water concerned. They maintain that the application of said Sec. 20
is limited only to water pollution incidents, which are situations that presuppose the occurrence of
specific, isolated pollution events requiring the corresponding containment, removal, and cleaning
operations. Pushing the point further, they argue that the aforequoted Sec. 62(g) requires cleanup
operations to restore the body of water to pre-spill condition, which means that there must have been a
specific incident of either intentional or accidental spillage of oil or other hazardous substances, as
mentioned in Sec. 62(h).
As a counterpoint, respondents argue that petitioners erroneously read Sec. 62(g) as delimiting the
application of Sec. 20 to the containment, removal, and cleanup operations for accidental spills only.
Contrary to petitioners posture, respondents assert that Sec. 62(g), in fact, even expanded the coverage
of Sec. 20. Respondents explain that without its Sec. 62(g), PD 1152 may have indeed covered only
pollution accumulating from the day-to-day operations of businesses around the Manila Bayand other
sources of pollution that slowly accumulated in the bay. Respondents, however, emphasize that Sec.
62(g), far from being a delimiting provision, in fact even enlarged the operational scope of Sec. 20, by
including accidental spills as among the water pollution incidents contemplated in Sec. 17 in relation
to Sec. 20 of PD 1152.
To respondents, petitioners parochial view on environmental issues, coupled with their narrow
reading of their respective mandated roles, has contributed to the worsening water quality of
the Manila Bay. Assuming, respondents assert, that petitioners are correct in saying that the cleanup
coverage of Sec. 20 of PD 1152 is constricted by the definition of the phrase cleanup operations
embodied in Sec. 62(g), Sec. 17 is not hobbled by such limiting definition. As pointed out, the phrases
cleanup operations and accidental spills do not appear in said Sec. 17, not even in the chapter where
said section is found.
Respondents are correct. For one thing, said Sec. 17 does not in any way state that the
government agencies concerned ought to confine themselves to the containment, removal, and
cleaning operations when a specific pollution incident occurs. On the contrary, Sec. 17 requires them
to act even in the absence of a specific pollution incident, as long as water quality has deteriorated to a
degree where its state will adversely affect its best usage. This section, to stress, commands concerned
government agencies, when appropriate, to take such measures as may be necessary to meet the
prescribed water quality standards. In fine, the underlying duty to upgrade the quality of water is not
conditional on the occurrence of any pollution incident.
For another, a perusal of Sec. 20 of the Environment Code, as couched, indicates that it is
properly applicable to a specific situation in which the pollution is caused by polluters who fail to
clean up the mess they left behind. In such instance, the concerned government agencies shall
undertake the cleanup work for the polluters account. Petitioners assertion, that they have to perform
cleanup operations in the Manila Bay only when there is a water pollution incident and the erring

polluters do not undertake the containment, removal, and cleanup operations, is quite off mark. As
earlier discussed, the complementary Sec. 17 of the Environment Code comes into play and the
specific duties of the agencies to clean up come in even if there are no pollution incidents staring at
them. Petitioners, thus, cannot plausibly invoke and hide behind Sec. 20 of PD 1152 or Sec. 16 of RA
9275 on the pretext that their cleanup mandate depends on the happening of a specific pollution
incident. In this regard, what the CA said with respect to the impasse over Secs. 17 and 20 of PD 1152
is at once valid as it is practical. The appellate court wrote: PD 1152 aims to introduce a
comprehensive program of environmental protection and management. This is better served by
making Secs. 17 & 20 of general application rather than limiting them to specific pollution incidents.
[35]

Granting arguendo that petitioners position thus described vis--vis the implementation of Sec.
20 is correct, they seem to have overlooked the fact that the pollution of the Manila Bay is of such
magnitude and scope that it is well-nigh impossible to draw the line between a specific and a general
pollution incident. And such impossibility extends to pinpointing with reasonable certainty who the
polluters are. We note that Sec. 20 of PD 1152 mentions water pollution incidents which may be
caused by polluters in the waters of the Manila Bay itself or by polluters in adjoining lands and in
water bodies or waterways that empty into the bay. Sec. 16 of RA 9275, on the other hand, specifically
adverts to any person who causes pollution in or pollutes water bodies, which may refer to an
individual or an establishment that pollutes the land mass near the Manila Bay or the waterways, such
that the contaminants eventually end up in the bay. In this situation, the water pollution incidents are
so numerous and involve nameless and faceless polluters that they can validly be categorized as
beyond the specific pollution incident level.
Not to be ignored of course is the reality that the government agencies concerned are so
undermanned that it would be almost impossible to apprehend the numerous polluters of
the Manila Bay. It may perhaps not be amiss to say that the apprehension, if any, of
the Manila Bay polluters has been few and far between. Hence, practically nobody has been required
to contain, remove, or clean up a given water pollution incident. In this kind of setting, it behooves the
Government to step in and undertake cleanup operations. Thus, Sec. 16 of RA 9275, previously Sec.
20 of PD 1152, covers for all intents and purposes a general cleanup situation.
The cleanup and/or restoration of the Manila Bay is only an aspect and the initial stage of the longterm solution. The preservation of the water quality of the bay after the rehabilitation process is as
important as the cleaning phase. It is imperative then that the wastes and contaminants found in the
rivers, inland bays, and other bodies of water be stopped from reaching the Manila Bay. Otherwise,
any cleanup effort would just be a futile, cosmetic exercise, for, in no time at all, the Manila Bay water
quality would again deteriorate below the ideal minimum standards set by PD 1152, RA 9275, and
other relevant laws. It thus behooves the Court to put the heads of the petitioner-department-agencies
and the bureaus and offices under them on continuing notice about, and to enjoin them to perform,
their mandates and duties towards cleaning up the Manila Bay and preserving the quality of its water
to the ideal level. Under what other judicial discipline describes as continuing mandamus, [36] the Court
may, under extraordinary circumstances, issue directives with the end in view of ensuring that its
decision would not be set to naught by administrative inaction or indifference. In India, the doctrine of
continuing mandamus was used to enforce directives of the court to clean up the length of
the Ganges River from industrial and municipal pollution.[37]
The Court can take judicial notice of the presence of shanties and other unauthorized structures which
do not have septic tanks along the Pasig-Marikina-San Juan Rivers, the National Capital Region
(NCR) (Paraaque-Zapote, Las Pias) Rivers, the Navotas-Malabon-Tullahan-Tenejeros Rivers, the
Meycuayan-Marilao-Obando (Bulacan) Rivers, the Talisay (Bataan) River, the Imus (Cavite) River,
the Laguna De Bay, and other minor rivers and connecting waterways, river banks, and esteroswhich
discharge their waters, with all the accompanying filth, dirt, and garbage, into the major rivers and
eventually the Manila Bay. If there is one factor responsible for the pollution of the major river

systems and the Manila Bay, these unauthorized structures would be on top of the list. And if the issue
of illegal or unauthorized structures is not seriously addressed with sustained resolve, then practically
all efforts to cleanse these important bodies of water would be for naught. The DENR Secretary said
as much.[38]
Giving urgent dimension to the necessity of removing these illegal structures is Art. 51 of PD 1067 or
the Water Code,[39] which prohibits the building of structures within a given length along banks of
rivers and other waterways. Art. 51 reads:
The banks of rivers and streams and the shores of the seas and lakes throughout
their entire length and within a zone of three (3) meters in urban areas, twenty (20)
meters in agricultural areas and forty (40) meters in forest areas, along their margins,
are subject to the easement of public use in the interest of recreation, navigation,
floatage, fishing and salvage. No person shall be allowed to stay in this zone longer than
what is necessary for recreation, navigation, floatage, fishing or salvage or to build
structures of any kind. (Emphasis added.)

Judicial notice may likewise be taken of factories and other industrial establishments standing along or
near the banks of the Pasig River, other major rivers, and connecting waterways. But while they may
not be treated as unauthorized constructions, some of these establishments undoubtedly contribute to
the pollution of thePasig River and waterways. The DILG and the concerned LGUs, have,
accordingly, the duty to see to it that non-complying industrial establishments set up, within a
reasonable period, the necessary waste water treatment facilities and infrastructure to prevent their
industrial discharge, including their sewage waters, from flowing into the Pasig River, other major
rivers, and connecting waterways. After such period, non-complying establishments shall be shut
down or asked to transfer their operations.
At this juncture, and if only to dramatize the urgency of the need for petitioners-agencies to comply
with their statutory tasks, we cite the Asian Development Bank-commissioned study on the garbage
problem in Metro Manila, the results of which are embodied in the The Garbage Book. As there
reported, the garbage crisis in the metropolitan area is as alarming as it is shocking. Some highlights
of the report:
1. As early as 2003, three land-filled dumpsites in Metro Manila - the Payatas,
Catmon and Rodriquez dumpsites - generate an alarming quantity of lead and leachate or
liquid run-off. Leachate are toxic liquids that flow along the surface and seep into the earth
and poison the surface and groundwater that are used for drinking, aquatic life, and the
environment.
2. The high level of fecal coliform confirms the presence of a large amount of human
waste in the dump sites and surrounding areas, which is presumably generated by households
that lack alternatives to sanitation. To say that Manila Bay needs rehabilitation is an
understatement.
3. Most of the deadly leachate, lead and other dangerous contaminants and possibly
strains of pathogens seeps untreated into ground water and runs into
the Marikina andPasig River systems and Manila Bay.[40]

Given the above perspective, sufficient sanitary landfills should now more than ever be
established as prescribed by the Ecological Solid Waste Management Act (RA 9003). Particular note
should be taken of the blatant violations by some LGUs and possibly the MMDA of Sec. 37,
reproduced below:
Sec. 37. Prohibition against the Use of Open Dumps for Solid Waste.No open dumps
shall be established and operated, nor any practice or disposal of solid waste by any person,
including LGUs which [constitute] the use of open dumps for solid waste, be allowed after

the effectivity of this Act: Provided, further that no controlled dumps shall be allowed (5)
years following the effectivity of this Act. (Emphasis added.)

RA 9003 took effect on February 15, 2001 and the adverted grace period of five (5) years which
ended on February 21, 2006 has come and gone, but no single sanitary landfill which strictly complies
with the prescribed standards under RA 9003 has yet been set up.
In addition, there are rampant and repeated violations of Sec. 48 of RA 9003, like littering,
dumping of waste matters in roads, canals, esteros, and other public places, operation of open dumps,
open burning of solid waste, and the like. Some sludge companies which do not have proper disposal
facilities simply discharge sludge into the Metro Manila sewerage system that ends up in
the Manila Bay. Equally unabated are violations of Sec. 27 of RA 9275, which enjoins the pollution of
water bodies, groundwater pollution, disposal of infectious wastes from vessels, and unauthorized
transport or dumping into sea waters of sewage or solid waste and of Secs. 4 and 102 of RA 8550
which proscribes the introduction by human or machine of substances to the aquatic environment
including dumping/disposal of waste and other marine litters, discharge of petroleum or residual
products of petroleum of carbonaceous materials/substances [and other] radioactive, noxious or
harmful liquid, gaseous or solid substances, from any water, land or air transport or other human-made
structure.
In the light of the ongoing environmental degradation, the Court wishes to emphasize the
extreme necessity for all concerned executive departments and agencies to immediately act and
discharge their respective official duties and obligations. Indeed, time is of the essence; hence, there is
a need to set timetables for the performance and completion of the tasks, some of them as defined for
them by law and the nature of their respective offices and mandates.
The importance of the Manila Bay as a sea resource, playground, and as a historical landmark
cannot be over-emphasized. It is not yet too late in the day to restore the Manila Bay to its former
splendor and bring back the plants and sea life that once thrived in its blue waters. But the tasks ahead,
daunting as they may be, could only be accomplished if those mandated, with the help and
cooperation of all civic-minded individuals, would put their minds to these tasks and take
responsibility. This means that the State, through petitioners, has to take the lead in the preservation
and protection of the Manila Bay.
The era of delays, procrastination, and ad hoc measures is over. Petitioners must transcend their
limitations, real or imaginary, and buckle down to work before the problem at hand becomes
unmanageable. Thus, we must reiterate that different government agencies and instrumentalities
cannot shirk from their mandates; they must perform their basic functions in cleaning up and
rehabilitating the Manila Bay. We are disturbed by petitioners hiding behind two untenable claims: (1)
that there ought to be a specific pollution incident before they are required to act; and (2) that the
cleanup of the bay is a discretionary duty.
RA 9003 is a sweeping piece of legislation enacted to radically transform and improve waste
management. It implements Sec. 16, Art. II of the 1987 Constitution, which explicitly provides that
the State shall protect and advance the right of the people to a balanced and healthful ecology in
accord with the rhythm and harmony of nature.
So it was that in Oposa v. Factoran, Jr. the Court stated that the right to a balanced and
healthful ecology need not even be written in the Constitution for it is assumed, like other civil and
political rights guaranteed in the Bill of Rights, to exist from the inception of mankind and it is an
issue of transcendental importance with intergenerational implications.[41] Even assuming the absence
of a categorical legal provision specifically prodding petitioners to clean up the bay, they and the men

and women representing them cannot escape their obligation to future generations of Filipinos to keep
the waters of the Manila Bay clean and clear as humanly as possible. Anything less would be a
betrayal of the trust reposed in them.
WHEREFORE, the petition is DENIED. The September 28, 2005 Decision of the CA in CA-G.R.
CV No. 76528 and SP No. 74944 and the September 13, 2002 Decision of the RTC in Civil Case No.
1851-99 are AFFIRMED but with MODIFICATIONS in view of subsequent developments or
supervening events in the case.The fallo of the RTC Decision shall now read:
WHEREFORE, judgment is hereby rendered ordering the abovenamed defendantgovernment agencies to clean up, rehabilitate, and preserve Manila Bay, and restore and
maintain its waters to SB level (Class B sea waters per Water Classification Tables under
DENR Administrative Order No. 34 [1990]) to make them fit for swimming, skin-diving,
and other forms of contact recreation.
In particular:
(1) Pursuant to Sec. 4 of EO 192, assigning the DENR as the primary agency responsible for the
conservation, management, development, and proper use of the countrys environment and natural
resources, and Sec. 19 of RA 9275, designating the DENR as the primary government agency
responsible for its enforcement and implementation, the DENR is directed to fully implement
its Operational Plan for the Manila Bay Coastal Strategy for the rehabilitation, restoration, and
conservation of the Manila Bay at the earliest possible time. It is ordered to call regular coordination
meetings with concerned government departments and agencies to ensure the successful
implementation of the aforesaid plan of action in accordance with its indicated completion schedules.
(2) Pursuant to Title XII (Local Government) of the Administrative Code of 1987 and Sec. 25 of the
Local Government Code of 1991,[42] the DILG, in exercising the Presidents power of general
supervision and its duty to promulgate guidelines in establishing waste management programs under
Sec. 43 of the Philippine Environment Code (PD 1152), shall direct all LGUs in Metro Manila, Rizal,
Laguna, Cavite, Bulacan, Pampanga, and Bataan to inspect all factories, commercial establishments,
and private homes along the banks of the major river systems in their respective areas of jurisdiction,
such as but not limited to the Pasig-Marikina-San Juan Rivers, the NCR (Paraaque-Zapote, Las Pias)
Rivers, the Navotas-Malabon-Tullahan-Tenejeros Rivers, the Meycauayan-Marilao-Obando (Bulacan)
Rivers, the Talisay (Bataan) River, the Imus (Cavite) River, the Laguna De Bay, and other minor rivers
and waterways that eventually discharge water into the Manila Bay; and the lands abutting the bay, to
determine whether they have wastewater treatment facilities or hygienic septic tanks as prescribed by
existing laws, ordinances, and rules and regulations. If none be found, these LGUs shall be ordered to
require non-complying establishments and homes to set up said facilities or septic tanks within a
reasonable time to prevent industrial wastes, sewage water, and human wastes from flowing into these
rivers, waterways, esteros, and the Manila Bay, under pain of closure or imposition of fines and other
sanctions.
(3) As mandated by Sec. 8 of RA 9275, [43] the MWSS is directed to provide, install, operate, and
maintain the necessary adequate waste water treatment facilities in Metro Manila, Rizal, and Cavite
where needed at the earliest possible time.
(4) Pursuant to RA 9275,[44] the LWUA, through the local water districts and in coordination
with the DENR, is ordered to provide, install, operate, and maintain sewerage and sanitation facilities
and the efficient and safe collection, treatment, and disposal of sewage in the provinces of Laguna,
Cavite, Bulacan, Pampanga, and Bataan where needed at the earliest possible time.
(5) Pursuant to Sec. 65 of RA 8550,[45] the DA, through the BFAR, is ordered to improve and restore
the marine life of the Manila Bay. It is also directed to assist the LGUs in Metro Manila, Rizal, Cavite,

Laguna, Bulacan, Pampanga, and Bataan in developing, using recognized methods, the fisheries and
aquatic resources in theManila Bay.
(6) The PCG, pursuant to Secs. 4 and 6 of PD 979, and the PNP Maritime Group, in accordance with
Sec. 124 of RA 8550, in coordination with each other, shall apprehend violators of PD 979, RA 8550,
and other existing laws and regulations designed to prevent marine pollution in the Manila Bay.
(7) Pursuant to Secs. 2 and 6-c of EO 513[46] and the International Convention for the Prevention
of Pollution from Ships, the PPA is ordered to immediately adopt such measures to prevent the
discharge and dumping of solid and liquid wastes and other ship-generated wastes into
the Manila Bay waters from vessels docked at ports and apprehend the violators.
(8) The MMDA, as the lead agency and implementor of programs and projects for flood control
projects and drainage services in Metro Manila, in coordination with the DPWH, DILG, affected
LGUs, PNP Maritime Group, Housing and Urban Development Coordinating Council (HUDCC), and
other agencies, shall dismantle and remove all structures, constructions, and other encroachments
established or built in violation of RA 7279, and other applicable laws along the Pasig-Marikina-San
Juan Rivers, the NCR (Paraaque-Zapote, Las Pias) Rivers, the Navotas-Malabon-Tullahan-Tenejeros
Rivers, and connecting waterways and esteros in Metro Manila.The DPWH, as the principal
implementor of programs and projects for flood control services in the rest of the country more
particularly in Bulacan, Bataan, Pampanga, Cavite, and Laguna, in coordination with the DILG,
affected LGUs, PNP Maritime Group, HUDCC, and other concerned government agencies, shall
remove and demolish all structures, constructions, and other encroachments built in breach of RA
7279 and other applicable laws along the Meycauayan-Marilao-Obando (Bulacan) Rivers, the Talisay
(Bataan) River, the Imus (Cavite) River, the Laguna De Bay, and other rivers, connecting waterways,
and esteros that discharge wastewater into the Manila Bay.
In addition, the MMDA is ordered to establish, operate, and maintain a sanitary landfill, as prescribed
by RA 9003, within a period of one (1) year from finality of this Decision. On matters within its
territorial jurisdiction and in connection with the discharge of its duties on the maintenance of sanitary
landfills and like undertakings, it is also ordered to cause the apprehension and filing of the
appropriate criminal cases against violators of the respective penal provisions of RA 9003, [47] Sec. 27
of RA 9275 (the Clean Water Act), and other existing laws on pollution.
(9) The DOH shall, as directed by Art. 76 of PD 1067 and Sec. 8 of RA 9275, within one (1) year from
finality of this Decision, determine if all licensed septic and sludge companies have the proper
facilities for the treatment and disposal of fecal sludge and sewage coming from septic tanks. The
DOH shall give the companies, if found to be non-complying, a reasonable time within which to set
up the necessary facilities under pain of cancellation of its environmental sanitation clearance.
(10) Pursuant to Sec. 53 of PD 1152,[48] Sec. 118 of RA 8550, and Sec. 56 of RA 9003, [49] the DepEd
shall integrate lessons on pollution prevention, waste management, environmental protection, and like
subjects in the school curricula of all levels to inculcate in the minds and hearts of students and,
through them, their parents and friends, the importance of their duty toward achieving and maintaining
a balanced and healthful ecosystem in the Manila Bay and the entire Philippine archipelago.
(11) The DBM shall consider incorporating an adequate budget in the General Appropriations Act of
2010 and succeeding years to cover the expenses relating to the cleanup, restoration, and preservation
of the water quality of the Manila Bay, in line with the countrys development objective to attain
economic growth in a manner consistent with the protection, preservation, and revival of our marine
waters.
(12) The heads of petitioners-agencies MMDA, DENR, DepEd, DOH, DA, DPWH, DBM, PCG, PNP
Maritime Group, DILG, and also of MWSS, LWUA, and PPA, in line with the principle of continuing

mandamus, shall, from finality of this Decision, each submit to the Court a quarterly progressive
report of the activities undertaken in accordance with this Decision.
No costs.
SO ORDERED.

G.R. No. L-30389 December 27, 1972

PEDRO LEE HONG HOK, SIMEON LEE HONG HOK, ROSITA LEE HONG HOK and LEONCIO LEE HONG
HOK, petitioners,
vs.
ANIANO DAVID, THE HON. SECRETARY OF AGRICULTURE AND NATURAL RESOURCES, THE
DIRECTOR OF LANDS and COURT OF APPEALS, respondents.
Augusto A. Pardalis for petitioners.
Luis General, Jr. for respondent Aniano David.
Office of the Solicitor General for other respondents.

FERNANDO, J.:p
Petitioners 1 in this appeal by certiorari would have us reverse a decision of respondent Court of Appeals affirming
a lower court judgment dismissing their complaint to have the Torrens Title 2 of respondent Aniano David declared
null and void. What makes the task for petitioners quite difficult is that their factual support for their pretension to
ownership of such disputed lot through accretion was rejected by respondent Court of Appeals. Without such
underpinning, they must perforce rely on a legal theory, which, to put it mildly, is distinguished by unorthodoxy
and is therefore far from persuasive. A grant by the government through the appropriate public
officials 3 exercising the competence duly vested in them by law is not to be set at naught on the premise,
unexpressed but implied, that land not otherwise passing into private ownership may not be disposed of by the
state. Such an assumption is at war with settled principles of constitutional law. It cannot receive our assent. We
affirm.
The decision of respondent Court of Appeals following that of the lower court makes clear that there is no
legal justification for nullifying the right of respondent Aniano David to the disputed lot arising from the
grant made in his favor by respondent officials. As noted in the decision under review, he "acquired lawful
title thereby pursuant to his miscellaneous sales application in accordance with which an order of award and
for issuance of a sales patent was made by the Director of Lands on June 18, 1958, covering Lot 2892
containing an area of 226 square meters, which is a portion of Lot 2863 of the Naga Cadastre. On the basis
of the order of award of the Director of Lands the Undersecretary of Agriculture and Natural Resources
issued on August 26, 1959, Miscellaneous Sales Patent No. V-1209 pursuant to which OCT No. 510 was

issued by the Register of Deeds of Naga City to defendant-appellee Aniano David on October 21, 1959.
According to the Stipulation of Facts, since the filing of the sales application of Aniano David and during all
the proceedings in connection with said application, up to the actual issuance of the sales patent in his
favor, the plaintiffs-appellants did not put up any opposition or adverse claim thereto. This is fatal to them
because after the registration and issuance of the certificate and duplicate certificate of title based on a
public land patent, the land covered thereby automatically comes under the operation of Republic Act 496
subject to all the safeguards provided therein.... Under Section 38 of Act 496 any question concerning the
validity of the certificate of title based on fraud should be raised within one year from the date of the
issuance of the patent. Thereafter the certificate of title based thereon becomes indefeasible.... In this case
the land in question is not a private property as the Director of Lands and the Secretary of Agriculture and
Natural Resources have always sustained the public character thereof for having been formed by
reclamation.... The only remedy therefore, available to the appellants is an action for reconveyance on the
ground of fraud. In this case we do not see any fraud committed by defendant-appellant Aniano David in
applying for the purchase of the land involved through his Miscellaneous Sales Application No. MSA-V-26747,
entered in the records of the Bureau of Lands [Miscellaneous Sales] Entry No. V-9033, because everything
was done in the open. The notices regarding the auction sale of the land were published, the actual sale and
award thereof to Aniano David were not clandestine but open and public official acts of an officer of the
Government. The application was merely a renewal of his deceased wife's application, and the said
deceased occupied the land since 1938." 4
On such finding of facts, the attempt of petitioners to elicit a different conclusion is likely to be attended with
frustration. The first error assigned predicated an accretion having taken place, notwithstanding its rejection
by respondent Court of Appeals, would seek to disregard what was accepted by respondent Court as to how
the disputed lot came into being, namely by reclamation. It does not therefore call for any further
consideration. Neither of the other two errors imputed to respondent Court, as to its holding that
authoritative doctrines preclude a party other than the government to dispute the validity of a grant and the
recognition of the indefeasible character of a public land patent after one year, is possessed of merit.
Consequently, as set forth at the outset, there is no justification for reversal.
1. More specifically, the shaft of criticism was let loose by petitioner aimed at this legal proposition set forth
in the exhaustive opinion of then Justice Salvador Esguerra of the Court of Appeals, now a member of this
Court: "There is, furthermore, a fatal defect of parties to this action. Only the Government, represented by
the Director of Lands, or the Secretary of Agriculture and Natural Resources, can bring an action to cancel a
void certificate of title issued pursuant to a void patent (Lucas vs. Durian, 102 Phil. 1157; Director of Lands
vs. Heirs of Ciriaco Carlo, G.R. No. L-12485, July 31, 1959). This was not done by said officers but by private
parties like the plaintiffs, who cannot claim that the patent and title issued for the land involved are void
since they are not the registered owners thereof nor had they been declared as owners in the cadastral
proceedings of Naga Cadastre after claiming it as their private property. The cases cited by appellants are
not in point as they refer to private registered lands or public lands over which vested rights have been
acquired but notwithstanding such fact the Land Department subsequently granted patents to public land
applicants." 5 Petitioner ought to have known better. The above excerpt is invulnerable to attack. It is a
restatement of a principle that dates back to Maninang v. Consolacion, 6 a 1908 decision. As was there
categorically stated: "The fact that the grant was made by the government is undisputed. Whether the grant was
in conformity with the law or not is a question which the government may raise, but until it is raised by the
government and set aside, the defendant can not question it. The legality of the grant is a question between the
grantee and the government." 7 The above citation was repeated ipsissimis verbis in Salazar v. Court of
Appeals. 8 Bereft as petitioners were of the right of ownership in accordance with the findings of the Court of
Appeals, they cannot, in the language of Reyes v. Rodriguez, 9 "question the [title] legally issued." 10 The second
assignment of error is thus disposed of.
2. As there are overtones indicative of skepticism, if not of outright rejection, of the well-known distinction in
public law between the government authority possessed by the state which is appropriately embraced in the
concept of sovereignty, and its capacity to own or acquire property, it is not inappropriate to pursue the
matter further. The former comes under the heading of imperium and the latter of dominium. The use of this
term is appropriate with reference to lands held by the state in its proprietary character. In such capacity, it
may provide for the exploitation and use of lands and other natural resources, including their disposition,
except as limited by the Constitution. Dean Pound did speak of the confusion that existed during the
medieval era between such two concepts, but did note the existence of res publicae as a corollary
to dominium." 11 As far as the Philippines was concerned, there was a recognition by Justice Holmes in Cario v.
Insular Government, 12 a case of Philippine origin, that "Spain in its earlier decrees embodied the universal feudal
theory that all lands were held from the Crown...." 13 That was a manifestation of the concept of jura
regalia, 14 which was adopted by the present Constitution, ownership however being vested in the state as such
rather than the head thereof. What was stated by Holmes served to confirm a much more extensive discussion of
the matter in the leading case of Valenton v. Murciano, 15 decided in 1904. One of the royal decrees cited was
incorporated in the Recopilacion de Leyes de las Indias 16 in these words: "We having acquired full sovereignty
over the Indies and all lands, territories, and possessions not heretofore ceded away by our royal predecessors, or
by us, or in our name, still pertaining to the royal crown and patrimony, it is our will that all lands which are held
without proper and true deeds of grant be restored to us according as they belong to us, in order that after
reserving before all what to us or to our viceroys audiences, and governors may seem necessary for public
squares, ways, pastures, and commons in those places which are peopled, taking into consideration not only their
present condition, but also their future and their probable increase, and after distributing to the natives what may
be necessary for tillage and pasturage, confirming them in what they now have and giving them more if
necessary, all the rest of said lands may remain free and unencumbered for us to dispose of as we may wish." 17
It could therefore be affirmed in Montano v. Insular Government" 18 that "as to the unappropriated public lands
constituting the public domain the sole power of legislation is vested in Congress, ..." 19 They continue to possess
that character until severed therefrom by state grant. 20 Where, as in this case, it was found by the Court of
Appeals that the disputed lot was the result of reclamation, its being correctly categorized as public land is

undeniable. 21 What was held in Heirs of Datu Pendatun v. Director of Lands 22 finds application. Thus: "There
being no evidence whatever that the property in question was ever acquired by the applicants or their ancestors
either by composition title from the Spanish Government or by possessory information title or by any other means
for the acquisition of public lands, the property must be held to be public domain." 23 For it is well-settled "that no
public land can be acquired by private persons without any grant, express or implied, from the government." 24 It
is indispensable then that there be a showing of a title from the state or any other mode of acquisition recognized
by law. 25 The most recent restatement of the doctrine, found in an opinion of Justice J.B.L. Reyes, follows: 26 "The
applicant, having failed to establish his right or title over the northern portion of Lot No. 463 involved in the
present controversy, and there being no showing that the same has been acquired by any private person from the
Government, either by purchase or by grant, the property is and remains part of the public domain." 27 To repeat,
the second assignment of error is devoid of merit.

3. The last error assigned would take issue with this portion of the opinion of Justice Esguerra: "According to
the Stipulation of Facts, since the filing of the sales application of Aniano David and during all the
proceedings in connection with said application, up to the actual issuance of the sales patent in his favor,
the
plaintiffs-appellants did not put up any opposition or adverse claim thereto. This is fatal to them because
after the registration and issuance of the certificate and duplicate certificate of title based on a public land
patent, the land covered thereby automatically comes under the operation of Republic Act 496 subject to all
the safeguards provided therein ... Under Section 38 of Act 496 any question concerning the validity of the
certificate of title based on fraud should be raised within one year from the date of the issuance of the
patent. Thereafter the certificate of title based thereon becomes indefeasible ..." 28 Petitioners cannot
reconcile themselves to the view that respondent David's title is impressed with the quality of indefeasibility. In
thus manifesting such an attitude, they railed to accord deference to controlling precedents. As far back as 1919,
in Aquino v. Director of
Lands, 29 Justice Malcolm, speaking for the Court, stated: "The proceedings under the Land Registration Law and
under the provisions of Chapter VI of the Public Land Law are the same in that both are against the whole world,
both take the nature of judicial proceedings, and for both the decree of registration issued is conclusive and
final." 30 Such a view has been followed since then. 31 The latest case in point is Cabacug v. Lao. 32 There is this
revealing excerpt appearing in that decision: "It is said, and with reason, that a holder of a land acquired under a
free patent is more favorably situated than that of an owner of registered property. Not only does a free patent
have a force and effect of a Torrens Title, but in addition the person to whom it is granted has likewise in his favor
the right to repurchase within a period of five years." 33 It is quite apparent, therefore, that petitioners' stand is
legally indefensible.
WHEREFORE, the decision of respondent Court of Appeals of January 31, 1969 and its resolution of March 14,
1969 are affirmed. With costs against petitioners-appellants.

G.R. No. 57667 May 28, 1990

SAN MIGUEL CORPORATION, petitioner,
vs.
COURT OF APPEALS and DIRECTOR OF LANDS, respondents.
Ciriaco Lopez, Jr. & Associates for petitioner.
FERNAN, C.J.:
In this petition for review on certiorari, San Miguel Corporation seeks the reversal of the decision of the Court
of Appeals 1 denying its application for registration of a parcel of land in view of its failure to show entitlement
thereto.

On December 23, 1975, petitioner San Miguel Corporation (SMC for brevity) purchased from Silverio Perez
Lot 684, a 14,531 square-meter parcel of land located in Sta. Anastacia, Sto. Tomas, Batangas, in
consideration of the sum of P133,084.80. 2 On February 21,1977, claiming ownership in fee simple of the land,
SMC filed before the then Court of First Instance, now Regional Trial Court of Batangas an application for its
registration under the Land Registration Act.
The Solicitor General, appearing for the Republic of the Philippines, opposed the application for registration
contending that SMC's claim of ownership in fee simple on the basis of a Spanish title or grant could no
longer be availed of by the applicant as the six-month period from February 16, 1976 prescribed by
Presidential Decree No. 892 had elapsed; that the parcel of land in question is part of the public domain, and
that SMC, being a private corporation, is disqualified under Section 11, Article XIV of the Constitution from
holding alienable lands of the public domain. The Solicitor General thereafter authorized the Provincial Fiscal
of Batangas to appear in said case, subject to his supervision and control.
At the initial and only hearing held on October 12, 197 7, the Court, upon motion of SMC and there being no
opposition to the application except that of the Republic of the Philippines, issued an order of general
default. SMC was allowed to mark documentary evidence to establish jurisdictional facts and to present
additional evidence before the Clerk of Court who was appointed Commissioner for that purpose.
On December 12, 1977, the lower court, presided by Judge Eduardo C. Abaya, rendered a decision granting
the application for registration and adjudicating the property in favor of SMC.
The Solicitor General appealed to the Court of Appeals. In its decision of March 23, 1981, said court reversed
the decision of the lower court and declared the parcel of land involved as public land. Hence, the instant
petition with SMC submitting the following alleged "grave errors" of the Court of Appeals for this Court's
resolution: (1) the Court of Appeals' failure to hold that "prescription is a mode of acquiring title or ownership
of land and that the title thus acquired is registrable"; (2) the Court of Appeals' disregard of SMC's evidence
"not on the basis of controverting evidence but on the basis of unfounded suppositions and conjectures,"
and (3) the Court of Appeals' reversal of the factual findings of the trial court which had the opportunity of
observing the demeanor and sincerity of the witnesses.3
We need not dwell lengthily on the third "error" assigned by petitioner. Suffice it to state that while trial
courts may have the opportunity to observe the demeanor of witnesses, their factual findings may
nonetheless be reversed by the Court of Appeals, the appellate court vested by law to resolve both legal and
factual issues, if, by the evidence on record, it appears that the trial court involved erred. What is of primary
concern to us in this case is the issue of whether or not the evidence presented by the petitioner is sufficient
to warrant a ruling that SMC and/or its predecessor-in-interest has a registrable right over Lot 684.
Open, exclusive and undisputed possession of alienable public land for the period prescribed by law creates
the legal fiction whereby the land, upon completion of the requisite period ipso-jure and without the need of
judicial or other sanction, ceases to be public land and becomes private property. 4 Such open, continuous,
exclusive and notorious occupation of the disputed properties for more than 30 years must, however,
be conclusively established. 6 This quantum of proof is necessary to avoid the erroneous validation of actually
fictitious claims of possession over the property in dispute.
In this case, petitioner's claim that its predecessor-in-interest had open, exclusive and undisputed
possession of Lot 684 for more than thirty years is anchored on certain documentary and testimonial
evidence. Its documentary evidence consist of tax declaration No. 923 wherein it appears that in 1974,
Silverio Perez declared as his own for taxation purposes, a certain riceland with an area of 1.5657 hectares
located in Sta. Anastacia, Sto. Tomas, Batangas, 6 and a certification of the Office of the Treasurer of Sto. Tomas
to the effect that in 1977, Silverio Perez paid realty taxes for the land subject of tax declaration no. 923. 7
Tax declarations and receipts are not conclusive evidence of ownership or right of possession over a piece of
land. 8They are merely indicia of a claim of ownership. 9 Tax declarations only become strong evidence of
ownership of land acquired by prescription, a mode of acquisition of ownership relied upon by petitioner in this
case, when accompanied by proof of actual possession. 10
Such proof of actual possession was sought to be provided by the testimony of vendor Silverio Perez that he
had been in possession of the property since 1933 until he sold it to SMC in 1975; that the property was
given to him by his parents when he got married; that no document evidenced that transfer; that it had
been in the possession of his parents since 1925; that he had declared the property in his name for taxation
purposes; that he had paid taxes therefor, and that he was in peaceful, continuous and exclusive possession
of the property until its sale to SMC. 11
Petitioner did not present other witnesses to corroborate Perez' testimony. Its other witness, Antonio M. de
las Alas, Jr., a lawyer of the petitioner, simply testified that he handled the negotiations for the purchase of
the property; that SMC was authorized to own and acquire property as shown by its articles of incorporation
and by-laws; that since its acquisition in 1975, the property had been used as a hatchery farm of SMC; that
SMC's possession in the concept of an owner had been continuous, adverse and against the whole world,
and that the land was declared for taxation purposes still in the name of Silverio Perez . 12
We hold that there is paucity of evidence of actual, notorious and exclusive possession of the property on
the part of vendor Silverio Perez so as to attach to it the character of an express grant from the
govemment. 13 Indeed, as correctly held by the Court of Appeals, Silverio Perez's testimony, being
uncorroborated, is simply self-serving and hence, undeserving of any weight.

WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED. Costs against the petitioner.
SO ORDERED.

G.R. No. 85322

April 30, 1991

ALFREDO M. ALMEDA, LEONARDO M. ALMEDA and ERNESTO M. ALMEDA, petitioners,

vs.

HON. COURT OF APPEALS and REPUBLIC OF THE PHILIPPINES, representative represented by

THE DIRECTOR OF LANDS, respondents.
Leonardo M. Almeda for petitioners.
GRIO-AQUINO, J.:
This petition for review assails the Court of Appeals' decision dated May 9, 1988 in CA-G.R. No. 09309-CV
reversing the judgment dated January 6, 1986 of the Regional Trial Court in LRC Case No. N-10771 entitled,
"Alfredo M. Almeda, Leonardo M. Almeda and Ernesto M. Almeda, Applicants versus Republic of the
Philippines, represented by the Director of Lands, Oppositor."
The case involves a parcel of land with an area of 1,208 square meters located in Barrio Pampangin Pateros,
Rizal, and described in Survey Plan Psu-128539. It was originally owned and possessed by Emiliano Almeda,
father of the petitioners, by virtue of an "Escritura de Particion Extrajudicial" (Exh. G) executed on June 15,
1935, between him and his brother Adriano wherein they attested the fact that the land in question was
inherited from their parents, Vedasto Almeda and Josefa C. Concepcion, who had inherited the same from
their own parents (great-grandparents of herein petitioners).
After Emiliano's death on May 1, 1948 at the age of 67, his wife, Ana Menguito and their children received
the produce of the land and rented out to third persons portions of the property where Emiliano had three
houses built. Upon Ana's death on April 3, 1950, her children with Emiliano inherited the property and the
lessees moved out. On June 9, 1980, the brothers Alfredo, Leonardo and Ernesto executed an extrajudicial
partition adjudicating the land to themselves (Exh. J).
On September 12, 1984, the Almeda brothers applied for the registration of the land in the Regional Trial
Court of Pasig, Branch CLVI, where the case was docketed as LRC Case No. N-10771, LRC Record No. N58761 entitled, "Alfredo M. Almeda, Leonardo M. Almeda and Ernesto M. Almeda, Applicants." Their
application was set for hearing on December 20, 1984. The notice of hearing dated October 10, 1984 was
duly published in the Official Gazette and posted by the deputy sheriff.
On the date of the hearing, no one appeared to oppose the application except the Director of Lands, through
the Solicitor General, who had earlier filed a formal opposition. An order of general default was issued
against the whole world, except the aforementioned oppositor, and the case was set for hearing.
The report of the Bureau of Lands stated that the land is not included in any military area or naval
reservation nor is it covered by any land patent or public land application. The Land Registration
Commission Report also stated that Plan Psu-128539, when plotted in the Municipal Index map, does not
overlap with any previously plotted titled properties under Act 496 as amended by PD 1525, and that the
survey books do not show that the subject lot had been applied for except in this case.
The Director of Lands, through the Office of the Solicitor General, presented Corazon Calamno senior forester
of the Bureau of Forest Development, who stated that she prepared the inspection report on November 26,
1984; that the land fags within the alienable and disposable land under Project No. 29 of Pateros, Metro
Manila, as per BFD Map LC 2623, certified and declared as such on January 23, 1968.
The Court found that the applicants' possession of the parcel of land sought to be registered, together with
that of their predecessors-in-interest, has been public, peaceful, continuous, adverse to the whole world and
in the concept of an owner for a period of more than thirty (30) years, and, that the land is not located
within any forest reservation nor mortgaged or encumbered in favor of any person or lending institution.
In a decision dated January 18, 1986, the trial court affirmed the order of general default and confirmed the
title of the applicants to the parcel of land covered by the plan, Psu-128539, and ordered its registration in
the names of Alfredo, Leonardo and Ernesto Almeda pro-indiviso (pp. 42-45, Rollo).
From that decision, the Republic of the Philippines, represented by the Solicitor General, appealed to the
Court of Appeals in CA-G.R. CV No. 09309, alleging that the applicants-appellees have not met the statutory
requirements on possession under Section 48(b) of CA 141, mainly because the land applied for was
inalienable forest land before its release as alienable and disposable land on January 3, 1968. The
applicants' possession thereof prior to January 3, 1968 was invalid for purposes of a grant under Section
48(b) of the Public Land Act.
The Court of Appeals, in a decision dated May 9, 1988, reversed the lower court and denied the application
for registration. It held that private respondents had not qualified for a grant under Section 48(b) of
Commonwealth Act 141 which requires public, peaceful, continuous, adverse possession by the applicants in
the concept of an owner, for a period of at least 30 years. They have to their credit only seventeen (17)
years possession and occupation of the land, counted from January 23, 1968, when it was declared alienable
and disposable, up to September 12, 1984, when their application for registration was filed.
After their motion for reconsideration was denied by the Court of Appeals, the applicants filed this petition
for review under Rule 45 of the Rules of Court.
Petitioners allege that the Court of Appeals erred:

1. in not holding that the land, classification made by the Director of Forestry (Bureau of Forest
Development) could not affect the vested rights of the applicants and their predecessors-in-interest
who had continuously occupied and profited from the land since 1918 or very much earlier, as in this
case; and
2. in denying the motion for reconsideration despite the ruling in "The Director of Lands vs. The
Honorable Court of Appeals and Iglesia ni Cristo," 158 SCRA 568 promulgated on March 14, 1988,
which allowed registration even when the land applied for was within the proposed alienable or
disposable block of aproposed LC project.
There is no merit in the petition.
The Court of Appeals correctly ruled that the private respondents had not qualified for a grant under Section
48(b) of the Public Land Act because their possession of the land while it was still inalienable forest land, or
before it was declared alienable and disposable land of the public domain on January 13, 1968, could not
ripen into private ownership, and should be excluded from the computation of the 30-year open and
continuous possession in concept of owner required under Section 48(b) of Com. Act 141. It accords with our
ruling in Director of Lands vs. Court of Appeals, Ibarra Bishar et al., 178 SCRA 708, that:
Unless and until the land classified as forest is released in an official proclamation to that effect so
that it may form part of the disposable agricultural lands of the public domain, the rules on
confirmation of imperfect title do not apply Amunategai vs. Director of Forestry, 126 SCRA 69;
Director of Lands vs. Court of Appeals, 129 SCRA 689; Director of Lands vs. Court of Appeals, 133
SCRA 701; Republic vs. Court of Appeals, 148 SCRA 480; Vallarta vs. Intermediate Appellate Court,
151 SCRA 679).
Thus, possession of forest lands, however long, cannot ripen into private ownership (Vamo vs.
Government, 41 Phil. 161 [1920]; Adorable vs. Director of Forestry, 107 Phil. 401 [1960]). A parcel of
forest land is within the exclusive jurisdiction of the Bureau of Forestry and beyond the power and
jurisdiction of the cadastral court to register under the Torrens System (Republic vs. Court of Appeals,
89 SCRA 648; Republic vs. Vera, 120 SCRA 210 [19831; Director of Lands vs. Court of Appeals, 129
SCRA 689 [1984]).
The petitioners have erroneously cited our decisions in Director of Forestry vs. Villareal, 170 SCRA 598
andRepublic vs. Court of Appeals, Miguel Marcelo, et al., 168 SCRA 77, in support of their position in this
case. In those cases, the applicants' possession of the land antedated its classification as forest land. We
held that such lands could not be retroactively legislated or classified as forest lands because it would
violate previously acquired property lights protected by the due process clause of the Constitution.
The situation of the land in this case is the reverse of the Villareal and Marcelo cases. The land here was
already forest land when occupied by the petitioners but it was later released on January 23, 1968 from its
forest classification. In other words, the petitioners here occupied forest land before it was released as
alienable and disposable, while the applicants in the Villareal and Marcelo cases possessed parcels of land
long before they were reserved as forest land. The subsequent reservation did not prejudice their vested
rights therein.
Petitioner's recourse to the decision of this Court in Director of Lands vs. Court of appeals and Iglesia Ni
Cristo, 158 SCRA 568, is inappropriate. That case did not involve forest land, but agricultural land of the
public domain within the proposed alienable or disposable block.
WHEREFORE, the petition for review is denied for lack of merit. Costs against the petitioners.
SO ORDERED.

G.R. No. 133250

July 9, 2002

FRANCISCO I. CHAVEZ, petitioner,

vs.
PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY DEVELOPMENT CORPORATION, respondents.
CARPIO, J.:
This is an original Petition for Mandamus with prayer for a writ of preliminary injunction and a temporary
restraining order. The petition seeks to compel the Public Estates Authority ("PEA" for brevity) to disclose all
facts on PEA's then on-going renegotiations with Amari Coastal Bay and Development Corporation ("AMARI"
for brevity) to reclaim portions of Manila Bay. The petition further seeks to enjoin PEA from signing a new
agreement with AMARI involving such reclamation.
The Facts
On November 20, 1973, the government, through the Commissioner of Public Highways, signed a contract
with the Construction and Development Corporation of the Philippines ("CDCP" for brevity) to reclaim certain
foreshore and offshore areas of Manila Bay. The contract also included the construction of Phases I and II of
the Manila-Cavite Coastal Road. CDCP obligated itself to carry out all the works in consideration of fifty
percent of the total reclaimed land.
On February 4, 1977, then President Ferdinand E. Marcos issued Presidential Decree No. 1084 creating PEA.
PD No. 1084 tasked PEA "to reclaim land, including foreshore and submerged areas," and "to develop,
improve, acquire, x x x lease and sell any and all kinds of lands." 1 On the same date, then President Marcos
issued Presidential Decree No. 1085 transferring to PEA the "lands reclaimed in the foreshore and offshore of
the Manila Bay"2 under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP).
On December 29, 1981, then President Marcos issued a memorandum directing PEA to amend its contract
with CDCP, so that "[A]ll future works in MCCRRP x x x shall be funded and owned by PEA." Accordingly, PEA
and CDCP executed a Memorandum of Agreement dated December 29, 1981, which stated:
"(i) CDCP shall undertake all reclamation, construction, and such other works in the MCCRRP as may
be agreed upon by the parties, to be paid according to progress of works on a unit price/lump sum
basis for items of work to be agreed upon, subject to price escalation, retention and other terms and
conditions provided for in Presidential Decree No. 1594. All the financing required for such works shall
be provided by PEA.
xxx
(iii) x x x CDCP shall give up all its development rights and hereby agrees to cede and transfer in
favor of PEA, all of the rights, title, interest and participation of CDCP in and to all the areas of land
reclaimed by CDCP in the MCCRRP as of December 30, 1981 which have not yet been sold,
transferred or otherwise disposed of by CDCP as of said date, which areas consist of approximately
Ninety-Nine Thousand Four Hundred Seventy Three (99,473) square meters in the Financial Center
Area covered by land pledge No. 5 and approximately Three Million Three Hundred Eighty Two
Thousand Eight Hundred Eighty Eight (3,382,888) square meters of reclaimed areas at varying
elevations above Mean Low Water Level located outside the Financial Center Area and the First
Neighborhood Unit."3
On January 19, 1988, then President Corazon C. Aquino issued Special Patent No. 3517, granting and
transferring to PEA "the parcels of land so reclaimed under the Manila-Cavite Coastal Road and Reclamation
Project (MCCRRP) containing a total area of one million nine hundred fifteen thousand eight hundred ninety
four (1,915,894) square meters." Subsequently, on April 9, 1988, the Register of Deeds of the Municipality of
Paraaque issued Transfer Certificates of Title Nos. 7309, 7311, and 7312, in the name of PEA, covering the
three reclaimed islands known as the "Freedom Islands" located at the southern portion of the Manila-Cavite
Coastal Road, Paraaque City. The Freedom Islands have a total land area of One Million Five Hundred
Seventy Eight Thousand Four Hundred and Forty One (1,578,441) square meters or 157.841 hectares.
On April 25, 1995, PEA entered into a Joint Venture Agreement ("JVA" for brevity) with AMARI, a private
corporation, to develop the Freedom Islands. The JVA also required the reclamation of an additional 250
hectares of submerged areas surrounding these islands to complete the configuration in the Master
Development Plan of the Southern Reclamation Project-MCCRRP. PEA and AMARI entered into the JVA
through negotiation without public bidding.4 On April 28, 1995, the Board of Directors of PEA, in its
Resolution No. 1245, confirmed the JVA.5 On June 8, 1995, then President Fidel V. Ramos, through then
Executive Secretary Ruben Torres, approved the JVA.6

On November 29, 1996, then Senate President Ernesto Maceda delivered a privilege speech in the Senate
and denounced the JVA as the "grandmother of all scams." As a result, the Senate Committee on
Government Corporations and Public Enterprises, and the Committee on Accountability of Public Officers and
Investigations, conducted a joint investigation. The Senate Committees reported the results of their
investigation in Senate Committee Report No. 560 dated September 16, 1997. 7 Among the conclusions of
their report are: (1) the reclaimed lands PEA seeks to transfer to AMARI under the JVA are lands of the public
domain which the government has not classified as alienable lands and therefore PEA cannot alienate these
lands; (2) the certificates of title covering the Freedom Islands are thus void, and (3) the JVA itself is illegal.
On December 5, 1997, then President Fidel V. Ramos issued Presidential Administrative Order No. 365
creating a Legal Task Force to conduct a study on the legality of the JVA in view of Senate Committee Report
No. 560. The members of the Legal Task Force were the Secretary of Justice, 8 the Chief Presidential Legal
Counsel,9 and the Government Corporate Counsel.10 The Legal Task Force upheld the legality of the JVA,
contrary to the conclusions reached by the Senate Committees. 11
On April 4 and 5, 1998, the Philippine Daily Inquirer and Today published reports that there were on-going
renegotiations between PEA and AMARI under an order issued by then President Fidel V. Ramos. According to
these reports, PEA Director Nestor Kalaw, PEA Chairman Arsenio Yulo and retired Navy Officer Sergio Cruz
composed the negotiating panel of PEA.
On April 13, 1998, Antonio M. Zulueta filed before the Court a Petition for Prohibition with Application for the
Issuance of a Temporary Restraining Order and Preliminary Injunction docketed as G.R. No. 132994 seeking
to nullify the JVA. The Court dismissed the petition "for unwarranted disregard of judicial hierarchy, without
prejudice to the refiling of the case before the proper court." 12
On April 27, 1998, petitioner Frank I. Chavez ("Petitioner" for brevity) as a taxpayer, filed the instant Petition
for Mandamus with Prayer for the Issuance of a Writ of Preliminary Injunction and Temporary Restraining
Order. Petitioner contends the government stands to lose billions of pesos in the sale by PEA of the
reclaimed lands to AMARI. Petitioner prays that PEA publicly disclose the terms of any renegotiation of the
JVA, invoking Section 28, Article II, and Section 7, Article III, of the 1987 Constitution on the right of the
people to information on matters of public concern. Petitioner assails the sale to AMARI of lands of the public
domain as a blatant violation of Section 3, Article XII of the 1987 Constitution prohibiting the sale of
alienable lands of the public domain to private corporations. Finally, petitioner asserts that he seeks to
enjoin the loss of billions of pesos in properties of the State that are of public dominion.
After several motions for extension of time,13 PEA and AMARI filed their Comments on October 19, 1998 and
June 25, 1998, respectively. Meanwhile, on December 28, 1998, petitioner filed an Omnibus Motion: (a) to
require PEA to submit the terms of the renegotiated PEA-AMARI contract; (b) for issuance of a temporary
restraining order; and (c) to set the case for hearing on oral argument. Petitioner filed a Reiterative Motion
for Issuance of a TRO dated May 26, 1999, which the Court denied in a Resolution dated June 22, 1999.
In a Resolution dated March 23, 1999, the Court gave due course to the petition and required the parties to
file their respective memoranda.
On March 30, 1999, PEA and AMARI signed the Amended Joint Venture Agreement ("Amended JVA," for
brevity). On May 28, 1999, the Office of the President under the administration of then President Joseph E.
Estrada approved the Amended JVA.
Due to the approval of the Amended JVA by the Office of the President, petitioner now prays that on
"constitutional and statutory grounds the renegotiated contract be declared null and void." 14
The Issues
The issues raised by petitioner, PEA15 and AMARI16 are as follows:
I. WHETHER THE PRINCIPAL RELIEFS PRAYED FOR IN THE PETITION ARE MOOT AND ACADEMIC
BECAUSE OF SUBSEQUENT EVENTS;
II. WHETHER THE PETITION MERITS DISMISSAL FOR FAILING TO OBSERVE THE PRINCIPLE GOVERNING
THE HIERARCHY OF COURTS;
III. WHETHER THE PETITION MERITS DISMISSAL FOR NON-EXHAUSTION OF ADMINISTRATIVE
REMEDIES;
IV. WHETHER PETITIONER HAS LOCUS STANDI TO BRING THIS SUIT;
V. WHETHER THE CONSTITUTIONAL RIGHT TO INFORMATION INCLUDES OFFICIAL INFORMATION ON
ON-GOING NEGOTIATIONS BEFORE A FINAL AGREEMENT;
VI. WHETHER THE STIPULATIONS IN THE AMENDED JOINT VENTURE AGREEMENT FOR THE TRANSFER
TO AMARI OF CERTAIN LANDS, RECLAIMED AND STILL TO BE RECLAIMED, VIOLATE THE 1987
CONSTITUTION; AND
VII. WHETHER THE COURT IS THE PROPER FORUM FOR RAISING THE ISSUE OF WHETHER THE
AMENDED JOINT VENTURE AGREEMENT IS GROSSLY DISADVANTAGEOUS TO THE GOVERNMENT.

The Court's Ruling

First issue: whether the principal reliefs prayed for in the petition are moot and academic
because of subsequent events.
The petition prays that PEA publicly disclose the "terms and conditions of the on-going negotiations for a
new agreement." The petition also prays that the Court enjoin PEA from "privately entering into, perfecting
and/or executing any new agreement with AMARI."
PEA and AMARI claim the petition is now moot and academic because AMARI furnished petitioner on June 21,
1999 a copy of the signed Amended JVA containing the terms and conditions agreed upon in the
renegotiations. Thus, PEA has satisfied petitioner's prayer for a public disclosure of the renegotiations.
Likewise, petitioner's prayer to enjoin the signing of the Amended JVA is now moot because PEA and AMARI
have already signed the Amended JVA on March 30, 1999. Moreover, the Office of the President has
approved the Amended JVA on May 28, 1999.
Petitioner counters that PEA and AMARI cannot avoid the constitutional issue by simply fast-tracking the
signing and approval of the Amended JVA before the Court could act on the issue. Presidential approval does
not resolve the constitutional issue or remove it from the ambit of judicial review.
We rule that the signing of the Amended JVA by PEA and AMARI and its approval by the President cannot
operate to moot the petition and divest the Court of its jurisdiction. PEA and AMARI have still to implement
the Amended JVA. The prayer to enjoin the signing of the Amended JVA on constitutional grounds necessarily
includes preventing its implementation if in the meantime PEA and AMARI have signed one in violation of the
Constitution. Petitioner's principal basis in assailing the renegotiation of the JVA is its violation of Section 3,
Article XII of the Constitution, which prohibits the government from alienating lands of the public domain to
private corporations. If the Amended JVA indeed violates the Constitution, it is the duty of the Court to enjoin
its implementation, and if already implemented, to annul the effects of such unconstitutional contract.
The Amended JVA is not an ordinary commercial contract but one which seeks to transfer title and
ownership to 367.5 hectares of reclaimed lands and submerged areas of Manila Bay to a single
private corporation. It now becomes more compelling for the Court to resolve the issue to insure the
government itself does not violate a provision of the Constitution intended to safeguard the national
patrimony. Supervening events, whether intended or accidental, cannot prevent the Court from rendering a
decision if there is a grave violation of the Constitution. In the instant case, if the Amended JVA runs counter
to the Constitution, the Court can still prevent the transfer of title and ownership of alienable lands of the
public domain in the name of AMARI. Even in cases where supervening events had made the cases moot,
the Court did not hesitate to resolve the legal or constitutional issues raised to formulate controlling
principles to guide the bench, bar, and the public. 17
Also, the instant petition is a case of first impression. All previous decisions of the Court involving Section 3,
Article XII of the 1987 Constitution, or its counterpart provision in the 1973
Constitution,18 covered agricultural lands sold to private corporations which acquired the lands from
private parties. The transferors of the private corporations claimed or could claim the right to judicial
confirmation of their imperfect titles19 under Title II of Commonwealth Act. 141 ("CA No. 141" for
brevity). In the instant case, AMARI seeks to acquire from PEA, a public corporation, reclaimed lands and
submerged areas for non-agricultural purposes by purchase under PD No. 1084 (charter of PEA)
and Title III of CA No. 141. Certain undertakings by AMARI under the Amended JVA constitute the
consideration for the purchase. Neither AMARI nor PEA can claim judicial confirmation of their titles because
the lands covered by the Amended JVA are newly reclaimed or still to be reclaimed. Judicial confirmation of
imperfect title requires open, continuous, exclusive and notorious occupation of agricultural lands of the
public domain for at least thirty years since June 12, 1945 or earlier. Besides, the deadline for filing
applications for judicial confirmation of imperfect title expired on December 31, 1987. 20
Lastly, there is a need to resolve immediately the constitutional issue raised in this petition because of the
possible transfer at any time by PEA to AMARI of title and ownership to portions of the reclaimed lands.
Under the Amended JVA, PEA is obligated to transfer to AMARI the latter's seventy percent proportionate
share in the reclaimed areas as the reclamation progresses. The Amended JVA even allows AMARI to
mortgage at any time the entire reclaimed area to raise financing for the reclamation project. 21
Second issue: whether the petition merits dismissal for failing to observe the principle
governing the hierarchy of courts.
PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking relief directly from the Court. The
principle of hierarchy of courts applies generally to cases involving factual questions. As it is not a trier of
facts, the Court cannot entertain cases involving factual issues. The instant case, however, raises
constitutional issues of transcendental importance to the public. 22 The Court can resolve this case without
determining any factual issue related to the case. Also, the instant case is a petition for mandamus which
falls under the original jurisdiction of the Court under Section 5, Article VIII of the Constitution. We resolve to
exercise primary jurisdiction over the instant case.
Third issue: whether the petition merits dismissal for non-exhaustion of administrative
remedies.

PEA faults petitioner for seeking judicial intervention in compelling PEA to disclose publicly certain
information without first asking PEA the needed information. PEA claims petitioner's direct resort to the
Court violates the principle of exhaustion of administrative remedies. It also violates the rule that mandamus
may issue only if there is no other plain, speedy and adequate remedy in the ordinary course of law.
PEA distinguishes the instant case from Taada v. Tuvera23 where the Court granted the petition for
mandamus even if the petitioners there did not initially demand from the Office of the President the
publication of the presidential decrees. PEA points out that in Taada, the Executive Department had
an affirmative statutory duty under Article 2 of the Civil Code24 and Section 1 of Commonwealth Act No.
63825 to publish the presidential decrees. There was, therefore, no need for the petitioners in Taada to make
an initial demand from the Office of the President. In the instant case, PEA claims it has no affirmative
statutory duty to disclose publicly information about its renegotiation of the JVA. Thus, PEA asserts that the
Court must apply the principle of exhaustion of administrative remedies to the instant case in view of the
failure of petitioner here to demand initially from PEA the needed information.
The original JVA sought to dispose to AMARI public lands held by PEA, a government corporation. Under
Section 79 of the Government Auditing Code,26 the disposition of government lands to private parties
requires public bidding. PEA was under a positive legal duty to disclose to the public the terms and
conditions for the sale of its lands. The law obligated PEA to make this public disclosure even without
demand from petitioner or from anyone. PEA failed to make this public disclosure because the original JVA,
like the Amended JVA, was the result of a negotiated contract, not of a public bidding. Considering that
PEA had an affirmative statutory duty to make the public disclosure, and was even in breach of this legal
duty, petitioner had the right to seek direct judicial intervention.
Moreover, and this alone is determinative of this issue, the principle of exhaustion of administrative
remedies does not apply when the issue involved is a purely legal or constitutional question. 27 The principal
issue in the instant case is the capacity of AMARI to acquire lands held by PEA in view of the constitutional
ban prohibiting the alienation of lands of the public domain to private corporations. We rule that the
principle of exhaustion of administrative remedies does not apply in the instant case.

Fourth issue: whether petitioner has locus standi to bring this suit
PEA argues that petitioner has no standing to institute mandamus proceedings to enforce his constitutional
right to information without a showing that PEA refused to perform an affirmative duty imposed on PEA by
the Constitution. PEA also claims that petitioner has not shown that he will suffer any concrete injury
because of the signing or implementation of the Amended JVA. Thus, there is no actual controversy requiring
the exercise of the power of judicial review.
The petitioner has standing to bring this taxpayer's suit because the petition seeks to compel PEA to comply
with its constitutional duties. There are two constitutional issues involved here. First is the right of citizens to
information on matters of public concern. Second is the application of a constitutional provision intended to
insure the equitable distribution of alienable lands of the public domain among Filipino citizens. The thrust of
the first issue is to compel PEA to disclose publicly information on the sale of government lands worth
billions of pesos, information which the Constitution and statutory law mandate PEA to disclose. The thrust
of the second issue is to prevent PEA from alienating hundreds of hectares of alienable lands of the public
domain in violation of the Constitution, compelling PEA to comply with a constitutional duty to the nation.
Moreover, the petition raises matters of transcendental importance to the public. In Chavez v. PCGG,28 the
Court upheld the right of a citizen to bring a taxpayer's suit on matters of transcendental importance to the
public, thus "Besides, petitioner emphasizes, the matter of recovering the ill-gotten wealth of the Marcoses is an
issue of 'transcendental importance to the public.' He asserts that ordinary taxpayers have a right to
initiate and prosecute actions questioning the validity of acts or orders of government agencies or
instrumentalities, if the issues raised are of 'paramount public interest,' and if they 'immediately
affect the social, economic and moral well being of the people.'
Moreover, the mere fact that he is a citizen satisfies the requirement of personal interest, when the
proceeding involves the assertion of a public right, such as in this case. He invokes several decisions
of this Court which have set aside the procedural matter of locus standi, when the subject of the case
involved public interest.
xxx
In Taada v. Tuvera, the Court asserted that when the issue concerns a public right and the object of
mandamus is to obtain the enforcement of a public duty, the people are regarded as the real parties
in interest; and because it is sufficient that petitioner is a citizen and as such is interested in the
execution of the laws, he need not show that he has any legal or special interest in the result of the
action. In the aforesaid case, the petitioners sought to enforce their right to be informed on matters of
public concern, a right then recognized in Section 6, Article IV of the 1973 Constitution, in connection
with the rule that laws in order to be valid and enforceable must be published in the Official Gazette
or otherwise effectively promulgated. In ruling for the petitioners' legal standing, the Court declared

that the right they sought to be enforced 'is a public right recognized by no less than the fundamental
law of the land.'
Legaspi v. Civil Service Commission, while reiterating Taada, further declared that 'when a
mandamus proceeding involves the assertion of a public right, the requirement of personal interest is
satisfied by the mere fact that petitioner is a citizen and, therefore, part of the general 'public' which
possesses the right.'
Further, in Albano v. Reyes, we said that while expenditure of public funds may not have been
involved under the questioned contract for the development, management and operation of the
Manila International Container Terminal, 'public interest [was] definitely involved considering the
important role [of the subject contract] . . . in the economic development of the country and the
magnitude of the financial consideration involved.' We concluded that, as a consequence, the
disclosure provision in the Constitution would constitute sufficient authority for upholding the
petitioner's standing.
Similarly, the instant petition is anchored on the right of the people to information and access to
official records, documents and papers a right guaranteed under Section 7, Article III of the 1987
Constitution. Petitioner, a former solicitor general, is a Filipino citizen. Because of the satisfaction of
the two basic requisites laid down by decisional law to sustain petitioner's legal standing, i.e. (1) the
enforcement of a public right (2) espoused by a Filipino citizen, we rule that the petition at bar should
be allowed."
We rule that since the instant petition, brought by a citizen, involves the enforcement of constitutional rights
- to information and to the equitable diffusion of natural resources - matters of transcendental public
importance, the petitioner has the requisite locus standi.
Fifth issue: whether the constitutional right to information includes official information on ongoing negotiations before a final agreement.
Section 7, Article III of the Constitution explains the people's right to information on matters of public
concern in this manner:
"Sec. 7. The right of the people to information on matters of public concern shall be recognized.
Access to official records, and to documents, and papers pertaining to official acts,
transactions, or decisions, as well as to government research data used as basis for policy
development, shall be afforded the citizen, subject to such limitations as may be provided by law."
(Emphasis supplied)
The State policy of full transparency in all transactions involving public interest reinforces the people's right
to information on matters of public concern. This State policy is expressed in Section 28, Article II of the
Constitution, thus:
"Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and implements
a policy of full public disclosure of all its transactions involving public interest." (Emphasis
supplied)
These twin provisions of the Constitution seek to promote transparency in policy-making and in the
operations of the government, as well as provide the people sufficient information to exercise effectively
other constitutional rights. These twin provisions are essential to the exercise of freedom of expression. If
the government does not disclose its official acts, transactions and decisions to citizens, whatever citizens
say, even if expressed without any restraint, will be speculative and amount to nothing. These twin
provisions are also essential to hold public officials "at all times x x x accountable to the people," 29 for unless
citizens have the proper information, they cannot hold public officials accountable for anything. Armed with
the right information, citizens can participate in public discussions leading to the formulation of government
policies and their effective implementation. An informed citizenry is essential to the existence and proper
functioning of any democracy. As explained by the Court in Valmonte v. Belmonte, Jr.30
"An essential element of these freedoms is to keep open a continuing dialogue or process of
communication between the government and the people. It is in the interest of the State that the
channels for free political discussion be maintained to the end that the government may perceive and
be responsive to the people's will. Yet, this open dialogue can be effective only to the extent that the
citizenry is informed and thus able to formulate its will intelligently. Only when the participants in the
discussion are aware of the issues and have access to information relating thereto can such bear
fruit."
PEA asserts, citing Chavez v. PCGG,31 that in cases of on-going negotiations the right to information is
limited to "definite propositions of the government." PEA maintains the right does not include access to
"intra-agency or inter-agency recommendations or communications during the stage when common
assertions are still in the process of being formulated or are in the 'exploratory stage'."
Also, AMARI contends that petitioner cannot invoke the right at the pre-decisional stage or before the closing
of the transaction. To support its contention, AMARI cites the following discussion in the 1986 Constitutional
Commission:

"Mr. Suarez. And when we say 'transactions' which should be distinguished from contracts,
agreements, or treaties or whatever, does the Gentleman refer to the steps leading to the
consummation of the contract, or does he refer to the contract itself?
Mr. Ople: The 'transactions' used here, I suppose is generic and therefore, it can cover
both steps leading to a contract and already a consummated contract, Mr. Presiding
Officer.
Mr. Suarez: This contemplates inclusion of negotiations leading to the consummation of
the transaction.
Mr. Ople: Yes, subject only to reasonable safeguards on the national interest.
Mr. Suarez: Thank you."32 (Emphasis supplied)
AMARI argues there must first be a consummated contract before petitioner can invoke the right. Requiring
government officials to reveal their deliberations at the pre-decisional stage will degrade the quality of
decision-making in government agencies. Government officials will hesitate to express their real sentiments
during deliberations if there is immediate public dissemination of their discussions, putting them under all
kinds of pressure before they decide.
We must first distinguish between information the law on public bidding requires PEA to disclose publicly,
and information the constitutional right to information requires PEA to release to the public. Before the
consummation of the contract, PEA must, on its own and without demand from anyone, disclose to the
public matters relating to the disposition of its property. These include the size, location, technical
description and nature of the property being disposed of, the terms and conditions of the disposition, the
parties qualified to bid, the minimum price and similar information. PEA must prepare all these data and
disclose them to the public at the start of the disposition process, long before the consummation of the
contract, because the Government Auditing Code requires public bidding. If PEA fails to make this
disclosure, any citizen can demand from PEA this information at any time during the bidding process.
Information, however, on on-going evaluation or review of bids or proposals being undertaken by the
bidding or review committee is not immediately accessible under the right to information. While the
evaluation or review is still on-going, there are no "official acts, transactions, or decisions" on the bids or
proposals. However, once the committee makes its official recommendation, there arises a "definite
proposition" on the part of the government. From this moment, the public's right to information attaches,
and any citizen can access all the non-proprietary information leading to such definite proposition.
In Chavez v. PCGG,33 the Court ruled as follows:
"Considering the intent of the framers of the Constitution, we believe that it is incumbent upon the
PCGG and its officers, as well as other government representatives, to disclose sufficient public
information on any proposed settlement they have decided to take up with the ostensible owners and
holders of ill-gotten wealth. Such information, though, must pertain to definite propositions of the
government, not necessarily to intra-agency or inter-agency recommendations or communications
during the stage when common assertions are still in the process of being formulated or are in the
"exploratory" stage. There is need, of course, to observe the same restrictions on disclosure of
information in general, as discussed earlier such as on matters involving national security,
diplomatic or foreign relations, intelligence and other classified information." (Emphasis supplied)
Contrary to AMARI's contention, the commissioners of the 1986 Constitutional Commission understood that
the right to information "contemplates inclusion of negotiations leading to the consummation of
the transaction."Certainly, a consummated contract is not a requirement for the exercise of the right to
information. Otherwise, the people can never exercise the right if no contract is consummated, and if one is
consummated, it may be too late for the public to expose its defects.
1wphi1.nt

Requiring a consummated contract will keep the public in the dark until the contract, which may be grossly
disadvantageous to the government or even illegal, becomes a fait accompli. This negates the State policy
of full transparency on matters of public concern, a situation which the framers of the Constitution could not
have intended. Such a requirement will prevent the citizenry from participating in the public discussion of
any proposed contract, effectively truncating a basic right enshrined in the Bill of Rights. We can allow
neither an emasculation of a constitutional right, nor a retreat by the State of its avowed "policy of full
disclosure of all its transactions involving public interest."
The right covers three categories of information which are "matters of public concern," namely: (1) official
records; (2) documents and papers pertaining to official acts, transactions and decisions; and (3)
government research data used in formulating policies. The first category refers to any document that is
part of the public records in the custody of government agencies or officials. The second category refers to
documents and papers recording, evidencing, establishing, confirming, supporting, justifying or explaining
official acts, transactions or decisions of government agencies or officials. The third category refers to
research data, whether raw, collated or processed, owned by the government and used in formulating
government policies.
The information that petitioner may access on the renegotiation of the JVA includes evaluation reports,
recommendations, legal and expert opinions, minutes of meetings, terms of reference and other documents
attached to such reports or minutes, all relating to the JVA. However, the right to information does not

compel PEA to prepare lists, abstracts, summaries and the like relating to the renegotiation of the JVA. 34 The
right only affords access to records, documents and papers, which means the opportunity to inspect and
copy them. One who exercises the right must copy the records, documents and papers at his expense. The
exercise of the right is also subject to reasonable regulations to protect the integrity of the public records
and to minimize disruption to government operations, like rules specifying when and how to conduct the
inspection and copying.35
The right to information, however, does not extend to matters recognized as privileged information under
the separation of powers.36 The right does not also apply to information on military and diplomatic secrets,
information affecting national security, and information on investigations of crimes by law enforcement
agencies before the prosecution of the accused, which courts have long recognized as confidential. 37 The
right may also be subject to other limitations that Congress may impose by law.
There is no claim by PEA that the information demanded by petitioner is privileged information rooted in the
separation of powers. The information does not cover Presidential conversations, correspondences, or
discussions during closed-door Cabinet meetings which, like internal deliberations of the Supreme Court and
other collegiate courts, or executive sessions of either house of Congress,38 are recognized as confidential.
This kind of information cannot be pried open by a co-equal branch of government. A frank exchange of
exploratory ideas and assessments, free from the glare of publicity and pressure by interested parties, is
essential to protect the independence of decision-making of those tasked to exercise Presidential, Legislative
and Judicial power.39 This is not the situation in the instant case.
We rule, therefore, that the constitutional right to information includes official information on on-going
negotiationsbefore a final contract. The information, however, must constitute definite propositions by the
government and should not cover recognized exceptions like privileged information, military and diplomatic
secrets and similar matters affecting national security and public order.40 Congress has also prescribed other
limitations on the right to information in several legislations.41
Sixth issue: whether stipulations in the Amended JVA for the transfer to AMARI of lands,
reclaimed or to be reclaimed, violate the Constitution.
The Regalian Doctrine
The ownership of lands reclaimed from foreshore and submerged areas is rooted in the Regalian doctrine
which holds that the State owns all lands and waters of the public domain. Upon the Spanish conquest of the
Philippines, ownership of all "lands, territories and possessions" in the Philippines passed to the Spanish
Crown.42 The King, as the sovereign ruler and representative of the people, acquired and owned all lands and
territories in the Philippines except those he disposed of by grant or sale to private individuals.
The 1935, 1973 and 1987 Constitutions adopted the Regalian doctrine substituting, however, the State, in
lieu of the King, as the owner of all lands and waters of the public domain. The Regalian doctrine is the
foundation of the time-honored principle of land ownership that "all lands that were not acquired from the
Government, either by purchase or by grant, belong to the public domain." 43 Article 339 of the Civil Code of
1889, which is now Article 420 of the Civil Code of 1950, incorporated the Regalian doctrine.
Ownership and Disposition of Reclaimed Lands
The Spanish Law of Waters of 1866 was the first statutory law governing the ownership and disposition of
reclaimed lands in the Philippines. On May 18, 1907, the Philippine Commission enacted Act No. 1654 which
provided for the lease, but not the sale, of reclaimed lands of the government to corporations
and individuals. Later, on November 29, 1919, the Philippine Legislature approved Act No. 2874, the Public
Land Act, which authorized the lease, but not the sale, of reclaimed lands of the government to
corporations and individuals. On November 7, 1936, the National Assembly passed Commonwealth Act
No. 141, also known as the Public Land Act, whichauthorized the lease, but not the sale, of reclaimed
lands of the government to corporations and individuals. CA No. 141 continues to this day as the
general law governing the classification and disposition of lands of the public domain.
The Spanish Law of Waters of 1866 and the Civil Code of 1889
Under the Spanish Law of Waters of 1866, the shores, bays, coves, inlets and all waters within the maritime
zone of the Spanish territory belonged to the public domain for public use.44 The Spanish Law of Waters of
1866 allowed the reclamation of the sea under Article 5, which provided as follows:
"Article 5. Lands reclaimed from the sea in consequence of works constructed by the State, or by the
provinces, pueblos or private persons, with proper permission, shall become the property of the party
constructing such works, unless otherwise provided by the terms of the grant of authority."
Under the Spanish Law of Waters, land reclaimed from the sea belonged to the party undertaking the
reclamation, provided the government issued the necessary permit and did not reserve ownership of the
reclaimed land to the State.
Article 339 of the Civil Code of 1889 defined property of public dominion as follows:
"Art. 339. Property of public dominion is

1. That devoted to public use, such as roads, canals, rivers, torrents, ports and bridges constructed by
the State, riverbanks, shores, roadsteads, and that of a similar character;
2. That belonging exclusively to the State which, without being of general public use, is employed in
some public service, or in the development of the national wealth, such as walls, fortresses, and other
works for the defense of the territory, and mines, until granted to private individuals."
Property devoted to public use referred to property open for use by the public. In contrast, property devoted
to public service referred to property used for some specific public service and open only to those authorized
to use the property.
Property of public dominion referred not only to property devoted to public use, but also to property not so
used but employed to develop the national wealth. This class of property constituted property of public
dominion although employed for some economic or commercial activity to increase the national wealth.
Article 341 of the Civil Code of 1889 governed the re-classification of property of public dominion into
private property, to wit:
"Art. 341. Property of public dominion, when no longer devoted to public use or to the defense of the
territory, shall become a part of the private property of the State."
This provision, however, was not self-executing. The legislature, or the executive department pursuant to
law, must declare the property no longer needed for public use or territorial defense before the government
could lease or alienate the property to private parties.45
Act No. 1654 of the Philippine Commission
On May 8, 1907, the Philippine Commission enacted Act No. 1654 which regulated the lease of reclaimed
and foreshore lands. The salient provisions of this law were as follows:
"Section 1. The control and disposition of the foreshore as defined in existing law, and the title
to all Government or public lands made or reclaimed by the Government by dredging or
filling or otherwise throughout the Philippine Islands, shall be retained by the
Government without prejudice to vested rights and without prejudice to rights conceded to the City
of Manila in the Luneta Extension.
Section 2. (a) The Secretary of the Interior shall cause all Government or public lands made or
reclaimed by the Government by dredging or filling or otherwise to be divided into lots or blocks, with
the necessary streets and alleyways located thereon, and shall cause plats and plans of such surveys
to be prepared and filed with the Bureau of Lands.
(b) Upon completion of such plats and plans the Governor-General shall give notice to the
public that such parts of the lands so made or reclaimed as are not needed for public
purposes will be leased for commercial and business purposes, x x x.
xxx
(e) The leases above provided for shall be disposed of to the highest and best
bidder therefore, subject to such regulations and safeguards as the Governor-General may by
executive order prescribe." (Emphasis supplied)
Act No. 1654 mandated that the government should retain title to all lands reclaimed by the
government. The Act also vested in the government control and disposition of foreshore lands. Private
parties could lease lands reclaimed by the government only if these lands were no longer needed for public
purpose. Act No. 1654 mandatedpublic bidding in the lease of government reclaimed lands. Act No. 1654
made government reclaimed lands sui generis in that unlike other public lands which the government
could sell to private parties, these reclaimed lands were available only for lease to private parties.
Act No. 1654, however, did not repeal Section 5 of the Spanish Law of Waters of 1866. Act No. 1654 did not
prohibit private parties from reclaiming parts of the sea under Section 5 of the Spanish Law of Waters. Lands
reclaimed from the sea by private parties with government permission remained private lands.
Act No. 2874 of the Philippine Legislature
On November 29, 1919, the Philippine Legislature enacted Act No. 2874, the Public Land Act. 46 The salient
provisions of Act No. 2874, on reclaimed lands, were as follows:
"Sec. 6. The Governor-General, upon the recommendation of the Secretary of Agriculture
and Natural Resources, shall from time to time classify the lands of the public domain
into
(a) Alienable or disposable,
(b) Timber, and

(c) Mineral lands, x x x.

Sec. 7. For the purposes of the government and disposition of alienable or disposable public
lands, the Governor-General, upon recommendation by the Secretary of Agriculture and
Natural Resources, shall from time to time declare what lands are open to disposition or
concession under this Act."
Sec. 8. Only those lands shall be declared open to disposition or concession which have
been officially delimited or classified x x x.
xxx
Sec. 55. Any tract of land of the public domain which, being neither timber nor mineral land, shall be
classified as suitable for residential purposes or for commercial, industrial, or other
productive purposes other than agricultural purposes, and shall be open to disposition or
concession, shall be disposed of under the provisions of this chapter, and not otherwise.
Sec. 56. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or banks of
navigable lakes or rivers;
(d) Lands not included in any of the foregoing classes.
x x x.
Sec. 58. The lands comprised in classes (a), (b), and (c) of section fifty-six shall be
disposed of to private parties by lease only and not otherwise, as soon as the GovernorGeneral, upon recommendation by the Secretary of Agriculture and Natural Resources,
shall declare that the same are not necessary for the public service and are open to
disposition under this chapter. The lands included in class (d) may be disposed of by sale or
lease under the provisions of this Act." (Emphasis supplied)
Section 6 of Act No. 2874 authorized the Governor-General to "classify lands of the public domain into x x x
alienable or disposable"47 lands. Section 7 of the Act empowered the Governor-General to "declare what
lands are open to disposition or concession." Section 8 of the Act limited alienable or disposable lands only
to those lands which have been "officially delimited and classified."
Section 56 of Act No. 2874 stated that lands "disposable under this title 48 shall be classified" as government
reclaimed, foreshore and marshy lands, as well as other lands. All these lands, however, must be suitable for
residential, commercial, industrial or other productive non-agricultural purposes. These provisions vested
upon the Governor-General the power to classify inalienable lands of the public domain into disposable lands
of the public domain. These provisions also empowered the Governor-General to classify further such
disposable lands of the public domain into government reclaimed, foreshore or marshy lands of the public
domain, as well as other non-agricultural lands.
Section 58 of Act No. 2874 categorically mandated that disposable lands of the public domain classified as
government reclaimed, foreshore and marshy lands "shall be disposed of to private parties by lease
only and not otherwise." The Governor-General, before allowing the lease of these lands to private
parties, must formally declare that the lands were "not necessary for the public service." Act No. 2874
reiterated the State policy to lease and not to sell government reclaimed, foreshore and marshy lands of the
public domain, a policy first enunciated in 1907 in Act No. 1654. Government reclaimed, foreshore and
marshy lands remained sui generis, as the only alienable or disposable lands of the public domain that the
government could not sell to private parties.
The rationale behind this State policy is obvious. Government reclaimed, foreshore and marshy public lands
for non-agricultural purposes retain their inherent potential as areas for public service. This is the reason the
government prohibited the sale, and only allowed the lease, of these lands to private parties. The State
always reserved these lands for some future public service.
Act No. 2874 did not authorize the reclassification of government reclaimed, foreshore and marshy lands
into other non-agricultural lands under Section 56 (d). Lands falling under Section 56 (d) were the only lands
for non-agricultural purposes the government could sell to private parties. Thus, under Act No. 2874, the
government could not sell government reclaimed, foreshore and marshy lands to private parties, unless
the legislature passed a law allowing their sale.49
Act No. 2874 did not prohibit private parties from reclaiming parts of the sea pursuant to Section 5 of the
Spanish Law of Waters of 1866. Lands reclaimed from the sea by private parties with government permission
remained private lands.

Dispositions under the 1935 Constitution

On May 14, 1935, the 1935 Constitution took effect upon its ratification by the Filipino people. The 1935
Constitution, in adopting the Regalian doctrine, declared in Section 1, Article XIII, that
"Section 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals, coal,
petroleum, and other mineral oils, all forces of potential energy and other natural resources of the
Philippines belong to the State, and their disposition, exploitation, development, or utilization shall be
limited to citizens of the Philippines or to corporations or associations at least sixty per centum of the
capital of which is owned by such citizens, subject to any existing right, grant, lease, or concession at
the time of the inauguration of the Government established under this Constitution. Natural
resources, with the exception of public agricultural land, shall not be alienated, and no
license, concession, or lease for the exploitation, development, or utilization of any of the natural
resources shall be granted for a period exceeding twenty-five years, renewable for another twentyfive years, except as to water rights for irrigation, water supply, fisheries, or industrial uses other than
the development of water power, in which cases beneficial use may be the measure and limit of the
grant." (Emphasis supplied)
The 1935 Constitution barred the alienation of all natural resources except public agricultural lands, which
were the only natural resources the State could alienate. Thus, foreshore lands, considered part of the
State's natural resources, became inalienable by constitutional fiat, available only for lease for 25 years,
renewable for another 25 years. The government could alienate foreshore lands only after these lands were
reclaimed and classified as alienable agricultural lands of the public domain. Government reclaimed and
marshy lands of the public domain, being neither timber nor mineral lands, fell under the classification of
public agricultural lands.50 However, government reclaimed and marshy lands, although subject to
classification as disposable public agricultural lands, could only be leased and not sold to private parties
because of Act No. 2874.
The prohibition on private parties from acquiring ownership of government reclaimed and marshy lands of
the public domain was only a statutory prohibition and the legislature could therefore remove such
prohibition. The 1935 Constitution did not prohibit individuals and corporations from acquiring government
reclaimed and marshy lands of the public domain that were classified as agricultural lands under existing
public land laws. Section 2, Article XIII of the 1935 Constitution provided as follows:
"Section 2. No private corporation or association may acquire, lease, or hold public
agricultural lands in excess of one thousand and twenty four hectares, nor may any
individual acquire such lands by purchase in excess of one hundred and forty hectares, or
by lease in excess of one thousand and twenty-four hectares, or by homestead in excess of
twenty-four hectares. Lands adapted to grazing, not exceeding two thousand hectares, may be leased
to an individual, private corporation, or association." (Emphasis supplied)
Still, after the effectivity of the 1935 Constitution, the legislature did not repeal Section 58 of Act No. 2874 to
open for sale to private parties government reclaimed and marshy lands of the public domain. On the
contrary, the legislature continued the long established State policy of retaining for the government title and
ownership of government reclaimed and marshy lands of the public domain.
Commonwealth Act No. 141 of the Philippine National Assembly
On November 7, 1936, the National Assembly approved Commonwealth Act No. 141, also known as the
Public Land Act, which compiled the then existing laws on lands of the public domain. CA No. 141, as
amended, remains to this day the existing general law governing the classification and disposition of
lands of the public domain other than timber and mineral lands.51
Section 6 of CA No. 141 empowers the President to classify lands of the public domain into "alienable or
disposable"52 lands of the public domain, which prior to such classification are inalienable and outside the
commerce of man. Section 7 of CA No. 141 authorizes the President to "declare what lands are open to
disposition or concession." Section 8 of CA No. 141 states that the government can declare open for
disposition or concession only lands that are "officially delimited and classified." Sections 6, 7 and 8 of CA
No. 141 read as follows:
"Sec. 6. The President, upon the recommendation of the Secretary of Agriculture and
Commerce, shall from time to time classify the lands of the public domain into
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands,
and may at any time and in like manner transfer such lands from one class to another, 53 for the
purpose of their administration and disposition.
Sec. 7. For the purposes of the administration and disposition of alienable or disposable public
lands, the President, upon recommendation by the Secretary of Agriculture and

Commerce, shall from time to time declare what lands are open to disposition or
concession under this Act.
Sec. 8. Only those lands shall be declared open to disposition or concession which have
been officially delimited and classified and, when practicable, surveyed, and which have not
been reserved for public or quasi-public uses, nor appropriated by the Government, nor in any
manner become private property, nor those on which a private right authorized and recognized by
this Act or any other valid law may be claimed, or which, having been reserved or appropriated, have
ceased to be so. x x x."
Thus, before the government could alienate or dispose of lands of the public domain, the President must first
officially classify these lands as alienable or disposable, and then declare them open to disposition or
concession. There must be no law reserving these lands for public or quasi-public uses.
The salient provisions of CA No. 141, on government reclaimed, foreshore and marshy lands of the public
domain, are as follows:
"Sec. 58. Any tract of land of the public domain which, being neither timber nor mineral
land, is intended to be used for residential purposes or for commercial, industrial, or
other productive purposes other than agricultural, and is open to disposition or
concession, shall be disposed of under the provisions of this chapter and not otherwise.
Sec. 59. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or banks of
navigable lakes or rivers;
(d) Lands not included in any of the foregoing classes.
Sec. 60. Any tract of land comprised under this title may be leased or sold, as the case may be, to
any person, corporation, or association authorized to purchase or lease public lands for agricultural
purposes. x x x.
Sec. 61. The lands comprised in classes (a), (b), and (c) of section fifty-nine shall be
disposed of to private parties by lease only and not otherwise, as soon as the President,
upon recommendation by the Secretary of Agriculture, shall declare that the same are not
necessary for the public service and are open to disposition under this chapter. The lands
included in class (d) may be disposed of by sale or lease under the provisions of this Act."
(Emphasis supplied)
Section 61 of CA No. 141 readopted, after the effectivity of the 1935 Constitution, Section 58 of Act No. 2874
prohibiting the sale of government reclaimed, foreshore and marshy disposable lands of the public domain.
All these lands are intended for residential, commercial, industrial or other non-agricultural purposes. As
before, Section 61 allowed only the lease of such lands to private parties. The government could sell to
private parties only lands falling under Section 59 (d) of CA No. 141, or those lands for non-agricultural
purposes not classified as government reclaimed, foreshore and marshy disposable lands of the public
domain. Foreshore lands, however, became inalienable under the 1935 Constitution which only allowed the
lease of these lands to qualified private parties.
Section 58 of CA No. 141 expressly states that disposable lands of the public domain intended for
residential, commercial, industrial or other productive purposes other than agricultural "shall be disposed
of under the provisions of this chapter and not otherwise." Under Section 10 of CA No. 141, the term
"disposition" includes lease of the land. Any disposition of government reclaimed, foreshore and marshy
disposable lands for non-agricultural purposes must comply with Chapter IX, Title III of CA No. 141, 54 unless a
subsequent law amended or repealed these provisions.
In his concurring opinion in the landmark case of Republic Real Estate Corporation v. Court of
Appeals,55Justice Reynato S. Puno summarized succinctly the law on this matter, as follows:
"Foreshore lands are lands of public dominion intended for public use. So too are lands reclaimed by
the government by dredging, filling, or other means. Act 1654 mandated that the control and
disposition of the foreshore and lands under water remained in the national government. Said law
allowed only the 'leasing' of reclaimed land. The Public Land Acts of 1919 and 1936 also declared that
the foreshore and lands reclaimed by the government were to be "disposed of to private parties by
lease only and not otherwise." Before leasing, however, the Governor-General, upon recommendation
of the Secretary of Agriculture and Natural Resources, had first to determine that the land reclaimed
was not necessary for the public service. This requisite must have been met before the land could be
disposed of. But even then, the foreshore and lands under water were not to be alienated
and sold to private parties. The disposition of the reclaimed land was only by lease. The
land remained property of the State." (Emphasis supplied)

As observed by Justice Puno in his concurring opinion, "Commonwealth Act No. 141 has remained in effect at
present."
The State policy prohibiting the sale to private parties of government reclaimed, foreshore and marshy
alienable lands of the public domain, first implemented in 1907 was thus reaffirmed in CA No. 141 after the
1935 Constitution took effect. The prohibition on the sale of foreshore lands, however, became a
constitutional edict under the 1935 Constitution. Foreshore lands became inalienable as natural resources of
the State, unless reclaimed by the government and classified as agricultural lands of the public domain, in
which case they would fall under the classification of government reclaimed lands.
After the effectivity of the 1935 Constitution, government reclaimed and marshy disposable lands of the
public domain continued to be only leased and not sold to private parties.56 These lands remained sui
generis, as the only alienable or disposable lands of the public domain the government could not sell to
private parties.
Since then and until now, the only way the government can sell to private parties government reclaimed and
marshy disposable lands of the public domain is for the legislature to pass a law authorizing such sale. CA
No. 141 does not authorize the President to reclassify government reclaimed and marshy lands into other
non-agricultural lands under Section 59 (d). Lands classified under Section 59 (d) are the only alienable or
disposable lands for non-agricultural purposes that the government could sell to private parties.
Moreover, Section 60 of CA No. 141 expressly requires congressional authority before lands under Section
59 that the government previously transferred to government units or entities could be sold to private
parties. Section 60 of CA No. 141 declares that
"Sec. 60. x x x The area so leased or sold shall be such as shall, in the judgment of the Secretary of
Agriculture and Natural Resources, be reasonably necessary for the purposes for which such sale or
lease is requested, and shall not exceed one hundred and forty-four hectares: Provided, however,
That this limitation shall not apply to grants, donations, or transfers made to a province, municipality
or branch or subdivision of the Government for the purposes deemed by said entities conducive to
the public interest; but the land so granted, donated, or transferred to a province,
municipality or branch or subdivision of the Government shall not be alienated,
encumbered, or otherwise disposed of in a manner affecting its title, except when
authorized by Congress: x x x." (Emphasis supplied)
The congressional authority required in Section 60 of CA No. 141 mirrors the legislative authority required in
Section 56 of Act No. 2874.
One reason for the congressional authority is that Section 60 of CA No. 141 exempted government units and
entities from the maximum area of public lands that could be acquired from the State. These government
units and entities should not just turn around and sell these lands to private parties in violation of
constitutional or statutory limitations. Otherwise, the transfer of lands for non-agricultural purposes to
government units and entities could be used to circumvent constitutional limitations on ownership of
alienable or disposable lands of the public domain. In the same manner, such transfers could also be used to
evade the statutory prohibition in CA No. 141 on the sale of government reclaimed and marshy lands of the
public domain to private parties. Section 60 of CA No. 141 constitutes by operation of law a lien on these
lands.57
In case of sale or lease of disposable lands of the public domain falling under Section 59 of CA No. 141,
Sections 63 and 67 require a public bidding. Sections 63 and 67 of CA No. 141 provide as follows:
"Sec. 63. Whenever it is decided that lands covered by this chapter are not needed for public
purposes, the Director of Lands shall ask the Secretary of Agriculture and Commerce (now the
Secretary of Natural Resources) for authority to dispose of the same. Upon receipt of such authority,
the Director of Lands shall give notice by public advertisement in the same manner as in the case of
leases or sales of agricultural public land, x x x.
Sec. 67. The lease or sale shall be made by oral bidding; and adjudication shall be made to
the highest bidder. x x x." (Emphasis supplied)
Thus, CA No. 141 mandates the Government to put to public auction all leases or sales of alienable or
disposable lands of the public domain.58
Like Act No. 1654 and Act No. 2874 before it, CA No. 141 did not repeal Section 5 of the Spanish Law of
Waters of 1866. Private parties could still reclaim portions of the sea with government permission. However,
the reclaimed land could become private land only if classified as alienable agricultural land of
the public domain open to disposition under CA No. 141. The 1935 Constitution prohibited the alienation of
all natural resources except public agricultural lands.
The Civil Code of 1950
The Civil Code of 1950 readopted substantially the definition of property of public dominion found in the Civil
Code of 1889. Articles 420 and 422 of the Civil Code of 1950 state that
"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.
x x x.
Art. 422. Property of public dominion, when no longer intended for public use or for public service,
shall form part of the patrimonial property of the State."
Again, the government must formally declare that the property of public dominion is no longer needed for
public use or public service, before the same could be classified as patrimonial property of the State. 59 In the
case of government reclaimed and marshy lands of the public domain, the declaration of their being
disposable, as well as the manner of their disposition, is governed by the applicable provisions of CA No.
141.
Like the Civil Code of 1889, the Civil Code of 1950 included as property of public dominion those properties
of the State which, without being for public use, are intended for public service or the "development of
the national wealth." Thus, government reclaimed and marshy lands of the State, even if not employed
for public use or public service, if developed to enhance the national wealth, are classified as property of
public dominion.
Dispositions under the 1973 Constitution
The 1973 Constitution, which took effect on January 17, 1973, likewise adopted the Regalian doctrine.
Section 8, Article XIV of the 1973 Constitution stated that
"Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all
forces of potential energy, fisheries, wildlife, and other natural resources of the Philippines belong to
the State. With the exception of agricultural, industrial or commercial, residential, and
resettlement lands of the public domain, natural resources shall not be alienated, and no
license, concession, or lease for the exploration, development, exploitation, or utilization of any of the
natural resources shall be granted for a period exceeding twenty-five years, renewable for not more
than twenty-five years, except as to water rights for irrigation, water supply, fisheries, or industrial
uses other than the development of water power, in which cases, beneficial use may be the measure
and the limit of the grant." (Emphasis supplied)
The 1973 Constitution prohibited the alienation of all natural resources with the exception of "agricultural,
industrial or commercial, residential, and resettlement lands of the public domain." In contrast, the 1935
Constitution barred the alienation of all natural resources except "public agricultural lands." However, the
term "public agricultural lands" in the 1935 Constitution encompassed industrial, commercial, residential
and resettlement lands of the public domain.60 If the land of public domain were neither timber nor mineral
land, it would fall under the classification of agricultural land of the public domain. Both the 1935 and
1973 Constitutions, therefore, prohibited the alienation of all natural resources except
agricultural lands of the public domain.
The 1973 Constitution, however, limited the alienation of lands of the public domain to individuals who were
citizens of the Philippines. Private corporations, even if wholly owned by Philippine citizens, were no longer
allowed to acquire alienable lands of the public domain unlike in the 1935 Constitution. Section 11, Article
XIV of the 1973 Constitution declared that
"Sec. 11. The Batasang Pambansa, taking into account conservation, ecological, and development
requirements of the natural resources, shall determine by law the size of land of the public domain
which may be developed, held or acquired by, or leased to, any qualified individual, corporation, or
association, and the conditions therefor. No private corporation or association may hold
alienable lands of the public domain except by lease not to exceed one thousand hectares in
area nor may any citizen hold such lands by lease in excess of five hundred hectares or acquire by
purchase, homestead or grant, in excess of twenty-four hectares. No private corporation or
association may hold by lease, concession, license or permit, timber or forest lands and other timber
or forest resources in excess of one hundred thousand hectares. However, such area may be
increased by the Batasang Pambansa upon recommendation of the National Economic and
Development Authority." (Emphasis supplied)
Thus, under the 1973 Constitution, private corporations could hold alienable lands of the public domain only
through lease. Only individuals could now acquire alienable lands of the public domain, and private
corporations became absolutely barred from acquiring any kind of alienable land of the public
domain. The constitutional ban extended to all kinds of alienable lands of the public domain, while the
statutory ban under CA No. 141 applied only to government reclaimed, foreshore and marshy alienable
lands of the public domain.
PD No. 1084 Creating the Public Estates Authority

On February 4, 1977, then President Ferdinand Marcos issued Presidential Decree No. 1084 creating PEA, a
wholly government owned and controlled corporation with a special charter. Sections 4 and 8 of PD No.
1084, vests PEA with the following purposes and powers:
"Sec. 4. Purpose. The Authority is hereby created for the following purposes:
(a) To reclaim land, including foreshore and submerged areas, by dredging, filling or other
means, or to acquire reclaimed land;
(b) To develop, improve, acquire, administer, deal in, subdivide, dispose, lease and sell any and all
kinds of lands, buildings, estates and other forms of real property, owned, managed, controlled
and/or operated by the government;
(c) To provide for, operate or administer such service as may be necessary for the efficient,
economical and beneficial utilization of the above properties.
Sec. 5. Powers and functions of the Authority. The Authority shall, in carrying out the purposes for
which it is created, have the following powers and functions:
(a)To prescribe its by-laws.
xxx
(i) To hold lands of the public domain in excess of the area permitted to private corporations by
statute.
(j) To reclaim lands and to construct work across, or otherwise, any stream, watercourse, canal,
ditch, flume x x x.
xxx
(o) To perform such acts and exercise such functions as may be necessary for the attainment of the
purposes and objectives herein specified." (Emphasis supplied)
PD No. 1084 authorizes PEA to reclaim both foreshore and submerged areas of the public domain. Foreshore
areas are those covered and uncovered by the ebb and flow of the tide.61 Submerged areas are those
permanently under water regardless of the ebb and flow of the tide. 62 Foreshore and submerged areas
indisputably belong to the public domain63 and are inalienable unless reclaimed, classified as alienable lands
open to disposition, and further declared no longer needed for public service.
The ban in the 1973 Constitution on private corporations from acquiring alienable lands of the public domain
did not apply to PEA since it was then, and until today, a fully owned government corporation. The
constitutional ban applied then, as it still applies now, only to "private corporations and associations." PD No.
1084 expressly empowers PEA "to hold lands of the public domain" even "in excess of the area
permitted to private corporations by statute." Thus, PEA can hold title to private lands, as well as
title to lands of the public domain.
In order for PEA to sell its reclaimed foreshore and submerged alienable lands of the public domain, there
must be legislative authority empowering PEA to sell these lands. This legislative authority is necessary in
view of Section 60 of CA No.141, which states
"Sec. 60. x x x; but the land so granted, donated or transferred to a province, municipality, or branch
or subdivision of the Government shall not be alienated, encumbered or otherwise disposed of in a
manner affecting its title, except when authorized by Congress; x x x." (Emphasis supplied)
Without such legislative authority, PEA could not sell but only lease its reclaimed foreshore and submerged
alienable lands of the public domain. Nevertheless, any legislative authority granted to PEA to sell its
reclaimed alienable lands of the public domain would be subject to the constitutional ban on private
corporations from acquiring alienable lands of the public domain. Hence, such legislative authority could
only benefit private individuals.
Dispositions under the 1987 Constitution
The 1987 Constitution, like the 1935 and 1973 Constitutions before it, has adopted the Regalian doctrine.
The 1987 Constitution declares that all natural resources are "owned by the State," and except for
alienable agricultural lands of the public domain, natural resources cannot be alienated. Sections 2 and 3,
Article XII of the 1987 Constitution state that
"Section 2. 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. The exploration, development, and utilization of
natural resources shall be under the full control and supervision of the State. x x x.

Section 3. Lands of the public domain are classified into agricultural, forest or timber, mineral lands,
and national parks. Agricultural lands of the public domain may be further classified by law according
to the uses which they may be devoted. Alienable lands of the public domain shall be limited
to agricultural lands. Private corporations or associations may not hold such alienable
lands of the public domain except by lease, for a period not exceeding twenty-five years,
renewable for not more than twenty-five years, and not to exceed one thousand hectares
in area. Citizens of the Philippines may lease not more than five hundred hectares, or acquire not
more than twelve hectares thereof by purchase, homestead, or grant.
Taking into account the requirements of conservation, ecology, and development, and subject to the
requirements of agrarian reform, the Congress shall determine, by law, the size of lands of the public
domain which may be acquired, developed, held, or leased and the conditions therefor." (Emphasis
supplied)
The 1987 Constitution continues the State policy in the 1973 Constitution banning private corporations
fromacquiring any kind of alienable land of the public domain. Like the 1973 Constitution, the 1987
Constitution allows private corporations to hold alienable lands of the public domain only through lease.
As in the 1935 and 1973 Constitutions, the general law governing the lease to private corporations of
reclaimed, foreshore and marshy alienable lands of the public domain is still CA No. 141.
The Rationale behind the Constitutional Ban
The rationale behind the constitutional ban on corporations from acquiring, except through lease, alienable
lands of the public domain is not well understood. During the deliberations of the 1986 Constitutional
Commission, the commissioners probed the rationale behind this ban, thus:
"FR. BERNAS: Mr. Vice-President, my questions have reference to page 3, line 5 which says:
`No private corporation or association may hold alienable lands of the public domain except by lease,
not to exceed one thousand hectares in area.'
If we recall, this provision did not exist under the 1935 Constitution, but this was introduced in the
1973 Constitution. In effect, it prohibits private corporations from acquiring alienable public
lands. But it has not been very clear in jurisprudence what the reason for this is. In some of
the cases decided in 1982 and 1983, it was indicated that the purpose of this is to prevent
large landholdings. Is that the intent of this provision?
MR. VILLEGAS: I think that is the spirit of the provision.
FR. BERNAS: In existing decisions involving the Iglesia ni Cristo, there were instances where the
Iglesia ni Cristo was not allowed to acquire a mere 313-square meter land where a chapel stood
because the Supreme Court said it would be in violation of this." (Emphasis supplied)
In Ayog v. Cusi,64 the Court explained the rationale behind this constitutional ban in this way:
"Indeed, one purpose of the constitutional prohibition against purchases of public agricultural lands
by private corporations is to equitably diffuse land ownership or to encourage 'owner-cultivatorship
and the economic family-size farm' and to prevent a recurrence of cases like the instant case. Huge
landholdings by corporations or private persons had spawned social unrest."
However, if the constitutional intent is to prevent huge landholdings, the Constitution could have simply
limited the size of alienable lands of the public domain that corporations could acquire. The Constitution
could have followed the limitations on individuals, who could acquire not more than 24 hectares of alienable
lands of the public domain under the 1973 Constitution, and not more than 12 hectares under the 1987
Constitution.
If the constitutional intent is to encourage economic family-size farms, placing the land in the name of a
corporation would be more effective in preventing the break-up of farmlands. If the farmland is registered in
the name of a corporation, upon the death of the owner, his heirs would inherit shares in the corporation
instead of subdivided parcels of the farmland. This would prevent the continuing break-up of farmlands into
smaller and smaller plots from one generation to the next.
In actual practice, the constitutional ban strengthens the constitutional limitation on individuals from
acquiring more than the allowed area of alienable lands of the public domain. Without the constitutional ban,
individuals who already acquired the maximum area of alienable lands of the public domain could easily set
up corporations to acquire more alienable public lands. An individual could own as many corporations as his
means would allow him. An individual could even hide his ownership of a corporation by putting his
nominees as stockholders of the corporation. The corporation is a convenient vehicle to circumvent the
constitutional limitation on acquisition by individuals of alienable lands of the public domain.
The constitutional intent, under the 1973 and 1987 Constitutions, is to transfer ownership of only a limited
area of alienable land of the public domain to a qualified individual. This constitutional intent is safeguarded
by the provision prohibiting corporations from acquiring alienable lands of the public domain, since the
vehicle to circumvent the constitutional intent is removed. The available alienable public lands are gradually
decreasing in the face of an ever-growing population. The most effective way to insure faithful adherence to

this constitutional intent is to grant or sell alienable lands of the public domain only to individuals. This, it
would seem, is the practical benefit arising from the constitutional ban.
The Amended Joint Venture Agreement
The subject matter of the Amended JVA, as stated in its second Whereas clause, consists of three properties,
namely:
1. "[T]hree partially reclaimed and substantially eroded islands along Emilio Aguinaldo Boulevard in
Paranaque and Las Pinas, Metro Manila, with a combined titled area of 1,578,441 square meters;"
2. "[A]nother area of 2,421,559 square meters contiguous to the three islands;" and
3. "[A]t AMARI's option as approved by PEA, an additional 350 hectares more or less to regularize the
configuration of the reclaimed area."65
PEA confirms that the Amended JVA involves "the development of the Freedom Islands and further
reclamation of about 250 hectares x x x," plus an option "granted to AMARI to subsequently reclaim another
350 hectares x x x."66
In short, the Amended JVA covers a reclamation area of 750 hectares. Only 157.84 hectares of the 750hectare reclamation project have been reclaimed, and the rest of the 592.15 hectares are still
submerged areas forming part of Manila Bay.
Under the Amended JVA, AMARI will reimburse PEA the sum of P1,894,129,200.00 for PEA's "actual cost" in
partially reclaiming the Freedom Islands. AMARI will also complete, at its own expense, the reclamation of
the Freedom Islands. AMARI will further shoulder all the reclamation costs of all the other areas, totaling
592.15 hectares, still to be reclaimed. AMARI and PEA will share, in the proportion of 70 percent and 30
percent, respectively, the total net usable area which is defined in the Amended JVA as the total reclaimed
area less 30 percent earmarked for common areas. Title to AMARI's share in the net usable area, totaling
367.5 hectares, will be issued in the name of AMARI. Section 5.2 (c) of the Amended JVA provides that
"x x x, PEA shall have the duty to execute without delay the necessary deed of transfer or
conveyance of the title pertaining to AMARI's Land share based on the Land Allocation Plan. PEA,
when requested in writing by AMARI, shall then cause the issuance and delivery of the
proper certificates of title covering AMARI's Land Share in the name of AMARI, x x x;
provided, that if more than seventy percent (70%) of the titled area at any given time pertains to
AMARI, PEA shall deliver to AMARI only seventy percent (70%) of the titles pertaining to AMARI, until
such time when a corresponding proportionate area of additional land pertaining to PEA has been
titled." (Emphasis supplied)
Indisputably, under the Amended JVA AMARI will acquire and own a maximum of 367.5 hectares
of reclaimed land which will be titled in its name.
To implement the Amended JVA, PEA delegated to the unincorporated PEA-AMARI joint venture PEA's
statutory authority, rights and privileges to reclaim foreshore and submerged areas in Manila Bay. Section
3.2.a of the Amended JVA states that
"PEA hereby contributes to the joint venture its rights and privileges to perform Rawland Reclamation
and Horizontal Development as well as own the Reclamation Area, thereby granting the Joint Venture
the full and exclusive right, authority and privilege to undertake the Project in accordance with the
Master Development Plan."
The Amended JVA is the product of a renegotiation of the original JVA dated April 25, 1995 and its
supplemental agreement dated August 9, 1995.
The Threshold Issue
The threshold issue is whether AMARI, a private corporation, can acquire and own under the Amended JVA
367.5 hectares of reclaimed foreshore and submerged areas in Manila Bay in view of Sections 2 and 3,
Article XII of the 1987 Constitution which state that:
"Section 2. 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. x x x.
xxx
Section 3. x x x Alienable lands of the public domain shall be limited to agricultural lands. Private
corporations or associations may not hold such alienable lands of the public domain
except by lease, x x x."(Emphasis supplied)
Classification of Reclaimed Foreshore and Submerged Areas

PEA readily concedes that lands reclaimed from foreshore or submerged areas of Manila Bay are alienable or
disposable lands of the public domain. In its Memorandum, 67 PEA admits that
"Under the Public Land Act (CA 141, as amended), reclaimed lands are classified as alienable
and disposable lands of the public domain:
'Sec. 59. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the government by dredging, filling, or other means;
x x x.'" (Emphasis supplied)
Likewise, the Legal Task Force68 constituted under Presidential Administrative Order No. 365 admitted in its
Report and Recommendation to then President Fidel V. Ramos, "[R]eclaimed lands are classified as
alienable and disposable lands of the public domain."69 The Legal Task Force concluded that
"D. Conclusion
Reclaimed lands are lands of the public domain. However, by statutory authority, the rights of
ownership and disposition over reclaimed lands have been transferred to PEA, by virtue of which PEA,
as owner, may validly convey the same to any qualified person without violating the Constitution or
any statute.
The constitutional provision prohibiting private corporations from holding public land, except by lease
(Sec. 3, Art. XVII,70 1987 Constitution), does not apply to reclaimed lands whose ownership has passed
on to PEA by statutory grant."
Under Section 2, Article XII of the 1987 Constitution, the foreshore and submerged areas of Manila Bay are
part of the "lands of the public domain, waters x x x and other natural resources" and consequently "owned
by the State." As such, foreshore and submerged areas "shall not be alienated," unless they are classified as
"agricultural lands" of the public domain. The mere reclamation of these areas by PEA does not convert
these inalienable natural resources of the State into alienable or disposable lands of the public domain.
There must be a law or presidential proclamation officially classifying these reclaimed lands as alienable or
disposable and open to disposition or concession. Moreover, these reclaimed lands cannot be classified as
alienable or disposable if the law has reserved them for some public or quasi-public use. 71
Section 8 of CA No. 141 provides that "only those lands shall be declared open to disposition or concession
which have been officially delimited and classified."72 The President has the authority to classify
inalienable lands of the public domain into alienable or disposable lands of the public domain, pursuant to
Section 6 of CA No. 141. In Laurel vs. Garcia,73 the Executive Department attempted to sell the Roppongi
property in Tokyo, Japan, which was acquired by the Philippine Government for use as the Chancery of the
Philippine Embassy. Although the Chancery had transferred to another location thirteen years earlier, the
Court still ruled that, under Article 42274 of the Civil Code, a property of public dominion retains such
character until formally declared otherwise. The Court ruled that
"The fact that the Roppongi site has not been used for a long time for actual Embassy service does
not automatically convert it to patrimonial property. Any such conversion happens only if the property
is withdrawn from public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66 SCRA 481 [1975]. A
property continues to be part of the public domain, not available for private appropriation
or ownership 'until there is a formal declaration on the part of the government to
withdraw it from being such' (Ignacio v. Director of Lands, 108 Phil. 335 [1960]." (Emphasis
supplied)
PD No. 1085, issued on February 4, 1977, authorized the issuance of special land patents for lands reclaimed
by PEA from the foreshore or submerged areas of Manila Bay. On January 19, 1988 then President Corazon C.
Aquino issued Special Patent No. 3517 in the name of PEA for the 157.84 hectares comprising the partially
reclaimed Freedom Islands. Subsequently, on April 9, 1999 the Register of Deeds of the Municipality of
Paranaque issued TCT Nos. 7309, 7311 and 7312 in the name of PEA pursuant to Section 103 of PD No. 1529
authorizing the issuance of certificates of title corresponding to land patents. To this day, these certificates
of title are still in the name of PEA.
PD No. 1085, coupled with President Aquino's actual issuance of a special patent covering the Freedom
Islands, is equivalent to an official proclamation classifying the Freedom Islands as alienable or disposable
lands of the public domain. PD No. 1085 and President Aquino's issuance of a land patent also constitute a
declaration that the Freedom Islands are no longer needed for public service. The Freedom Islands are
thus alienable or disposable lands of the public domain, open to disposition or concession to
qualified parties.
At the time then President Aquino issued Special Patent No. 3517, PEA had already reclaimed the Freedom
Islands although subsequently there were partial erosions on some areas. The government had also
completed the necessary surveys on these islands. Thus, the Freedom Islands were no longer part of Manila
Bay but part of the land mass. Section 3, Article XII of the 1987 Constitution classifies lands of the public
domain into "agricultural, forest or timber, mineral lands, and national parks." Being neither timber, mineral,
nor national park lands, the reclaimed Freedom Islands necessarily fall under the classification of agricultural
lands of the public domain. Under the 1987 Constitution, agricultural lands of the public domain are the only

natural resources that the State may alienate to qualified private parties. All other natural resources, such as
the seas or bays, are "waters x x x owned by the State" forming part of the public domain, and are
inalienable pursuant to Section 2, Article XII of the 1987 Constitution.
AMARI claims that the Freedom Islands are private lands because CDCP, then a private corporation,
reclaimed the islands under a contract dated November 20, 1973 with the Commissioner of Public Highways.
AMARI, citing Article 5 of the Spanish Law of Waters of 1866, argues that "if the ownership of reclaimed
lands may be given to the party constructing the works, then it cannot be said that reclaimed lands are
lands of the public domain which the State may not alienate." 75 Article 5 of the Spanish Law of Waters reads
as follows:
"Article 5. Lands reclaimed from the sea in consequence of works constructed by the State, or by the
provinces, pueblos or private persons, with proper permission, shall become the property of the party
constructing such works, unless otherwise provided by the terms of the grant of authority."
(Emphasis supplied)
Under Article 5 of the Spanish Law of Waters of 1866, private parties could reclaim from the sea only with
"proper permission" from the State. Private parties could own the reclaimed land only if not "otherwise
provided by the terms of the grant of authority." This clearly meant that no one could reclaim from the sea
without permission from the State because the sea is property of public dominion. It also meant that the
State could grant or withhold ownership of the reclaimed land because any reclaimed land, like the sea from
which it emerged, belonged to the State. Thus, a private person reclaiming from the sea without permission
from the State could not acquire ownership of the reclaimed land which would remain property of public
dominion like the sea it replaced.76 Article 5 of the Spanish Law of Waters of 1866 adopted the time-honored
principle of land ownership that "all lands that were not acquired from the government, either by purchase
or by grant, belong to the public domain."77
Article 5 of the Spanish Law of Waters must be read together with laws subsequently enacted on the
disposition of public lands. In particular, CA No. 141 requires that lands of the public domain must first be
classified as alienable or disposable before the government can alienate them. These lands must not be
reserved for public or quasi-public purposes.78 Moreover, the contract between CDCP and the government
was executed after the effectivity of the 1973 Constitution which barred private corporations from acquiring
any kind of alienable land of the public domain. This contract could not have converted the Freedom Islands
into private lands of a private corporation.
Presidential Decree No. 3-A, issued on January 11, 1973, revoked all laws authorizing the reclamation of
areas under water and revested solely in the National Government the power to reclaim lands. Section 1 of
PD No. 3-A declared that
"The provisions of any law to the contrary notwithstanding, the reclamation of areas under
water, whether foreshore or inland, shall be limited to the National Government or any person
authorized by it under a proper contract. (Emphasis supplied)
x x x."
PD No. 3-A repealed Section 5 of the Spanish Law of Waters of 1866 because reclamation of areas under
water could now be undertaken only by the National Government or by a person contracted by the National
Government. Private parties may reclaim from the sea only under a contract with the National Government,
and no longer by grant or permission as provided in Section 5 of the Spanish Law of Waters of 1866.
Executive Order No. 525, issued on February 14, 1979, designated PEA as the National Government's
implementing arm to undertake "all reclamation projects of the government," which "shall be undertaken
by the PEA or through a proper contract executed by it with any person or entity." Under such
contract, a private party receives compensation for reclamation services rendered to PEA. Payment to the
contractor may be in cash, or in kind consisting of portions of the reclaimed land, subject to the
constitutional ban on private corporations from acquiring alienable lands of the public domain. The
reclaimed land can be used as payment in kind only if the reclaimed land is first classified as alienable or
disposable land open to disposition, and then declared no longer needed for public service.
The Amended JVA covers not only the Freedom Islands, but also an additional 592.15 hectares which are still
submerged and forming part of Manila Bay. There is no legislative or Presidential act classifying
these submerged areas as alienable or disposable lands of the public domain open to
disposition. These submerged areas are not covered by any patent or certificate of title. There can be no
dispute that these submerged areas form part of the public domain, and in their present state
are inalienable and outside the commerce of man. Until reclaimed from the sea, these submerged
areas are, under the Constitution, "waters x x x owned by the State," forming part of the public domain and
consequently inalienable. Only when actually reclaimed from the sea can these submerged areas be
classified as public agricultural lands, which under the Constitution are the only natural resources that the
State may alienate. Once reclaimed and transformed into public agricultural lands, the government may
then officially classify these lands as alienable or disposable lands open to disposition. Thereafter, the
government may declare these lands no longer needed for public service. Only then can these reclaimed
lands be considered alienable or disposable lands of the public domain and within the commerce of man.
The classification of PEA's reclaimed foreshore and submerged lands into alienable or disposable lands open
to disposition is necessary because PEA is tasked under its charter to undertake public services that require

the use of lands of the public domain. Under Section 5 of PD No. 1084, the functions of PEA include the
following: "[T]o own or operate railroads, tramways and other kinds of land transportation, x x x; [T]o
construct, maintain and operate such systems of sanitary sewers as may be necessary; [T]o construct,
maintain and operate such storm drains as may be necessary." PEA is empowered to issue "rules and
regulations as may be necessary for the proper use by private parties of any or all of the highways,
roads, utilities, buildings and/or any of its properties and to impose or collect fees or tolls for their
use." Thus, part of the reclaimed foreshore and submerged lands held by the PEA would actually be needed
for public use or service since many of the functions imposed on PEA by its charter constitute essential
public services.
Moreover, Section 1 of Executive Order No. 525 provides that PEA "shall be primarily responsible for
integrating, directing, and coordinating all reclamation projects for and on behalf of the National
Government." The same section also states that "[A]ll reclamation projects shall be approved by the
President upon recommendation of the PEA, and shall be undertaken by the PEA or through a proper
contract executed by it with any person or entity; x x x." Thus, under EO No. 525, in relation to PD No. 3-A
and PD No.1084, PEA became the primary implementing agency of the National Government to reclaim
foreshore and submerged lands of the public domain. EO No. 525 recognized PEA as the government entity
"to undertake the reclamation of lands and ensure their maximum utilization inpromoting public welfare
and interests."79 Since large portions of these reclaimed lands would obviously be needed for public
service, there must be a formal declaration segregating reclaimed lands no longer needed for public service
from those still needed for public service.
1wphi1.nt

Section 3 of EO No. 525, by declaring that all lands reclaimed by PEA "shall belong to or be owned by the
PEA," could not automatically operate to classify inalienable lands into alienable or disposable lands of the
public domain. Otherwise, reclaimed foreshore and submerged lands of the public domain would
automatically become alienable once reclaimed by PEA, whether or not classified as alienable or disposable.
The Revised Administrative Code of 1987, a later law than either PD No. 1084 or EO No. 525, vests in the
Department of Environment and Natural Resources ("DENR" for brevity) the following powers and functions:
"Sec. 4. Powers and Functions. The Department shall:
(1) x x x
xxx
(4) Exercise supervision and control over forest lands, alienable and disposable public lands,
mineral resources and, in the process of exercising such control, impose appropriate taxes, fees,
charges, rentals and any such form of levy and collect such revenues for the exploration,
development, utilization or gathering of such resources;
xxx
(14) Promulgate rules, regulations and guidelines on the issuance of licenses, permits,
concessions, lease agreements and such other privileges concerning the development,
exploration and utilization of the country's marine, freshwater, and brackish water and
over all aquatic resources of the country and shall continue to oversee, supervise and
police our natural resources; cancel or cause to cancel such privileges upon failure, noncompliance or violations of any regulation, order, and for all other causes which are in furtherance of
the conservation of natural resources and supportive of the national interest;
(15) Exercise exclusive jurisdiction on the management and disposition of all lands of the
public domain and serve as the sole agency responsible for classification, sub-classification,
surveying and titling of lands in consultation with appropriate agencies." 80 (Emphasis supplied)
As manager, conservator and overseer of the natural resources of the State, DENR exercises "supervision
and control over alienable and disposable public lands." DENR also exercises "exclusive jurisdiction on the
management and disposition of all lands of the public domain." Thus, DENR decides whether areas under
water, like foreshore or submerged areas of Manila Bay, should be reclaimed or not. This means that PEA
needs authorization from DENR before PEA can undertake reclamation projects in Manila Bay, or in any part
of the country.
DENR also exercises exclusive jurisdiction over the disposition of all lands of the public domain. Hence, DENR
decides whether reclaimed lands of PEA should be classified as alienable under Sections 6 81 and 782 of CA No.
141. Once DENR decides that the reclaimed lands should be so classified, it then recommends to the
President the issuance of a proclamation classifying the lands as alienable or disposable lands of the public
domain open to disposition. We note that then DENR Secretary Fulgencio S. Factoran, Jr. countersigned
Special Patent No. 3517 in compliance with the Revised Administrative Code and Sections 6 and 7 of CA No.
141.
In short, DENR is vested with the power to authorize the reclamation of areas under water, while PEA is
vested with the power to undertake the physical reclamation of areas under water, whether directly or
through private contractors. DENR is also empowered to classify lands of the public domain into alienable or
disposable lands subject to the approval of the President. On the other hand, PEA is tasked to develop, sell
or lease the reclaimed alienable lands of the public domain.

Clearly, the mere physical act of reclamation by PEA of foreshore or submerged areas does not make the
reclaimed lands alienable or disposable lands of the public domain, much less patrimonial lands of PEA.
Likewise, the mere transfer by the National Government of lands of the public domain to PEA does not make
the lands alienable or disposable lands of the public domain, much less patrimonial lands of PEA.
Absent two official acts a classification that these lands are alienable or disposable and open to disposition
and a declaration that these lands are not needed for public service, lands reclaimed by PEA remain
inalienable lands of the public domain. Only such an official classification and formal declaration can convert
reclaimed lands into alienable or disposable lands of the public domain, open to disposition under the
Constitution, Title I and Title III83 of CA No. 141 and other applicable laws.84
PEA's Authority to Sell Reclaimed Lands
PEA, like the Legal Task Force, argues that as alienable or disposable lands of the public domain, the
reclaimed lands shall be disposed of in accordance with CA No. 141, the Public Land Act. PEA, citing Section
60 of CA No. 141, admits that reclaimed lands transferred to a branch or subdivision of the government
"shall not be alienated, encumbered, or otherwise disposed of in a manner affecting its title, except when
authorized by Congress: x x x."85 (Emphasis by PEA)
In Laurel vs. Garcia,86 the Court cited Section 48 of the Revised Administrative Code of 1987, which states
that
"Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the Government is
authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the
government by the following: x x x."
Thus, the Court concluded that a law is needed to convey any real property belonging to the Government.
The Court declared that "It is not for the President to convey real property of the government on his or her own sole will. Any
such conveyance must be authorized and approved by a law enacted by the Congress. It
requires executive and legislative concurrence." (Emphasis supplied)
PEA contends that PD No. 1085 and EO No. 525 constitute the legislative authority allowing PEA to sell its
reclaimed lands. PD No. 1085, issued on February 4, 1977, provides that
"The land reclaimed in the foreshore and offshore area of Manila Bay pursuant to the
contract for the reclamation and construction of the Manila-Cavite Coastal Road Project between the
Republic of the Philippines and the Construction and Development Corporation of the Philippines
dated November 20, 1973 and/or any other contract or reclamation covering the same area is
hereby transferred, conveyed and assigned to the ownership and administration of the
Public Estates Authority established pursuant to PD No. 1084; Provided, however, That the rights
and interests of the Construction and Development Corporation of the Philippines pursuant to the
aforesaid contract shall be recognized and respected.
Henceforth, the Public Estates Authority shall exercise the rights and assume the obligations of the
Republic of the Philippines (Department of Public Highways) arising from, or incident to, the aforesaid
contract between the Republic of the Philippines and the Construction and Development Corporation
of the Philippines.
In consideration of the foregoing transfer and assignment, the Public Estates Authority shall issue in
favor of the Republic of the Philippines the corresponding shares of stock in said entity with an issued
value of said shares of stock (which) shall be deemed fully paid and non-assessable.
The Secretary of Public Highways and the General Manager of the Public Estates Authority shall
execute such contracts or agreements, including appropriate agreements with the Construction and
Development Corporation of the Philippines, as may be necessary to implement the above.
Special land patent/patents shall be issued by the Secretary of Natural Resources in favor
of the Public Estates Authority without prejudice to the subsequent transfer to the
contractor or his assignees of such portion or portions of the land reclaimed or to be
reclaimed as provided for in the above-mentioned contract. On the basis of such patents,
the Land Registration Commission shall issue the corresponding certificate of title."
(Emphasis supplied)
On the other hand, Section 3 of EO No. 525, issued on February 14, 1979, provides that "Sec. 3. All lands reclaimed by PEA shall belong to or be owned by the PEA which shall be
responsible for its administration, development, utilization or disposition in accordance with the
provisions of Presidential Decree No. 1084. Any and all income that the PEA may derive from the sale,
lease or use of reclaimed lands shall be used in accordance with the provisions of Presidential Decree
No. 1084."
There is no express authority under either PD No. 1085 or EO No. 525 for PEA to sell its reclaimed lands. PD
No. 1085 merely transferred "ownership and administration" of lands reclaimed from Manila Bay to PEA,

while EO No. 525 declared that lands reclaimed by PEA "shall belong to or be owned by PEA." EO No. 525
expressly states that PEA should dispose of its reclaimed lands "in accordance with the provisions of
Presidential Decree No. 1084," the charter of PEA.
PEA's charter, however, expressly tasks PEA "to develop, improve, acquire, administer, deal in, subdivide,
dispose, lease and sell any and all kinds of lands x x x owned, managed, controlled and/or operated by
the government."87(Emphasis supplied) There is, therefore, legislative authority granted to PEA to
sell its lands, whether patrimonial or alienable lands of the public domain. PEA may sell to private
parties its patrimonial propertiesin accordance with the PEA charter free from constitutional limitations.
The constitutional ban on private corporations from acquiring alienable lands of the public domain does not
apply to the sale of PEA's patrimonial lands.
PEA may also sell its alienable or disposable lands of the public domain to private individuals since,
with the legislative authority, there is no longer any statutory prohibition against such sales and the
constitutional ban does not apply to individuals. PEA, however, cannot sell any of its alienable or disposable
lands of the public domain to private corporations since Section 3, Article XII of the 1987 Constitution
expressly prohibits such sales. The legislative authority benefits only individuals. Private corporations remain
barred from acquiring any kind of alienable land of the public domain, including government reclaimed
lands.
The provision in PD No. 1085 stating that portions of the reclaimed lands could be transferred by PEA to the
"contractor or his assignees" (Emphasis supplied) would not apply to private corporations but only to
individuals because of the constitutional ban. Otherwise, the provisions of PD No. 1085 would violate both
the 1973 and 1987 Constitutions.
The requirement of public auction in the sale of reclaimed lands
Assuming the reclaimed lands of PEA are classified as alienable or disposable lands open to disposition, and
further declared no longer needed for public service, PEA would have to conduct a public bidding in selling
or leasing these lands. PEA must observe the provisions of Sections 63 and 67 of CA No. 141 requiring public
auction, in the absence of a law exempting PEA from holding a public auction. 88 Special Patent No. 3517
expressly states that the patent is issued by authority of the Constitution and PD No. 1084, "supplemented
by Commonwealth Act No. 141, as amended." This is an acknowledgment that the provisions of CA No. 141
apply to the disposition of reclaimed alienable lands of the public domain unless otherwise provided by law.
Executive Order No. 654,89 which authorizes PEA "to determine the kind and manner of payment for the
transfer" of its assets and properties, does not exempt PEA from the requirement of public auction. EO No.
654 merely authorizes PEA to decide the mode of payment, whether in kind and in installment, but does not
authorize PEA to dispense with public auction.
Moreover, under Section 79 of PD No. 1445, otherwise known as the Government Auditing Code, the
government is required to sell valuable government property through public bidding. Section 79 of PD No.
1445 mandates that
"Section 79. When government property has become unserviceable for any cause, or is no longer
needed, it shall, upon application of the officer accountable therefor, be inspected by the head of the
agency or his duly authorized representative in the presence of the auditor concerned and, if found to
be valueless or unsaleable, it may be destroyed in their presence. If found to be valuable, it may
be sold at public auction to the highest bidder under the supervision of the proper committee
on award or similar body in the presence of the auditor concerned or other authorized representative
of the Commission, after advertising by printed notice in the Official Gazette, or for not less
than three consecutive days in any newspaper of general circulation, or where the value of
the property does not warrant the expense of publication, by notices posted for a like period in at
least three public places in the locality where the property is to be sold. In the event that the
public auction fails, the property may be sold at a private sale at such price as may be
fixed by the same committee or body concerned and approved by the Commission."
It is only when the public auction fails that a negotiated sale is allowed, in which case the Commission on
Audit must approve the selling price.90 The Commission on Audit implements Section 79 of the Government
Auditing Code through Circular No. 89-29691 dated January 27, 1989. This circular emphasizes that
government assets must be disposed of only through public auction, and a negotiated sale can be resorted
to only in case of "failure of public auction."
At the public auction sale, only Philippine citizens are qualified to bid for PEA's reclaimed foreshore and
submerged alienable lands of the public domain. Private corporations are barred from bidding at the auction
sale of any kind of alienable land of the public domain.
PEA originally scheduled a public bidding for the Freedom Islands on December 10, 1991. PEA imposed a
condition that the winning bidder should reclaim another 250 hectares of submerged areas to regularize the
shape of the Freedom Islands, under a 60-40 sharing of the additional reclaimed areas in favor of the
winning bidder.92 No one, however, submitted a bid. On December 23, 1994, the Government Corporate
Counsel advised PEA it could sell the Freedom Islands through negotiation, without need of another public
bidding, because of the failure of the public bidding on December 10, 1991. 93
However, the original JVA dated April 25, 1995 covered not only the Freedom Islands and the additional 250
hectares still to be reclaimed, it also granted an option to AMARI to reclaim another 350 hectares. The

original JVA, a negotiated contract, enlarged the reclamation area to 750 hectares.94 The failure of public
bidding on December 10, 1991, involving only 407.84 hectares, 95 is not a valid justification for a negotiated
sale of 750 hectares, almost double the area publicly auctioned. Besides, the failure of public bidding
happened on December 10, 1991, more than three years before the signing of the original JVA on April 25,
1995. The economic situation in the country had greatly improved during the intervening period.
Reclamation under the BOT Law and the Local Government Code
The constitutional prohibition in Section 3, Article XII of the 1987 Constitution is absolute and clear: "Private
corporations or associations may not hold such alienable lands of the public domain except by lease, x x x."
Even Republic Act No. 6957 ("BOT Law," for brevity), cited by PEA and AMARI as legislative authority to sell
reclaimed lands to private parties, recognizes the constitutional ban. Section 6 of RA No. 6957 states
"Sec. 6. Repayment Scheme. - For the financing, construction, operation and maintenance of any
infrastructure projects undertaken through the build-operate-and-transfer arrangement or any of its
variations pursuant to the provisions of this Act, the project proponent x x x may likewise be repaid in
the form of a share in the revenue of the project or other non-monetary payments, such as, but not
limited to, the grant of a portion or percentage of the reclaimed land, subject to the constitutional
requirements with respect to the ownership of the land: x x x." (Emphasis supplied)
A private corporation, even one that undertakes the physical reclamation of a government BOT project,
cannot acquire reclaimed alienable lands of the public domain in view of the constitutional ban.
Section 302 of the Local Government Code, also mentioned by PEA and AMARI, authorizes local
governments in land reclamation projects to pay the contractor or developer in kind consisting of a
percentage of the reclaimed land, to wit:
"Section 302. Financing, Construction, Maintenance, Operation, and Management of Infrastructure
Projects by the Private Sector. x x x
xxx
In case of land reclamation or construction of industrial estates, the repayment plan may consist of
the grant of a portion or percentage of the reclaimed land or the industrial estate constructed."
Although Section 302 of the Local Government Code does not contain a proviso similar to that of the BOT
Law, the constitutional restrictions on land ownership automatically apply even though not expressly
mentioned in the Local Government Code.
Thus, under either the BOT Law or the Local Government Code, the contractor or developer, if a corporate
entity, can only be paid with leaseholds on portions of the reclaimed land. If the contractor or developer is
an individual, portions of the reclaimed land, not exceeding 12 hectares 96 of non-agricultural lands, may be
conveyed to him in ownership in view of the legislative authority allowing such conveyance. This is the only
way these provisions of the BOT Law and the Local Government Code can avoid a direct collision with
Section 3, Article XII of the 1987 Constitution.
Registration of lands of the public domain
Finally, PEA theorizes that the "act of conveying the ownership of the reclaimed lands to public respondent
PEA transformed such lands of the public domain to private lands." This theory is echoed by AMARI which
maintains that the "issuance of the special patent leading to the eventual issuance of title takes the subject
land away from the land of public domain and converts the property into patrimonial or private property." In
short, PEA and AMARI contend that with the issuance of Special Patent No. 3517 and the corresponding
certificates of titles, the 157.84 hectares comprising the Freedom Islands have become private lands of PEA.
In support of their theory, PEA and AMARI cite the following rulings of the Court:
1. Sumail v. Judge of CFI of Cotabato,97 where the Court held
"Once the patent was granted and the corresponding certificate of title was issued, the land ceased to
be part of the public domain and became private property over which the Director of Lands has
neither control nor jurisdiction."
2. Lee Hong Hok v. David,98 where the Court declared "After the registration and issuance of the certificate and duplicate certificate of title based on a
public land patent, the land covered thereby automatically comes under the operation of Republic Act
496 subject to all the safeguards provided therein."3. Heirs of Gregorio Tengco v. Heirs of Jose
Aliwalas,99 where the Court ruled "While the Director of Lands has the power to review homestead patents, he may do so only so long
as the land remains part of the public domain and continues to be under his exclusive control; but
once the patent is registered and a certificate of title is issued, the land ceases to be part of the
public domain and becomes private property over which the Director of Lands has neither control nor
jurisdiction."

4. Manalo v. Intermediate Appellate Court,100 where the Court held

"When the lots in dispute were certified as disposable on May 19, 1971, and free patents were issued
covering the same in favor of the private respondents, the said lots ceased to be part of the public
domain and, therefore, the Director of Lands lost jurisdiction over the same."
5.Republic v. Court of Appeals,101 where the Court stated
"Proclamation No. 350, dated October 9, 1956, of President Magsaysay legally effected a land grant to
the Mindanao Medical Center, Bureau of Medical Services, Department of Health, of the whole lot,
validly sufficient for initial registration under the Land Registration Act. Such land grant is constitutive
of a 'fee simple' title or absolute title in favor of petitioner Mindanao Medical Center. Thus, Section
122 of the Act, which governs the registration of grants or patents involving public lands, provides
that 'Whenever public lands in the Philippine Islands belonging to the Government of the United
States or to the Government of the Philippines are alienated, granted or conveyed to persons or to
public or private corporations, the same shall be brought forthwith under the operation of this Act
(Land Registration Act, Act 496) and shall become registered lands.'"
The first four cases cited involve petitions to cancel the land patents and the corresponding certificates of
titlesissued to private parties. These four cases uniformly hold that the Director of Lands has no
jurisdiction over private lands or that upon issuance of the certificate of title the land automatically comes
under the Torrens System. The fifth case cited involves the registration under the Torrens System of a 12.8hectare public land granted by the National Government to Mindanao Medical Center, a government unit
under the Department of Health. The National Government transferred the 12.8-hectare public land to serve
as the site for the hospital buildings and other facilities of Mindanao Medical Center, which performed a
public service. The Court affirmed the registration of the 12.8-hectare public land in the name of Mindanao
Medical Center under Section 122 of Act No. 496. This fifth case is an example of a public land being
registered under Act No. 496 without the land losing its character as a property of public dominion.
In the instant case, the only patent and certificates of title issued are those in the name of PEA, a wholly
government owned corporation performing public as well as proprietary functions. No patent or certificate of
title has been issued to any private party. No one is asking the Director of Lands to cancel PEA's patent or
certificates of title. In fact, the thrust of the instant petition is that PEA's certificates of title should remain
with PEA, and the land covered by these certificates, being alienable lands of the public domain, should not
be sold to a private corporation.
Registration of land under Act No. 496 or PD No. 1529 does not vest in the registrant private or public
ownership of the land. Registration is not a mode of acquiring ownership but is merely evidence of
ownership previously conferred by any of the recognized modes of acquiring ownership. Registration does
not give the registrant a better right than what the registrant had prior to the registration. 102 The registration
of lands of the public domain under the Torrens system, by itself, cannot convert public lands into private
lands.103
Jurisprudence holding that upon the grant of the patent or issuance of the certificate of title the alienable
land of the public domain automatically becomes private land cannot apply to government units and entities
like PEA. The transfer of the Freedom Islands to PEA was made subject to the provisions of CA No. 141 as
expressly stated in Special Patent No. 3517 issued by then President Aquino, to wit:
"NOW, THEREFORE, KNOW YE, that by authority of the Constitution of the Philippines and in
conformity with the provisions of Presidential Decree No. 1084, supplemented by Commonwealth
Act No. 141, as amended, there are hereby granted and conveyed unto the Public Estates
Authority the aforesaid tracts of land containing a total area of one million nine hundred fifteen
thousand eight hundred ninety four (1,915,894) square meters; the technical description of which are
hereto attached and made an integral part hereof." (Emphasis supplied)
Thus, the provisions of CA No. 141 apply to the Freedom Islands on matters not covered by PD No. 1084.
Section 60 of CA No. 141 prohibits, "except when authorized by Congress," the sale of alienable lands of the
public domain that are transferred to government units or entities. Section 60 of CA No. 141 constitutes,
under Section 44 of PD No. 1529, a "statutory lien affecting title" of the registered land even if not annotated
on the certificate of title.104Alienable lands of the public domain held by government entities under Section
60 of CA No. 141 remain public lands because they cannot be alienated or encumbered unless Congress
passes a law authorizing their disposition. Congress, however, cannot authorize the sale to private
corporations of reclaimed alienable lands of the public domain because of the constitutional ban. Only
individuals can benefit from such law.
The grant of legislative authority to sell public lands in accordance with Section 60 of CA No. 141 does not
automatically convert alienable lands of the public domain into private or patrimonial lands. The alienable
lands of the public domain must be transferred to qualified private parties, or to government entities not
tasked to dispose of public lands, before these lands can become private or patrimonial lands. Otherwise,
the constitutional ban will become illusory if Congress can declare lands of the public domain as private or
patrimonial lands in the hands of a government agency tasked to dispose of public lands. This will allow
private corporations to acquire directly from government agencies limitless areas of lands which, prior to
such law, are concededly public lands.

Under EO No. 525, PEA became the central implementing agency of the National Government to reclaim
foreshore and submerged areas of the public domain. Thus, EO No. 525 declares that
"EXECUTIVE ORDER NO. 525
Designating the Public Estates Authority as the Agency Primarily Responsible for all Reclamation
Projects
Whereas, there are several reclamation projects which are ongoing or being proposed to be
undertaken in various parts of the country which need to be evaluated for consistency with national
programs;
Whereas, there is a need to give further institutional support to the Government's declared policy to
provide for a coordinated, economical and efficient reclamation of lands;
Whereas, Presidential Decree No. 3-A requires that all reclamation of areas shall be limited to the
National Government or any person authorized by it under proper contract;
Whereas, a central authority is needed to act on behalf of the National Government which
shall ensure a coordinated and integrated approach in the reclamation of lands;
Whereas, Presidential Decree No. 1084 creates the Public Estates Authority as a
government corporation to undertake reclamation of lands and ensure their maximum
utilization in promoting public welfare and interests; and
Whereas, Presidential Decree No. 1416 provides the President with continuing authority to reorganize
the national government including the transfer, abolition, or merger of functions and offices.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers
vested in me by the Constitution and pursuant to Presidential Decree No. 1416, do hereby order and
direct the following:
Section 1. The Public Estates Authority (PEA) shall be primarily responsible for integrating,
directing, and coordinating all reclamation projects for and on behalf of the National
Government. All reclamation projects shall be approved by the President upon recommendation of
the PEA, and shall be undertaken by the PEA or through a proper contract executed by it with any
person or entity; Provided, that, reclamation projects of any national government agency or entity
authorized under its charter shall be undertaken in consultation with the PEA upon approval of the
President.
x x x ."
As the central implementing agency tasked to undertake reclamation projects nationwide, with authority to
sell reclaimed lands, PEA took the place of DENR as the government agency charged with leasing or selling
reclaimed lands of the public domain. The reclaimed lands being leased or sold by PEA are not private lands,
in the same manner that DENR, when it disposes of other alienable lands, does not dispose of private lands
but alienable lands of the public domain. Only when qualified private parties acquire these lands will the
lands become private lands. In the hands of the government agency tasked and authorized to
dispose of alienable of disposable lands of the public domain, these lands are still public, not
private lands.
Furthermore, PEA's charter expressly states that PEA "shall hold lands of the public domain" as well as
"any and all kinds of lands." PEA can hold both lands of the public domain and private lands. Thus, the mere
fact that alienable lands of the public domain like the Freedom Islands are transferred to PEA and issued land
patents or certificates of title in PEA's name does not automatically make such lands private.
To allow vast areas of reclaimed lands of the public domain to be transferred to PEA as private lands will
sanction a gross violation of the constitutional ban on private corporations from acquiring any kind of
alienable land of the public domain. PEA will simply turn around, as PEA has now done under the
Amended JVA, and transfer several hundreds of hectares of these reclaimed and still to be reclaimed lands
to a single private corporation in only one transaction. This scheme will effectively nullify the constitutional
ban in Section 3, Article XII of the 1987 Constitution which was intended to diffuse equitably the ownership
of alienable lands of the public domain among Filipinos, now numbering over 80 million strong.
This scheme, if allowed, can even be applied to alienable agricultural lands of the public domain since PEA
can "acquire x x x any and all kinds of lands." This will open the floodgates to corporations and even
individuals acquiring hundreds of hectares of alienable lands of the public domain under the guise that in the
hands of PEA these lands are private lands. This will result in corporations amassing huge landholdings
never before seen in this country - creating the very evil that the constitutional ban was designed to
prevent. This will completely reverse the clear direction of constitutional development in this country. The
1935 Constitution allowed private corporations to acquire not more than 1,024 hectares of public
lands.105 The 1973 Constitution prohibited private corporations from acquiring any kind of public land, and
the 1987 Constitution has unequivocally reiterated this prohibition.

The contention of PEA and AMARI that public lands, once registered under Act No. 496 or PD No. 1529,
automatically become private lands is contrary to existing laws. Several laws authorize lands of the public
domain to be registered under the Torrens System or Act No. 496, now PD No. 1529, without losing their
character as public lands. Section 122 of Act No. 496, and Section 103 of PD No. 1529, respectively, provide
as follows:
Act No. 496
"Sec. 122. Whenever public lands in the Philippine Islands belonging to the x x x Government of the
Philippine Islands are alienated, granted, or conveyed to persons or the public or private
corporations, the same shall be brought forthwith under the operation of this Act and shall become
registered lands."
PD No. 1529
"Sec. 103. Certificate of Title to Patents. Whenever public land is by the Government alienated,
granted or conveyed to any person, the same shall be brought forthwith under the operation of this
Decree." (Emphasis supplied)
Based on its legislative history, the phrase "conveyed to any person" in Section 103 of PD No. 1529 includes
conveyances of public lands to public corporations.
Alienable lands of the public domain "granted, donated, or transferred to a province, municipality, or branch
or subdivision of the Government," as provided in Section 60 of CA No. 141, may be registered under the
Torrens System pursuant to Section 103 of PD No. 1529. Such registration, however, is expressly subject to
the condition in Section 60 of CA No. 141 that the land "shall not be alienated, encumbered or otherwise
disposed of in a manner affecting its title, except when authorized by Congress." This provision
refers to government reclaimed, foreshore and marshy lands of the public domain that have been titled but
still cannot be alienated or encumbered unless expressly authorized by Congress. The need for legislative
authority prevents the registered land of the public domain from becoming private land that can be disposed
of to qualified private parties.
The Revised Administrative Code of 1987 also recognizes that lands of the public domain may be registered
under the Torrens System. Section 48, Chapter 12, Book I of the Code states
"Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the Government is
authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the
government by the following:
(1) x x x
(2) For property belonging to the Republic of the Philippines, but titled in the name of any
political subdivision or of any corporate agency or instrumentality, by the executive head of
the agency or instrumentality." (Emphasis supplied)
Thus, private property purchased by the National Government for expansion of a public wharf may be titled
in the name of a government corporation regulating port operations in the country. Private property
purchased by the National Government for expansion of an airport may also be titled in the name of the
government agency tasked to administer the airport. Private property donated to a municipality for use as a
town plaza or public school site may likewise be titled in the name of the municipality. 106 All these properties
become properties of the public domain, and if already registered under Act No. 496 or PD No. 1529, remain
registered land. There is no requirement or provision in any existing law for the de-registration of land from
the Torrens System.
Private lands taken by the Government for public use under its power of eminent domain become
unquestionably part of the public domain. Nevertheless, Section 85 of PD No. 1529 authorizes the Register
of Deeds to issue in the name of the National Government new certificates of title covering such
expropriated lands. Section 85 of PD No. 1529 states
"Sec. 85. Land taken by eminent domain. Whenever any registered land, or interest therein, is
expropriated or taken by eminent domain, the National Government, province, city or municipality, or
any other agency or instrumentality exercising such right shall file for registration in the proper
Registry a certified copy of the judgment which shall state definitely by an adequate description, the
particular property or interest expropriated, the number of the certificate of title, and the nature of
the public use. A memorandum of the right or interest taken shall be made on each certificate of title
by the Register of Deeds, and where the fee simple is taken, a new certificate shall be issued in
favor of the National Government, province, city, municipality, or any other agency or
instrumentality exercising such right for the land so taken. The legal expenses incident to the
memorandum of registration or issuance of a new certificate of title shall be for the account of the
authority taking the land or interest therein." (Emphasis supplied)
Consequently, lands registered under Act No. 496 or PD No. 1529 are not exclusively private or patrimonial
lands. Lands of the public domain may also be registered pursuant to existing laws.

AMARI makes a parting shot that the Amended JVA is not a sale to AMARI of the Freedom Islands or of the
lands to be reclaimed from submerged areas of Manila Bay. In the words of AMARI, the Amended JVA "is not
a sale but a joint venture with a stipulation for reimbursement of the original cost incurred by PEA for the
earlier reclamation and construction works performed by the CDCP under its 1973 contract with the
Republic." Whether the Amended JVA is a sale or a joint venture, the fact remains that the Amended JVA
requires PEA to "cause the issuance and delivery of the certificates of title conveying AMARI's Land Share in
the name of AMARI."107
This stipulation still contravenes Section 3, Article XII of the 1987 Constitution which provides that private
corporations "shall not hold such alienable lands of the public domain except by lease." The transfer of title
and ownership to AMARI clearly means that AMARI will "hold" the reclaimed lands other than by lease. The
transfer of title and ownership is a "disposition" of the reclaimed lands, a transaction considered a sale or
alienation under CA No. 141,108 the Government Auditing Code,109 and Section 3, Article XII of the 1987
Constitution.
The Regalian doctrine is deeply implanted in our legal system. Foreshore and submerged areas form part of
the public domain and are inalienable. Lands reclaimed from foreshore and submerged areas also form part
of the public domain and are also inalienable, unless converted pursuant to law into alienable or disposable
lands of the public domain. Historically, lands reclaimed by the government are sui generis, not available
for sale to private parties unlike other alienable public lands. Reclaimed lands retain their inherent potential
as areas for public use or public service. Alienable lands of the public domain, increasingly becoming scarce
natural resources, are to be distributed equitably among our ever-growing population. To insure such
equitable distribution, the 1973 and 1987 Constitutions have barred private corporations from acquiring any
kind of alienable land of the public domain. Those who attempt to dispose of inalienable natural resources of
the State, or seek to circumvent the constitutional ban on alienation of lands of the public domain to private
corporations, do so at their own risk.
We can now summarize our conclusions as follows:
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
hectares110of 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 hectares 111 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 1987 Constitution which prohibits private corporations from
acquiring any kind of alienable land of the public domain.
Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987 Constitution. Under
Article 1409112 of the Civil Code, contracts whose "object or purpose is contrary to law," or whose "object is
outside the commerce of men," are "inexistent and void from the beginning." The Court must perform its
duty to defend and uphold the Constitution, and therefore declares the Amended JVA null and void ab
initio.
Seventh issue: whether the Court is the proper forum to raise the issue of whether the
Amended JVA is grossly disadvantageous to the government.
Considering that the Amended JVA is null and void ab initio, there is no necessity to rule on this last issue.
Besides, the Court is not a trier of facts, and this last issue involves a determination of factual matters.
WHEREFORE, the petition is GRANTED. The Public Estates Authority and Amari Coastal Bay Development
Corporation are PERMANENTLY ENJOINED from implementing the Amended Joint Venture Agreement
which is hereby declared NULL and VOID ab initio. SO ORDERED.
G.R. No. L-48321

August 31, 1946

OH CHO, applicant-appellee,
vs.
THE DIRECTOR OF LANDS, oppositor-appellant.
Office of the Solicitor General Roman Ozaeta and Assistant Solicitor General Rafael Amparo for appellant.
Vicente Constantino for appellee.
Ferrier, Gomez and Sotelo and J. T. Chuidian as amici curiae.
PADILLA, J.:
This is an appeal from a judgment decreeing the registration of a residential lot located in the municipality of
Guinayangan, Province of Tayabas in the name of the applicant.
The opposition of the Director of Lands is based on the applicant's lack of title to the lot, and on his
disqualification, as alien, from acquiring lands of the public domain.
The applicant, who is an alien, and his predecessors in interest have been in open, continuous, exclusive and
notorious possession of the lot from 1880 to filing of the application for registration on January 17, 1940.
The Solicitor General reiterates the second objection of the opponent and adds that the lower court,
committed an error in not declaring null and void the sale of the lot to the applicant.
The applicant invokes the Land Registration Act (Act No. 496), or should it not be applicable to the case,
then he would apply for the benefits of the Public Land Act (C.A. No. 141).
The applicant failed to show that he has title to the lot that may be confirmed under the Land Registration
Act. He failed to show that he or any of his predecessors in interest had acquired the lot from the
Government, either by purchase or by grant, under the laws, orders and decrease promulgated by the
Spanish Government in the Philippines, or by possessory information under the Mortgaged Law (section 19,
Act 496). All lands that were not acquired from the Government, either by purchase or by grant below to the
public domain. An exception to the rule would be any land that should have been in the possession of an
occupant and of his predecessors in interest since time immemorial, for such possession would justify the
presumption that the land had never been part of the public domain or that it had been a private property
even before the Spanish conquest. (Cario vs. Insular Government, 212 U.S., 449; 53 Law. Ed., 594.) The
applicant does not come under the exception, for the earliest possession of the lot by his first predecessors
in interest begun in 1880.
As the applicant failed to show title to the lot, the next question is whether he is entitled to decree or
registration of the lot, because he is alien disqualified from acquiring lands of the public domain (sections
48, 49, C.A. No. 141).
As the applicant failed to show the title to the lot, and has invoked the provisions of the Public Land Act, it
seems unnecessary to make pronouncement in this case on the nature or classifications of the sought to be
registered.
It may be argued that under the provisions of the Public Land Act the applicant immediate predecessor in
interest would have been entitled to a decree of registration of the lot had they applied for its registration;
and that he having purchased or acquired it, the right of his immediate predecessor in interest to a decree of
registration must be deemed also to have been acquired by him. The benefits provided in the Public Land
Act for applicant's immediate predecessors in interest should comply with the condition precedent for the
grant of such benefits. The condition precedent is to apply for the registration of the land of which they had
been in possession at least since July 26, 1894. This the applicant's immediate predecessors in interest
failed to do. They did not have any vested right in the lot amounting to the title which was transmissible to
the applicant. The only right, if it may thus be called, is their possession of the lot which, tacked to that of
their predecessors in interest, may be availed of by a qualified person to apply for its registration but not by
a person as the applicant who is disqualified.
It is urged that the sale of the lot to the applicant should have been declared null and void. In a suit between
vendor and vendee for the annulment of the sale, such pronouncement would be necessary, if the court
were of the opinion that it is void. It is not necessary in this case where the vendors do not even object to
the application filed by the vendee.
Accordingly, judgment is reversed and the application for registration dismissed, without costs.
Moran, C.J., Feria, Pablo, Hilado and Bengzon, JJ., concur.

THIRD DIVISION
[G.R. No. 31688 : December 17, 1990.]
192 SCRA 296
DIRECTOR OF LANDS, DIRECTOR OF FORESTRY and REPUBLIC OF THE PHILIPPINES,
Petitioners, vs. HON. JUAN P. AQUINO, as Judge of the Court of First Instance of Abra, Second Judicial
District and ABRA INDUSTRIAL CORPORATION, Respondents.
DECISION
FERNAN, J.:
The center of controversy in the instant petition for review on Certiorari is a limestone-rich 70-hectare land in
Bucay, Abra 66 hectares of which are, according to petitioners, within the Central Cordillera Forest Reserve.
Private respondent Abra Industrial Corporation (AIC for brevity), a duly registered corporation established for the
purpose of setting up a cement factory, claims on the other hand, to be the owner in fee simple of the whole 70hectare area indicated in survey plans PSU-217518, PSU-217519 and PSU-217520 with a total assessed value of
P6,724.48. Thus, on September 23, 1965, it filed in the then Court of First Instance of Abra an application for
registration in its name of said parcels of land under the Land Registration Act or, in the alternative, under Sec. 48
of Commonwealth Act No. 141 1 as amended by Republic Act No. 1942 inasmuch as its predecessors-in-interest
had allegedly been in possession thereof since July 26, 1894. 2
The requisite publication and posting of notice having been complied with, the application was set for hearing.
Except for the Director of Lands, nobody appeared to oppose the application. Hence, the court issued an order of
default against the whole world except the Director of Lands.
After the applicant had rested its case, the provincial fiscal, appearing for the Director of Lands, submitted
evidence supporting the opposition filed by the Solicitor General to the effect that AIC had no registerable title
and that the highly mineralized parcels of land applied for were within the Central Cordillera Forest Reserve which
had not yet been released as alienable and disposable land pursuant to the Public Land Law.
On July 22, 1966, the lower court 3 favorably acted on the application and ordered the registration of the parcels
of land under the Land Registration Act. It ruled that although said land was within the forest zone, the opposition
of the Director of Lands was not well-taken because the Bureau of Forestry, thru the District Forester of Abra,
"offered no objection to exclude the same area from the forest reserve." 4 It found that the parcels of land had
been acquired by purchase and AIC's possession thereof, including that of its predecessors-in-interest, had been
for forty-nine (49) years.
The Director of Lands, through the provincial fiscal, filed a motion for reconsideration of the decision asserting
that except for a 4-hectare area, the land covered by PSU-217518, 217519 and 217520 fell within the Central
Cordillera Forest Reserve, under Proclamation No. 217 dated February 16, 1929; that although it had been
denuded, it was covered with massive, corraline, tufaceous limestone estimated to yield 200,000,000 metric tons
about a fifth of which was suitable for the manufacture of high grade portland cement type and that the
limestone, being 250 meters thick, could yield 10,000 bags of cement a day for 1,000 years. 5 He contended that,
while the land could be reclassified as mineral land under the jurisdiction of the Bureau of Mines, the process of
exclusion from the Cordillera Forest Reserve had not yet been undertaken pursuant to Sec. 1826 of Republic Act
No. 3092 and therefore it was still part of the forest zone which was inalienable under the 1935 Constitution.
AIC having filed its opposition to the motion for reconsideration, the lower court denied it on September 28, 1967
holding that the grounds raised therein were relevant and proper only if the Bureau of Forestry and the Bureau of
Mines were parties to the case. It added that the motion for intervention filed by the Bureau of Lands and the
Bureau of Mines was improper in land registration cases. 6
The Director of Lands filed a petition for Certiorari with the Court of Appeals but the same was dismissed for
having been filed out of time. 7 Hence, on December 22, 1967, the Commissioner of Land Registration issued
Decrees Nos. 118198, 118199 and 118200 for the registration of the subject parcels of land in the name of AIC.
Within one year from the issuance of said decrees or on May 22, 1968, the Republic of the Philippines, through the
Solicitor General, invoking Section 38 of Act No. 496, filed in the Court of First Instance of Abra a petition for
review of the decrees of registration and the lower court's decision of July 22, 1966. The Solicitor General alleged
that although the evidence presented by AIC showed that it had purchased from individual owners only a total
area of 24 hectares, the application included 46 hectares of the Central Cordillera Forest Reserve and therefore
AIC "employed actual fraud" which misled the court "to error in finding the applicant to have a registerable title
over the parcels of land subject of the application." 8
On November 27, 1969, the lower court 9 denied the petition on the ground that if, as alleged by the Solicitor
General, then presiding Judge Macario M. Ofilada was mistaken in appreciating the evidence presented, the
judicial error was "not synonymous with actual fraud." 10
Without asking for a reconsideration of said order, on February 25, 1970, the Solicitor General, representing the
Director of Lands, the Director of Forestry and the Republic of the Philippines, filed the present petition for review
on Certiorari under Republic Act No. 5440.
:-cralaw

The petition was forthwith given due course by the Court 11 but inasmuch as no action was taken on their prayer
for the issuance of a temporary restraining order, the petitioners filed a motion reiterating said prayer. Finding the
motion meritorious, the Court issued a temporary restraining order enjoining the private respondent and its

agents and representatives "from further acts of possession and disposition to innocent purchasers for value of
the parcels of land involved" in this case. 12
AIC filed a motion to dismiss the instant petition on the grounds that it raises "unsubstantial" issues and that it
was filed out of time. The motion was denied by the Court 13 but it bears pointing out that AIC's second ground
for dismissal, which is premised on its perception that a motion for reconsideration of the order of November 27,
1969 is necessary before the filing of the instant petition, is incorrect.
A motion for new trial or reconsideration is not a prerequisite to an appeal, petition for review or a petition for
review on Certiorari. 14 The reglementary period for filing the petition for review on Certiorari in the instant case
was thirty (30) days from notice of the order or judgment subject of review 15 which period, parenthetically, is
now fifteen (15) days pursuant to Section 39 of the Judiciary Act of 1980. 16 Petitioners having been granted a
total of sixty (60) days 17 within which to file the petition, the same was timely filed.
Petitioners herein contend that the lower court erred in granting the application for registration of the parcels of
land notwithstanding its finding that they are within the forest zone. The District Forester's failure to object to the
exclusion of the area sought to be registered from the forest reserve was not enough justification for registration
because under Commonwealth Act No. 141, the power to exclude an area from the forest zone belongs to the
President of the Philippines, upon the recommendation of the Secretary of Agriculture and Natural Resources, and
not the District Forester or even the Director of Forestry.
Petitioners also contend that the lower court erred in denying the petition for review based on actual fraud
because under Section 38 of Act No. 496, a decree of registration may be reviewed not only by reason of actual
fraud but also for a fatal infirmity of the decision upon which the decree is based, provided no innocent purchaser
for value will be prejudiced.
We find the petition to be meritorious. Once again, we reiterate the rule enunciated by this Court in Director of
Forestry vs. Muoz 18 and consistently adhered to in a long line of cases 19 the more recent of which is Republic
vs. Court of Appeals, 20 that forest lands or forest reserves are incapable of private appropriation and possession
thereof, however long, cannot convert them into private properties. This ruling is premised on the Regalian
doctrine enshrined not only in the 1935 and 1973 Constitutions but also in the 1987 Constitution Article XIII of
which provides that:
"Sec. 2. All lands of the public domain, waters, minerals, coal . . . , forests or timber, . . . and other natural
resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be
alienated."
Pursuant to this constitutional provision, the land must first be released from its classification as forest land and
reclassified as agricultural land in accordance with the certification issued by the Director of Forestry as provided
for by Section 1827 of the Revised Administrative Code. 21 This is because the classification of public lands is an
exclusive prerogative of the executive department of the government and not of the courts. 22 Moreover, a
positive act of the government is needed to declassify a forest land into alienable or disposable land for
agricultural or other purposes. 23
Being the interested party, an applicant for registration of a parcel of land bears the burden of overcoming the
presumption that the land sought to be registered forms part of the public domain. 24 In this case, AIC asserts
that the land in dispute is no longer part of the Cordillera Forest Reserve because the communal forest in Bucay,
Abra which had been established in 1909 by virtue of Forestry Administrative Order No. 2-298, had been
"cancelled and de-established" by Forestry Administrative Order No. 2-622 dated October 1, 1965 and issued by
then Acting Secretary of Agriculture and Natural Resources Jose Y. Feliciano. 25 AIC therefore tries to impress upon
the Court the fact that as there was no longer a forested area, the same area had become alienable more so
because its actual occupants, who had been devoting it to agriculture, had relinquished their rights over it in favor
of AIC "to give way for greater economic benefits for the people in the locality." 26 It should be emphasized,
however, that the classification of the land as forest land is descriptive of its legal nature or status and does not
have to be descriptive of what the land actually looks like. 27 Hence, the fact that the contested parcels of land
have long been denuded and actually contains rich limestone deposits does not in any way affect its present
classification as forest land.
: nad

While it is true that under Section 1839 of the Revised Administrative Code, the Director of Forestry, with the
approval of the Department Head, may change the location of a communal forest, such executive action does not
amount to a declassification of a forest reserve into an alienable or disposable land. Under Commonwealth Act No.
141, 28 it is no less than the President, upon the recommendation of the proper department head, who has the
authority to classify the lands of the public domain into alienable or disposable, timber and mineral lands. 29 The
President shall also declare from time to time what lands are open to disposition or concession. 30 AIC therefore,
should prove first of all that the lands it claims for registration are alienable or disposable lands. As it is, AIC has
not only failed to prove that it has a registerable title but more important]y, it failed to show that the lands are no
longer a part of the public domain.
The petitioners therefore validly insisted on the review of the decision ordering the issuance of the decree of
registration in view of its patent infirmity. The lower court closed its eyes to a basic doctrine in land registration
cases that the inclusion in a title of a part of the public domain nullifies the title. 31 Its decision to order the
registration of an inalienable land in favor of AIC under the misconception that it is imperative for the Director of
Forestry to object to its exclusion from the forest reserve even in the face of its finding that indeed a sizable
portion of the Central Cordillera Forest Reserve is involved, cannot be allowed to stay unreversed. It betrays an
inherent infirmity which must be corrected.
:-cralaw

WHEREFORE, the order of November 27, 1969 denying the petition for review under Section 38 of Act No. 496 and
the decision of July 22, 1966 insofar as it orders the registration of land within the Central Cordillera Forest
Reserve are hereby REVERSED AND SET ASIDE. The temporary restraining order issued on April 7, 1970 is hereby
made permanent. Costs against the private respondent.
SO ORDERED.

EN BANC
G.R. No. 167707
THE SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL
RESOURCES, THE REGIONAL EXECUTIVE DIRECTOR, DENR-REGION VI,
REGIONAL TECHNICAL DIRECTOR FOR LANDS, LANDS MANAGEMENT
BUREAU
REGION
VI
PROVINCIAL
ENVIRONMENT AND NATURAL
RESOURCES OFFICER OF KALIBO,
AKLAN, REGISTER OF DEEDS,
DIRECTOR OF LAND REGISTRATION AUTHORITY, DEPARTMENT OF
TOURISM SECRETARY, DIRECTOR OF PHILIPPINE TOURISM AUTHORITY,
Petitioners,
- versus MAYOR JOSE S. YAP, LIBERTAD, TALAPIAN, MILA Y. SUMNDAD, and
ANICETO YAP, in their behalf and in behalf of all those similarly
situated,
Respondents.
October 8, 2008
x--------------------------------------------------x
G.R. No. 173775
DR. ORLANDO SACAY and WILFREDO GELITO, joined by THE
LANDOWNERS OF
BORACAY SIMILARLY SITUATED NAMED IN A LIST, ANNEX A OF THIS
PETITION,
Petitioners,
- versus THE SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL
RESOURCES, THE REGIONAL TECHNICAL DIRECTOR FOR LANDS, LANDS
MANAGEMENT BUREAU,
REGION VI, PROVINCIAL ENVIRONMENT AND NATURAL RESOURCES
OFFICER, KALIBO, AKLAN,
Respondents.
x--------------------------------------------------x
DECISION
REYES, R.T., J.:

AT stake in these consolidated cases is the right of the present occupants

of Boracay Island to secure titles over their occupied lands.
There are two consolidated petitions. The first is G.R. No. 167707, a petition
for review on certiorari of the Decision[1] of the Court of Appeals (CA) affirming
that[2] of the Regional Trial Court (RTC) in Kalibo, Aklan, which granted the petition
for declaratory relief filed by respondents-claimants Mayor Jose Yap, et al. and
ordered the survey of Boracay for titling purposes. The second is G.R. No.
173775, a petition for prohibition, mandamus, and nullification of Proclamation
No. 1064[3]issued by President Gloria Macapagal-Arroyo classifying Boracay into
reserved forest and agricultural land.
The Antecedents
G.R. No. 167707
Boracay Island in the Municipality of Malay, Aklan, with its powdery white
sand beaches and warm crystalline waters, is reputedly a premier Philippine
tourist destination. The island is also home to 12,003 inhabitants [4] who live in the
bone-shaped islands three barangays.[5]
On April 14, 1976, the Department of Environment and Natural
Resources (DENR) approved the National Reservation Survey of Boracay
Island,[6] which identified several lots as being occupied or claimed by named
persons.[7]
On November 10, 1978, then President Ferdinand Marcos issued
Proclamation No. 1801[8] declaring Boracay Island, among other islands, caves
and peninsulas in the Philippines, as tourist zones and marine reserves under
the administration of the Philippine Tourism Authority (PTA). President Marcos
later approved the issuance of PTA Circular 3-82[9] dated September 3, 1982, to
implement Proclamation No. 1801.
Claiming that Proclamation No. 1801 and PTA Circular No 3-82 precluded
them from filing an application for judicial confirmation of imperfect title or
survey
of
land
for
titling
purposes,
respondents-claimants
Mayor Jose S. Yap, Jr., Libertad Talapian, Mila Y. Sumndad, and Aniceto Yap filed a
petition for declaratory relief with the RTC in Kalibo, Aklan.
In their petition, respondents-claimants alleged that Proclamation No. 1801
and PTA Circular No. 3-82 raised doubts on their right to secure titles over their
occupied lands. They declared that they themselves, or through their
predecessors-in-interest, had been in open, continuous, exclusive, and notorious
possession and occupation in Boracay since June 12, 1945, or earlier since time
immemorial. They declared their lands for tax purposes and paid realty taxes on
them.[10]
Respondents-claimants posited that Proclamation No. 1801 and its
implementing Circular did not place Boracay beyond the commerce of man. Since
the Islandwas classified as a tourist zone, it was susceptible of private

ownership. Under Section 48(b) of Commonwealth Act (CA) No. 141, otherwise
known as the Public Land Act, they had the right to have the lots registered in
their names through judicial confirmation of imperfect titles.
The Republic, through the Office of the Solicitor General (OSG), opposed the
petition for declaratory relief. The OSG countered that Boracay Island was
anunclassified land of the public domain. It formed part of the mass of lands
classified as public forest, which was not available for disposition pursuant to
Section 3(a) of Presidential Decree (PD) No. 705 or the Revised Forestry Code,
[11]
as amended.
The OSG maintained that respondents-claimants reliance on PD No. 1801
and PTA Circular No. 3-82 was misplaced. Their right to judicial confirmation of
title was governed by CA No. 141 and PD No. 705. Since Boracay Island had not
been classified as alienable and disposable, whatever possession they had
cannot ripen into ownership.
During pre-trial, respondents-claimants and the OSG stipulated on the
following facts: (1) respondents-claimants were presently in possession of parcels
of land in Boracay Island; (2) these parcels of land were planted with coconut
trees and other natural growing trees; (3) the coconut trees had heights of more
or less twenty (20) meters and were planted more or less fifty (50) years ago;
and (4) respondents-claimants declared the land they were occupying for tax
purposes.[12]
The parties also agreed that the principal issue for resolution was purely
legal: whether Proclamation No. 1801 posed any legal hindrance or impediment
to the titling of the lands in Boracay. They decided to forego with the trial and to
submit the case for resolution upon submission of their respective memoranda. [13]
The RTC took judicial notice[14] that certain parcels of land in Boracay Island,
more particularly Lots 1 and 30, Plan PSU-5344, were covered by Original
Certificate of Title No. 19502 (RO 2222) in the name of the Heirs of Ciriaco S.
Tirol. These lots were involved in Civil Case Nos. 5222 and 5262 filed before
the RTC ofKalibo, Aklan.[15] The titles were issued on
August 7, 1933.[16]
RTC and CA Dispositions
On July 14, 1999, the RTC rendered a decision in favor of respondentsclaimants, with a fallo reading:
WHEREFORE, in view of the foregoing, the Court declares that
Proclamation No. 1801 and PTA Circular No. 3-82 pose no legal obstacle to
the petitioners and those similarly situated to acquire title to their lands
in Boracay, in accordance with the applicable laws and in the manner
prescribed therein; and to have their lands surveyed and approved by
respondent Regional Technical Director of Lands as the approved survey
does not in itself constitute a title to the land.
SO ORDERED.[17]

The RTC upheld respondents-claimants right to have their occupied lands

titled in their name. It ruled that neither Proclamation No. 1801 nor PTA Circular
No. 3-82 mentioned that lands in Boracay were inalienable or could not be the
subject of disposition.[18] The Circular itself recognized private ownership of lands.
[19]
The trial court cited Sections 87[20] and 53[21] of the Public Land Act as basis for
acknowledging private ownership of lands in Boracay and that only those
forested areas in public lands were declared as part of the forest reserve. [22]
The OSG moved for reconsideration but its motion was denied. [23] The
Republic then appealed to the CA.
On December 9, 2004, the appellate court affirmed in toto the RTC decision,
disposing as follows:
WHEREFORE, in view of the foregoing premises, judgment is hereby
rendered by us DENYING the appeal filed in this case and AFFIRMING the
decision of the lower court.[24]

The CA held that respondents-claimants could not be prejudiced by a

declaration that the lands they occupied since time immemorial were part of a
forest reserve.
Again, the OSG sought reconsideration but it was similarly denied. [25] Hence,
the present petition under Rule 45.
G.R. No. 173775
On May 22, 2006, during the pendency of G.R. No. 167707, President Gloria
Macapagal-Arroyo issued Proclamation No. 1064 [26] classifying Boracay Island into
four hundred (400) hectares of reserved forest land (protection purposes) and six
hundred twenty-eight and 96/100 (628.96) hectares of agricultural land
(alienable and disposable). The Proclamation likewise provided for a fifteen-meter
buffer zone on each side of the centerline of roads and trails, reserved for rightof-way and which shall form part of the area reserved for forest land protection
purposes.
On August 10, 2006, petitioners-claimants Dr. Orlando Sacay, [27] Wilfredo
Gelito,[28] and other landowners[29] in Boracay filed with this Court an original
petition for prohibition, mandamus, and nullification of Proclamation No. 1064.
[30]
They allege that the Proclamation infringed on their prior vested rights over
portions of Boracay. They have been in continued possession of their respective
lots in Boracay since time immemorial. They have also invested billions of pesos
in developing their lands and building internationally renowned first class resorts
on their lots.[31]

Petitioners-claimants contended that there is no need for a proclamation

reclassifying Boracay into agricultural land. Being classified as neither mineral
nor timber land, the island is deemed agricultural pursuant to the Philippine Bill
of 1902 and Act No. 926, known as the first Public Land Act.[32] Thus, their
possession in the concept of owner for the required period entitled them to
judicial confirmation of imperfect title.

Opposing the petition, the OSG argued that petitioners-claimants do not

have a vested right over their occupied portions in the island. Boracay is an
unclassified public forest land pursuant to Section 3(a) of PD No. 705. Being
public forest, the claimed portions of the island are inalienable and cannot be the
subject of judicial confirmation of imperfect title. It is only the executive
department, not the courts, which has authority to reclassify lands of the public
domain into alienable and disposable lands. There is a need for a positive
government act in order to release the lots for disposition.
On November 21, 2006, this Court ordered the consolidation of the two
petitions as they principally involve the same issues on the land classification
of BoracayIsland.[33]
Issues
G.R. No. 167707
The OSG raises the lone issue of whether Proclamation No. 1801
and PTA Circular No. 3-82 pose any legal obstacle for respondents, and all those
similarly situated, to acquire title to their occupied lands in Boracay Island.[34]

G.R. No. 173775

Petitioners-claimants hoist five (5) issues, namely:
I.
AT THE TIME OF THE ESTABLISHED POSSESSION OF PETITIONERS IN
CONCEPT OF OWNER OVER THEIR RESPECTIVE AREAS IN BORACAY, SINCE
TIME IMMEMORIAL OR AT THE LATEST SINCE 30 YRS. PRIOR TO THE
FILING OF THE PETITION FOR DECLARATORY RELIEF ON NOV. 19,
1997, WERE THE AREAS OCCUPIED BY THEM PUBLIC AGRICULTURAL
LANDS AS DEFINED BY LAWS THEN ON JUDICIAL CONFIRMATION OF
IMPERFECT TITLES OR PUBLIC FOREST AS DEFINED BY SEC. 3a, PD 705?
II.
HAVE PETITIONERS OCCUPANTS ACQUIRED PRIOR VESTED RIGHT OF
PRIVATE
OWNERSHIP OVER
THEIR
OCCUPIED
PORTIONS
OF BORACAY LAND, DESPITE THE FACT THAT THEY HAVE NOT APPLIED YET
FOR JUDICIAL CONFIRMATION OF IMPERFECT TITLE?
III.
IS
THE
EXECUTIVE
DECLARATION
OF
THEIR
AREAS
AS
ALIENABLE AND DISPOSABLE UNDER SEC 6,
CA
141
[AN]
INDISPENSABLE PRE-REQUISITE
FOR
PETITIONERS
TO
OBTAIN
TITLE UNDER THE TORRENS SYSTEM?
IV.
IS THE ISSUANCE OF PROCLAMATION 1064 ON MAY 22, 2006, VIOLATIVE
OF THE PRIOR VESTED RIGHTS TO PRIVATE OWNERSHIP OF
PETITIONERS OVER THEIR LANDS IN BORACAY, PROTECTED BY THE DUE
PROCESS CLAUSE OF THE CONSTITUTION OR IS PROCLAMATION 1064
CONTRARY TO SEC. 8, CA 141, OR SEC. 4(a) OF RA 6657.

V.
CAN RESPONDENTS BE COMPELLED BY MANDAMUS TO ALLOW THE
SURVEY AND TO APPROVE THE SURVEY PLANS FOR PURPOSES OF THE
APPLICATION FOR TITLING OF THE LANDS OF PETITIONERS IN BORACAY?
[35]
(Underscoring supplied)

In capsule, the main issue is whether private claimants (respondentsclaimants in G.R. No. 167707 and petitioners-claimants in G.R. No. 173775) have
a right to secure titles over their occupied portions in Boracay. The twin petitions
pertain to their right, if any, to judicial confirmation of imperfect title under CA
No. 141, as amended. They do not involve their right to secure title under other
pertinent laws.
Our Ruling
Regalian Doctrine and power of the executive
to reclassify lands of the public domain
Private claimants rely on three (3) laws and executive acts in their bid for
judicial confirmation of imperfect title, namely: (a) Philippine Bill of 1902 [36] in
relation to Act No. 926, later amended and/or superseded by Act No. 2874 and
CA No. 141;[37] (b) Proclamation No. 1801[38] issued by then President Marcos; and
(c) Proclamation No. 1064[39] issued by President Gloria Macapagal-Arroyo. We
shall proceed to determine their rights to apply for judicial confirmation of
imperfect title under these laws and executive acts.
But first, a peek at the Regalian principle and the power of the executive to
reclassify lands of the public domain.
The 1935 Constitution classified lands of the public domain into agricultural,
forest or timber.[40] Meanwhile, the 1973 Constitution provided the following
divisions: agricultural, industrial or commercial, residential, resettlement,
mineral, timber or forest and grazing lands, and such other classes as may be
provided by law,[41] giving the government great leeway for classification. [42] Then
the 1987 Constitution reverted to the 1935 Constitution classification with one
addition: national parks.[43] Of these, only agricultural lands may be alienated.
[44]
Prior
to
Proclamation
No.
1064
of May
22,
2006, Boracay Island had never been expressly and administratively classified
under any of these grand divisions. Boracay was an unclassified land of the
public domain.
The Regalian Doctrine dictates that all lands of the public domain belong to
the State, that the State is the source of any asserted right to ownership of land
and charged with the conservation of such patrimony. [45] The doctrine has been
consistently adopted under the 1935, 1973, and 1987 Constitutions. [46]
All lands not otherwise appearing to be clearly within private ownership are
presumed to belong to the State.[47] Thus, all lands that have not been acquired
from the government, either by purchase or by grant, belong to the State as part
of the inalienable public domain.[48] Necessarily, it is up to the State to determine
if lands of the public domain will be disposed of for private ownership. The
government, as the agent of the state, is possessed of the plenary power as the
persona in law to determine who shall be the favored recipients of public lands,

as well as under what terms they may be granted such privilege, not excluding
the placing of obstacles in the way of their exercise of what otherwise would be
ordinary acts of ownership.[49]
Our present land law traces its roots to the Regalian Doctrine. Upon the
Spanish conquest of the Philippines, ownership of all lands, territories and
possessions in the Philippines passed to the Spanish Crown. [50] The Regalian
doctrine was first introduced in the Philippines through the Laws of the Indies and
the Royal Cedulas, which laid the foundation that all lands that were not acquired
from the Government, either by purchase or by grant, belong to the public
domain.[51]
The Laws of the Indies was followed by the Ley Hipotecaria or the Mortgage
Law of 1893. The Spanish Mortgage Law provided for the systematic registration
of titles and deeds as well as possessory claims. [52]
The Royal Decree of 1894 or the Maura Law[53] partly amended the Spanish
Mortgage Law and the Laws of the Indies. It established possessory information
as the method of legalizing possession of vacant Crown land, under certain
conditions which were set forth in said decree. [54] Under Section 393 of the Maura
Law, aninformacion posesoria or possessory information title, [55] when duly
inscribed in the Registry of Property, is converted into a title of ownership only
after the lapse of twenty (20) years of uninterrupted possession which must be
actual, public, and adverse, [56] from the date of its inscription. [57] However,
possessory information title had to be perfected one year after the promulgation
of the Maura Law, or until April 17, 1895. Otherwise, the lands would revert to the
State.[58]
In sum, private ownership of land under the Spanish regime could only be
founded on royal concessions which took various forms, namely: (1) titulo real or
royal grant; (2) concesion especial or special grant; (3) composicion con el
estado or adjustment title; (4) titulo de compra or title by purchase; and
(5) informacion posesoriaor possessory information title.[59]
The first law
governing
the
disposition
of
public
lands
in
the Philippines under American rule was embodied in the Philippine Bill of 1902.
[60]
By this law, lands of the public domain in the Philippine Islands were classified
into three (3) grand divisions, to wit: agricultural, mineral, and timber or forest
lands.[61] The act provided for, among others, the disposal of mineral lands by
means of absolute grant (freehold system) and by lease (leasehold system). [62] It
also provided the definition by exclusion of agricultural public lands.
[63]
Interpreting the meaning of agricultural lands under the Philippine Bill of 1902,
the Court declared in Mapa v. Insular Government:[64]

x x x In other words, that the phrase agricultural land as used in

Act No. 926 means those public lands acquired from Spain which
are not timber or mineral lands. x x x[65] (Emphasis Ours)

On February 1, 1903, the Philippine Legislature passed Act No. 496,

otherwise known as the Land Registration Act. The act established a system of
registration by which recorded title becomes absolute, indefeasible, and
imprescriptible. This is known as the Torrens system.[66]

Concurrently, on October 7, 1903, the Philippine Commission passed Act

No. 926, which was the first Public Land Act. The Act introduced the homestead
system and made provisions for judicial and administrative confirmation of
imperfect titles and for the sale or lease of public lands. It permitted corporations
regardless of the nationality of persons owning the controlling stock to lease or
purchase lands of the public domain.[67] Under the Act, open, continuous,
exclusive, and notorious possession and occupation of agricultural lands for the
next ten (10) years preceding July 26, 1904 was sufficient for judicial
confirmation of imperfect title.[68]
On November 29, 1919, Act No. 926 was superseded by Act No. 2874,
otherwise known as the second Public Land Act. This new, more comprehensive
law limited the exploitation of agricultural lands to Filipinos and Americans and
citizens of other countries which gave Filipinos the same privileges. For judicial
confirmation of title, possession and occupation en concepto dueo since time
immemorial, or since July 26, 1894, was required.[69]
After the passage of the 1935 Constitution, CA No. 141 amended Act No.
2874 on December 1, 1936. To this day, CA No. 141, as amended, remains as
the existing general law governing the classification and disposition of lands of
the public domain other than timber and mineral lands, [70] and privately owned
lands which reverted to the State.[71]
Section 48(b) of CA No. 141 retained the requirement under Act No. 2874 of
possession and occupation of lands of the public domain since time immemorial
or since July 26, 1894. However, this provision was superseded by Republic Act
(RA) No. 1942,[72] which provided for a simple thirty-year prescriptive period for
judicial confirmation of imperfect title. The provision was last amended by PD
No. 1073,[73] which now provides for possession and occupation of the land
applied for sinceJune 12, 1945, or earlier.[74]
The issuance of PD No. 892[75] on February 16, 1976 discontinued the use of
Spanish titles as evidence in land registration proceedings. [76] Under the decree,
all holders of Spanish titles or grants should apply for registration of their lands
under Act No. 496 within six (6) months from the effectivity of the decree
on February 16, 1976. Thereafter, the recording of all unregistered lands[77] shall
be governed by Section 194 of the Revised Administrative Code, as amended by
Act No. 3344.
On June 11, 1978, Act No. 496 was amended and updated by PD No. 1529,
known as the Property Registration Decree. It was enacted to codify the various
laws relative to registration of property. [78] It governs registration of lands under
the Torrens system as well as unregistered lands, including chattel mortgages. [79]
A positive act declaring land as alienable and disposable is
required. In keeping with the presumption of State ownership, the Court has
time and again emphasized that there must be a positive act of the
government, such as an official proclamation, [80] declassifying inalienable public
land into disposable land for agricultural or other purposes. [81] In fact, Section 8 of
CA No. 141 limits alienable or disposable lands only to those lands which have
been officially delimited and classified.[82]

The burden of proof in overcoming the presumption of State ownership of

the lands of the public domain is on the person applying for registration (or
claiming ownership), who must prove that the land subject of the application is
alienable or disposable.[83] To overcome this presumption, incontrovertible
evidence must be established that the land subject of the application (or claim) is
alienable or disposable.[84] There must still be a positive act declaring land of the
public domain as alienable and disposable. To prove that the land subject of an
application for registration is alienable, the applicant must establish the
existence of a positive act of the government such as a presidential proclamation
or an executive order; an administrative action; investigation reports of Bureau of
Lands investigators; and a legislative act or a statute. [85] The applicant may also
secure a certification from the government that the land claimed to have been
possessed for the required number of years is alienable and disposable. [86]
In the case at bar, no such proclamation, executive order, administrative
action, report, statute, or certification was presented to the Court. The records
are bereft of evidence showing that, prior to 2006, the portions of Boracay
occupied by private claimants were subject of a government proclamation that
the land is alienable and disposable. Absent such well-nigh incontrovertible
evidence, the Court cannot accept the submission that lands occupied by private
claimants were already open to disposition before 2006. Matters of land
classification or reclassification cannot be assumed. They call for proof.[87]
Ankron and De Aldecoa did not make the whole of Boracay Island,
or portions of it, agricultural lands. Private claimants posit that Boracay was
already an agricultural land pursuant to the old cases Ankron v. Government of
the Philippine Islands (1919)[88] and De Aldecoa v. The Insular Government
(1909).[89] These cases were decided under the provisions of the Philippine Bill of
1902 and Act No. 926. There is a statement in these old cases that in the
absence of evidence to the contrary, that in each case the lands are agricultural
lands until the contrary is shown.[90]
Private claimants reliance on Ankron and De Aldecoa is misplaced. These
cases did not have the effect of converting the whole of Boracay Island or
portions of it into agricultural lands. It should be stressed that the Philippine Bill
of 1902 and Act No. 926 merely provided the manner through which land
registration courts would classify lands of the public domain. Whether the land
would be classified as timber, mineral, or agricultural depended on proof
presented in each case.
Ankron and De Aldecoa were decided at a time when the President of the
Philippines had no power to classify lands of the public domain into mineral,
timber, and agricultural. At that time, the courts were free to make corresponding
classifications in justiciable cases, or were vested with implicit power to do so,
depending upon the preponderance of the evidence. [91] This was the Courts ruling
in Heirs of the Late Spouses Pedro S. Palanca and Soterranea Rafols Vda. De
Palanca v. Republic,[92] in which it stated, through Justice Adolfo Azcuna, viz.:
x x x Petitioners furthermore insist that a particular land need not be
formally released by an act of the Executive before it can be deemed
open to private ownership, citing the cases of Ramos v. Director of
Lands and Ankron v. Government of the Philippine Islands.

xxxx
Petitioners reliance upon Ramos v. Director of Lands and Ankron v.
Government is misplaced. These cases were decided under the Philippine
Bill of 1902 and the first Public Land Act No. 926 enacted by the Philippine
Commission on October 7, 1926, under which there was no legal provision
vesting in the Chief Executive or President of the Philippines the power to
classify lands of the public domain into mineral, timber and agricultural so
that the courts then were free to make corresponding classifications in
justiciable cases, or were vested with implicit power to do so, depending
upon the preponderance of the evidence.[93]

To aid the courts in resolving land registration cases under Act No. 926, it
was then necessary to devise a presumption on land classification. Thus evolved
the dictum in Ankron that the courts have a right to presume, in the absence of
evidence to the contrary, that in each case the lands are agricultural lands until
the contrary is shown.[94]

But We cannot unduly expand the presumption in Ankron and De Aldecoa to

an argument that all lands of the public domain had been automatically
reclassified as disposable and alienable agricultural lands. By no stretch of
imagination did the presumption convert all lands of the public domain into
agricultural lands.
If We accept the position of private claimants, the Philippine Bill of 1902 and
Act No. 926 would have automatically made all lands in the Philippines, except
those already classified as timber or mineral land, alienable and disposable
lands. That would take these lands out of State ownership and worse, would be
utterly inconsistent with and totally repugnant to the long-entrenched Regalian
doctrine.
The presumption in Ankron and De Aldecoa attaches only to land
registration cases brought under the provisions of Act No. 926, or more
specifically those cases dealing with judicial and administrative confirmation of
imperfect titles. The presumption applies to an applicant for judicial or
administrative conformation of imperfect title under Act No. 926. It certainly
cannot apply to landowners, such as private claimants or their predecessors-ininterest, who failed to avail themselves of the benefits of Act No. 926. As to them,
their land remained unclassified and, by virtue of the Regalian doctrine,
continued to be owned by the State.
In any case, the assumption in Ankron and De Aldecoa was not
absolute. Land classification was, in the end, dependent on proof. If there was
proof that the land was better suited for non-agricultural uses, the courts
could adjudge it as a mineral or timber land despite the presumption. In Ankron,
this Court stated:
In the case of Jocson vs. Director of Forestry (supra), the AttorneyGeneral admitted in effect that whether the particular land in question
belongs to one class or another is a question of fact. The mere fact that a
tract of land has trees upon it or has mineral within it is not of itself

sufficient to declare that one is forestry land and the other, mineral
land.There must be some proof of the extent and present or future value
of the forestry and of the minerals. While, as we have just said, many
definitions have been given for agriculture, forestry, and mineral lands,
and that in each case it is a question of fact, we think it is safe to say that
in order to be forestry or mineral land the proof must show that it is more
valuable for the forestry or the mineral which it contains than it is for
agricultural purposes. (Sec. 7, Act No. 1148.) It is not sufficient to show
that there exists some trees upon the land or that it bears some mineral.
Land may be classified as forestry or mineral today, and, by reason of the
exhaustion of the timber or mineral, be classified as agricultural land
tomorrow. And vice-versa, by reason of the rapid growth of timber or the
discovery of valuable minerals, lands classified as agricultural today may
be differently classified tomorrow.Each case must be decided upon
the proof in that particular case, having regard for its present or
future value for one or the other purposes. We believe, however,
considering the fact that it is a matter of public knowledge that a majority
of the lands in the Philippine Islands are agricultural lands that the courts
have a right to presume, in the absence of evidence to the contrary, that
in each case the lands are agricultural lands until the contrary is
shown. Whatever the land involved in a particular land
registration case is forestry or mineral land must, therefore, be a
matter of proof. Its superior value for one purpose or the other is
a question of fact to be settled by the proof in each particular
case. The fact that the land is a manglar [mangrove swamp] is not
sufficient for the courts to decide whether it is agricultural, forestry, or
mineral land. It may perchance belong to one or the other of said classes
of land. The Government, in the first instance, under the provisions of Act
No. 1148, may, by reservation, decide for itself what portions of public
land shall be considered forestry land, unless private interests have
intervened before such reservation is made. In the latter case, whether
the land is agricultural, forestry, or mineral, is a question of proof. Until
private interests have intervened, the Government, by virtue of the terms
of said Act (No. 1148), may decide for itself what portions of the public
domain shall be set aside and reserved as forestry or mineral land.
(Ramos vs. Director of Lands, 39 Phil. 175; Jocson vs. Director of
Forestry, supra)[95] (Emphasis ours)

Since 1919, courts were no longer free to determine the classification of

lands from the facts of each case, except those that have already became private
lands.[96] Act No. 2874, promulgated in 1919 and reproduced in Section 6 of CA
No. 141, gave the Executive Department, through the President,
the exclusive prerogative to classify or reclassify public lands into alienable or
disposable, mineral or forest.96-a Since then, courts no longer had the authority,
whether express or implied, to determine the classification of lands of the public
domain.[97]
Here, private claimants, unlike the Heirs of Ciriaco Tirol who were issued
their title in 1933,[98] did not present a justiciable case for determination by the
land registration court of the propertys land classification. Simply put, there was
no opportunity for the courts then to resolve if the land the Boracay occupants
are now claiming were agricultural lands. When Act No. 926 was supplanted by
Act No. 2874 in 1919, without an application for judicial confirmation having been
filed by private claimants or their predecessors-in-interest, the courts were no
longer authorized to determine the propertys land classification. Hence, private
claimants cannot bank on Act No. 926.

We note that the RTC decision[99] in G.R. No. 167707 mentioned Krivenko v.
Register of Deeds of Manila,[100] which was decided in 1947 when CA No. 141,
vesting the Executive with the sole power to classify lands of the public domain
was already in effect. Krivenko cited the old cases Mapa v. Insular Government,
[101]
De Aldecoa v. The Insular Government,[102] and Ankron v. Government of the
Philippine Islands.[103]
Krivenko, however, is not controlling here because it involved a totally
different issue. The pertinent issue in Krivenko was whether residential lots were
included in the general classification of agricultural lands; and if so, whether an
alien could acquire a residential lot. This Court ruled that as an alien, Krivenko
was prohibited by the 1935 Constitution [104] from acquiring agricultural land,
which included residential lots. Here, the issue is whether unclassified lands of
the public domain are automatically deemed agricultural.

Notably, the definition of agricultural public lands mentioned

in Krivenko relied on the old cases decided prior to the enactment of Act No.
2874, includingAnkron and De Aldecoa.[105] As We have already stated, those
cases cannot apply here, since they were decided when the Executive did not
have the authority to classify lands as agricultural, timber, or mineral.
Private claimants continued possession under Act No. 926 does not
create a presumption that the land is alienable. Private claimants also
contend that their continued possession of portions of Boracay Island for the
requisite period of ten (10) years under Act No. 926 [106] ipso facto converted the
island into private ownership. Hence, they may apply for a title in their name.
A similar argument was squarely rejected by the Court in Collado v. Court of
Appeals.[107] Collado, citing the separate opinion of now Chief Justice Reynato S.
Puno in Cruz v. Secretary of Environment and Natural Resources,107-a ruled:
Act No. 926, the first Public Land Act, was passed in
pursuance of the provisions of the Philippine Bill of 1902. The
law governed the disposition of lands of the public domain. It
prescribed rules and regulations for the homesteading, selling
and leasing of portions of the public domain of the Philippine
Islands, and prescribed the terms and conditions to enable
persons to perfect their titles to public lands in the Islands. It
also provided for the issuance of patents to certain native
settlers upon public lands, for the establishment of town sites
and sale of lots therein, for the completion of imperfect titles,
and for the cancellation or confirmation of Spanish concessions
and grants in the Islands. In short, the Public Land Act
operated on the assumption that title to public lands in the
Philippine Islands remained in the government; and that the
governments title to public land sprung from the Treaty of
Paris and other subsequent treaties between Spain and the
United States. The term public land referred to all lands of the
public domain whose title still remained in the government and
are thrown open to private appropriation and settlement, and
excluded the patrimonial property of the government and the
friar lands.
Thus, it is plain error for petitioners to argue that under the
Philippine Bill of 1902 and Public Land Act No. 926, mere

possession by private individuals of lands creates the legal

presumption that the lands are alienable and disposable.
[108]
(Emphasis Ours)

Except for lands already covered by existing titles, Boracay was an

unclassified land of the public domain prior to Proclamation No.
1064. Such unclassified lands are considered public forest under PD No.
705. The DENR[109] and the National Mapping and Resource Information
Authority[110] certify that Boracay Islandis an unclassified land of the public
domain.
PD No. 705 issued by President Marcos categorized all unclassified lands
of the public domain as public forest. Section 3(a) of PD No. 705 defines a public
forest as a mass of lands of the public domain which has not been the subject of
the present system of classification for the determination of which lands are
needed for forest purpose and which are not. Applying PD No. 705, all
unclassified lands, including those in Boracay Island, are ipso facto considered
public forests. PD No. 705, however, respects titles already existing prior to its
effectivity.
The Court notes that the classification of Boracay as a forest land under PD
No. 705 may seem to be out of touch with the present realities in the
island. Boracay, no doubt, has been partly stripped of its forest cover to pave the
way for commercial developments. As a premier tourist destination for local and
foreign tourists, Boracay appears more of a commercial island resort, rather than
a forest land.
Nevertheless, that the occupants of Boracay have built multi-million peso
beach resorts on the island;[111] that the island has already been stripped of its
forest cover; or that the implementation of Proclamation No. 1064 will destroy
the islands tourism industry, do not negate its character as public forest.
Forests, in the context of both the Public Land Act and the
Constitution[112] classifying lands of the public domain into agricultural, forest or
timber, mineral lands, and national parks, do not necessarily refer to large tracts
of wooded land or expanses covered by dense growths of trees and
underbrushes.[113] The discussion in Heirs of Amunategui v. Director of
Forestry[114] is particularly instructive:
A forested area classified as forest land of the public domain does
not lose such classification simply because loggers or settlers may have
stripped it of its forest cover.Parcels of land classified as forest land may
actually be covered with grass or planted to crops by kaingin cultivators
or other farmers. Forest lands do not have to be on mountains or in out of
the way places. Swampy areas covered by mangrove trees, nipa palms,
and other trees growing in brackish or sea water may also be classified as
forest land. The classification is descriptive of its legal nature or
status and does not have to be descriptive of what the land
actually looks like. Unless and until the land classified as forest is
released in an official proclamation to that effect so that it may form part
of the disposable agricultural lands of the public domain, the rules on
confirmation of imperfect title do not apply.[115] (Emphasis supplied)

There is a big difference between forest as defined in a dictionary and forest or

timber land as a classification of lands of the public domain as appearing in our
statutes.One is descriptive of what appears on the land while the other is a legal
status, a classification for legal purposes. [116] At any rate, the Court is tasked to
determine thelegal status of Boracay Island, and not look into its physical
layout. Hence, even if its forest cover has been replaced by beach resorts,
restaurants and other commercial establishments, it has not been automatically
converted from public forest to alienable agricultural land.
Private claimants cannot rely on Proclamation No. 1801 as basis for
judicial confirmation of imperfect title. The proclamation did not
convert Boracay into an agricultural land. However, private claimants argue
that Proclamation No. 1801 issued by then President Marcos in 1978 entitles
them to judicial confirmation of imperfect title. The Proclamation classified
Boracay, among other islands, as a tourist zone. Private claimants assert that, as
a tourist spot, the island is susceptible of private ownership.
Proclamation No. 1801 or PTA Circular No. 3-82 did not convert the whole of
Boracay into an agricultural land. There is nothing in the law or the Circular which
made Boracay Island an agricultural land. The reference in Circular No. 3-82 to
private lands[117] and areas declared as alienable and disposable [118] does not by
itself classify the entire island as agricultural. Notably, Circular No. 3-82 makes
reference not only to private lands and areas but also to public forested
lands. Rule VIII, Section 3 provides:
No trees in forested private lands may be cut without prior authority
from the PTA. All forested areas in public lands are declared forest
reserves. (Emphasis supplied)

Clearly, the reference in the Circular to both private and public lands merely
recognizes that the island can be classified by the Executive department
pursuant to its powers under CA No. 141. In fact, Section 5 of the Circular
recognizes the then Bureau of Forest Developments authority to declare areas in
the island as alienable and disposable when it provides:
Subsistence farming, in areas declared as alienable and disposable
by the Bureau of Forest Development.

Therefore, Proclamation No. 1801 cannot be deemed the positive act

needed to classify Boracay Island as alienable and disposable land. If President
Marcos intended to classify the island as alienable and disposable or forest, or
both, he would have identified the specific limits of each, as President Arroyo did
in Proclamation No. 1064. This was not done in Proclamation No. 1801.
The Whereas clauses of Proclamation No. 1801 also explain the rationale
behind the declaration of Boracay Island, together with other islands, caves and
peninsulas in the Philippines, as a tourist zone and marine reserve to be
administered by the PTA to ensure the concentrated efforts of the public and
private sectors in the development of the areas tourism potential with due regard
for ecological balance in the marine environment. Simply put, the proclamation is
aimed at administering the islands for tourism and ecological purposes. It
does not address the areas alienability.[119]

More importantly, Proclamation No. 1801 covers not only Boracay Island,
but sixty-four (64) other islands, coves, and peninsulas in the Philippines, such as
Fortune and Verde Islands in Batangas, Port Galera in Oriental Mindoro, Panglao
and Balicasag Islands in Bohol, Coron Island, Puerto Princesa and surrounding
areas in Palawan, Camiguin Island in Cagayan de Oro, and Misamis Oriental, to
name a few. If the designation of Boracay Island as tourist zone makes it
alienable and disposable by virtue of Proclamation No. 1801, all the other areas
mentioned would likewise be declared wide open for private disposition. That
could not have been, and is clearly beyond, the intent of the proclamation.
It was Proclamation No. 1064 of 2006 which positively declared
part of Boracay as alienable and opened the same to private
ownership. Sections 6 and 7 of CA No. 141 [120] provide that it is only the
President, upon the recommendation of the proper department head, who has
the authority to classify the lands of the public domain into alienable or
disposable, timber and mineral lands. [121]
In issuing Proclamation No. 1064, President Gloria Macapagal-Arroyo merely
exercised the authority granted to her to classify lands of the public domain,
presumably subject to existing vested rights. Classification of public lands is the
exclusive prerogative of the Executive Department, through the Office of the
President.Courts have no authority to do so. [122] Absent such classification, the
land remains unclassified until released and rendered open to disposition. [123]
Proclamation No. 1064 classifies Boracay into 400 hectares of reserved
forest land and 628.96 hectares of agricultural land. The Proclamation likewise
provides for a 15-meter buffer zone on each side of the center line of roads and
trails, which are reserved for right of way and which shall form part of the area
reserved for forest land protection purposes.
Contrary to private claimants argument, there was nothing invalid or
irregular,
much
less
unconstitutional,
about
the
classification
of Boracay Island made by the President through Proclamation No. 1064. It was
within her authority to make such classification, subject to existing vested rights.
Proclamation No. 1064 does not violate the Comprehensive
Agrarian Reform Law. Private claimants further assert that Proclamation No.
1064 violates the provision of the Comprehensive Agrarian Reform Law (CARL) or
RA No. 6657 barring conversion of public forests into agricultural lands. They
claim that since Boracay is a public forest under PD No. 705, President Arroyo can
no longer convert it into an agricultural land without running afoul of Section 4(a)
of RA No. 6657, thus:
SEC. 4. Scope. The Comprehensive Agrarian Reform Law of 1988
shall cover, regardless of tenurial arrangement and commodity produced,
all public and private agricultural lands as provided in Proclamation No.
131 and Executive Order No. 229, including other lands of the public
domain suitable for agriculture.
More specifically, the following lands
Comprehensive Agrarian Reform Program:

are

covered

by

(a) All alienable and disposable lands of the public domain

devoted
to
or
suitable
for
agriculture. No reclassification of forest or mineral lands

the

to agricultural lands shall be undertaken after the approval

of this Act until Congress, taking into account ecological,
developmental and equity considerations, shall have
determined by law, the specific limits of the public domain.

That Boracay Island was classified as a public forest under PD No. 705 did
not bar the Executive from later converting it into agricultural
land. Boracay Islandstill remained an unclassified land of the public domain
despite PD No. 705.
In Heirs of the Late Spouses Pedro S. Palanca and Soterranea Rafols v.
Republic,[124] the Court stated that unclassified lands are public forests.

While it is true that the land classification map does not

categorically state that the islands are public forests, the fact
that they were unclassified lands leads to the same result. In the
absence of the classification as mineral or timber land, the land remains
unclassified land until released and rendered open to disposition.
[125]
(Emphasis supplied)

Moreover, the prohibition under the CARL applies only to a reclassification of

land. If the land had never been previously classified, as in the case of Boracay,
there can be no prohibited reclassification under the agrarian law. We agree with
the opinion of the Department of Justice[126] on this point:
Indeed, the key word to the correct application of the prohibition in
Section 4(a) is the word reclassification. Where there has been no
previous classification of public forest [referring, we repeat, to the mass
of the public domain which has not been the subject of the present
system of classification for purposes of determining which are needed for
forest purposes and which are not] into permanent forest or forest
reserves or some other forest uses under the Revised Forestry Code,
there can be no reclassification of forest lands to speak of within the
meaning of Section 4(a).
Thus, obviously, the prohibition in Section 4(a) of the CARL against
the reclassification of forest lands to agricultural lands without a prior law
delimiting the limits of the public domain, does not, and cannot, apply to
those lands of the public domain, denominated as public forest under the
Revised Forestry Code, which have not been previously determined, or
classified, as needed for forest purposes in accordance with the
provisions of the Revised Forestry Code.[127]

Private claimants are not entitled to apply for judicial confirmation

of imperfect title under CA No. 141. Neither do they have vested rights
over the occupied lands under the said law. There are two requisites for
judicial confirmation of imperfect or incomplete title under CA No. 141, namely:
(1) open, continuous, exclusive, and notorious possession and occupation of the
subject land by himself or through his predecessors-in-interest under a bona
fide claim of ownership since time immemorial or from June 12, 1945; and (2) the
classification of the land as alienable and disposable land of the public domain.
[128]

As discussed, the Philippine Bill of 1902, Act No. 926, and Proclamation No.
1801 did not convert portions of Boracay Island into an agricultural land. The

island remained an unclassified land of the public domain and, applying the
Regalian doctrine, is considered State property.
Private claimants bid for judicial confirmation of imperfect title, relying on
the Philippine Bill of 1902, Act No. 926, and Proclamation No. 1801, must fail
because of the absence of the second element of alienable and disposable
land. Their entitlement to a government grant under our present Public Land Act
presupposes that the land possessed and applied for is already alienable and
disposable. This is clear from the wording of the law itself. [129] Where the land is
not alienable and disposable, possession of the land, no matter how long, cannot
confer ownership or possessory rights. [130]
Neither may private claimants apply for judicial confirmation of imperfect
title under Proclamation No. 1064, with respect to those lands which were
classified as agricultural lands. Private claimants failed to prove the first element
of open, continuous, exclusive, and notorious possession of their lands in Boracay
since June 12, 1945.
We cannot sustain the CA and RTC conclusion in the petition for declaratory
relief that private claimants complied with the requisite period of possession.
The tax declarations in the name of private claimants are insufficient to
prove the first element of possession. We note that the earliest of the tax
declarations in the name of private claimants were issued in 1993. Being of
recent dates, the tax declarations are not sufficient to convince this Court that
the period of possession and occupation commenced on June 12, 1945.
Private claimants insist that they have a vested right in Boracay, having
been in possession of the island for a long time. They have invested millions of
pesos in developing the island into a tourist spot. They say their continued
possession and investments give them a vested right which cannot be
unilaterally rescinded by Proclamation No. 1064.
The continued possession and considerable investment of private claimants
do not automatically give them a vested right in Boracay. Nor do these give them
a right to apply for a title to the land they are presently occupying. This Court is
constitutionally bound to decide cases based on the evidence presented and the
laws applicable. As the law and jurisprudence stand, private claimants are
ineligible to apply for a judicial confirmation of title over their occupied portions
in Boracay even with their continued possession and considerable investment in
the island.
One Last Note
The Court is aware that millions of pesos have been invested for the
development of Boracay Island, making it a by-word in the local and international
tourism industry. The Court also notes that for a number of years, thousands of
people have called the island their home. While the Court commiserates with
private claimants plight, We are bound to apply the law strictly and
judiciously. This is the law and it should prevail. Ito ang batas at ito ang dapat
umiral.

All is not lost, however, for private claimants. While they may not be eligible
to apply for judicial confirmation of imperfect title under Section 48(b) of CA No.
141, as amended, this does not denote their automatic ouster from the
residential, commercial, and other areas they possess now classified as
agricultural. Neither will this mean the loss of their substantial investments on
their occupied alienable lands. Lack of title does not necessarily mean lack of
right to possess.
For one thing, those with lawful possession may claim good faith as builders
of improvements. They can take steps to preserve or protect their possession. For
another, they may look into other modes of applying for original registration of
title, such as by homestead [131] or sales patent,[132] subject to the conditions
imposed by law.
More realistically, Congress may enact a law to entitle private claimants to
acquire title to their occupied lots or to exempt them from certain requirements
under the present land laws. There is one such bill [133] now pending in the House
of Representatives. Whether that bill or a similar bill will become a law is for
Congress to decide.
In issuing Proclamation No. 1064, the government has taken the step
necessary to open up the island to private ownership. This gesture may not be
sufficient to appease some sectors which view the classification of the island
partially into a forest reserve as absurd. That the island is no longer overrun by
trees, however, does not becloud the vision to protect its remaining forest cover
and to strike a healthy balance between progress and ecology. Ecological
conservation is as important as economic progress.
To be sure, forest lands are fundamental to our nations survival. Their
promotion and protection are not just fancy rhetoric for politicians and
activists. These are needs that become more urgent as destruction of our
environment gets prevalent and difficult to control. As aptly observed by Justice
Conrado Sanchez in 1968 inDirector of Forestry v. Munoz:[134]
The view this Court takes of the cases at bar is but in adherence to
public policy that should be followed with respect to forest lands. Many
have written much, and many more have spoken, and quite often, about
the pressing need for forest preservation, conservation, protection,
development and reforestation. Not without justification. For, forests
constitute a vital segment of any country's natural resources. It is of
common knowledge by now that absence of the necessary green cover
on our lands produces a number of adverse or ill effects of serious
proportions. Without the trees, watersheds dry up; rivers and lakes which
they supply are emptied of their contents. The fish disappear. Denuded
areas become dust bowls. As waterfalls cease to function, so will
hydroelectric plants. With the rains, the fertile topsoil is washed away;
geological erosion results. With erosion come the dreaded floods that
wreak havoc and destruction to property crops, livestock, houses, and
highways not to mention precious human lives. Indeed, the foregoing
observations should be written down in a lumbermans decalogue. [135]

WHEREFORE, judgment is rendered as follows:

1. The petition for certiorari in G.R. No. 167707 is GRANTED and the Court
of Appeals Decision in CA-G.R. CV No. 71118 REVERSED AND SET ASIDE.
2. The petition for certiorari in G.R. No. 173775 is DISMISSED for lack of
merit.
SO ORDERED.

THIRD DIVISION
[G.R. No. 31688 : December 17, 1990.]
192 SCRA 296
DIRECTOR OF LANDS, DIRECTOR OF FORESTRY and REPUBLIC OF THE PHILIPPINES,
Petitioners, vs. HON. JUAN P. AQUINO, as Judge of the Court of First Instance of Abra, Second Judicial
District and ABRA INDUSTRIAL CORPORATION, Respondents.
DECISION
FERNAN, J.:
The center of controversy in the instant petition for review on Certiorari is a limestone-rich 70-hectare land in
Bucay, Abra 66 hectares of which are, according to petitioners, within the Central Cordillera Forest Reserve.
Private respondent Abra Industrial Corporation (AIC for brevity), a duly registered corporation established for the
purpose of setting up a cement factory, claims on the other hand, to be the owner in fee simple of the whole 70hectare area indicated in survey plans PSU-217518, PSU-217519 and PSU-217520 with a total assessed value of
P6,724.48. Thus, on September 23, 1965, it filed in the then Court of First Instance of Abra an application for
registration in its name of said parcels of land under the Land Registration Act or, in the alternative, under Sec. 48
of Commonwealth Act No. 141 1 as amended by Republic Act No. 1942 inasmuch as its predecessors-in-interest
had allegedly been in possession thereof since July 26, 1894. 2
The requisite publication and posting of notice having been complied with, the application was set for hearing.
Except for the Director of Lands, nobody appeared to oppose the application. Hence, the court issued an order of
default against the whole world except the Director of Lands.
After the applicant had rested its case, the provincial fiscal, appearing for the Director of Lands, submitted
evidence supporting the opposition filed by the Solicitor General to the effect that AIC had no registerable title
and that the highly mineralized parcels of land applied for were within the Central Cordillera Forest Reserve which
had not yet been released as alienable and disposable land pursuant to the Public Land Law.
On July 22, 1966, the lower court 3 favorably acted on the application and ordered the registration of the parcels
of land under the Land Registration Act. It ruled that although said land was within the forest zone, the opposition
of the Director of Lands was not well-taken because the Bureau of Forestry, thru the District Forester of Abra,
"offered no objection to exclude the same area from the forest reserve." 4 It found that the parcels of land had
been acquired by purchase and AIC's possession thereof, including that of its predecessors-in-interest, had been
for forty-nine (49) years.
The Director of Lands, through the provincial fiscal, filed a motion for reconsideration of the decision asserting
that except for a 4-hectare area, the land covered by PSU-217518, 217519 and 217520 fell within the Central
Cordillera Forest Reserve, under Proclamation No. 217 dated February 16, 1929; that although it had been
denuded, it was covered with massive, corraline, tufaceous limestone estimated to yield 200,000,000 metric tons
about a fifth of which was suitable for the manufacture of high grade portland cement type and that the
limestone, being 250 meters thick, could yield 10,000 bags of cement a day for 1,000 years. 5 He contended that,
while the land could be reclassified as mineral land under the jurisdiction of the Bureau of Mines, the process of
exclusion from the Cordillera Forest Reserve had not yet been undertaken pursuant to Sec. 1826 of Republic Act
No. 3092 and therefore it was still part of the forest zone which was inalienable under the 1935 Constitution.
AIC having filed its opposition to the motion for reconsideration, the lower court denied it on September 28, 1967
holding that the grounds raised therein were relevant and proper only if the Bureau of Forestry and the Bureau of
Mines were parties to the case. It added that the motion for intervention filed by the Bureau of Lands and the
Bureau of Mines was improper in land registration cases. 6

The Director of Lands filed a petition for Certiorari with the Court of Appeals but the same was dismissed for
having been filed out of time. 7 Hence, on December 22, 1967, the Commissioner of Land Registration issued
Decrees Nos. 118198, 118199 and 118200 for the registration of the subject parcels of land in the name of AIC.
Within one year from the issuance of said decrees or on May 22, 1968, the Republic of the Philippines, through the
Solicitor General, invoking Section 38 of Act No. 496, filed in the Court of First Instance of Abra a petition for
review of the decrees of registration and the lower court's decision of July 22, 1966. The Solicitor General alleged
that although the evidence presented by AIC showed that it had purchased from individual owners only a total
area of 24 hectares, the application included 46 hectares of the Central Cordillera Forest Reserve and therefore
AIC "employed actual fraud" which misled the court "to error in finding the applicant to have a registerable title
over the parcels of land subject of the application." 8
On November 27, 1969, the lower court 9 denied the petition on the ground that if, as alleged by the Solicitor
General, then presiding Judge Macario M. Ofilada was mistaken in appreciating the evidence presented, the
judicial error was "not synonymous with actual fraud." 10
Without asking for a reconsideration of said order, on February 25, 1970, the Solicitor General, representing the
Director of Lands, the Director of Forestry and the Republic of the Philippines, filed the present petition for review
on Certiorari under Republic Act No. 5440.
:-cralaw

The petition was forthwith given due course by the Court 11 but inasmuch as no action was taken on their prayer
for the issuance of a temporary restraining order, the petitioners filed a motion reiterating said prayer. Finding the
motion meritorious, the Court issued a temporary restraining order enjoining the private respondent and its
agents and representatives "from further acts of possession and disposition to innocent purchasers for value of
the parcels of land involved" in this case. 12
AIC filed a motion to dismiss the instant petition on the grounds that it raises "unsubstantial" issues and that it
was filed out of time. The motion was denied by the Court 13 but it bears pointing out that AIC's second ground
for dismissal, which is premised on its perception that a motion for reconsideration of the order of November 27,
1969 is necessary before the filing of the instant petition, is incorrect.
A motion for new trial or reconsideration is not a prerequisite to an appeal, petition for review or a petition for
review on Certiorari. 14 The reglementary period for filing the petition for review on Certiorari in the instant case
was thirty (30) days from notice of the order or judgment subject of review 15 which period, parenthetically, is
now fifteen (15) days pursuant to Section 39 of the Judiciary Act of 1980. 16 Petitioners having been granted a
total of sixty (60) days 17 within which to file the petition, the same was timely filed.
Petitioners herein contend that the lower court erred in granting the application for registration of the parcels of
land notwithstanding its finding that they are within the forest zone. The District Forester's failure to object to the
exclusion of the area sought to be registered from the forest reserve was not enough justification for registration
because under Commonwealth Act No. 141, the power to exclude an area from the forest zone belongs to the
President of the Philippines, upon the recommendation of the Secretary of Agriculture and Natural Resources, and
not the District Forester or even the Director of Forestry.
Petitioners also contend that the lower court erred in denying the petition for review based on actual fraud
because under Section 38 of Act No. 496, a decree of registration may be reviewed not only by reason of actual
fraud but also for a fatal infirmity of the decision upon which the decree is based, provided no innocent purchaser
for value will be prejudiced.
We find the petition to be meritorious. Once again, we reiterate the rule enunciated by this Court in Director of
Forestry vs. Muoz 18 and consistently adhered to in a long line of cases 19 the more recent of which is Republic
vs. Court of Appeals, 20 that forest lands or forest reserves are incapable of private appropriation and possession
thereof, however long, cannot convert them into private properties. This ruling is premised on the Regalian
doctrine enshrined not only in the 1935 and 1973 Constitutions but also in the 1987 Constitution Article XIII of
which provides that:
"Sec. 2. All lands of the public domain, waters, minerals, coal . . . , forests or timber, . . . and other natural
resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be
alienated."
Pursuant to this constitutional provision, the land must first be released from its classification as forest land and
reclassified as agricultural land in accordance with the certification issued by the Director of Forestry as provided
for by Section 1827 of the Revised Administrative Code. 21 This is because the classification of public lands is an
exclusive prerogative of the executive department of the government and not of the courts. 22 Moreover, a
positive act of the government is needed to declassify a forest land into alienable or disposable land for
agricultural or other purposes. 23
Being the interested party, an applicant for registration of a parcel of land bears the burden of overcoming the
presumption that the land sought to be registered forms part of the public domain. 24 In this case, AIC asserts
that the land in dispute is no longer part of the Cordillera Forest Reserve because the communal forest in Bucay,
Abra which had been established in 1909 by virtue of Forestry Administrative Order No. 2-298, had been
"cancelled and de-established" by Forestry Administrative Order No. 2-622 dated October 1, 1965 and issued by
then Acting Secretary of Agriculture and Natural Resources Jose Y. Feliciano. 25 AIC therefore tries to impress upon
the Court the fact that as there was no longer a forested area, the same area had become alienable more so
because its actual occupants, who had been devoting it to agriculture, had relinquished their rights over it in favor
of AIC "to give way for greater economic benefits for the people in the locality." 26 It should be emphasized,
however, that the classification of the land as forest land is descriptive of its legal nature or status and does not
have to be descriptive of what the land actually looks like. 27 Hence, the fact that the contested parcels of land
have long been denuded and actually contains rich limestone deposits does not in any way affect its present
classification as forest land.
: nad

While it is true that under Section 1839 of the Revised Administrative Code, the Director of Forestry, with the
approval of the Department Head, may change the location of a communal forest, such executive action does not
amount to a declassification of a forest reserve into an alienable or disposable land. Under Commonwealth Act No.
141, 28 it is no less than the President, upon the recommendation of the proper department head, who has the
authority to classify the lands of the public domain into alienable or disposable, timber and mineral lands. 29 The
President shall also declare from time to time what lands are open to disposition or concession. 30 AIC therefore,

should prove first of all that the lands it claims for registration are alienable or disposable lands. As it is, AIC has
not only failed to prove that it has a registerable title but more important]y, it failed to show that the lands are no
longer a part of the public domain.
The petitioners therefore validly insisted on the review of the decision ordering the issuance of the decree of
registration in view of its patent infirmity. The lower court closed its eyes to a basic doctrine in land registration
cases that the inclusion in a title of a part of the public domain nullifies the title. 31 Its decision to order the
registration of an inalienable land in favor of AIC under the misconception that it is imperative for the Director of
Forestry to object to its exclusion from the forest reserve even in the face of its finding that indeed a sizable
portion of the Central Cordillera Forest Reserve is involved, cannot be allowed to stay unreversed. It betrays an
inherent infirmity which must be corrected.
:-cralaw

WHEREFORE, the order of November 27, 1969 denying the petition for review under Section 38 of Act No. 496 and
the decision of July 22, 1966 insofar as it orders the registration of land within the Central Cordillera Forest
Reserve are hereby REVERSED AND SET ASIDE. The temporary restraining order issued on April 7, 1970 is hereby
made permanent. Costs against the private respondent.
SO ORDERED.

G.R. No. 127882

December 1, 2004

LA BUGAL-B'LAAN TRIBAL ASSOCIATION, INC., petitioners,

vs.
VICTOR O. RAMOS, Secretary, Department of Environment and Natural Resources
(DENR, respondents.
RESOLUTION
PANGANIBAN, J.:
All mineral resources are owned by the State. Their exploration, development and utilization (EDU) must
always be subject to the full control and supervision of the State. More specifically, given the inadequacy of
Filipino capital and technology in large-scale EDU activities, the State may secure the help of foreign
companies in all relevant matters -- especially financial and technical assistance -- provided that, at all
times, the State maintains its right of full control. The foreign assistor or contractor assumes all financial,
technical and entrepreneurial risks in the EDU activities; hence, it may be given reasonable management,
operational, marketing, audit and other prerogatives to protect its investments and to enable the business to
succeed.
Full control is not anathematic to day-to-day management by the contractor, provided that the State retains
the power to direct overall strategy; and to set aside, reverse or modify plans and actions of the contractor.
The idea of full control is similar to that which is exercised by the board of directors of a private corporation:
the performance of managerial, operational, financial, marketing and other functions may be delegated to
subordinate officers or given to contractual entities, but the board retains full residual control of the
business.
Who or what organ of government actually exercises this power of control on behalf of the State? The
Constitution is crystal clear: the President. Indeed, the Chief Executive is the official constitutionally
mandated to "enter into agreements with foreign owned corporations." On the other hand, Congress may
review the action of the President once it is notified of "every contract entered into in accordance with this

[constitutional] provision within thirty days from its execution." In contrast to this express mandate of the
President and Congress in the EDU of natural resources, Article XII of the Constitution is silent on the role of
the judiciary. However, should the President and/or Congress gravely abuse their discretion in this regard,
the courts may -- in a proper case -- exercise their residual duty under Article VIII. Clearly then, the judiciary
should not inordinately interfere in the exercise of this presidential power of control over the EDU of our
natural resources.
The Constitution should be read in broad, life-giving strokes. It should not be used to strangulate economic
growth or to serve narrow, parochial interests. Rather, it should be construed to grant the President and
Congress sufficient discretion and reasonable leeway to enable them to attract foreign investments and
expertise, as well as to secure for our people and our posterity the blessings of prosperity and peace.
On the basis of this control standard, this Court upholds the constitutionality of the Philippine Mining Law, its
Implementing Rules and Regulations -- insofar as they relate to financial and technical agreements -- as well
as the subject Financial and Technical Assistance Agreement (FTAA). 5
Background
The Petition for Prohibition and Mandamus before the Court challenges the constitutionality of (1) Republic
Act No. [RA] 7942 (The Philippine Mining Act of 1995); (2) its Implementing Rules and Regulations (DENR
Administrative Order No. [DAO] 96-40); and (3) the FTAA dated March 30, 1995, 6 executed by the
government with Western Mining Corporation (Philippines), Inc. (WMCP). 7
On January 27, 2004, the Court en banc promulgated its Decision8 granting the Petition and declaring the
unconstitutionality of certain provisions of RA 7942, DAO 96-40, as well as of the entire FTAA executed
between the government and WMCP, mainly on the finding that FTAAs are service contracts prohibited
by the 1987 Constitution.
The Decision struck down the subject FTAA for being similar to service contracts, 9 which, though permitted
under the 1973 Constitution,10 were subsequently denounced for being antithetical to the principle of
sovereignty over our natural resources, because they allowed foreign control over the exploitation of our
natural resources, to the prejudice of the Filipino nation.
The Decision quoted several legal scholars and authors who had criticized service contracts for, inter
alia, vesting in the foreign contractor exclusive management and control of the enterprise, including
operation of the field in the event petroleum was discovered; control of production, expansion and
development; nearly unfettered control over the disposition and sale of the products discovered/extracted;
effective ownership of the natural resource at the point of extraction; and beneficial ownership of our
economic resources. According to the Decision, the 1987 Constitution (Section 2 of Article XII) effectively
banned such service contracts.
Subsequently, respondents filed separate Motions for Reconsideration. In a Resolution dated March 9, 2004,
the Court required petitioners to comment thereon. In the Resolution of June 8, 2004, it set the case for Oral
Argument on June 29, 2004.
After hearing the opposing sides, the Court required the parties to submit their respective Memoranda in
amplification of their arguments. In a Resolution issued later the same day, June 29, 2004, the Court
noted, inter alia, the Manifestation and Motion (in lieu of comment) filed by the Office of the Solicitor General
(OSG) on behalf of public respondents. The OSG said that it was not interposing any objection to the Motion
for Intervention filed by the Chamber of Mines of the Philippines, Inc. (CMP) and was in fact joining and
adopting the latter's Motion for Reconsideration.

Memoranda were accordingly filed by the intervenor as well as by petitioners, public respondents, and
private respondent, dwelling at length on the three issues discussed below. Later, WMCP submitted its Reply
Memorandum, while the OSG -- in obedience to an Order of this Court -- filed a Compliance submitting
copies of more FTAAs entered into by the government.
Three Issues Identified by the Court
During the Oral Argument, the Court identified the three issues to be resolved in the present controversy, as
follows:
1. Has the case been rendered moot by the sale of WMC shares in WMCP to Sagittarius (60 percent of
Sagittarius' equity is owned by Filipinos and/or Filipino-owned corporations while 40 percent is owned by
Indophil Resources NL, an Australian company) and by the subsequent transfer and registration of the FTAA
from WMCP to Sagittarius?
2. Assuming that the case has been rendered moot, would it still be proper to resolve the constitutionality of
the assailed provisions of the Mining Law, DAO 96-40 and the WMCP FTAA?
3. What is the proper interpretation of the phrase Agreements Involving Either Technical or Financial
Assistancecontained in paragraph 4 of Section 2 of Article XII of the Constitution?

Should the Motion for Reconsideration Be Granted?

Respondents' and intervenor's Motions for Reconsideration should be granted, for the reasons discussed
below. The foregoing three issues identified by the Court shall now be taken up seriatim.
First Issue:
Mootness
In declaring unconstitutional certain provisions of RA 7942, DAO 96-40, and the WMCP FTAA, the majority
Decision agreed with petitioners' contention that the subject FTAA had been executed in violation of Section
2 of Article XII of the 1987 Constitution. According to petitioners, the FTAAs entered into by the government
with foreign-owned corporations are limited by the fourth paragraph of the said provision to agreements
involving only technical or financial assistance for large-scale exploration, development and utilization of
minerals, petroleum and other mineral oils. Furthermore, the foreign contractor is allegedly permitted by the
FTAA in question to fully manage and control the mining operations and, therefore, to acquire "beneficial
ownership" of our mineral resources.
The Decision merely shrugged off the Manifestation by WMPC informing the Court (1) that on January 23,
2001, WMC had sold all its shares in WMCP to Sagittarius Mines, Inc., 60 percent of whose equity was held
by Filipinos; and (2) that the assailed FTAA had likewise been transferred from WMCP to
Sagittarius.11 The ponencia declared that the instant case had not been rendered moot by the transfer and
registration of the FTAA to a Filipino-owned corporation, and that the validity of the said transfer remained in
dispute and awaited final judicial determination.12Patently therefore, the Decision is anchored on the
assumption that WMCP had remained a foreign corporation.
The crux of this issue of mootness is the fact that WMCP, at the time it entered into the FTAA, happened to
be wholly owned by WMC Resources International Pty., Ltd. (WMC), which in turn was a wholly owned
subsidiary of Western Mining Corporation Holdings Ltd., a publicly listed major Australian mining and
exploration company.
The nullity of the FTAA was obviously premised upon the contractor being a foreign corporation. Had the
FTAA been originally issued to a Filipino-owned corporation, there would have been no constitutionality issue
to speak of. Upon the other hand, the conveyance of the WMCP FTAA to a Filipino corporation can be likened
to the sale of land to a foreigner who subsequently acquires Filipino citizenship, or who later resells the same
land to a Filipino citizen. The conveyance would be validated, as the property in question would no longer be
owned by a disqualified vendee.
And, inasmuch as the FTAA is to be implemented now by a Filipino corporation, it is no longer possible for
the Court to declare it unconstitutional. The case pending in the Court of Appeals is a dispute between two
Filipino companies (Sagittarius and Lepanto), both claiming the right to purchase the foreign shares in
WMCP. So, regardless of which side eventually wins, the FTAA would still be in the hands of a qualified
Filipino company. Considering that there is no longer any justiciable controversy, the plea to nullify the
Mining Law has become a virtual petition for declaratory relief, over which this Court has no original
jurisdiction.
In their Final Memorandum, however, petitioners argue that the case has not become moot, considering the
invalidity of the alleged sale of the shares in WMCP from WMC to Sagittarius, and of the transfer of the FTAA
from WMCP to Sagittarius, resulting in the change of contractor in the FTAA in question. And even assuming
that the said transfers were valid, there still exists an actual case predicated on the invalidity of RA 7942 and
its Implementing Rules and Regulations (DAO 96-40). Presently, we shall discuss petitioners' objections to
the transfer of both the shares and the FTAA. We shall take up the alleged invalidity of RA 7942 and DAO 9640 later on in the discussion of the third issue.
No Transgression of the Constitution
by the Transfer of the WMCP Shares
Petitioners claim, first, that the alleged invalidity of the transfer of the WMCP shares to Sagittarius violates
the fourth paragraph of Section 2 of Article XII of the Constitution; second, that it is contrary to the
provisions of the WMCP FTAA itself; and third, that the sale of the shares is suspect and should therefore be
the subject of a case in which its validity may properly be litigated.
On the first ground, petitioners assert that paragraph 4 of Section 2 of Article XII permits the government to
enter into FTAAs only with foreign-owned corporations. Petitioners insist that the first paragraph of this
constitutional provision limits the participation of Filipino corporations in the exploration, development and
utilization of natural resources to only three species of contracts -- production sharing, co-production and
joint venture -- to the exclusion of all other arrangements or variations thereof, and the WMCP FTAA may
therefore not be validly assumed and implemented by Sagittarius. In short, petitioners claim that a Filipino
corporation is not allowed by the Constitution to enter into an FTAA with the government.
However, a textual analysis of the first paragraph of Section 2 of Article XII does not support petitioners'
argument. The pertinent part of the said provision states: "Sec. 2. x x x The exploration, development and
utilization of natural resources shall be under the full control and supervision of the State. The State may
directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing
agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital

is owned by such citizens. x x x." Nowhere in the provision is there any express limitation or restriction
insofar as arrangements other than the three aforementioned contractual schemes are concerned.
Neither can one reasonably discern any implied stricture to that effect. Besides, there is no basis to believe
that the framers of the Constitution, a majority of whom were obviously concerned with furthering the
development and utilization of the country's natural resources, could have wanted to restrict Filipino
participation in that area. This point is clear, especially in the light of the overarching constitutional principle
of giving preference and priority to Filipinos and Filipino corporations in the development of our natural
resources.
Besides, even assuming (purely for argument's sake) that a constitutional limitation barring Filipino
corporations from holding and implementing an FTAA actually exists, nevertheless, such provision would
apply only to the transfer of the FTAA to Sagittarius, but definitely not to the sale of WMC's equity stake in
WMCP to Sagittarius. Otherwise, an unreasonable curtailment of property rights without due process of law
would ensue. Petitioners' argument must therefore fail.
FTAA Not Intended
Solely for Foreign Corporation
Equally barren of merit is the second ground cited by petitioners -- that the FTAA was intended to apply
solely to a foreign corporation, as can allegedly be seen from the provisions therein. They manage to cite
only one WMCP FTAA provision that can be regarded as clearly intended to apply only to a foreign
contractor: Section 12, which provides for international commercial arbitration under the auspices of the
International Chamber of Commerce, after local remedies are exhausted. This provision, however, does not
necessarily imply that the WMCP FTAA cannot be transferred to and assumed by a Filipino corporation like
Sagittarius, in which event the said provision should simply be disregarded as a superfluity.
No Need for a Separate
Litigation of the Sale of Shares
Petitioners claim as third ground the "suspicious" sale of shares from WMC to Sagittarius; hence, the need to
litigate it in a separate case. Section 40 of RA 7942 (the Mining Law) allegedly requires the President's prior
approval of a transfer.
A re-reading of the said provision, however, leads to a different conclusion. "Sec. 40. Assignment/Transfer
-- A financial or technical assistance agreement may be assigned or transferred, in whole or in part, to a
qualified person subject to the prior approval of the President: Provided, That the President shall notify
Congress of every financial or technical assistance agreement assigned or converted in accordance with this
provision within thirty (30) days from the date of the approval thereof."
Section 40 expressly applies to the assignment or transfer of the FTAA, not to the sale and transfer of shares
of stock in WMCP. Moreover, when the transferee of an FTAA is another foreign corporation, there is a logical
application of the requirement of prior approval by the President of the Republic and notification to Congress
in the event of assignment or transfer of an FTAA. In this situation, such approval and notification are
appropriate safeguards, considering that the new contractor is the subject of a foreign government.
On the other hand, when the transferee of the FTAA happens to be a Filipino corporation, the need for such
safeguard is not critical; hence, the lack of prior approval and notification may not be deemed fatal as to
render the transfer invalid. Besides, it is not as if approval by the President is entirely absent in this instance.
As pointed out by private respondent in its Memorandum,13 the issue of approval is the subject of one of the
cases brought by Lepanto against Sagittarius in GR No. 162331. That case involved the review of the
Decision of the Court of Appeals dated November 21, 2003 in CA-GR SP No. 74161, which affirmed the DENR
Order dated December 31, 2001 and the Decision of the Office of the President dated July 23, 2002,
both approving the assignment of the WMCP FTAA to Sagittarius.
Petitioners also question the sale price and the financial capacity of the transferee. According to the Deed of
Absolute Sale dated January 23, 2001, executed between WMC and Sagittarius, the price of the WMCP
shares was fixed at US$9,875,000, equivalent to P553 million at an exchange rate of 56:1. Sagittarius had an
authorized capital stock of P250 million and a paid up capital of P60 million. Therefore, at the time of
approval of the sale by the DENR, the debt-to-equity ratio of the transferee was over 9:1 -- hardly ideal for
an FTAA contractor, according to petitioners.
However, private respondents counter that the Deed of Sale specifically provides that the payment of the
purchase price would take place only after Sagittarius' commencement of commercial production from
mining operations, if at all. Consequently, under the circumstances, we believe it would not be reasonable to
conclude, as petitioners did, that the transferee's high debt-to-equity ratio per se necessarily carried
negative implications for the enterprise; and it would certainly be improper to invalidate the sale on that
basis, as petitioners propose.

FTAA Not Void,

Thus Transferrable

To bolster further their claim that the case is not moot, petitioners insist that the FTAA is void and, hence
cannot be transferred; and that its transfer does not operate to cure the constitutional infirmity that is
inherent in it; neither will a change in the circumstances of one of the parties serve to ratify the void
contract.
While the discussion in their Final Memorandum was skimpy, petitioners in their Comment (on the MR) did
ratiocinate that this Court had declared the FTAA to be void because, at the time it was executed with
WMCP, the latter was a fully foreign-owned corporation, in which the former vested full control and
management with respect to the exploration, development and utilization of mineral resources, contrary to
the provisions of paragraph 4 of Section 2 of Article XII of the Constitution. And since the FTAA was per se
void, no valid right could be transferred; neither could it be ratified, so petitioners conclude.
Petitioners have assumed as fact that which has yet to be established. First and foremost, the Decision of
this Court declaring the FTAA void has not yet become final. That was precisely the reason the Court still
heard Oral Argument in this case. Second, the FTAA does not vest in the foreign corporation full control and
supervision over the exploration, development and utilization of mineral resources, to the exclusion of the
government. This point will be dealt with in greater detail below; but for now, suffice it to say that a perusal
of the FTAA provisions will prove that the government has effective overall direction and control of the
mining operations, including marketing and product pricing, and that the contractor's work programs and
budgets are subject to its review and approval or disapproval.
As will be detailed later on, the government does not have to micro-manage the mining operations and dip
its hands into the day-to-day management of the enterprise in order to be considered as having overall
control and direction. Besides, for practical and pragmatic reasons, there is a need for government agencies
to delegate certain aspects of the management work to the contractor. Thus the basis for declaring the FTAA
void still has to be revisited, reexamined and reconsidered.
Petitioners sniff at the citation of Chavez v. Public Estates Authority,14 and Halili v. CA,15 claiming that the
doctrines in these cases are wholly inapplicable to the instant case.
Chavez clearly teaches: "Thus, the Court has ruled consistently that where a Filipino citizen sells land to an
alien who later sells the land to a Filipino, the invalidity of the first transfer is corrected by the subsequent
sale to a citizen. Similarly, where the alien who buys the land subsequently acquires Philippine citizenship,
the sale is validated since the purpose of the constitutional ban to limit land ownership to Filipinos has been
achieved. In short, the law disregards the constitutional disqualification of the buyer to hold land if the land
is subsequently transferred to a qualified party, or the buyer himself becomes a qualified party." 16
In their Comment, petitioners contend that in Chavez and Halili, the object of the transfer (the land) was not
what was assailed for alleged unconstitutionality. Rather, it was the transaction that was assailed; hence
subsequent compliance with constitutional provisions would cure its infirmity. In contrast, in the instant case
it is the FTAA itself, the object of the transfer, that is being assailed as invalid and unconstitutional. So,
petitioners claim that the subsequent transfer of a void FTAA to a Filipino corporation would not cure the
defect.
Petitioners are confusing themselves. The present Petition has been filed, precisely because the grantee of
the FTAA was a wholly owned subsidiary of a foreign corporation. It cannot be gainsaid that anyone would
have asserted that the same FTAA was void if it had at the outset been issued to a Filipino corporation. The
FTAA, therefore, is not per se defective or unconstitutional. It was questioned only because it had been
issued to an allegedly non-qualified, foreign-owned corporation.
We believe that this case is clearly analogous to Halili, in which the land acquired by a non-Filipino was reconveyed to a qualified vendee and the original transaction was thereby cured. Paraphrasing Halili, the same
rationale applies to the instant case: assuming arguendo the invalidity of its prior grant to a foreign
corporation, the disputed FTAA -- being now held by a Filipino corporation -- can no longer be assailed; the
objective of the constitutional provision -- to keep the exploration, development and utilization of our natural
resources in Filipino hands -- has been served.
More accurately speaking, the present situation is one degree better than that obtaining in Halili, in which
the original sale to a non-Filipino was clearly and indisputably violative of the constitutional prohibition and
thus void ab initio. In the present case, the issuance/grant of the subject FTAA to the then foreign-owned
WMCP was not illegal, void or unconstitutional at the time. The matter had to be brought to court, precisely
for adjudication as to whether the FTAA and the Mining Law had indeed violated the Constitution. Since, up
to this point, the decision of this Court declaring the FTAA void has yet to become final, to all intents and
purposes, the FTAA must be deemed valid and constitutional. 17
At bottom, we find completely outlandish petitioners' contention that an FTAA could be entered into by the
government only with a foreign corporation, never with a Filipino enterprise. Indeed, the nationalistic
provisions of the Constitution are all anchored on the protection of Filipino interests. How petitioners can
now argue that foreigners have the exclusive right to FTAAs totally overturns the entire basis of the Petition
-- preference for the Filipino in the exploration, development and utilization of our natural resources. It does
not take deep knowledge of law and logic to understand that what the Constitution grants to foreigners
should be equally available to Filipinos.
Second Issue:

Whether the Court Can Still Decide the Case,

Even Assuming It Is Moot
All the protagonists are in agreement that the Court has jurisdiction to decide this controversy, even
assuming it to be moot.
Petitioners stress the following points. First, while a case becomes moot and academic when "there is no
more actual controversy between the parties or no useful purpose can be served in passing upon the
merits,"18 what is at issue in the instant case is not only the validity of the WMCP FTAA, but also the
constitutionality of RA 7942 and its Implementing Rules and Regulations. Second, the acts of private
respondent cannot operate to cure the law of its alleged unconstitutionality or to divest this Court of its
jurisdiction to decide. Third, the Constitution imposes upon the Supreme Court the duty to declare invalid
any law that offends the Constitution.
Petitioners also argue that no amendatory laws have been passed to make the Mining Act of 1995 conform
to constitutional strictures (assuming that, at present, it does not); that public respondents will continue to
implement and enforce the statute until this Court rules otherwise; and that the said law continues to be the
source of legal authority in accepting, processing and approving numerous applications for mining rights.
Indeed, it appears that as of June 30, 2002, some 43 FTAA applications had been filed with the Mines and
Geosciences Bureau (MGB), with an aggregate area of 2,064,908.65 hectares -- spread over Luzon, the
Visayas and Mindanao19 -- applied for. It may be a bit far-fetched to assert, as petitioners do, that each and
every FTAA that was entered into under the provisions of the Mining Act "invites potential litigation" for as
long as the constitutional issues are not resolved with finality. Nevertheless, we must concede that there
exists the distinct possibility that one or more of the future FTAAs will be the subject of yet another suit
grounded on constitutional issues.
But of equal if not greater significance is the cloud of uncertainty hanging over the mining industry, which is
even now scaring away foreign investments. Attesting to this climate of anxiety is the fact that the Chamber
of Mines of the Philippines saw the urgent need to intervene in the case and to present its position during
the Oral Argument; and that Secretary General Romulo Neri of the National Economic Development
Authority (NEDA) requested this Court to allow him to speak, during that Oral Argument, on the economic
consequences of the Decision of January 27, 2004. 20
We are convinced. We now agree that the Court must recognize the exceptional character of the situation
and the paramount public interest involved, as well as the necessity for a ruling to put an end to the
uncertainties plaguing the mining industry and the affected communities as a result of doubts cast upon the
constitutionality and validity of the Mining Act, the subject FTAA and future FTAAs, and the need to avert a
multiplicity of suits. ParaphrasingGonzales v. Commission on Elections,21 it is evident that strong reasons of
public policy demand that the constitutionality issue be resolved now.22
In further support of the immediate resolution of the constitutionality issue, public respondents cite Acop v.
Guingona,23 to the effect that the courts will decide a question -- otherwise moot and academic -- if it
is "capable of repetition, yet evading review."24 Public respondents ask the Court to avoid a situation in which
the constitutionality issue may again arise with respect to another FTAA, the resolution of which may not be
achieved until after it has become too late for our mining industry to grow out of its infancy. They also
recall Salonga v. Cruz Pao,25 in which this Court declared that "(t)he Court also has the duty to formulate
guiding and controlling constitutional principles, precepts, doctrines or rules. It has the symbolic function of
educating the bench and bar on the extent of protection given by constitutional guarantees. x x x."
The mootness of the case in relation to the WMCP FTAA led the undersigned ponente to state in his dissent
to the Decision that there was no more justiciable controversy and the plea to nullify the Mining Law has
become a virtual petition for declaratory relief.26 The entry of the Chamber of Mines of the Philippines, Inc.,
however, has put into focus the seriousness of the allegations of unconstitutionality of RA 7942 and DAO 9640 which converts the case to one for prohibition 27 in the enforcement of the said law and regulations.
Indeed, this CMP entry brings to fore that the real issue in this case is whether paragraph 4 of Section 2 of
Article XII of the Constitution is contravened by RA 7942 and DAO 96-40, not whether it was violated by
specific acts implementing RA 7942 and DAO 96-40. "[W]hen an act of the legislative department is
seriously alleged to have infringed the Constitution, settling the controversy becomes the duty of this Court.
By the mere enactment of the questioned law or the approval of the challenged action, the dispute is said to
have ripened into a judicial controversy even without any other overt act." 28 This ruling can be traced
from Taada v. Angara,29 in which the Court said:
"In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the
Constitution, the petition no doubt raises a justiciable controversy. Where an action of the legislative
branch is seriously alleged to have infringed the Constitution, it becomes not only the right but in fact
the duty of the judiciary to settle the dispute.
xxxxxxxxx
"As this Court has repeatedly and firmly emphasized in many cases, it will not shirk, digress from or
abandon its sacred duty and authority to uphold the Constitution in matters that involve grave abuse
of discretion brought before it in appropriate cases, committed by any officer, agency, instrumentality
or department of the government."30

Additionally, the entry of CMP into this case has also effectively forestalled any possible objections arising
from the standing or legal interest of the original parties.
For all the foregoing reasons, we believe that the Court should proceed to a resolution of the constitutional
issues in this case.
Third Issue:
The Proper Interpretation of the Constitutional Phrase
"Agreements Involving Either Technical or Financial Assistance"
The constitutional provision at the nucleus of the controversy is paragraph 4 of Section 2 of Article XII of the
1987 Constitution. In order to appreciate its context, Section 2 is reproduced in full:
"Sec. 2. 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. The exploration, development and utilization of natural resources shall be
under the full control and supervision of the State. The State may directly undertake such activities,
or it may enter into co-production, joint venture or production-sharing agreements with Filipino
citizens or corporations or associations at least sixty per centum of whose capital is owned by such
citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not
more than twenty-five years, and under such terms and conditions as may be provided by law. In
cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, beneficial use may be the measure and limit of the grant.
"The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea, and
exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens.
"The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as
well as cooperative fish farming, with priority to subsistence fishermen and fish-workers in rivers,
lakes, bays and lagoons.
"The President may enter into agreements with foreign-owned corporations involving either
technical or financial assistance for large-scale exploration, development, and utilization
of minerals, petroleum, and other mineral oils according to the general terms and conditions
provided by law, based on real contributions to the economic growth and general welfare of the
country. In such agreements, the State shall promote the development and use of local scientific and
technical resources.
"The President shall notify the Congress of every contract entered into in accordance with this
provision, within thirty days from its execution."31
No Restriction of Meaning by
a Verba Legis Interpretation
To interpret the foregoing provision, petitioners adamantly assert that the language of the Constitution
should prevail; that the primary method of interpreting it is to seek the ordinary meaning of the words used
in its provisions. They rely on rulings of this Court, such as the following:
"The fundamental principle in constitutional construction however is that the primary source from
which to ascertain constitutional intent or purpose is the language of the provision itself. The
presumption is that the words in which the constitutional provisions are couched express the
objective sought to be attained. In other words, verba legis prevails. Only when the meaning of the
words used is unclear and equivocal should resort be made to extraneous aids of construction and
interpretation, such as the proceedings of the Constitutional Commission or Convention to shed light
on and ascertain the true intent or purpose of the provision being construed." 32
Very recently, in Francisco v. The House of Representatives,33 this Court indeed had the occasion to reiterate
the well-settled principles of constitutional construction:
"First, verba legis, that is, wherever possible, the words used in the Constitution must be given
their ordinary meaning except where technical terms are employed. x x x.
xxxxxxxxx
"Second, where there is ambiguity, ratio legis est anima. The words of the Constitution should be
interpretedin accordance with the intent of its framers. x x x.
xxxxxxxxx
"Finally, ut magis valeat quam pereat. The Constitution is to be interpreted as a whole."34

For ease of reference and in consonance with verba legis, we reconstruct and stratify the aforequoted
Section 2 as follows:
1. All natural resources are owned by the State. Except for agricultural lands, natural resources
cannot be alienated by the State.
2. The exploration, development and utilization (EDU) of natural resources shall be under the full
control and supervision of the State.
3. The State may undertake these EDU activities through either of the following:
(a) By itself directly and solely
(b) By (i) co-production; (ii) joint venture; or (iii) production sharing agreements with Filipino
citizens or corporations, at least 60 percent of the capital of which is owned by such citizens
4. Small-scale utilization of natural resources may be allowed by law in favor of Filipino citizens.
5. For large-scale EDU of minerals, petroleum and other mineral oils, the President may enter into
"agreements with foreign-owned corporations involving either technical or financial assistance
according to the general terms and conditions provided by law x x x."
Note that in all the three foregoing mining activities -- exploration, development and utilization -- the State
may undertake such EDU activities by itself or in tandem with Filipinos or Filipino corporations, except in two
instances:first, in small-scale utilization of natural resources, which Filipinos may be allowed by law to
undertake; and second, in large-scale EDU of minerals, petroleum and mineral oils, which may be
undertaken by the State via "agreementswith foreign-owned corporations involving either technical or
financial assistance" as provided by law.
Petitioners claim that the phrase "agreements x x x involving either technical or financial assistance" simply
meanstechnical assistance or financial assistance agreements, nothing more and nothing else. They insist
that there is no ambiguity in the phrase, and that a plain reading of paragraph 4 quoted above leads to the
inescapable conclusion that what a foreign-owned corporation may enter into with the government is merely
an agreement for eitherfinancial or technical assistance only, for the large-scale exploration, development
and utilization of minerals, petroleum and other mineral oils; such a limitation, they argue, excludes foreign
management and operation of a mining enterprise.35
This restrictive interpretation, petitioners believe, is in line with the general policy enunciated by the
Constitution reserving to Filipino citizens and corporations the use and enjoyment of the country's natural
resources. They maintain that this Court's Decision 36 of January 27, 2004 correctly declared the WMCP FTAA,
along with pertinent provisions of RA 7942, void for allowing a foreign contractor to have direct and
exclusive management of a mining enterprise. Allowing such a privilege not only runs counter to the "full
control and supervision" that the State is constitutionally mandated to exercise over the exploration,
development and utilization of the country's natural resources; doing so also vests in the foreign company
"beneficial ownership" of our mineral resources. It will be recalled that the Decision of January 27, 2004
zeroed in on "management or other forms of assistance" or other activities associated with the "service
contracts" of the martial law regime, since "the management or operation of mining activities by foreign
contractors, which is the primary feature of service contracts, was precisely the evil that the drafters of the
1987 Constitution sought to eradicate."
On the other hand, the intervenor37 and public respondents argue that the FTAA allowed by paragraph 4 is
not merely an agreement for supplying limited and specific financial or technical services to the State.
Rather, such FTAA is a comprehensive agreement for the foreign-owned corporation's integrated exploration,
development and utilization of mineral, petroleum or other mineral oils on a large-scale basis. The
agreement, therefore, authorizes the foreign contractor's rendition of a whole range of integrated and
comprehensive services, ranging from the discovery to the development, utilization and production of
minerals or petroleum products.
We do not see how applying a strictly literal or verba legis interpretation of paragraph 4 could inexorably
lead to the conclusions arrived at in the ponencia. First, the drafters' choice of words -- their use of the
phrase agreements x x xinvolving either technical or financial assistance -- does not indicate the intent
to exclude other modes of assistance. The drafters opted to use involving when they could have simply
said agreements for financial or technical assistance, if that was their intention to begin with. In this case,
the limitation would be very clear and no further debate would ensue.
In contrast, the use of the word "involving" signifies the possibility of the inclusion of other forms of
assistance or activities having to do with, otherwise related to or compatible with financial or technical
assistance. The word "involving" as used in this context has three connotations that can be differentiated
thus: one, the sense of "concerning," "having to do with," or "affecting"; two, "entailing," "requiring,"
"implying" or "necessitating"; and three, "including," "containing" or "comprising."38
Plainly, none of the three connotations convey a sense of exclusivity. Moreover, the word "involving," when
understood in the sense of "including," as in including technical or financial assistance, necessarily implies
that there are activities other than those that are being included. In other words, if an

agreement includes technical or financial assistance, there is apart from such assistance -- something else
already in, and covered or may be covered by, the said agreement.
In short, it allows for the possibility that matters, other than those explicitly mentioned, could be made part
of the agreement. Thus, we are now led to the conclusion that the use of the word "involving" implies that
these agreements with foreign corporations are not limited to mere financial or technical assistance. The
difference in sense becomes very apparent when we juxtapose "agreements for technical or financial
assistance" against "agreements including technical or financial assistance." This much is unalterably clear
in a verba legis approach.
Second, if the real intention of the drafters was to confine foreign corporations to financial or technical
assistance and nothing more, their language would have certainly been so unmistakably restrictive and
stringent as to leave no doubt in anyone's mind about their true intent. For example, they would have used
the sentence foreign corporations are absolutely prohibited from involvement in the management or
operation of mining or similar ventures or words of similar import. A search for such stringent wording yields
negative results. Thus, we come to the inevitable conclusion that there was a conscious and
deliberate decision to avoid the use of restrictive wording that bespeaks an intent not to use
the expression "agreements x x x involving either technical or financial assistance" in an
exclusionary and limiting manner.
Deletion of "Service Contracts" to
Avoid Pitfalls of Previous Constitutions,
Not to Ban Service Contracts Per Se
Third, we do not see how a verba legis approach leads to the conclusion that "the management or operation
of mining activities by foreign contractors, which is the primary feature of service contracts, was precisely
the evil that the drafters of the 1987 Constitution sought to eradicate." Nowhere in the above-quoted
Section can be discerned the objective to keep out of foreign hands the management or operation of mining
activities or the plan to eradicate service contracts as these were understood in the 1973 Constitution. Still,
petitioners maintain that the deletion or omission from the 1987 Constitution of the term "service contracts"
found in the 1973 Constitution sufficiently proves the drafters' intent to exclude foreigners from the
management of the affected enterprises.
To our mind, however, such intent cannot be definitively and conclusively established from the mere failure
to carry the same expression or term over to the new Constitution, absent a more specific, explicit and
unequivocal statement to that effect. What petitioners seek (a complete ban on foreign participation in the
management of mining operations, as previously allowed by the earlier Constitutions) is nothing short of
bringing about a momentous sea change in the economic and developmental policies; and the
fundamentally capitalist, free-enterprise philosophy of our government. We cannot imagine such a radical
shift being undertaken by our government, to the great prejudice of the mining sector in particular and our
economy in general, merely on the basis of the omission of the termsservice contract from or the failure to
carry them over to the new Constitution. There has to be a much more definite and even unarguable basis
for such a drastic reversal of policies.
Fourth, a literal and restrictive interpretation of paragraph 4, such as that proposed by petitioners, suffers
from certain internal logical inconsistencies that generate ambiguities in the understanding of the provision.
As the intervenor pointed out, there has never been any constitutional or statutory provision that reserved
to Filipino citizens or corporations, at least 60 percent of which is Filipino-owned, the rendition of financial or
technical assistance to companies engaged in mining or the development of any other natural resource. The
taking out of foreign-currency or peso-denominated loans or any other kind of financial assistance, as well as
the rendition of technical assistance -- whether to the State or to any other entity in the Philippines -- has
never been restricted in favor of Filipino citizens or corporations having a certain minimum percentage of
Filipino equity. Such a restriction would certainly be preposterous and unnecessary. As a matter of fact,
financial, and even technical assistance,regardless of the nationality of its source, would be welcomed in the
mining industry anytime with open arms, on account of the dearth of local capital and the need to
continually update technological know-how and improve technical skills.
There was therefore no need for a constitutional provision specifically allowing foreign-owned corporations to
render financial or technical assistance, whether in respect of mining or some other resource development
or commercial activity in the Philippines. The last point needs to be emphasized: if merely financial
or technical assistance agreements are allowed, there would be no need to limit them to largescale mining operations, as there would be far greater need for them in the smaller-scale
mining activities (and even in non-mining areas). Obviously, the provision in question was
intended to refer to agreements other than those for mere financial or technical assistance.
In like manner, there would be no need to require the President of the Republic to report to Congress, if only
financial or technical assistance agreements are involved. Such agreements are in the nature of foreign
loans that -- pursuant to Section 20 of Article VII39 of the 1987 Constitution -- the President may contract or
guarantee, merely with the prior concurrence of the Monetary Board. In turn, the Board is required to report
to Congress within thirty days from the end of every quarter of the calendar year, not thirty days after the
agreement is entered into.
And if paragraph 4 permits only agreements for loans and other forms of financial, or technical assistance,
what is the point of requiring that they be based on real contributions to the economic growth and general
welfare of the country? For instance, how is one to measure and assess the "real contributions" to the
"economic growth" and "general welfare" of the country that may ensue from a foreign-currency loan

agreement or a technical-assistance agreement for, say, the refurbishing of an existing power generating
plant for a mining operation somewhere in Mindanao? Such a criterion would make more sense when applied
to a major business investment in a principal sector of the industry.
The conclusion is clear and inescapable -- a verba legis construction shows that paragraph 4 is not to be
understood as one limited only to foreign loans (or other forms of financial support) and to technical
assistance. There is definitely more to it than that. These are provisions permitting participation by
foreign companies; requiring the President's report to Congress; and using, as yardstick,
contributions based on economic growth and general welfare. These were neither accidentally
inserted into the Constitution nor carelessly cobbled together by the drafters in lip service to
shallow nationalism. The provisions patently have significance and usefulness in a context that allows
agreements with foreign companies to include more than mere financial or technical assistance.
Fifth, it is argued that Section 2 of Article XII authorizes nothing more than a rendition of specific and limited
financial service or technical assistance by a foreign company. This argument begs the question "To whom or
for whom would it be rendered"? or Who is being assisted? If the answer is "The State," then it necessarily
implies that the State itself is the one directly and solely undertaking the large-scale exploration,
development and utilization of a mineral resource, so it follows that the State must itself bear the liability
and cost of repaying the financing sourced from the foreign lender and/or of paying compensation to the
foreign entity rendering technical assistance.
However, it is of common knowledge, and of judicial notice as well, that the government is and has for many
many years been financially strapped, to the point that even the most essential services have suffered
serious curtailments -- education and health care, for instance, not to mention judicial services -- have had
to make do with inadequate budgetary allocations. Thus, government has had to resort to build-operatetransfer and similar arrangements with the private sector, in order to get vital infrastructure projects built
without any governmental outlay.
The very recent brouhaha over the gargantuan "fiscal crisis" or "budget deficit" merely confirms what the
ordinary citizen has suspected all along. After the reality check, one will have to admit the implausibility of a
direct undertaking -- by the State itself -- of large-scale exploration, development and utilization of minerals,
petroleum and other mineral oils. Such an undertaking entails not only humongous capital requirements, but
also the attendant risk of never finding and developing economically viable quantities of minerals, petroleum
and other mineral oils.40
It is equally difficult to imagine that such a provision restricting foreign companies to the rendition of only
financial or technical assistance to the government was deliberately crafted by the drafters of the
Constitution, who were all well aware of the capital-intensive and technology-oriented nature of large-scale
mineral or petroleum extraction and the country's deficiency in precisely those areas. 41 To say so would be
tantamount to asserting that the provision was purposely designed to ladle the large-scale development and
utilization of mineral, petroleum and related resources with impossible conditions; and to remain forever and
permanently "reserved" for future generations of Filipinos.

A More Reasonable Look

at the Charter's Plain Language
Sixth, we shall now look closer at the plain language of the Charter and examining the logical inferences.
The drafters chose to emphasize and highlight agreements x x x involving either technical or financial
assistance in relation to foreign corporations' participation in large-scale EDU. The inclusion of this clause on
"technical or financial assistance" recognizes the fact that foreign business entities and multinational
corporations are the ones with the resources and know-how to provide technical and/or financial assistance
of the magnitude and type required for large-scale exploration, development and utilization of these
resources.
The drafters -- whose ranks included many academicians, economists, businessmen, lawyers, politicians and
government officials -- were not unfamiliar with the practices of foreign corporations and multinationals.
Neither were they so nave as to believe that these entities would provide "assistance" without
conditionalities or some quid pro quo. Definitely, as business persons well know and as a matter of judicial
notice, this matter is not just a question of signing a promissory note or executing a technology transfer
agreement. Foreign corporations usually require that they be given a say in the management, for instance,
of day-to-day operations of the joint venture. They would demand the appointment of their own men as, for
example, operations managers, technical experts, quality control heads, internal auditors or comptrollers.
Furthermore, they would probably require seats on the Board of Directors -- all these to ensure the success
of the enterprise and the repayment of the loans and other financial assistance and to make certain that the
funding and the technology they supply would not go to waste. Ultimately, they would also want to protect
their business reputation and bottom lines.42
In short, the drafters will have to be credited with enough pragmatism and savvy to know that these foreign
entities will not enter into such "agreements involving assistance" without requiring arrangements for the
protection of their investments, gains and benefits.

Thus, by specifying such "agreements involving assistance," the drafters necessarily gave implied assent to
everything that these agreements necessarily entailed; or that could reasonably be deemed necessary to
make them tenable and effective, including management authority with respect to the day-to-day operations
of the enterprise and measures for the protection of the interests of the foreign corporation, PROVIDED THAT
Philippine sovereignty over natural resources and full control over the enterprise undertaking the EDU
activities remain firmly in the State.
Petitioners' Theory Deflated by the
Absence of Closing-Out Rules or Guidelines
Seventh and final point regarding the plain-language approach, one of the practical difficulties that results
from it is the fact that there is nothing by way of transitory provisions that would serve to confirm the theory
that the omission of the term "service contract" from the 1987 Constitution signaled the demise of service
contracts.
The framers knew at the time they were deliberating that there were various service contracts extant and in
force and effect, including those in the petroleum industry. Many of these service contracts were long-term
(25 years) and had several more years to run. If they had meant to ban service contracts altogether, they
would have had to provide for the termination or pretermination of the existing contracts. Accordingly, they
would have supplied the specifics and the when and how of effecting the extinguishment of these existing
contracts (or at least the mechanics for determining them); and of putting in place the means to address the
just claims of the contractors for compensation for their investments, lost opportunities, and so on, if not for
the recovery thereof.
If the framers had intended to put an end to service contracts, they would have at least left specific
instructions to Congress to deal with these closing-out issues, perhaps by way of general guidelines and a
timeline within which to carry them out. The following are some extant examples of such transitory
guidelines set forth in Article XVIII of our Constitution:
"Section 23. Advertising entities affected by paragraph (2), Section 11 of Article XVI of this
Constitution shall have five years from its ratification to comply on a graduated and proportionate
basis with the minimum Filipino ownership requirement therein.
xxxxxxxxx
"Section 25. After the expiration in 1991 of the Agreement between the Republic of the Philippines
and the United States of America concerning military bases, foreign military bases, troops, or
facilities shall not be allowed in the Philippines except under a treaty duly concurred in by the Senate
and, when the Congress so requires, ratified by a majority of the votes cast by the people in a
national referendum held for that purpose, and recognized as a treaty by the other contracting State.
"Section 26. The authority to issue sequestration or freeze orders under Proclamation No. 3 dated
March 25, 1986 in relation to the recovery of ill-gotten wealth shall remain operative for not more
than eighteen months after the ratification of this Constitution. However, in the national interest, as
certified by the President, the Congress may extend such period.
A sequestration or freeze order shall be issued only upon showing of a prima facie case. The order
and the list of the sequestered or frozen properties shall forthwith be registered with the proper
court. For orders issued before the ratification of this Constitution, the corresponding judicial action or
proceeding shall be filed within six months from its ratification. For those issued after such
ratification, the judicial action or proceeding shall be commenced within six months from the
issuance thereof.
The sequestration or freeze order is deemed automatically lifted if no judicial action or proceeding is
commenced as herein provided." 43]
It is inconceivable that the drafters of the Constitution would leave such an important matter -- an
expression of sovereignty as it were -- indefinitely hanging in the air in a formless and ineffective state.
Indeed, the complete absence of even a general framework only serves to further deflate petitioners' theory,
like a child's balloon losing its air.
Under the circumstances, the logical inconsistencies resulting from petitioners' literal and purely verba
legisapproach to paragraph 4 of Section 2 of Article XII compel a resort to other aids to interpretation.
Petitioners' Posture Also Negated
by Ratio Legis Et Anima
Thus, in order to resolve the inconsistencies, incongruities and ambiguities encountered and to supply the
deficiencies of the plain-language approach, there is a need for recourse to the proceedings of the 1986
Constitutional Commission. There is a need for ratio legis et anima.
Service Contracts Not
"Deconstitutionalized"

Pertinent portions of the deliberations of the members of the Constitutional Commission (ConCom)
conclusively show that they discussed agreements involving either technical or financial assistance in the
same breadth asservice contracts and used the terms interchangeably. The following exchange between
Commissioner Jamir (sponsor of the provision) and Commissioner Suarez irrefutably proves that the
"agreements involving technical or financial assistance" were none other than service contracts.
THE PRESIDENT. Commissioner Jamir is recognized. We are still on Section 3.
MR. JAMIR. Yes, Madam President. With respect to the second paragraph of Section 3, my amendment
by substitution reads: THE PRESIDENT MAY ENTER INTO AGREEMENTS WITH FOREIGN-OWNED
CORPORATIONS INVOLVING EITHER TECHNICAL OR FINANCIAL ASSISTANCE FOR LARGE-SCALE
EXPLORATION, DEVELOPMENT AND UTILIZATION OF NATURAL RESOURCES ACCORDING TO THE TERMS
AND CONDITIONS PROVIDED BY LAW.
MR. VILLEGAS. The Committee accepts the amendment. Commissioner Suarez will give the
background.
MR. JAMIR. Thank you.
THE PRESIDENT. Commissioner Suarez is recognized.
MR. SUAREZ. Thank you, Madam President.
Will Commissioner Jamir answer a few clarificatory questions?
MR. JAMIR. Yes, Madam President.
MR. SUAREZ. This particular portion of the section has reference to what was popularly known
before as service contracts, among other things, is that correct?
MR. JAMIR. Yes, Madam President.
MR. SUAREZ. As it is formulated, the President may enter into service contracts but subject to the
guidelines that may be promulgated by Congress?
MR. JAMIR. That is correct.
MR. SUAREZ. Therefore, that aspect of negotiation and consummation will fall on the President, not
upon Congress?
MR. JAMIR. That is also correct, Madam President.
MR. SUAREZ. Except that all of these contracts, service or otherwise, must be made strictly in
accordance with guidelines prescribed by Congress?
MR. JAMIR. That is also correct.
MR. SUAREZ. And the Gentleman is thinking in terms of a law that uniformly covers situations of the
same nature?
MR. JAMIR. That is 100 percent correct.
MR. SUAREZ. I thank the Commissioner.
MR. JAMIR. Thank you very much.44
The following exchange leaves no doubt that the commissioners knew exactly what they were dealing with:
service contracts.
THE PRESIDENT. Commissioner Gascon is recognized.
MR. GASCON. Commissioner Jamir had proposed an amendment with regard to special service
contractswhich was accepted by the Committee. Since the Committee has accepted it, I would like
to ask some questions.
THE PRESIDENT. Commissioner Gascon may proceed.
MR. GASCON. As it is proposed now, such service contracts will be entered into by the President
with the guidelines of a general law on service contract to be enacted by Congress. Is that correct?
MR. VILLEGAS. The Commissioner is right, Madam President.

MR. GASCON. According to the original proposal, if the President were to enter into a particular
agreement, he would need the concurrence of Congress. Now that it has been changed by the
proposal of Commissioner Jamir in that Congress will set the general law to which the President shall
comply, the President will, therefore, not need the concurrence of Congress every time he enters
into service contracts. Is that correct?
MR. VILLEGAS. That is right.
MR. GASCON. The proposed amendment of Commissioner Jamir is in indirect contrast to my proposed
amendment, so I would like to object and present my proposed amendment to the body.
xxxxxxxxx
MR. GASCON. Yes, it will be up to the body.
I feel that the general law to be set by Congress as regard service contract agreements which the
President will enter into might be too general or since we do not know the content yet of such a law, it
might be that certain agreements will be detrimental to the interest of the Filipinos. This is in direct
contrast to my proposal which provides that there be effective constraints in the implementation
of service contracts.
So instead of a general law to be passed by Congress to serve as a guideline to the President when
entering into service contract agreements, I propose that every service contract entered into by
the President would need the concurrence of Congress, so as to assure the Filipinos of their interests
with regard to the issue in Section 3 on all lands of the public domain. My alternative amendment,
which we will discuss later, reads: THAT THE PRESIDENT SHALL ENTER INTO SUCH AGREEMENTS ONLY
WITH THE CONCURRENCE OF TWO-THIRDS VOTE OF ALL THE MEMBERS OF CONGRESS SITTING
SEPARATELY.
xxxxxxxxx
MR. BENGZON. The reason we made that shift is that we realized the original proposal could breed
corruption. By the way, this is not just confined to service contracts but also to financial
assistance. If we are going to make every single contract subject to the concurrence of Congress
which, according to the Commissioner's amendment is the concurrence of two-thirds of Congress
voting separately then (1) there is a very great chance that each contract will be different from
another; and (2) there is a great temptation that it would breed corruption because of the great
lobbying that is going to happen. And we do not want to subject our legislature to that.
Now, to answer the Commissioner's apprehension, by "general law," we do not mean statements of
motherhood. Congress can build all the restrictions that it wishes into that general law so that every
contract entered into by the President under that specific area will have to be uniform. The President
has no choice but to follow all the guidelines that will be provided by law.
MR. GASCON. But my basic problem is that we do not know as of yet the contents of such a general
law as to how much constraints there will be in it. And to my mind, although the Committee's
contention that the regular concurrence from Congress would subject Congress to extensive lobbying,
I think that is a risk we will have to take since Congress is a body of representatives of the people
whose membership will be changing regularly as there will be changing circumstances every time
certain agreements are made. It would be best then to keep in tab and attuned to the interest of the
Filipino people, whenever the President enters into any agreement with regard to such an important
matter as technical or financial assistance for large-scale exploration, development and
utilization of natural resources or service contracts, the people's elected representatives
should be on top of it.
xxxxxxxxx
MR. OPLE. Madam President, we do not need to suspend the session. If Commissioner Gascon needs a
few minutes, I can fill up the remaining time while he completes his proposed amendment. I just
wanted to ask Commissioner Jamir whether he would entertain a minor amendment to his
amendment, and it reads as follows: THE PRESIDENT SHALL SUBSEQUENTLY NOTIFY CONGRESS OF
EVERY SERVICE CONTRACT ENTERED INTO IN ACCORDANCE WITH THE GENERAL LAW. I think the
reason is, if I may state it briefly, as Commissioner Bengzon said, Congress can always change the
general law later on to conform to new perceptions of standards that should be built into service
contracts. But the only way Congress can do this is if there were a notification requirement from the
Office of the President that suchservice contracts had been entered into, subject then to the
scrutiny of the Members of Congress. This pertains to a situation where the service contracts are
already entered into, and all that this amendment seeks is the reporting requirement from the Office
of the President. Will Commissioner Jamir entertain that?

MR. JAMIR. I will gladly do so, if it is still within my power.

MR. VILLEGAS. Yes, the Committee accepts the amendment.

xxxxxxxxx
SR. TAN. Madam President, may I ask a question?
THE PRESIDENT. Commissioner Tan is recognized.
SR. TAN. Am I correct in thinking that the only difference between these future service
contracts and the past service contracts under Mr. Marcos is the general law to be enacted by the
legislature and the notification of Congress by the President? That is the only difference, is it not?
MR. VILLEGAS. That is right.
SR. TAN. So those are the safeguards.
MR. VILLEGAS. Yes. There was no law at all governing service contracts before.
SR. TAN. Thank you, Madam President.45
More Than Mere Financial
and Technical Assistance
Entailed by the Agreements
The clear words of Commissioner Jose N. Nolledo quoted below explicitly and eloquently demonstrate that
the drafters knew that the agreements with foreign corporations were going to entail not mere technical or
financial assistance but, rather, foreign investment in and management of an enterprise involved in largescale exploration,development and utilization of minerals, petroleum, and other mineral oils.
THE PRESIDENT. Commissioner Nolledo is recognized.
MR. NOLLEDO. Madam President, I have the permission of the Acting Floor Leader to speak for only
two minutes in favor of the amendment of Commissioner Gascon.
THE PRESIDENT. Commissioner Nolledo may proceed.
MR. NOLLEDO. With due respect to the members of the Committee and Commissioner Jamir, I am in
favor of the objection of Commissioner Gascon.
Madam President, I was one of those who refused to sign the 1973 Constitution, and one of the
reasons is that there were many provisions in the Transitory Provisions therein that favored
aliens. I was shocked when I read a provision authorizing service contracts while we, in this
Constitutional Commission, provided for Filipino control of the economy. We are, therefore,
providing for exceptional instances where aliens may circumvent Filipino control of our
economy. And one way of circumventing the rule in favor of Filipino control of the economy is
to recognize service contracts.
As far as I am concerned, if I should have my own way, I am for the complete deletion of this
provision.However, we are presenting a compromise in the sense that we are requiring a
two-thirds vote of all the Members of Congress as a safeguard. I think we should not mistrust
the future Members of Congress by saying that the purpose of this provision is to avoid
corruption. We cannot claim that they are less patriotic than we are. I think the Members of
this Commission should know that entering intoservice contracts is an exception to the rule
on protection of natural resources for the interest of the nation, and therefore, being an
exception it should be subject, whenever possible, to stringent rules. It seems to me that we
are liberalizing the rules in favor of aliens.
I say these things with a heavy heart, Madam President. I do not claim to be a nationalist, but I
love my country. Although we need investments, we must adopt safeguards that are
truly reflective of the sentiments of the people and not mere cosmetic safeguards as they now
appear in the Jamir amendment. (Applause)
Thank you, Madam President.46
Another excerpt, featuring then Commissioner (now Chief Justice) Hilario G. Davide Jr., indicates the
limitations of the scope of such service contracts -- they are valid only in regard to minerals, petroleum and
other mineral oils, not to all natural resources.
THE PRESIDENT. Commissioner Davide is recognized.
MR. DAVIDE. Thank you, Madam President. This is an amendment to the Jamir amendment and also to
the Ople amendment. I propose to delete "NATURAL RESOURCES" and substitute it with the following:
MINERALS, PETROLEUM AND OTHER MINERAL OILS. On the Ople amendment, I propose to add: THE
NOTIFICATION TO CONGRESS SHALL BE WITHIN THIRTY DAYS FROM THE EXECUTION OF THE SERVICE
CONTRACT.

THE PRESIDENT. What does the Committee say with respect to the first amendment in lieu of
"NATURAL RESOURCES"?
MR. VILLEGAS. Could Commissioner Davide explain that?
MR. DAVIDE. Madam President, with the use of "NATURAL RESOURCES" here, it would necessarily
include all lands of the public domain, our marine resources, forests, parks and so on. So we would
like to limit the scope of these service contracts to those areas really where these may be needed,
the exploitation, development and exploration of minerals, petroleum and other mineral oils. And so,
we believe that we should really, if we want to grant service contracts at all, limit the same to only
those particular areas where Filipino capital may not be sufficient, and not to all natural
resources.
MR. SUAREZ. Just a point of clarification again, Madam President. When the Commissioner made
those enumerations and specifications, I suppose he deliberately did not include "agricultural land"?
MR. DAVIDE. That is precisely the reason we have to enumerate what these resources are into
whichservice contracts may enter. So, beyond the reach of any service contract will be lands of
the public domain, timberlands, forests, marine resources, fauna and flora, wildlife and national
parks.47
After the Jamir amendment was voted upon and approved by a vote of 21 to 10 with 2 abstentions,
Commissioner Davide made the following statement, which is very relevant to our quest:
THE PRESIDENT. Commissioner Davide is recognized.
MR. DAVIDE. I am very glad that Commissioner Padilla emphasized minerals, petroleum and mineral
oils. The Commission has just approved the possible foreign entry into the development, exploration
and utilization of these minerals, petroleum and other mineral oils by virtue of the Jamir amendment.
I voted in favor of the Jamir amendment because it will eventually give way to vesting in exclusively
Filipino citizens and corporations wholly owned by Filipino citizens the right to utilize the other natural
resources. This means that as a matter of policy, natural resources should be utilized and exploited
only by Filipino citizens or corporations wholly owned by such citizens. But by virtue of the Jamir
amendment, since we feel that Filipino capital may not be enough for the development and utilization
of minerals, petroleum and other mineral oils, the President can enter into service contracts with
foreign corporations precisely for the development and utilization of such resources. And so, there is
nothing to fear that we will stagnate in the development of minerals, petroleum and mineral
oils because we now allow service contracts. x x x."48
The foregoing are mere fragments of the framers' lengthy discussions of the provision dealing
with agreements x x x involving either technical or financial assistance, which ultimately became paragraph
4 of Section 2 of Article XII of the Constitution. Beyond any doubt, the members of the ConCom were
actually debating about the martial-law-eraservice contracts for which they were crafting appropriate
safeguards.
In the voting that led to the approval of Article XII by the ConCom, the explanations given by Commissioners
Gascon, Garcia and Tadeo indicated that they had voted to reject this provision on account of their
objections to the "constitutionalization" of the "service contract" concept.
Mr. Gascon said, "I felt that if we would constitutionalize any provision on service contracts, this should
always be with the concurrence of Congress and not guided only by a general law to be promulgated by
Congress."49 Mr. Garcia explained, "Service contracts are given constitutional legitimization in Sec. 3, even
when they have been proven to be inimical to the interests of the nation, providing, as they do, the legal
loophole for the exploitation of our natural resources for the benefit of foreign interests." 50 Likewise, Mr.
Tadeo cited inter alia the fact that service contracts continued to subsist, enabling foreign interests to
benefit from our natural resources.51 It was hardly likely that these gentlemen would have objected
so strenuously, had the provision called for mere technical or financial assistance and nothing
more.
The deliberations of the ConCom and some commissioners' explanation of their votes leave no room for
doubt that the service contract concept precisely underpinned the commissioners' understanding of the
"agreements involving either technical or financial assistance."
Summation of the
Concom Deliberations
At this point, we sum up the matters established, based on a careful reading of the ConCom deliberations, as
follows:
In their deliberations on what was to become paragraph 4, the framers used the term service
contracts in referring to agreements x x x involving either technical or financial assistance.
They spoke of service contracts as the concept was understood in the 1973 Constitution.
It was obvious from their discussions that they were not about to ban or eradicate service contracts.

 Instead, they were plainly crafting provisions to put in place safeguards that would eliminate or
minimize the abuses prevalent during the marital law regime. In brief, they were going to permit
service contracts with foreign corporations as contractors, but with safety measures to prevent
abuses, as an exception to the general norm established in the first paragraph of Section 2 of Article
XII. This provision reserves or limits to Filipino citizens -- and corporations at least 60 percent of which
is owned by such citizens -- the exploration, development and utilization of natural resources.
This provision was prompted by the perceived insufficiency of Filipino capital and the felt need for
foreign investments in the EDU of minerals and petroleum resources.
The framers for the most part debated about the sort of safeguards that would be considered
adequate and reasonable. But some of them, having more "radical" leanings, wanted to ban service
contracts altogether; for them, the provision would permit aliens to exploit and benefit from the
nation's natural resources, which they felt should be reserved only for Filipinos.
In the explanation of their votes, the individual commissioners were heard by the entire body. They
sounded off their individual opinions, openly enunciated their philosophies, and supported or attacked
the provisions with fervor. Everyone's viewpoint was heard.
In the final voting, the Article on the National Economy and Patrimony -- including paragraph 4
allowing service contracts with foreign corporations as an exception to the general norm in paragraph
1 of Section 2 of the same article -- was resoundingly approved by a vote of 32 to 7, with 2
abstentions.
Agreements Involving Technical
or Financial Assistance Are
Service Contracts With Safeguards
From the foregoing, we are impelled to conclude that the phrase agreements involving either technical or
financial assistance, referred to in paragraph 4, are in fact service contracts. But unlike those of the 1973
variety, the new ones are between foreign corporations acting as contractors on the one hand; and on the
other, the government as principal or "owner" of the works. In the new service contracts, the foreign
contractors provide capital, technology and technical know-how, and managerial expertise in the creation
and operation of large-scale mining/extractive enterprises; and the government, through its agencies (DENR,
MGB), actively exercises control and supervision over the entire operation.
Such service contracts may be entered into only with respect to minerals, petroleum and other mineral oils.
The grant thereof is subject to several safeguards, among which are these requirements:
(1) The service contract shall be crafted in accordance with a general law that will set standard or
uniform terms, conditions and requirements, presumably to attain a certain uniformity in provisions
and avoid the possible insertion of terms disadvantageous to the country.
(2) The President shall be the signatory for the government because, supposedly before an
agreement is presented to the President for signature, it will have been vetted several times over at
different levels to ensure that it conforms to law and can withstand public scrutiny.
(3) Within thirty days of the executed agreement, the President shall report it to Congress to give that
branch of government an opportunity to look over the agreement and interpose timely objections, if
any.
Use of the Record of the ConCom to Ascertain Intent
At this juncture, we shall address, rather than gloss over, the use of the "framers' intent" approach, and the
criticism hurled by petitioners who quote a ruling of this Court:
"While it is permissible in this jurisdiction to consult the debates and proceedings of the constitutional
convention in order to arrive at the reason and purpose of the resulting Constitution, resort thereto
may be had only when other guides fail as said proceedings are powerless to vary the terms of the
Constitution when the meaning is clear. Debates in the constitutional convention 'are of value as
showing the views of the individual members, and as indicating the reason for their votes, but they
give us no light as to the views of the large majority who did not talk, much less the mass of our
fellow citizens whose votes at the polls gave that instrument the force of fundamental law. We think it
safer to construe the constitution from what appears upon its face.' The proper interpretation
therefore depends more on how it was understood by the people adopting it than in the framers'
understanding thereof."52
The notion that the deliberations reflect only the views of those members who spoke out and not the views
of the majority who remained silent should be clarified. We must never forget that those who spoke out were
heard by those who remained silent and did not react. If the latter were silent because they happened not to
be present at the time, they are presumed to have read the minutes and kept abreast of the deliberations.
By remaining silent, they are deemed to have signified their assent to and/or conformity with at least some
of the views propounded or their lack of objections thereto. It was incumbent upon them, as representatives

of the entire Filipino people, to follow the deliberations closely and to speak their minds on the matter if they
did not see eye to eye with the proponents of the draft provisions.
In any event, each and every one of the commissioners had the opportunity to speak out and to vote on the
matter. Moreover, the individual explanations of votes are on record, and they show where each delegate
stood on the issues. In sum, we cannot completely denigrate the value or usefulness of the record
of the ConCom, simply because certain members chose not to speak out.
It is contended that the deliberations therein did not necessarily reflect the thinking of the voting population
that participated in the referendum and ratified the Constitution. Verily, whether we like it or not, it is a bit
too much to assume that every one of those who voted to ratify the proposed Charter did so only after
carefully reading and mulling over it, provision by provision.
Likewise, it appears rather extravagant to assume that every one of those who did in fact bother to read the
draft Charter actually understood the import of its provisions, much less analyzed it vis--vis the previous
Constitutions. We believe that in reality, a good percentage of those who voted in favor of it did so more out
of faith and trust. For them, it was the product of the hard work and careful deliberation of a group of
intelligent, dedicated and trustworthy men and women of integrity and conviction, whose love of country
and fidelity to duty could not be questioned.
In short, a large proportion of the voters voted "yes" because the drafters, or a majority of them, endorsed
the proposed Constitution. What this fact translates to is the inescapable conclusion that many of the voters
in the referendum did not form their own isolated judgment about the draft Charter, much less about
particular provisions therein. They only relied or fell back and acted upon the favorable endorsement or
recommendation of the framers as a group. In other words, by voting yes, they may be deemed to have
signified their voluntary adoption of the understanding and interpretation of the delegates with respect to
the proposed Charter and its particular provisions. "If it's good enough for them, it's good enough for me;"
or, in many instances, "If it's good enough for President Cory Aquino, it's good enough for me."
And even for those who voted based on their own individual assessment of the proposed Charter, there is no
evidence available to indicate that their assessment or understanding of its provisions was in fact different
from that of the drafters. This unwritten assumption seems to be petitioners' as well. For all we know, this
segment of voters must have read and understood the provisions of the Constitution in the same way the
framers had, an assumption that would account for the favorable votes.
Fundamentally speaking, in the process of rewriting the Charter, the members of the ConCom as a group
were supposed to represent the entire Filipino people. Thus, we cannot but regard their views as being very
much indicative of the thinking of the people with respect to the matters deliberated upon and to the
Charter as a whole.
It is therefore reasonable and unavoidable to make the following conclusion, based on the
above arguments. As written by the framers and ratified and adopted by the people, the
Constitution allows the continued use of service contracts with foreign corporations -- as
contractors who would invest in and operate and manage extractive enterprises, subject to the
full control and supervision of the State -- sans the abuses of the past regime. The purpose is
clear: to develop and utilize our mineral, petroleum and other resources on a large scale for the
immediate and tangible benefit of the Filipino people.
In view of the foregoing discussion, we should reverse the Decision of January 27, 2004, and in fact now hold
a view different from that of the Decision, which had these findings: (a) paragraph 4 of Section 2 of Article
XII limits foreign involvement in the local mining industry to agreements strictly for either financial or
technical assistance only; (b) the same paragraph precludes agreements that grant to foreign corporations
the management of local mining operations, as such agreements are purportedly in the nature of service
contracts as these were understood under the 1973 Constitution; (c) these service contracts were
supposedly "de-constitutionalized" and proscribed by the omission of the term service contracts from the
1987 Constitution; (d) since the WMCP FTAA contains provisions permitting the foreign contractor to manage
the concern, the said FTAA is invalid for being a prohibited service contract; and (e) provisions of RA 7942
and DAO 96-40, which likewise grant managerial authority to the foreign contractor, are also invalid and
unconstitutional.
Ultimate Test: State's "Control"
Determinative of Constitutionality
But we are not yet at the end of our quest. Far from it. It seems that we are confronted with a possible
collision of constitutional provisions. On the one hand, paragraph 1 of Section 2 of Article XII explicitly
mandates the State to exercise "full control and supervision" over the exploration, development and
utilization of natural resources. On the other hand, paragraph 4 permits safeguarded service contracts with
foreign contractors. Normally, pursuant thereto, the contractors exercise management prerogatives over the
mining operations and the enterprise as a whole. There is thus a legitimate ground to be concerned that
either the State's full control and supervision may rule out any exercise of management authority by the
foreign contractor; or, the other way around, allowing the foreign contractor full management prerogatives
may ultimately negate the State's full control and supervision.
Ut Magis Valeat
Quam Pereat

Under the third principle of constitutional construction laid down in Francisco -- ut magis valeat quam pereat
-- every part of the Constitution is to be given effect, and the Constitution is to be read and understood as a
harmonious whole. Thus, "full control and supervision" by the State must be understood as one that does
not preclude the legitimate exercise of management prerogatives by the foreign contractor. Before any
further discussion, we must stress the primacy and supremacy of the principle of sovereignty and State
control and supervision over all aspects of exploration, development and utilization of the country's natural
resources, as mandated in the first paragraph of Section 2 of Article XII.
But in the next breadth we have to point out that "full control and supervision" cannot be taken literally to
mean that the State controls and supervises everything involved, down to the minutest details, and
makes all decisionsrequired in the mining operations. This strained concept of control and supervision over
the mining enterprise would render impossible the legitimate exercise by the contractors of a reasonable
degree of management prerogative and authority necessary and indispensable to their proper functioning.
For one thing, such an interpretation would discourage foreign entry into large-scale exploration,
development and utilization activities; and result in the unmitigated stagnation of this sector, to the
detriment of our nation's development. This scenario renders paragraph 4 inoperative and useless. And as
respondents have correctly pointed out, the government does not have to micro-manage the mining
operations and dip its hands into the day-to-day affairs of the enterprise in order for it to be considered as
having full control and supervision.
The concept of control53 adopted in Section 2 of Article XII must be taken to mean less than dictatorial, allencompassing control; but nevertheless sufficient to give the State the power to direct, restrain, regulate
and govern the affairs of the extractive enterprises. Control by the State may be on a macro level, through
the establishment of policies, guidelines, regulations, industry standards and similar measures that would
enable the government to control the conduct of affairs in various enterprises and restrain activities deemed
not desirable or beneficial.
The end in view is ensuring that these enterprises contribute to the economic development and general
welfare of the country, conserve the environment, and uplift the well-being of the affected local
communities. Such a concept of control would be compatible with permitting the foreign contractor sufficient
and reasonable management authority over the enterprise it invested in, in order to ensure that it is
operating efficiently and profitably, to protect its investments and to enable it to succeed.
The question to be answered, then, is whether RA 7942 and its Implementing Rules enable the
government to exercise that degree of control sufficient to direct and regulate the conduct of
affairs of individual enterprises and restrain undesirable activities.
On the resolution of these questions will depend the validity and constitutionality of certain provisions of the
Philippine Mining Act of 1995 (RA 7942) and its Implementing Rules and Regulations (DAO 96-40), as well as
the WMCP FTAA.
Indeed, petitioners charge54 that RA 7942, as well as its Implementing Rules and Regulations, makes it
possible for FTAA contracts to cede full control and management of mining enterprises over to fully foreignowned corporations, with the result that the State is allegedly reduced to a passive regulator dependent on
submitted plans and reports, with weak review and audit powers. The State does not supposedly act as the
owner of the natural resources for and on behalf of the Filipino people; it practically has little effective say in
the decisions made by the enterprise. Petitioners then conclude that the law, the implementing regulations,
and the WMCP FTAA cede "beneficial ownership" of the mineral resources to the foreign contractor.
A careful scrutiny of the provisions of RA 7942 and its Implementing Rules belies petitioners' claims.
Paraphrasing the Constitution, Section 4 of the statute clearly affirms the State's control thus:
"Sec. 4. Ownership of Mineral Resources. Mineral resources are owned by the State and the
exploration, development, utilization and processing thereof shall be under its full control and
supervision. The State may directly undertake such activities or it may enter into mineral agreements
with contractors.
"The State shall recognize and protect the rights of the indigenous cultural communities to their
ancestral lands as provided for by the Constitution."
The aforequoted provision is substantively reiterated in Section 2 of DAO 96-40 as follows:
"Sec. 2. Declaration of Policy. All mineral resources in public and private lands within the territory and
exclusive economic zone of the Republic of the Philippines are owned by the State. It shall be the
responsibility of the State to promote their rational exploration, development, utilization and
conservation through the combined efforts of the Government and private sector in order to enhance
national growth in a way that effectively safeguards the environment and protects the rights of
affected communities."
Sufficient Control Over Mining
Operations Vested in the State
by RA 7942 and DAO 96-40

RA 7942 provides for the State's control and supervision over mining operations. The following provisions
thereof establish the mechanism of inspection and visitorial rights over mining operations and institute
reportorial requirements in this manner:
1. Sec. 8 which provides for the DENR's power of over-all supervision and periodic review for "the
conservation, management, development and proper use of the State's mineral resources";
2. Sec. 9 which authorizes the Mines and Geosciences Bureau (MGB) under the DENR to exercise
"direct charge in the administration and disposition of mineral resources", and empowers the MGB to
"monitor the compliance by the contractor of the terms and conditions of the mineral agreements",
"confiscate surety and performance bonds", and deputize whenever necessary any member or unit of
the Phil. National Police, barangay, duly registered non-governmental organization (NGO) or any
qualified person to police mining activities;
3. Sec. 66 which vests in the Regional Director "exclusive jurisdiction over safety inspections of all
installations, whether surface or underground", utilized in mining operations.
4. Sec. 35, which incorporates into all FTAAs the following terms, conditions and warranties:
"(g) Mining operations shall be conducted in accordance with the provisions of the Act and its
IRR.
"(h) Work programs and minimum expenditures commitments.
xxxxxxxxx
"(k) Requiring proponent to effectively use appropriate anti-pollution technology and facilities
to protect the environment and restore or rehabilitate mined-out areas.
"(l) The contractors shall furnish the Government records of geologic, accounting and other
relevant data for its mining operation, and that books of accounts and records shall be open for
inspection by the government. x x x.
"(m) Requiring the proponent to dispose of the minerals at the highest price and more
advantageous terms and conditions.
"(n) x x x x x x x x x
"(o) Such other terms and conditions consistent with the Constitution and with this Act as the
Secretary may deem to be for the best interest of the State and the welfare of the Filipino
people."
The foregoing provisions of Section 35 of RA 7942 are also reflected and implemented in
Section 56 (g), (h), (l), (m) and (n) of the Implementing Rules, DAO 96-40.
Moreover, RA 7942 and DAO 96-40 also provide various stipulations confirming the government's control
over mining enterprises:
The contractor is to relinquish to the government those portions of the contract area not needed for
mining operations and not covered by any declaration of mining feasibility (Section 35-e, RA 7942;
Section 60, DAO 96-40).
The contractor must comply with the provisions pertaining to mine safety, health and environmental
protection (Chapter XI, RA 7942; Chapters XV and XVI, DAO 96-40).
For violation of any of its terms and conditions, government may cancel an FTAA. (Chapter XVII, RA
7942; Chapter XXIV, DAO 96-40).
An FTAA contractor is obliged to open its books of accounts and records for inspection by the
government (Section 56-m, DAO 96-40).
An FTAA contractor has to dispose of the minerals and by-products at the highest market price and
register with the MGB a copy of the sales agreement (Section 56-n, DAO 96-40).
MGB is mandated to monitor the contractor's compliance with the terms and conditions of the FTAA;
and to deputize, when necessary, any member or unit of the Philippine National Police, the barangay
or a DENR-accredited nongovernmental organization to police mining activities (Section 7-d and -f,
DAO 96-40).
An FTAA cannot be transferred or assigned without prior approval by the President (Section 40, RA
7942; Section 66, DAO 96-40).

 A mining project under an FTAA cannot proceed to the construction/development/utilization stage,

unless its Declaration of Mining Project Feasibility has been approved by government (Section 24, RA
7942).
The Declaration of Mining Project Feasibility filed by the contractor cannot be approved without
submission of the following documents:
1. Approved mining project feasibility study (Section 53-d, DAO 96-40)
2. Approved three-year work program (Section 53-a-4, DAO 96-40)
3. Environmental compliance certificate (Section 70, RA 7942)
4. Approved environmental protection and enhancement program (Section 69, RA 7942)
5. Approval by the Sangguniang Panlalawigan/Bayan/Barangay (Section 70, RA 7942; Section
27, RA 7160)
6. Free and prior informed consent by the indigenous peoples concerned, including payment of
royalties through a Memorandum of Agreement (Section 16, RA 7942; Section 59, RA 8371)
The FTAA contractor is obliged to assist in the development of its mining community, promotion of
the general welfare of its inhabitants, and development of science and mining technology (Section
57, RA 7942).
The FTAA contractor is obliged to submit reports (on quarterly, semi-annual or annual basis as the
case may be; per Section 270, DAO 96-40), pertaining to the following:
1. Exploration
2. Drilling
3. Mineral resources and reserves
4. Energy consumption
5. Production
6. Sales and marketing
7. Employment
8. Payment of taxes, royalties, fees and other Government Shares
9. Mine safety, health and environment
10. Land use
11. Social development
12. Explosives consumption
An FTAA pertaining to areas within government reservations cannot be granted without a written
clearance from the government agencies concerned (Section 19, RA 7942; Section 54, DAO 96-40).
An FTAA contractor is required to post a financial guarantee bond in favor of the government in an
amount equivalent to its expenditures obligations for any particular year. This requirement is apart
from the representations and warranties of the contractor that it has access to all the financing,
managerial and technical expertise and technology necessary to carry out the objectives of the FTAA
(Section 35-b, -e, and -f, RA 7942).
Other reports to be submitted by the contractor, as required under DAO 96-40, are as follows: an
environmental report on the rehabilitation of the mined-out area and/or mine waste/tailing covered
area, and anti-pollution measures undertaken (Section 35-a-2); annual reports of the mining
operations and records of geologic accounting (Section 56-m); annual progress reports and final
report of exploration activities (Section 56-2).
Other programs required to be submitted by the contractor, pursuant to DAO 96-40, are the
following: a safety and health program (Section 144); an environmental work program (Section 168);
an annual environmental protection and enhancement program (Section 171).
The foregoing gamut of requirements, regulations, restrictions and limitations imposed upon the FTAA
contractor by the statute and regulations easily overturns petitioners' contention. The setup under RA 7942

and DAO 96-40 hardly relegates the State to the role of a "passive regulator" dependent on submitted plans
and reports. On the contrary, the government agencies concerned are empowered to approve or disapprove
-- hence, to influence, direct and change -- the various work programs and the corresponding minimum
expenditure commitments for each of the exploration, development and utilization phases of the mining
enterprise.
Once these plans and reports are approved, the contractor is bound to comply with its commitments therein.
Figures for mineral production and sales are regularly monitored and subjected to government review, in
order to ensure that the products and by-products are disposed of at the best prices possible; even copies of
sales agreements have to be submitted to and registered with MGB. And the contractor is mandated to open
its books of accounts and records for scrutiny, so as to enable the State to determine if the government
share has been fully paid.
The State may likewise compel the contractor's compliance with mandatory requirements on mine safety,
health and environmental protection, and the use of anti-pollution technology and facilities. Moreover, the
contractor is also obligated to assist in the development of the mining community and to pay royalties to the
indigenous peoples concerned.
Cancellation of the FTAA may be the penalty for violation of any of its terms and conditions and/or
noncompliance with statutes or regulations. This general, all-around, multipurpose sanction is no trifling
matter, especially to a contractor who may have yet to recover the tens or hundreds of millions of dollars
sunk into a mining project.
Overall, considering the provisions of the statute and the regulations just discussed, we believe that the
State definitely possesses the means by which it can have the ultimate word in the operation of the
enterprise, set directions and objectives, and detect deviations and noncompliance by the contractor;
likewise, it has the capability to enforce compliance and to impose sanctions, should the occasion therefor
arise.
In other words, the FTAA contractor is not free to do whatever it pleases and get away with it;
on the contrary, it will have to follow the government line if it wants to stay in the enterprise.
Ineluctably then, RA 7942 and DAO 96-40 vest in the government more than a sufficient degree
of control and supervision over the conduct of mining operations.
Section 3(aq) of RA 7942
Not Unconstitutional
An objection has been expressed that Section 3(aq)55 of RA 7942 -- which allows a foreign contractor to apply
for and hold an exploration permit -- is unconstitutional. The reasoning is that Section 2 of Article XII of the
Constitution does not allow foreign-owned corporations to undertake mining operations directly. They may
act only as contractors of the State under an FTAA; and the State, as the party directly undertaking
exploitation of its natural resources, must hold through the government all exploration permits and similar
authorizations. Hence, Section 3(aq), in permitting foreign-owned corporations to hold exploration permits, is
unconstitutional.
The objection, however, is not well-founded. While the Constitution mandates the State to exercise full
control and supervision over the exploitation of mineral resources, nowhere does it require the government
to hold all exploration permits and similar authorizations. In fact, there is no prohibition at all against foreign
or local corporations or contractors holding exploration permits. The reason is not hard to see.
Pursuant to Section 20 of RA 7942, an exploration permit merely grants to a qualified person the right
to conduct exploration for all minerals in specified areas. Such a permit does not amount to an authorization
to extract and carry off the mineral resources that may be discovered. This phase involves nothing but
expenditures for exploring the contract area and locating the mineral bodies. As no extraction is involved,
there are no revenues or incomes to speak of. In short, the exploration permit is an authorization for the
grantee to spend its own funds on exploration programs that are pre-approved by the government, without
any right to recover anything should no minerals in commercial quantities be discovered. The State risks
nothing and loses nothing by granting these permits to local or foreign firms; in fact, it stands to gain in the
form of data generated by the exploration activities.
Pursuant to Section 24 of RA 7942, an exploration permit grantee who determines the commercial viability
of a mining area may, within the term of the permit, file with the MGB a declaration of mining project
feasibility accompanied by a work program for development. The approval of the mining project feasibility
and compliance with other requirements of RA 7942 vests in the grantee the exclusive right to an MPSA or
any other mineral agreement, or to an FTAA.
Thus, the permit grantee may apply for an MPSA, a joint venture agreement, a co-production agreement, or
an FTAA over the permit area, and the application shall be approved if the permit grantee meets the
necessary qualifications and the terms and conditions of any such agreement. Therefore, the contractor will
be in a position to extract minerals and earn revenues only when the MPSA or another mineral agreement,
or an FTAA, is granted. At that point, the contractor's rights and obligations will be covered by an FTAA or a
mineral agreement.
But prior to the issuance of such FTAA or mineral agreement, the exploration permit grantee (or prospective
contractor) cannot yet be deemed to have entered into any contract or agreement with the State, and the

grantee would definitely need to have some document or instrument as evidence of its right to conduct
exploration works within the specified area. This need is met by the exploration permit issued pursuant to
Sections 3(aq), 20 and 23 of RA 7942.
In brief, the exploration permit serves a practical and legitimate purpose in that it protects the
interests and preserves the rights of the exploration permit grantee (the would-be contractor) -foreign or local -- during the period of time that it is spending heavily on exploration works,
without yet being able to earn revenues to recoup any of its investments and
expenditures. Minus this permit and the protection it affords, the exploration works and expenditures may
end up benefiting only claim-jumpers. Such a possibility tends to discourage investors and contractors. Thus,
Section 3(aq) of RA 7942 may not be deemed unconstitutional.
The Terms of the WMCP FTAA A Deference to State Control
A perusal of the WMCP FTAA also reveals a slew of stipulations providing for State control and supervision:
1. The contractor is obligated to account for the value of production and sale of minerals (Clause 1.4).
2. The contractor's work program, activities and budgets must be approved by/on behalf of the State
(Clause 2.1).
3. The DENR secretary has the power to extend the exploration period (Clause 3.2-a).
4. Approval by the State is necessary for incorporating lands into the FTAA contract area (Clause 4.3c).
5. The Bureau of Forest Development is vested with discretion in regard to approving the inclusion of
forest reserves as part of the FTAA contract area (Clause 4.5).
6. The contractor is obliged to relinquish periodically parts of the contract area not needed for
exploration and development (Clause 4.6).
7. A Declaration of Mining Feasibility must be submitted for approval by the State (Clause 4.6-b).
8. The contractor is obligated to report to the State its exploration activities (Clause 4.9).
9. The contractor is required to obtain State approval of its work programs for the succeeding twoyear periods, containing the proposed work activities and expenditures budget related to exploration
(Clause 5.1).
10. The contractor is required to obtain State approval for its proposed expenditures for exploration
activities (Clause 5.2).
11. The contractor is required to submit an annual report on geological, geophysical, geochemical and
other information relating to its explorations within the FTAA area (Clause 5.3-a).
12. The contractor is to submit within six months after expiration of exploration period a final report
on all its findings in the contract area (Clause 5.3-b).
13. The contractor, after conducting feasibility studies, shall submit a declaration of mining feasibility,
along with a description of the area to be developed and mined, a description of the proposed mining
operations and the technology to be employed, and a proposed work program for the development
phase, for approval by the DENR secretary (Clause 5.4).
14. The contractor is obliged to complete the development of the mine, including construction of the
production facilities, within the period stated in the approved work program (Clause 6.1).
15. The contractor is obligated to submit for approval of the DENR secretary a work program covering
each period of three fiscal years (Clause 6.2).
16. The contractor is to submit reports to the DENR secretary on the production, ore reserves, work
accomplished and work in progress, profile of its work force and management staff, and other
technical information (Clause 6.3).
17. Any expansions, modifications, improvements and replacements of mining facilities shall be
subject to the approval of the secretary (Clause 6.4).
18. The State has control with respect to the amount of funds that the contractor may borrow within
the Philippines (Clause 7.2).
19. The State has supervisory power with respect to technical, financial and marketing issues (Clause
10.1-a).

20. The contractor is required to ensure 60 percent Filipino equity in the contractor, within ten years
of recovering specified expenditures, unless not so required by subsequent legislation (Clause 10.1).
21. The State has the right to terminate the FTAA for the contractor's unremedied substantial breach
thereof (Clause 13.2);
22. The State's approval is needed for any assignment of the FTAA by the contractor to an entity
other than an affiliate (Clause 14.1).
We should elaborate a little on the work programs and budgets, and what they mean with respect to the
State's ability to exercise full control and effective supervision over the enterprise. For instance, throughout
the initial five-year exploration and feasibility phase of the project, the contractor is mandated by Clause 5.1
of the WMCP FTAA to submit a series of work programs (copy furnished the director of MGB) to the DENR
secretary for approval. The programs will detail the contractor's proposed exploration activities and
budget covering each subsequent period of two fiscal years.
In other words, the concerned government officials will be informed beforehand of the proposed exploration
activities and expenditures of the contractor for each succeeding two-year period, with the right to
approve/disapprove them or require changes or adjustments therein if deemed necessary.
Likewise, under Clause 5.2(a), the amount that the contractor was supposed to spend for exploration
activities during the first contract year of the exploration period was fixed at not less than P24 million; and
then for the succeeding years, the amount shall be as agreed between the DENR secretary and the
contractor prior to the commencement of each subsequent fiscal year. If no such agreement is arrived upon,
the previous year's expenditure commitment shall apply.
This provision alone grants the government through the DENR secretary a very big say in the exploration
phase of the project. This fact is not something to be taken lightly, considering that the government has
absolutely no contribution to the exploration expenditures or work activities and yet is given veto power
over such a critical aspect of the project. We cannot but construe as very significant such a degree of control
over the project and, resultantly, over the mining enterprise itself.
Following its exploration activities or feasibility studies, if the contractor believes that any part of the
contract area is likely to contain an economic mineral resource, it shall submit to the DENR secretary a
declaration of mining feasibility (per Clause 5.4 of the FTAA), together with a technical description of the
area delineated for development and production, a description of the proposed mining operations including
the technology to be used, a work program for development, an environmental impact statement, and a
description of the contributions to the economic and general welfare of the country to be generated by the
mining operations (pursuant to Clause 5.5).
The work program for development is subject to the approval of the DENR secretary. Upon its approval, the
contractor must comply with it and complete the development of the mine, including the construction of
production facilities and installation of machinery and equipment, within the period provided in the approved
work program for development (per Clause 6.1).
Thus, notably, the development phase of the project is likewise subject to the control and supervision of the
government. It cannot be emphasized enough that the proper and timely construction and deployment of
the production facilities and the development of the mine are of pivotal significance to the success of the
mining venture. Any missteps here will potentially be very costly to remedy. Hence, the submission of the
work program for development to the DENR secretary for approval is particularly noteworthy, considering
that so many millions of dollars worth of investments -- courtesy of the contractor -- are made to depend on
the State's consideration and action.
Throughout the operating period, the contractor is required to submit to the DENR secretary for approval,
copy furnished the director of MGB, work programs covering each period of three fiscal years (per Clause
6.2). During the same period (per Clause 6.3), the contractor is mandated to submit various quarterly and
annual reports to the DENR secretary, copy furnished the director of MGB, on the tonnages of production in
terms of ores and concentrates, with corresponding grades, values and destinations; reports of sales; total
ore reserves, total tonnage of ores, work accomplished and work in progress (installations and facilities
related to mining operations), investments made or committed, and so on and so forth.
Under Section VIII, during the period of mining operations, the contractor is also required to submit to the
DENR secretary (copy furnished the director of MGB) the work program and corresponding budget for the
contract area, describing the mining operations that are proposed to be carried out during the period
covered. The secretary is, of course, entitled to grant or deny approval of any work program or budget
and/or propose revisions thereto. Once the program/budget has been approved, the contractor shall comply
therewith.
In sum, the above provisions of the WMCP FTAA taken together, far from constituting a surrender of control
and a grant of beneficial ownership of mineral resources to the contractor in question, bestow upon the
State more than adequate control and supervision over the activities of the contractor and the
enterprise.
No Surrender of Control
Under the WMCP FTAA

Petitioners, however, take aim at Clause 8.2, 8.3, and 8.5 of the WMCP FTAA which, they say, amount to a
relinquishment of control by the State, since it "cannot truly impose its own discretion" in respect of the
submitted work programs.
"8.2. The Secretary shall be deemed to have approved any Work Programme or Budget or variation
thereofsubmitted by the Contractor unless within sixty (60) days after submission by the Contractor
the Secretary gives notice declining such approval or proposing a revision of certain features and
specifying its reasons therefor ('the Rejection Notice').
8.3. If the Secretary gives a Rejection Notice, the Parties shall promptly meet and endeavor to agree
on amendments to the Work Programme or Budget. If the Secretary and the Contractor fail to
agree on the proposed revision within 30 days from delivery of the Rejection Notice then the Work
Programme or Budget or variation thereof proposed by the Contractor shall be deemed approved, so
as not to unnecessarily delay the performance of the Agreement.
8.4. x x x x x x x x x
8.5. So far as is practicable, the Contractor shall comply with any approved Work Programme and
Budget. It is recognized by the Secretary and the Contractor that the details of any Work Programmes
or Budgets may require changes in the light of changing circumstances. The Contractor may make
such changes without approval of the Secretary provided they do not change the general objective of
any Work Programme, nor entail a downward variance of more than twenty per centum (20percent)
of the relevant Budget. All other variations to an approved Work Programme or Budget shall be
submitted for approval of the Secretary."
From the provisions quoted above, petitioners generalize by asserting that the government does not
participate in making critical decisions regarding the operations of the mining firm. Furthermore, while the
State can require the submission of work programs and budgets, the decision of the contractor will still
prevail, if the parties have a difference of opinion with regard to matters affecting operations and
management.
We hold, however, that the foregoing provisions do not manifest a relinquishment of control. For instance,
Clause 8.2 merely provides a mechanism for preventing the business or mining operations from grinding to a
complete halt as a result of possibly over-long and unjustified delays in the government's handling,
processing and approval of submitted work programs and budgets. Anyway, the provision does give the
DENR secretary more than sufficient time (60 days) to react to submitted work programs and budgets. It
cannot be supposed that proper grounds for objecting thereto, if any exist, cannot be discovered within a
period of two months.
On the other hand, Clause 8.3 seeks to provide a temporary, stop-gap solution in the event a disagreement
over the submitted work program or budget arises between the State and the contractor and results in a
stalemate or impasse, in order that there will be no unreasonably long delays in the performance of the
works.
These temporary or stop-gap solutions are not necessarily evil or wrong. Neither does it follow that the
government will inexorably be aggrieved if and when these temporary remedies come into play. First,
avoidance of long delays in these situations will undoubtedly redound to the benefit of the State as well as
the contractor. Second, who is to say that the work program or budget proposed by the contractor and
deemed approved under Clause 8.3 would not be the better or more reasonable or more effective
alternative? The contractor, being the "insider," as it were, may be said to be in a better position than the
State -- an outsider looking in -- to determine what work program or budget would be appropriate, more
effective, or more suitable under the circumstances.
All things considered, we take exception to the characterization of the DENR secretary as a subservient
nonentity whom the contractor can overrule at will, on account of Clause 8.3. And neither is it true that
under the same clause, the DENR secretary has no authority whatsoever to disapprove the work program.
As Respondent WMCP reasoned in its Reply-Memorandum, the State -- despite Clause 8.3 -- still has control
over the contract area and it may, as sovereign authority, prohibit work thereon until the dispute is resolved.
And ultimately, the State may terminate the agreement, pursuant to Clause 13.2 of the same FTAA, citing
substantial breach thereof. Hence, it clearly retains full and effective control of the exploitation of the
mineral resources.
On the other hand, Clause 8.5 is merely an acknowledgment of the parties' need for flexibility, given that no
one can accurately forecast under all circumstances, or predict how situations may change. Hence, while
approved work programs and budgets are to be followed and complied with as far as practicable, there may
be instances in which changes will have to be effected, and effected rapidly, since events may take shape
and unfold with suddenness and urgency. Thus, Clause 8.5 allows the contractor to move ahead and make
changes without the express or implicit approval of the DENR secretary. Such changes are, however, subject
to certain conditions that will serve to limit or restrict the variance and prevent the contractor from straying
very far from what has been approved.
Clause 8.5 provides the contractor a certain amount of flexibility to meet unexpected situations, while still
guaranteeing that the approved work programs and budgets are not abandoned altogether. Clause 8.5 does
not constitute proof that the State has relinquished control. And ultimately, should there be disagreement

with the actions taken by the contractor in this instance as well as under Clause 8.3 discussed above, the
DENR secretary may resort to cancellation/termination of the FTAA as the ultimate sanction.

Discretion to Select Contract

Area Not an Abdication of Control
Next, petitioners complain that the contractor has full discretion to select -- and the government has no say
whatsoever as to -- the parts of the contract area to be relinquished pursuant to Clause 4.6 of the WMCP
FTAA.56This clause, however, does not constitute abdication of control. Rather, it is a mere acknowledgment
of the fact that the contractor will have determined, after appropriate exploration works, which portions of
the contract area do not contain minerals in commercial quantities sufficient to justify developing the same
and ought therefore to be relinquished. The State cannot just substitute its judgment for that of the
contractor and dictate upon the latter which areas to give up.
Moreover, we can be certain that the contractor's self-interest will propel proper and efficient
relinquishment. According to private respondent,57 a mining company tries to relinquish as much non-mineral
areas as soon as possible, because the annual occupation fees paid to the government are based on the
total hectarage of the contract area, net of the areas relinquished. Thus, the larger the remaining area, the
heftier the amount of occupation fees to be paid by the contractor. Accordingly, relinquishment is not an
issue, given that the contractor will not want to pay the annual occupation fees on the non-mineral parts of
its contract area. Neither will it want to relinquish promising sites, which other contractors may subsequently
pick up.
Government Not a Subcontractor
Petitioners further maintain that the contractor can compel the government to exercise its power of eminent
domain to acquire surface areas within the contract area for the contractor's use. Clause 10.2 (e) of the
WMCP FTAA provides that the government agrees that the contractor shall "(e) have the right to require the
Government at the Contractor's own cost, to purchase or acquire surface areas for and on behalf of the
Contractor at such price and terms as may be acceptable to the contractor. At the termination of this
Agreement such areas shall be sold by public auction or tender and the Contractor shall be entitled to
reimbursement of the costs of acquisition and maintenance, adjusted for inflation, from the proceeds of
sale."
According to petitioners, "government becomes a subcontractor to the contractor" and may, on account of
this provision, be compelled "to make use of its power of eminent domain, not for public purposes but on
behalf of a private party, i.e., the contractor." Moreover, the power of the courts to determine the amount
corresponding to the constitutional requirement of just compensation has allegedly also been contracted
away by the government, on account of the latter's commitment that the acquisition shall be at such terms
as may be acceptable to the contractor.
However, private respondent has proffered a logical explanation for the provision. 58 Section 10.2(e)
contemplates a situation applicable to foreign-owned corporations. WMCP, at the time of the execution of
the FTAA, was a foreign-owned corporation and therefore not qualified to own land. As contractor, it has at
some future date to construct the infrastructure -- the mine processing plant, the camp site, the tailings
dam, and other infrastructure -- needed for the large-scale mining operations. It will then have to identify
and pinpoint, within the FTAA contract area, the particular surface areas with favorable topography deemed
ideal for such infrastructure and will need to acquire the surface rights. The State owns the mineral deposits
in the earth, and is also qualified to own land.
Section 10.2(e) sets forth the mechanism whereby the foreign-owned contractor, disqualified to own land,
identifies to the government the specific surface areas within the FTAA contract area to be acquired for the
mine infrastructure. The government then acquires ownership of the surface land areas on behalf of the
contractor, in order to enable the latter to proceed to fully implement the FTAA.
The contractor, of course, shoulders the purchase price of the land. Hence, the provision allows it, after
termination of the FTAA, to be reimbursed from proceeds of the sale of the surface areas, which the
government will dispose of through public bidding. It should be noted that this provision will not be
applicable to Sagittarius as the present FTAA contractor, since it is a Filipino corporation qualified to own and
hold land. As such, it may therefore freely negotiate with the surface rights owners and acquire the surface
property in its own right.
Clearly, petitioners have needlessly jumped to unwarranted conclusions, without being aware of the
rationale for the said provision. That provision does not call for the exercise of the power of eminent domain
-- and determination of just compensation is not an issue -- as much as it calls for a qualified party to acquire
the surface rights on behalf of a foreign-owned contractor.
Rather than having the foreign contractor act through a dummy corporation, having the State do the
purchasing is a better alternative. This will at least cause the government to be aware of such transaction/s
and foster transparency in the contractor's dealings with the local property owners. The government, then,
will not act as a subcontractor of the contractor; rather, it will facilitate the transaction and enable the
parties to avoid a technical violation of the Anti-Dummy Law.

Absence of Provision
Requiring Sale at Posted
Prices Not Problematic
The supposed absence of any provision in the WMCP FTAA directly and explicitly requiring the contractor
to sell the mineral products at posted or market prices is not a problem. Apart from Clause 1.4 of the FTAA
obligating the contractor to account for the total value of mineral production and the sale of minerals, we
can also look to Section 35 of RA 7942, which incorporates into all FTAAs certain terms, conditions and
warranties, including the following:
"(l) The contractors shall furnish the Government records of geologic, accounting and other relevant
data for its mining operation, and that books of accounts and records shall be open for inspection by
the government.x x x
(m) Requiring the proponent to dispose of the minerals at the highest price and more advantageous
terms and conditions."
For that matter, Section 56(n) of DAO 99-56 specifically obligates an FTAA contractor to dispose of the
minerals and by-products at the highest market price and to register with the MGB a copy of the sales
agreement. After all, the provisions of prevailing statutes as well as rules and regulations are deemed
written into contracts.
Contractor's Right to Mortgage
Not Objectionable Per Se
Petitioners also question the absolute right of the contractor under Clause 10.2 (l) to mortgage and
encumber not only its rights and interests in the FTAA and the infrastructure and improvements introduced,
but also the mineral products extracted. Private respondents do not touch on this matter, but we believe
that this provision may have to do with the conditions imposed by the creditor-banks of the then foreign
contractor WMCP to secure the lendings made or to be made to the latter. Ordinarily, banks lend not only on
the security of mortgages on fixed assets, but also on encumbrances of goods produced that can easily be
sold and converted into cash that can be applied to the repayment of loans. Banks even lend on the security
of accounts receivable that are collectible within 90 days.59
It is not uncommon to find that a debtor corporation has executed deeds of assignment "by way of security"
over the production for the next twelve months and/or the proceeds of the sale thereof -- or the
corresponding accounts receivable, if sold on terms -- in favor of its creditor-banks. Such deeds may include
authorizing the creditors to sell the products themselves and to collect the sales proceeds and/or the
accounts receivable.
Seen in this context, Clause 10.2(l) is not something out of the ordinary or objectionable. In any case, as will
be explained below, even if it is allowed to mortgage or encumber the mineral end-products themselves, the
contractor is not freed of its obligation to pay the government its basic and additional shares in the net
mining revenue, which is the essential thing to consider.
In brief, the alarum raised over the contractor's right to mortgage the minerals is simply unwarranted. Just
the same, the contractor must account for the value of mineral production and the sales proceeds
therefrom. Likewise, under the WMCP FTAA, the government remains entitled to its sixty percent share in the
net mining revenues of the contractor. The latter's right to mortgage the minerals does not negate the
State's right to receive its share of net mining revenues.
Shareholders Free to Sell Their Stocks
Petitioners likewise criticize Clause 10.2(k), which gives the contractor authority "to change its equity
structure at any time." This provision may seem somewhat unusual, but considering that WMCP then was
100 percent foreign-owned, any change would mean that such percentage would either stay unaltered or be
decreased in favor of Filipino ownership. Moreover, the foreign-held shares may change hands freely. Such
eventuality is as it should be.
We believe it is not necessary for government to attempt to limit or restrict the freedom of the shareholders
in the contractor to freely transfer, dispose of or encumber their shareholdings, consonant with the
unfettered exercise of their business judgment and discretion. Rather, what is critical is that, regardless of
the identity, nationality and percentage ownership of the various shareholders of the contractor -- and
regardless of whether these shareholders decide to take the company public, float bonds and other fixedincome instruments, or allow the creditor-banks to take an equity position in the company -- the foreignowned contractor is always in a position to render the services required under the FTAA, under the direction
and control of the government.
Contractor's Right to Ask
For Amendment Not Absolute
With respect to Clauses 10.4(e) and (i), petitioners complain that these provisions bind government to allow
amendments to the FTAA if required by banks and other financial institutions as part of the conditions for
new lendings. However, we do not find anything wrong with Clause 10.4(e), which only states that "if the
Contractor seeks to obtain financing contemplated herein from banks or other financial institutions, (the

Government shall) cooperate with the Contractor in such efforts provided that such financing arrangements
will in no event reduce the Contractor's obligations or the Government's rights
hereunder." The colatilla obviously safeguards the State's interests; if breached, it will give the government
cause to object to the proposed amendments.
On the other hand, Clause 10.4(i) provides that "the Government shall favourably consider any request from
[the] Contractor for amendments of this Agreement which are necessary in order for the Contractor to
successfully obtain the financing." Petitioners see in this provision a complete renunciation of control. We
disagree.
The proviso does not say that the government shall grant any request for amendment. Clause 10.4(i) only
obliges the State to favorably consider any such request, which is not at all unreasonable, as it is not
equivalent to saying that the government must automatically consent to it. This provision should be read
together with the rest of the FTAA provisions instituting government control and supervision over the mining
enterprise. The clause should not be given an interpretation that enables the contractor to wiggle out of the
restrictions imposed upon it by merely suggesting that certain amendments are requested by the lenders.
Rather, it is up to the contractor to prove to the government that the requested changes to the FTAA are
indispensable, as they enable the contractor to obtain the needed financing; that without such contract
changes, the funders would absolutely refuse to extend the loan; that there are no other sources of financing
available to the contractor (a very unlikely scenario); and that without the needed financing, the execution
of the work programs will not proceed. But the bottom line is, in the exercise of its power of control, the
government has the final say on whether to approve or disapprove such requested amendments to the
FTAA. In short, approval thereof is not mandatory on the part of the government.
In fine, the foregoing evaluation and analysis of the aforementioned FTAA provisions sufficiently
overturns petitioners' litany of objections to and criticisms of the State's alleged lack of control.
Financial Benefits Not
Surrendered to the Contractor
One of the main reasons certain provisions of RA 7942 were struck down was the finding mentioned in the
Decision that beneficial ownership of the mineral resources had been conveyed to the contractor. This
finding was based on the underlying assumption, common to the said provisions, that the foreign contractor
manages the mineral resources in the same way that foreign contractors in service contracts used to. "By
allowing foreign contractors to manage or operate all the aspects of the mining operation, the above-cited
provisions of R.A. No. 7942 have in effect conveyed beneficial ownership over the nation's mineral
resources to these contractors, leaving the State with nothing but bare title thereto." 60 As the WMCP FTAA
contained similar provisions deemed by the ponente to be abhorrent to the Constitution, the Decision struck
down the Contract as well.
Beneficial ownership has been defined as ownership recognized by law and capable of being enforced in the
courts at the suit of the beneficial owner.61 Black's Law Dictionary indicates that the term is used in two
senses: first, to indicate the interest of a beneficiary in trust property (also called "equitable ownership");
and second, to refer to the power of a corporate shareholder to buy or sell the shares, though the
shareholder is not registered in the corporation's books as the owner. 62 Usually, beneficial ownership is
distinguished from naked ownership, which is the enjoyment of all the benefits and privileges of ownership,
as against possession of the bare title to property.
An assiduous examination of the WMCP FTAA uncovers no indication that it confers upon WMCP ownership,
beneficial or otherwise, of the mining property it is to develop, the minerals to be produced, or the proceeds
of their sale, which can be legally asserted and enforced as against the State.
As public respondents correctly point out, any interest the contractor may have in the proceeds of the
mining operation is merely the equivalent of the consideration the government has undertaken to pay for its
services. All lawful contracts require such mutual prestations, and the WMCP FTAA is no different. The
contractor commits to perform certain services for the government in respect of the mining operation, and in
turn it is to be compensated out of the net mining revenues generated from the sale of mineral products.
What would be objectionable is a contractual provision that unduly benefits the contractor far in excess of
the service rendered or value delivered, if any, in exchange therefor.
A careful perusal of the statute itself and its implementing rules reveals that neither RA 7942 nor DAO 99-56
can be said to convey beneficial ownership of any mineral resource or product to any foreign FTAA
contractor.
Equitable Sharing
of Financial Benefits
On the contrary, DAO 99-56, entitled "Guidelines Establishing the Fiscal Regime of Financial or Technical
Assistance Agreements" aims to ensure an equitable sharing of the benefits derived from mineral resources.
These benefits are to be equitably shared among the government (national and local), the FTAA contractor,
and the affected communities. The purpose is to ensure sustainable mineral resources development; and a
fair, equitable, competitive and stable investment regime for the large-scale exploration, development and
commercial utilization of minerals. The general framework or concept followed in crafting the fiscal regime
of the FTAA is based on the principle that the government expects real contributions to the economic growth

and general welfare of the country, while the contractor expects a reasonable return on its investments in
the project.63
Specifically, under the fiscal regime, the government's expectation is, inter alia, the receipt of its share from
the taxes and fees normally paid by a mining enterprise. On the other hand, the FTAA contractor is granted
by the government certain fiscal and non-fiscal incentives 64 to help support the former's cash flow during the
most critical phase (cost recovery) and to make the Philippines competitive with other mineral-producing
countries. After the contractor has recovered its initial investment, it will pay all the normal taxes and fees
comprising the basic share of the government, plus an additional share for the government based on the
options and formulae set forth in DAO 99-56.
The said DAO spells out the financial benefits the government will receive from an FTAA, referred to as "the
Government Share," composed of a basic government share and an additional government share.
The basic government share is comprised of all direct taxes, fees and royalties, as well as other payments
made by the contractor during the term of the FTAA. These are amounts paid directly to (i) the national
government (through the Bureau of Internal Revenue, Bureau of Customs, Mines & Geosciences Bureau and
other national government agencies imposing taxes or fees), (ii) the local government units where the
mining activity is conducted, and (iii) persons and communities directly affected by the mining project. The
major taxes and other payments constituting the basic government share are enumerated below: 65
Payments to the National Government:
Excise tax on minerals - 2 percent of the gross output of mining operations
Contractor' income tax - maximum of 32 percent of taxable income for corporations
Customs duties and fees on imported capital equipment -the rate is set by the Tariff and
Customs Code (3-7 percent for chemicals; 3-10 percent for explosives; 3-15 percent for
mechanical and electrical equipment; and 3-10 percent for vehicles, aircraft and vessels
VAT on imported equipment, goods and services 10 percent of value
Royalties due the government on minerals extracted from mineral reservations, if applicable
5 percent of the actual market value of the minerals produced
Documentary stamp tax - the rate depends on the type of transaction
Capital gains tax on traded stocks - 5 to 10 percent of the value of the shares
Withholding tax on interest payments on foreign loans -15 percent of the amount of interest
Withholding tax on dividend payments to foreign stockholders 15 percent of the dividend
Wharfage and port fees
Licensing fees (for example, radio permit, firearms permit, professional fees)
Other national taxes and fees.
Payments to Local Governments:
Local business tax - a maximum of 2 percent of gross sales or receipts (the rate varies among
local government units)
Real property tax - 2 percent of the fair market value of the property, based on an
assessment level set by the local government
Special education levy - 1 percent of the basis used for the real property tax
Occupation fees - PhP50 per hectare per year; PhP100 per hectare per year if located in a
mineral reservation
Community tax - maximum of PhP10,500 per year
All other local government taxes, fees and imposts as of the effective date of the FTAA - the
rate and the type depend on the local government
Other Payments:
Royalty to indigenous cultural communities, if any 1 percent of gross output from mining
operations

 Special allowance - payment to claim owners and surface rights holders

Apart from the basic share, an additional government share is also collected from the FTAA contractor in
accordance with the second paragraph of Section 81 of RA 7942, which provides that the government share
shall be comprised of, among other things, certain taxes, duties and fees. The subject proviso reads:
"The Government share in a financial or technical assistance agreement shall consist of, among other
things, the contractor's corporate income tax, excise tax, special allowance, withholding tax due from the
contractor's foreign stockholders arising from dividend or interest payments to the said foreign stockholder
in case of a foreign national, and all such other taxes, duties and fees as provided for under existing
laws." (Bold types supplied.)
The government, through the DENR and the MGB, has interpreted the insertion of the phrase among other
things as signifying that the government is entitled to an "additional government share" to be paid by the
contractor apart from the "basic share," in order to attain a fifty-fifty sharing of net benefits from mining.
The additional government share is computed by using one of three options or schemes presented in
DAO 99-56: (1) a fifty-fifty sharing in the cumulative present value of cash flows; (2) the share based on
excess profits; and (3) the sharing based on the cumulative net mining revenue. The particular formula to be
applied will be selected by the contractor, with a written notice to the government prior to the
commencement of the development and construction phase of the mining project. 66
Proceeds from the government shares arising from an FTAA contract are distributed to and received by the
different levels of government in the following proportions:

National Government

50 percent

Provincial Government

10 percent

Municipal Government

20 percent

Affected Barangays

20 percent

The portion of revenues remaining after the deduction of the basic and additional government shares is what
goes to the contractor.

Government's Share in an
FTAA Not Consisting Solely
of Taxes, Duties and Fees
In connection with the foregoing discussion on the basic and additional government shares, it is
pertinent at this juncture to mention the criticism leveled at the second paragraph of Section 81 of RA 7942,
quoted earlier. The said proviso has been denounced, because, allegedly, the State's share in FTAAs with
foreign contractors has been limited to taxes, fees and duties only; in effect, the State has been deprived of
a share in the after-tax income of the enterprise. In the face of this allegation, one has to consider that the
law does not define the term among other things; and the Office of the Solicitor General, in its Motion for
Reconsideration, appears to have erroneously claimed that the phrase refers to indirect taxes.
The law provides no definition of the term among other things, for the reason that Congress deliberately
avoided setting unnecessary limitations as to what may constitute compensation to the State for the
exploitation and use of mineral resources. But the inclusion of that phrase clearly and unmistakably reveals
the legislative intent to have the State collect more than just the usual taxes, duties and fees. Certainly,
there is nothing in that phrase -- or in the second paragraph of Section 81 -- that would suggest that such
phrase should be interpreted as referring only to taxes, duties, fees and the like.
Precisely for that reason, to fulfill the legislative intent behind the inclusion of the phrase among other
things in the second paragraph of Section 81,67 the DENR structured and formulated in DAO 99-56 the
said additional government share. Such a share was to consist not of taxes, but of a share in the
earnings or cash flows of the mining enterprise. The additional government share was to be paid by
the contractor on top of the basic share, so as to achieve a fifty-fifty sharing -- between the government and
the contractor -- of net benefits from mining. In the Ramos-DeVera paper, the explanation of the three
options or formulas68 -- presented in DAO 99-56 for the computation of the additional government share --

serves to debunk the claim that the government's take from an FTAA consists solely of taxes, fees and
duties.
Unfortunately, the Office of the Solicitor General -- although in possession of the relevant data -- failed to
fully replicate or echo the pertinent elucidation in the Ramos-DeVera paper regarding the three schemes or
options for computing the additional government share presented in DAO 99-56. Had due care been taken
by the OSG, the Court would have been duly apprised of the real nature and particulars of the additional
share.
But, perhaps, on account of the esoteric discussion in the Ramos-DeVera paper, and the even more abstruse
mathematical jargon employed in DAO 99-56, the OSG omitted any mention of the three options. Instead,
the OSG skipped to a side discussion of the effect of indirect taxes, which had nothing at all to do with the
additional government share, to begin with. Unfortunately, this move created the wrong impression, pointed
out in Justice Antonio T. Carpio's Opinion, that the OSG had taken the position that the additional
government share consisted of indirect taxes.
In any event, what is quite evident is the fact that the additional government share, as formulated, has
nothing to do with taxes -- direct or indirect -- or with duties, fees or charges. To repeat, it is over and above
the basic government share composed of taxes and duties. Simply put, the additional share may be (a) an
amount that will result in a 50-50 sharing of the cumulative present value of the cash flows69 of the
enterprise; (b) an amount equivalent to 25 percent of the additional or excess profits of the enterprise,
reckoned against a benchmark return on investments; or (c) an amount that will result in a fifty-fifty sharing
of the cumulative net mining revenue from the end of the recovery period up to the taxable year in question.
The contractor is required to select one of the three options or formulae for computing the additional share,
an option it will apply to all of its mining operations.
As used above, "net mining revenue" is defined as the gross output from mining operations for a calendar
year, less deductible expenses (inclusive of taxes, duties and fees). Such revenue would roughly be
equivalent to "taxable income" or income before income tax. Definitely, as compared with, say, calculating
the additional government share on the basis of net income (after income tax), the net mining revenue
is a better and much more reasonable basis for such computation, as it gives a truer picture of the
profitability of the company.
To demonstrate that the three options or formulations will operate as intended, Messrs. Ramos and de Vera
also performed some quantifications of the government share via a financial modeling of each of the three
options discussed above. They found that the government would get the highest share from the option that
is based on the net mining revenue, as compared with the other two options, considering only the basic and
the additional shares; and that, even though production rate decreases, the government share will actually
increase when the net mining revenue and the additional profit-based options are used.
Furthermore, it should be noted that the three options or formulae do not yet take into account the indirect
taxes70and other financial contributions71 of mining projects. These indirect taxes and other contributions are
real and actual benefits enjoyed by the Filipino people and/or government. Now, if some of the quantifiable
items are taken into account in the computations, the financial modeling would show that the total
government share increases to 60 percent or higher -- in one instance, as much as 77 percent and even 89
percent -- of the net present value of total benefits from the project. As noted in the Ramos-DeVera paper,
these results are not at all shabby, considering that the contractor puts in all the capital requirements and
assumes all the risks, without the government having to contribute or risk anything.
Despite the foregoing explanation, Justice Carpio still insisted during the Court's deliberations that the
phraseamong other things refers only to taxes, duties and fees. We are bewildered by his position. On the
one hand, he condemns the Mining Law for allegedly limiting the government's benefits only to taxes, duties
and fees; and on the other, he refuses to allow the State to benefit from the correct and proper
interpretation of the DENR/MGB. To remove all doubts then, we hold that the State's share is not limited to
taxes, duties and fees only and that the DENR/MGB interpretation of the phrase among other things is
correct. Definitely, this DENR/MGB interpretation is not only legally sound, but also greatly advantageous to
the government.
One last point on the subject. The legislature acted judiciously in not defining the terms among other
things and, instead, leaving it to the agencies concerned to devise and develop the various modes of
arriving at a reasonable and fair amount for the additional government share. As can be seen from DAO
99-56, the agencies concerned did an admirable job of conceiving and developing not just one formula, but
three different formulae for arriving at the additional government share. Each of these options is quite fair
and reasonable; and, as Messrs. Ramos and De Vera stated, other alternatives or schemes for a possible
improvement of the fiscal regime for FTAAs are also being studied by the government.
Besides, not locking into a fixed definition of the term among other things will ultimately be more beneficial
to the government, as it will have that innate flexibility to adjust to and cope with rapidly changing
circumstances, particularly those in the international markets. Such flexibility is especially significant for the
government in terms of helping our mining enterprises remain competitive in world markets despite
challenging and shifting economic scenarios.
In conclusion, we stress that we do not share the view that in FTAAs with foreign contractors
under RA 7942, the government's share is limited to taxes, fees and duties. Consequently, we
find the attacks on the second paragraph of Section 81 of RA 7942 totally unwarranted.

Collections Not Made Uncertain

by the Third Paragraph of Section 81
The third or last paragraph of Section 8172 provides that the government share in FTAAs shall be collected
when the contractor shall have recovered its pre-operating expenses and exploration and development
expenditures. The objection has been advanced that, on account of the proviso, the collection of the State's
share is not even certain, as there is no time limit in RA 7942 for this grace period or recovery period.
We believe that Congress did not set any time limit for the grace period, preferring to leave it to the
concerned agencies, which are, on account of their technical expertise and training, in a better position to
determine the appropriate durations for such recovery periods. After all, these recovery periods are
determined, to a great extent, by technical and technological factors peculiar to the mining industry.
Besides, with developments and advances in technology and in the geosciences, we cannot discount the
possibility of shorter recovery periods. At any rate, the concerned agencies have not been remiss in this
area. The 1995 and 1996 Implementing Rules and Regulations of RA 7942 specify that the period of
recovery, reckoned from the date of commercial operation, shall be for a period not exceeding five years, or
until the date of actual recovery, whichever comes earlier.
Approval of Pre-Operating
Expenses Required by RA 7942
Still, RA 7942 is criticized for allegedly not requiring government approval of pre-operating, exploration and
development expenses of the foreign contractors, who are in effect given unfettered discretion to determine
the amounts of such expenses. Supposedly, nothing prevents the contractors from recording such expenses
in amounts equal to the mining revenues anticipated for the first 10 or 15 years of commercial production,
with the result that the share of the State will be zero for the first 10 or 15 years. Moreover, under the
circumstances, the government would be unable to say when it would start to receive its share under the
FTAA.
We believe that the argument is based on incorrect information as well as speculation. Obviously, certain
crucial provisions in the Mining Law were overlooked. Section 23, dealing with the rights and obligations of
the exploration permit grantee, states: "The permittee shall undertake exploration work on the area as
specified by its permit based on an approved work program." The next proviso reads: "Any expenditure in
excess of the yearly budget of theapproved work program may be carried forward and credited to the
succeeding years covering the duration of the permit. x x x." (underscoring supplied)
Clearly, even at the stage of application for an exploration permit, the applicant is required to submit -- for
approval by the government -- a proposed work program for exploration, containing a yearly budget of
proposed expenditures. The State has the opportunity to pass upon (and approve or reject) such proposed
expenditures, with the foreknowledge that -- if approved -- these will subsequently be recorded as preoperating expenses that the contractor will have to recoup over the grace period. That is not all.
Under Section 24, an exploration permit holder who determines the commercial viability of a project
covering a mining area may, within the term of the permit, file with the Mines and Geosciences Bureau a
declaration of mining project feasibility. This declaration is to be accompanied by a work program for
development for the Bureau's approval, the necessary prelude for entering into an FTAA, a mineral
production sharing agreement (MPSA), or some other mineral agreement. At this stage, too, the government
obviously has the opportunity to approve or reject the proposed work program and budgeted expenditures
for development works on the project. Such expenditures will ultimately become the pre-operating and
development costs that will have to be recovered by the contractor.
Naturally, with the submission of approved work programs and budgets for the exploration and the
development/construction phases, the government will be able to scrutinize and approve or reject such
expenditures. It will be well-informed as to the amounts of pre-operating and other expenses that the
contractor may legitimately recover and the approximate period of time needed to effect such a recovery.
There is therefore no way the contractor can just randomly post any amount of pre-operating expenses and
expect to recover the same.
The aforecited provisions on approved work programs and budgets have counterparts in Section 35, which
deals with the terms and conditions exclusively applicable to FTAAs. The said provision requires certain
terms and conditions to be incorporated into FTAAs; among them, "a firm commitment x x x of an amount
corresponding to theexpenditure obligation that will be invested in the contract area" and "representations
and warranties x x x to timely deploy these [financing, managerial and technical expertise and
technological] resources under its supervision pursuant to the periodic work programs and related budgets x
x x," as well as "work programs and minimum expenditures commitments." (underscoring supplied)
Unarguably, given the provisions of Section 35, the State has every opportunity to pass upon the proposed
expenditures under an FTAA and approve or reject them. It has access to all the information it may need in
order to determine in advance the amounts of pre-operating and developmental expenses that will have to
be recovered by the contractor and the amount of time needed for such recovery.
In summary, we cannot agree that the third or last paragraph of Section 81 of RA 7942 is in any
manner unconstitutional.
No Deprivation of Beneficial Rights

It is also claimed that aside from the second and the third paragraphs of Section 81 (discussed above),
Sections 80, 84 and 112 of RA 7942 also operate to deprive the State of beneficial rights of ownership over
mineral resources; and give them away for free to private business enterprises (including foreign owned
corporations). Likewise, the said provisions have been construed as constituting, together with Section 81,
an ingenious attempt to resurrect the old and discredited system of "license, concession or lease."
Specifically, Section 80 is condemned for limiting the State's share in a mineral production-sharing
agreement (MPSA) to just the excise tax on the mineral product. Under Section 151(A) of the Tax Code, such
tax is only 2 percent of the market value of the gross output of the minerals. The colatilla in Section 84, the
portion considered offensive to the Constitution, reiterates the same limitation made in Section 80. 73
It should be pointed out that Section 80 and the colatilla in Section 84 pertain only to MPSAs and have no
application to FTAAs. These particular statutory provisions do not come within the issues that were defined
and delineated by this Court during the Oral Argument -- particularly the third issue, which pertained
exclusively to FTAAs. Neither did the parties argue upon them in their pleadings. Hence, this Court cannot
make any pronouncement in this case regarding the constitutionality of Sections 80 and 84 without violating
the fundamental rules of due process. Indeed, the two provisos will have to await another case specifically
placing them in issue.
On the other hand, Section 11274 is disparaged for allegedly reverting FTAAs and all mineral agreements to
the old and discredited "license, concession or lease" system. This Section states in relevant part that "the
provisions of Chapter XIV [which includes Sections 80 to 82] on government share in mineral productionsharing agreement x x x shall immediately govern and apply to a mining lessee or
contractor." (underscoring supplied) This provision is construed as signifying that the 2 percent excise tax
which, pursuant to Section 80, comprises the government share in MPSAs shall now also constitute the
government share in FTAAs -- as well as in co-production agreements and joint venture agreements -- to the
exclusion of revenues of any other nature or from any other source.
Apart from the fact that Section 112 likewise does not come within the issues delineated by this Court during
the Oral Argument, and was never touched upon by the parties in their pleadings, it must also be noted that
the criticism hurled against this Section is rooted in unwarranted conclusions made without considering
other relevant provisions in the statute. Whether Section 112 may properly apply to co-production or joint
venture agreements, the fact of the matter is that it cannot be made to apply to FTAAs.
First, Section 112 does not specifically mention or refer to FTAAs; the only reason it is being applied to them
at all is the fact that it happens to use the word "contractor." Hence, it is a bit of a stretch to insist that it
covers FTAAs as well. Second, mineral agreements, of which there are three types -- MPSAs, co-production
agreements, and joint venture agreements -- are covered by Chapter V of RA 7942. On the other hand,
FTAAs are covered by and in fact are the subject of Chapter VI, an entirely different chapter altogether. The
law obviously intends to treat them as a breed apart from mineral agreements, since Section 35 (found in
Chapter VI) creates a long list of specific terms, conditions, commitments, representations and warranties -which have not been made applicable to mineral agreements -- to be incorporated into FTAAs.
Third, under Section 39, the FTAA contractor is given the option to "downgrade" -- to convert the FTAA into a
mineral agreement at any time during the term if the economic viability of the contract area is inadequate to
sustain large-scale mining operations. Thus, there is no reason to think that the law through Section 112
intends to exact from FTAA contractors merely the same government share (a 2 percent excise tax) that it
apparently demands from contractors under the three forms of mineral agreements. In brief, Section 112
does not apply to FTAAs.
Notwithstanding the foregoing explanation, Justices Carpio and Morales maintain that the Court must
rule now on the constitutionality of Sections 80, 84 and 112, allegedly because the WMCP FTAA contains a
provision which grants the contractor unbridled and "automatic" authority to convert the FTAA into an MPSA;
and should such conversion happen, the State would be prejudiced since its share would be limited to the 2
percent excise tax. Justice Carpio adds that there are five MPSAs already signed just awaiting the judgment
of this Court on respondents' and intervenor's Motions for Reconsideration. We hold however that, at this
point, this argument is based on pure speculation. The Court cannot rule on mere surmises and hypothetical
assumptions, without firm factual anchor. We repeat: basic due process requires that we hear the parties
who have a real legal interest in the MPSAs (i.e. the parties who executed them) before these MPSAs can be
reviewed, or worse, struck down by the Court. Anything less than that requirement would be arbitrary and
capricious.
In any event, the conversion of the present FTAA into an MPSA is problematic. First, the contractor must
comply with the law, particularly Section 39 of RA 7942; inter alia, it must convincingly show that the
"economic viability of the contract is found to be inadequate to justify large-scale mining
operations;" second, it must contend with the President's exercise of the power of State control over the EDU
of natural resources; and third, it will have to risk a possible declaration of the unconstitutionality (in a
proper case) of Sections 80, 84 and 112.
The first requirement is not as simple as it looks. Section 39 contemplates a situation in which an FTAA has
already been executed and entered into, and is presumably being implemented, when the contractor
"discovers" that the mineral ore reserves in the contract area are not sufficient to justify large-scale mining,
and thus the contractor requests the conversion of the FTAA into an MPSA. The contractor in effect needs to
explain why, despite its exploration activities, including the conduct of various geologic and other scientific
tests and procedures in the contract area, it was unable to determine correctly the mineral ore reserves and
the economic viability of the area. The contractor must explain why, after conducting such exploration

activities, it decided to file a declaration of mining feasibility, and to apply for an FTAA, thereby leading the
State to believe that the area could sustain large-scale mining. The contractor must justify fully why
its earlier findings, based on scientific procedures, tests and data,turned out to be wrong, or were way off. It
must likewise prove that its new findings, also based on scientific tests and procedures, are correct. Right
away, this puts the contractor's technical capabilities and expertise into serious doubt. We wonder if anyone
would relish being in this situation. The State could even question and challenge the contractor's
qualification and competence to continue the activity under an MPSA.
All in all, while there may be cogent grounds to assail the aforecited Sections, this Court -- on
considerations of due process -- cannot rule upon them here. Anyway, if later on these Sections
are declared unconstitutional, such declaration will not affect the other portions since they are
clearly separable from the rest.
Our Mineral Resources Not
Given Away for Free by RA 7942
Nevertheless, if only to disabuse our minds, we should address the contention that our mineral resources are
effectively given away for free by the law (RA 7942) in general and by Sections 80, 81, 84 and 112 in
particular.
Foreign contractors do not just waltz into town one day and leave the next, taking away mineral
resources without paying anything. In order to get at the minerals, they have to invest huge sums of money
(tens or hundreds of millions of dollars) in exploration works first. If the exploration proves unsuccessful, all
the cash spent thereon will not be returned to the foreign investors; rather, those funds will have been
infused into the local economy, to remain there permanently. The benefits therefrom cannot be simply
ignored. And assuming that the foreign contractors are successful in finding ore bodies that are viable for
commercial exploitation, they do not just pluck out the minerals and cart them off. They have first to build
camp sites and roadways; dig mine shafts and connecting tunnels; prepare tailing ponds, storage areas and
vehicle depots; install their machinery and equipment, generator sets, pumps, water tanks and sewer
systems, and so on.
In short, they need to expend a great deal more of their funds for facilities, equipment and supplies, fuel,
salaries of local labor and technical staff, and other operating expenses. In the meantime, they also have to
pay taxes,75duties, fees, and royalties. All told, the exploration, pre-feasibility, feasibility, development and
construction phases together add up to as many as eleven years.76 The contractors have to continually shell
out funds for the duration of over a decade, before they can commence commercial production from which
they would eventually derive revenues. All that money translates into a lot of "pump-priming" for the local
economy.
Granted that the contractors are allowed subsequently to recover their pre-operating expenses, still, that
eventuality will happen only after they shall have first put out the cash and fueled the economy. Moreover, in
the process of recouping their investments and costs, the foreign contractors do not actually pull out the
money from the economy. Rather, they recover or recoup their investments out of actual commercial
production by not paying a portion of the basic government share corresponding to national taxes, along
with the additional government share, for a period of not more than five years 77 counted from the
commencement of commercial production.
It must be noted that there can be no recovery without commencing actual commercial production. In the
meantime that the contractors are recouping costs, they need to continue operating; in order to do so, they
have to disburse money to meet their various needs. In short, money is continually infused into the
economy.
The foregoing discussion should serve to rid us of the mistaken belief that, since the foreign contractors are
allowed to recover their investments and costs, the end result is that they practically get the minerals for
free, which leaves the Filipino people none the better for it.
All Businesses Entitled
to Cost Recovery
Let it be put on record that not only foreign contractors, but all businessmen and all business entities in
general, have to recoup their investments and costs. That is one of the first things a student learns in
business school. Regardless of its nationality, and whether or not a business entity has a five-year cost
recovery period, it will -- must -- have to recoup its investments, one way or another. This is just common
business sense. Recovery of investments is absolutely indispensable for business survival; and business
survival ensures soundness of the economy, which is critical and contributory to the general welfare of the
people. Even government corporations must recoup their investments in order to survive and continue in
operation. And, as the preceding discussion has shown, there is no business that gets ahead or earns profits
without any cost to it.
It must also be stressed that, though the State owns vast mineral wealth, such wealth is not readily
accessible or transformable into usable and negotiable currency without the intervention of the credible
mining companies. Those untapped mineral resources, hidden beneath tons of earth and rock, may as well
not be there for all the good they do us right now. They have first to be extracted and converted into
marketable form, and the country needs the foreign contractor's funds, technology and know-how for that.

After about eleven years of pre-operation and another five years for cost recovery, the foreign contractors
will have just broken even. Is it likely that they would at that point stop their operations and leave? Certainly
not. They have yet to make profits. Thus, for the remainder of the contract term, they must strive to
maintain profitability. During this period, they pay the whole of the basic government share and the
additional government share which, taken together with indirect taxes and other contributions, amount to
approximately 60 percent or more of the entire financial benefits generated by the mining venture.
In sum, we can hardly talk about foreign contractors taking our mineral resources for free. It takes a lot of
hard cash to even begin to do what they do. And what they do in this country ultimately benefits the local
economy, grows businesses, generates employment, and creates infrastructure, as discussed above. Hence,
we definitely disagree with the sweeping claim that no FTAA under Section 81 will ever make any real
contribution to the growth of the economy or to the general welfare of the country. This is not a plea for
foreign contractors. Rather, this is a question of focusing the judicial spotlight squarely on all the pertinent
facts as they bear upon the issue at hand, in order to avoid leaping precipitately to ill-conceived conclusions
not solidly grounded upon fact.
Repatriation of After-Tax Income
Another objection points to the alleged failure of the Mining Law to ensure real contributions to the economic
growth and general welfare of the country, as mandated by Section 2 of Article XII of the Constitution.
Pursuant to Section 81 of the law, the entire after-tax income arising from the exploitation of mineral
resources owned by the State supposedly belongs to the foreign contractors, which will naturally repatriate
the said after-tax income to their home countries, thereby resulting in no real contribution to the economic
growth of this country. Clearly, this contention is premised on erroneous assumptions.
First, as already discussed in detail hereinabove, the concerned agencies have correctly interpreted the
second paragraph of Section 81 of RA 7942 to mean that the government is entitled to an additional share,
to be computed based on any one of the following factors: net mining revenues, the present value of the
cash flows, or excess profits reckoned against a benchmark rate of return on investments. So it is not correct
to say that all of the after-tax income will accrue to the foreign FTAA contractor, as the
government effectively receives a significant portion thereof.
Second, the foreign contractors can hardly "repatriate the entire after-tax income to their home
countries." Even a bit of knowledge of corporate finance will show that it will be impossible to maintain a
business as a "going concern" if the entire "net profit" earned in any particular year will be taken out and
repatriated. The "net income" figure reflected in the bottom line is a mere accounting figure not necessarily
corresponding to cash in the bank, or other quick assets. In order to produce and set aside cash in an
amount equivalent to the bottom line figure, one may need to sell off assets or immediately collect
receivables or liquidate short-term investments; but doing so may very likely disrupt normal business
operations.
In terms of cash flows, the funds corresponding to the net income as of a particular point in time are actually
in usein the normal course of business operations. Pulling out such net income disrupts the cash flows and
cash position of the enterprise and, depending on the amount being taken out, could seriously cripple or
endanger the normal operations and financial health of the business enterprise. In short, no sane
business person, concerned with maintaining the mining enterprise as a going concern and
keeping a foothold in its market, can afford to repatriate the entire after-tax income to the
home country.
The State's Receipt of Sixty
Percent of an FTAA Contractor's
After-Tax Income Not Mandatory
We now come to the next objection which runs this way: In FTAAs with a foreign contractor, the State must
receive at least 60 percent of the after-tax income from the exploitation of its mineral resources. This share
is the equivalent of the constitutional requirement that at least 60 percent of the capital, and hence 60
percent of the income, of mining companies should remain in Filipino hands.
First, we fail to see how we can properly conclude that the Constitution mandates the State to extract at
least 60 percent of the after-tax income from a mining company run by a foreign contractor. The argument is
that the Charter requires the State's partner in a co-production agreement, joint venture agreement or MPSA
to be a Filipino corporation (at least 60 percent owned by Filipino citizens).
We question the logic of this reasoning, premised on a supposedly parallel or analogous situation. We are,
after all, dealing with an essentially different equation, one that involves different elements. The Charter
did not intend to fix an iron-clad rule on the 60 percent share, applicable to all situations at all
times and in all circumstances.If ever such was the intention of the framers, they would have spelt it out
in black and white. Verba legis will serve to dispel unwarranted and untenable conclusions.
Second, if we would bother to do the math, we might better appreciate the impact (and reasonableness) of
what we are demanding of the foreign contractor. Let us use a simplified illustration. Let us base it on gross
revenues of, say,P500. After deducting operating expenses, but prior to income tax, suppose a mining firm
makes a taxable incomeof P100. A corporate income tax of 32 percent results in P32 of taxable income
going to the government, leaving the mining firm with P68. Government then takes 60 percent thereof,
equivalent to P40.80, leaving only P27.20 for the mining firm.

At this point the government has pocketed P32.00 plus P40.80, or a total of P72.80 for every P100 of taxable
income, leaving the mining firm with only P27.20. But that is not all. The government has also taken 2
percent excise tax "off the top," equivalent to another P10. Under the minimum 60 percent proposal, the
government nets around P82.80 (not counting other taxes, duties, fees and charges) from a taxable income
of P100 (assuming gross revenues of P500, for purposes of illustration). On the other hand, the foreign
contractor, which provided all the capital, equipment and labor, and took all the entrepreneurial risks
-- receives P27.20. One cannot but wonder whether such a distribution is even remotely equitable and
reasonable, considering the nature of the mining business. The amount of P82.80 out of P100.00 is really a
lot it does not matter that we call part of it excise tax orincome tax, and another portion thereof income
from exploitation of mineral resources. Some might think it wonderful to be able to take the lion's share of
the benefits. But we have to ask ourselves if we are really serious in attracting the investments that are the
indispensable and key element in generating the monetary benefits of which we wish to take the lion's
share. Fairness is a credo not only in law, but also in business.
Third, the 60 percent rule in the petroleum industry cannot be insisted upon at all times in the mining
business. The reason happens to be the fact that in petroleum operations, the bulk of expenditures is in
exploration, but once the contractor has found and tapped into the deposit, subsequent investments and
expenditures are relatively minimal. The crude (or gas) keeps gushing out, and the work entailed is just a
matter of piping, transporting and storing. Not so in mineral mining. The ore body does not pop out on its
own. Even after it has been located, the contractor must continually invest in machineries and expend funds
to dig and build tunnels in order to access and extract the minerals from underneath hundreds of tons of
earth and rock.
As already stated, the numerous intrinsic differences involved in their respective operations and
requirements, cost structures and investment needs render it highly inappropriate to use petroleum
operations FTAAs as benchmarks for mining FTAAs. Verily, we cannot just ignore the realities of the distinctly
different situations and stubbornly insist on the "minimum 60 percent."
The Mining and the Oil Industries
Different From Each Other
To stress, there is no independent showing that the taking of at least a 60 percent share in the after-tax
income of a mining company operated by a foreign contractor is fair and reasonable under most if not all
circumstances. The fact that some petroleum companies like Shell acceded to such percentage of
sharing does not ipso facto mean that it is per se reasonable and applicable to non-petroleum situations
(that is, mining companies) as well. We can take judicial notice of the fact that there are, after all, numerous
intrinsic differences involved in their respective operations and equipment or technological requirements,
costs structures and capital investment needs, and product pricing and markets.
There is no showing, for instance, that mining companies can readily cope with a 60 percent government
share in the same way petroleum companies apparently can. What we have is a suggestion to enforce the
60 percent quota on the basis of a disjointed analogy. The only factor common to the two disparate
situations is the extraction of natural resources.
Indeed, we should take note of the fact that Congress made a distinction between mining firms and
petroleum companies. In Republic Act No. 7729 -- "An Act Reducing the Excise Tax Rates on Metallic and
Non-Metallic Minerals and Quarry Resources, Amending for the Purpose Section 151(a) of the National
Internal Revenue Code, as amended" -- the lawmakers fixed the excise tax rate on metallic and non-metallic
minerals at two percent of the actual market value of the annual gross output at the time of removal.
However, in the case of petroleum, the lawmakers set the excise tax rate for the first taxable sale at fifteen
percent of the fair international market price thereof.
There must have been a very sound reason that impelled Congress to impose two very dissimilar excise tax
rate. We cannot assume, without proof, that our honorable legislators acted arbitrarily, capriciously and
whimsically in this instance. We cannot just ignore the reality of two distinctly different situations and
stubbornly insist on going "minimum 60 percent."
To repeat, the mere fact that gas and oil exploration contracts grant the State 60 percent of the net
revenues does not necessarily imply that mining contracts should likewise yield a minimum of 60 percent for
the State. Jumping to that erroneous conclusion is like comparing apples with oranges. The exploration,
development and utilization of gas and oil are simply different from those of mineral resources.
To stress again, the main risk in gas and oil is in the exploration. But once oil in commercial quantities is
struck and the wells are put in place, the risk is relatively over and black gold simply flows out continuously
with comparativelyless need for fresh investments and technology.
On the other hand, even if minerals are found in viable quantities, there is still need for continuous
fresh capital and expertise to dig the mineral ores from the mines. Just because deposits of mineral ores are
found in one area is no guarantee that an equal amount can be found in the adjacent areas. There are
simply continuing risks and need for more capital, expertise and industry all the time.
Note, however, that the indirect benefits -- apart from the cash revenues -- are much more in the mineral
industry. As mines are explored and extracted, vast employment is created, roads and other infrastructure
are built, and other multiplier effects arise. On the other hand, once oil wells start producing, there is less
need for employment. Roads and other public works need not be constructed continuously. In fine, there is

no basis for saying that government revenues from the oil industry and from the mineral industries are to be
identical all the time.
Fourth, to our mind, the proffered "minimum 60 percent" suggestion tends to limit the flexibility and tie the
hands of government, ultimately hampering the country's competitiveness in the international market, to
the detriment of the Filipino people. This "you-have-to-give-us-60-percent-of-after-tax-income-or-we-don'tdo- business-with-you" approach is quite perilous. True, this situation may not seem too unpalatable to the
foreign contractor during good years, when international market prices are up and the mining firm manages
to keep its costs in check. However, under unfavorable economic and business conditions, with costs
spiraling skywards and minerals prices plummeting, a mining firm may consider itself lucky to make just
minimal profits.
The inflexible, carved-in-granite demand for a 60 percent government share may spell the end of the mining
venture, scare away potential investors, and thereby further worsen the already dismal economic scenario.
Moreover, such an unbending or unyielding policy prevents the government from responding appropriately
to changing economic conditions and shifting market forces. This inflexibility further renders our country
less attractive as an investment option compared with other countries.
And fifth, for this Court to decree imperiously that the government's share should be not less than 60
percent of the after-tax income of FTAA contractors at all times is nothing short of dictating upon the
government. The result, ironically, is that the State ends up losing control. To avoid compromising the State's
full control and supervision over the exploitation of mineral resources, this Court must back off from insisting
upon a "minimum 60 percent" rule. It is sufficient that the State has the power and means, should it so
decide, to get a 60 percent share (or more) in the contractor's net mining revenues or after-tax income, or
whatever other basis the government may decide to use in reckoning its share. It is not necessary for it to
do so in every case, regardless of circumstances.
In fact, the government must be trusted, must be accorded the liberty and the utmost flexibility to deal,
negotiate and transact with contractors and third parties as it sees fit; and upon terms that it ascertains to
be most favorable or most acceptable under the circumstances, even if it means agreeing to less than 60
percent. Nothing must prevent the State from agreeing to a share less than that, should it be deemed fit;
otherwise the State will be deprived of full control over mineral exploitation that the Charter has vested in it.
To stress again, there is simply no constitutional or legal provision fixing the minimum share of the
government in an FTAA at 60 percent of the net profit. For this Court to decree such minimum is to wade
into judicial legislation, and thereby inordinately impinge on the control power of the State. Let it be clear:
the Court is not against the grant of more benefits to the State; in fact, the more the better. If during the
FTAA negotiations, the President can secure 60 percent, 78 or even 90 percent, then all the better for our
people. But, if under the peculiar circumstances of a specific contract, the President could secure only 50
percent or 55 percent, so be it. Needless to say, the President will have to report (and be responsible for) the
specific FTAA to Congress, and eventually to the people.
Finally, if it should later be found that the share agreed to is grossly disadvantageous to the government, the
officials responsible for entering into such a contract on its behalf will have to answer to the courts for their
malfeasance. And the contract provision voided. But this Court would abuse its own authority should it force
the government's hand to adopt the 60 percent demand of some of our esteemed colleagues.
Capital and Expertise Provided,
Yet All Risks Assumed by Contractor
Here, we will repeat what has not been emphasized and appreciated enough: the fact that the contractor in
an FTAA provides all the needed capital, technical and managerial expertise, and technology required to
undertake the project.
In regard to the WMCP FTAA, the then foreign-owned WMCP as contractor committed, at the very outset, to
make capital investments of up to US$50 million in that single mining project. WMCP claims to have already
poured in well over P800 million into the country as of February 1998, with more in the pipeline. These
resources, valued in the tens or hundreds of millions of dollars, are invested in a mining project that provides
no assurance whatsoever that any part of the investment will be ultimately recouped.
At the same time, the contractor must comply with legally imposed environmental standards and the social
obligations, for which it also commits to make significant expenditures of funds. Throughout, the contractor
assumes all the risks79 of the business, as mentioned earlier. These risks are indeed very high, considering
that the rate of success in exploration is extremely low. The probability of finding any mineral or petroleum
in commercially viable quantities is estimated to be about 1:1,000 only. On that slim chance rides the
contractor's hope of recouping investments and generating profits. And when the contractor has recouped
its initial investments in the project, the government share increases to sixty percent of net benefits -without the State ever being in peril of incurring costs, expenses and losses.
And even in the worst possible scenario -- an absence of commercial quantities of minerals to justify
development -- the contractor would already have spent several million pesos for exploration works, before
arriving at the point in which it can make that determination and decide to cut its losses. In fact, during
the first year alone of the exploration period, the contractor was already committed to spend not less
than P24 million. The FTAA therefore clearly ensures benefits for the local economy, courtesy of the
contractor.

All in all, this setup cannot be regarded as disadvantageous to the State or the Filipino people;
it certainly cannot be said to convey beneficial ownership of our mineral resources to foreign
contractors.
Deductions Allowed by the
WMCP FTAA Reasonable
Petitioners question whether the State's weak control might render the sharing arrangements ineffective.
They cite the so-called "suspicious" deductions allowed by the WMCP FTAA in arriving at the net mining
revenue, which is the basis for computing the government share. The WMCP FTAA, for instance, allows
expenditures for "development within and outside the Contract Area relating to the Mining
Operations,"80 "consulting fees incurred both inside andoutside the Philippines for work related directly to the
Mining Operations,"81 and "the establishment and administration of field offices including administrative
overheads incurred within and outside the Philippines which are properly allocatable to the Mining
Operations and reasonably related to the performance of the Contractor's obligations and exercise of its
rights under this Agreement."82
It is quite well known, however, that mining companies do perform some marketing activities abroad in
respect of selling their mineral products and by-products. Hence, it would not be improper to allow the
deduction of reasonableconsulting fees incurred abroad, as well as administrative expenses and overheads
related to marketing offices also located abroad -- provided that these deductions are directly related or
properly allocatable to the mining operations and reasonably related to the performance of the contractor's
obligations and exercise of its rights. In any event, more facts are needed. Until we see how these provisions
actually operate, mere "suspicions" will not suffice to propel this Court into taking action.
Section 7.9 of the WMCP FTAA
Invalid and Disadvantageous
Having defended the WMCP FTAA, we shall now turn to two defective provisos. Let us start with Section 7.9
of the WMCP FTAA. While Section 7.7 gives the government a 60 percent share in the net mining revenues of
WMCP from the commencement of commercial production, Section 7.9 deprives the government of part or
all of the said 60 percent. Under the latter provision, should WMCP's foreign shareholders -- who originally
owned 100 percent of the equity -- sell 60 percent or more of its outstanding capital stock to a Filipino citizen
or corporation, the State loses its right to receive its 60 percent share in net mining revenues under Section
7.7.
Section 7.9 provides:
The percentage of Net Mining Revenues payable to the Government pursuant to Clause 7.7 shall be
reduced by 1percent of Net Mining Revenues for every 1percent ownership interest in the Contractor
(i.e., WMCP) held by a Qualified Entity.83
Evidently, what Section 7.7 grants to the State is taken away in the next breath by Section 7.9 without any
offsetting compensation to the State. Thus, in reality, the State has no vested right to receive any income
from the FTAA for the exploitation of its mineral resources. Worse, it would seem that what is given to the
State in Section 7.7 is by mere tolerance of WMCP's foreign stockholders, who can at any time cut off the
government's entire 60 percent share. They can do so by simply selling 60 percent of WMCP's outstanding
capital stock to a Philippine citizen or corporation. Moreover, the proceeds of such sale will of course accrue
to the foreign stockholders of WMCP, not to the State.
The sale of 60 percent of WMCP's outstanding equity to a corporation that is 60 percent Filipino-owned and
40 percent foreign-owned will still trigger the operation of Section 7.9. Effectively, the State will lose its right
to receive all 60 percent of the net mining revenues of WMCP; and foreign stockholders will own beneficially
up to 64 percent of WMCP, consisting of the remaining 40 percent foreign equity therein, plus the 24 percent
pro-rata share in the buyer-corporation.84
In fact, the January 23, 2001 sale by WMCP's foreign stockholder of the entire outstanding equity in WMCP to
Sagittarius Mines, Inc. -- a domestic corporation at least 60 percent Filipino owned -- may be deemed to
have automatically triggered the operation of Section 7.9, without need of further action by any party, and
removed the State's right to receive the 60 percent share in net mining revenues.
At bottom, Section 7.9 has the effect of depriving the State of its 60 percent share in the net mining
revenues of WMCP without any offset or compensation whatsoever. It is possible that the inclusion of the
offending provision was initially prompted by the desire to provide some form of incentive for the principal
foreign stockholder in WMCP to eventually reduce its equity position and ultimately divest in favor of Filipino
citizens and corporations. However, as finally structured, Section 7.9 has the deleterious effect of depriving
government of the entire 60 percent share in WMCP's net mining revenues, without any form of
compensation whatsoever. Such an outcome is completely unacceptable.
The whole point of developing the nation's natural resources is to benefit the Filipino people, future
generations included. And the State as sovereign and custodian of the nation's natural wealth is mandated
to protect, conserve, preserve and develop that part of the national patrimony for their benefit. Hence, the
Charter lays great emphasis on "real contributions to the economic growth and general welfare of the
country"85 as essential guiding principles to be kept in mind when negotiating the terms and conditions of
FTAAs.

Earlier, we held (1) that the State must be accorded the liberty and the utmost flexibility to deal, negotiate
and transact with contractors and third parties as it sees fit, and upon terms that it ascertains to be most
favorable or most acceptable under the circumstances, even if that should mean agreeing to less than 60
percent; (2) that it is not necessary for the State to extract a 60 percent share in every case and regardless
of circumstances; and (3) that should the State be prevented from agreeing to a share less than 60 percent
as it deems fit, it will be deprived of the full control over mineral exploitation that the Charter has vested in
it.
That full control is obviously not an end in itself; it exists and subsists precisely because of the need to serve
and protect the national interest. In this instance, national interest finds particular application in the
protection of the national patrimony and the development and exploitation of the country's mineral
resources for the benefit of the Filipino people and the enhancement of economic growth and the general
welfare of the country. Undoubtedly, such full control can be misused and abused, as we now
witness.
Section 7.9 of the WMCP FTAA effectively gives away the State's share of net mining revenues (provided for
in Section 7.7) without anything in exchange. Moreover, this outcome constitutes unjust enrichment on the
part of the local and foreign stockholders of WMCP. By their mere divestment of up to 60 percent equity in
WMCP in favor of Filipino citizens and/or corporations, the local and foreign stockholders get a windfall. Their
share in the net mining revenues of WMCP is automatically increased, without their having to pay the
government anything for it. In short, the provision in question is without a doubt grossly disadvantageous to
the government, detrimental to the interests of the Filipino people, and violative of public policy.
Moreover, it has been reiterated in numerous decisions86 that the parties to a contract may establish any
agreements, terms and conditions that they deem convenient; but these should not be contrary to law,
morals, good customs, public order or public policy.87 Being precisely violative of anti-graft provisions and
contrary to public policy, Section 7.9 must therefore be stricken off as invalid.
Whether the government officials concerned acceded to that provision by sheer mistake or with full
awareness of the ill consequences, is of no moment. It is hornbook doctrine that the principle of estoppel
does not operate against the government for the act of its agents,88 and that it is never estopped by any
mistake or error on their part.89 It is therefore possible and proper to rectify the situation at this time.
Moreover, we may also say that the FTAA in question does not involve mere contractual rights; being
impressed as it is with public interest, the contractual provisions and stipulations must yield to the common
good and the national interest.
Since the offending provision is very much separable90 from Section 7.7 and the rest of the FTAA, the
deletion of Section 7.9 can be done without affecting or requiring the invalidation of the WMCP FTAA itself.
Such a deletion will preserve for the government its due share of the benefits. This way, the mandates of the
Constitution are complied with and the interests of the government fully protected, while the business
operations of the contractor are not needlessly disrupted.

Section 7.8(e) of the WMCP FTAA

Also Invalid and Disadvantageous
Section 7.8(e) of the WMCP FTAA is likewise invalid. It provides thus:
"7.8 The Government Share shall be deemed to include all of the following sums:
"(a) all Government taxes, fees, levies, costs, imposts, duties and royalties including excise
tax, corporate income tax, customs duty, sales tax, value added tax, occupation and
regulatory fees, Government controlled price stabilization schemes, any other form of
Government backed schemes, any tax on dividend payments by the Contractor or its Affiliates
in respect of revenues from the Mining Operations and any tax on interest on domestic and
foreign loans or other financial arrangements or accommodations, including loans extended to
the Contractor by its stockholders;
"(b) any payments to local and regional government, including taxes, fees, levies, costs,
imposts, duties, royalties, occupation and regulatory fees and infrastructure contributions;
"(c) any payments to landowners, surface rights holders, occupiers, indigenous people or
Claimowners;
"(d) costs and expenses of fulfilling the Contractor's obligations to contribute to national
development in accordance with Clause 10.1(i) (1) and 10.1(i) (2);
"(e) an amount equivalent to whatever benefits that may be extended in the future by the
Government to the Contractor or to financial or technical assistance agreement contractors in
general;

"(f) all of the foregoing items which have not previously been offset against the Government
Share in an earlier Fiscal Year, adjusted for inflation." (underscoring supplied)
Section 7.8(e) is out of place in the FTAA. It makes no sense why, for instance, money spent by the
government for the benefit of the contractor in building roads leading to the mine site should still be
deductible from the State's share in net mining revenues. Allowing this deduction results in benefiting the
contractor twice over. It constitutesunjust enrichment on the part of the contractor at the expense of the
government, since the latter is effectively being made to pay twice for the same item. 91 For being grossly
disadvantageous and prejudicial to the government and contrary to public policy, Section 7.8(e) is
undoubtedly invalid and must be declared to be without effect. Fortunately, this provision can also easily be
stricken off without affecting the rest of the FTAA.
Nothing Left Over
After Deductions?
In connection with Section 7.8, an objection has been raised: Specified in Section 7.8 are numerous items of
deduction from the State's 60 percent share. After taking these into account, will the State ever receive
anything for its ownership of the mineral resources?
We are confident that under normal circumstances, the answer will be yes. If we examine the various items
of "deduction" listed in Section 7.8 of the WMCP FTAA, we will find that they correspond closely to the
components or elements of the basic government share established in DAO 99-56, as discussed in the
earlier part of this Opinion.
Likewise, the balance of the government's 60 percent share -- after netting out the items of deduction listed
in Section 7.8 --corresponds closely to the additional government share provided for in DAO 99-56 which,
we once again stress, has nothing at all to do with indirect taxes. The Ramos-DeVera paper 92 concisely
presents the fiscal contribution of an FTAA under DAO 99-56 in this equation:
Receipts from an FTAA = basic gov't share + add'l gov't share
Transposed into a similar equation, the fiscal payments system from the WMCP FTAA assumes the following
formulation:
Government's 60 percent share in net mining revenues of WMCP = items listed in Sec. 7.8 of the FTAA
+ balance of Gov't share, payable 4 months from the end of the fiscal year
It should become apparent that the fiscal arrangement under the WMCP FTAA is very similar to that under
DAO 99-56, with the "balance of government share payable 4 months from end of fiscal year" being the
equivalent of theadditional government share computed in accordance with the "net-mining-revenuebased option" under DAO 99-56, as discussed above. As we have emphasized earlier, we find each of the
three options for computing theadditional government share -- as presented in DAO 99-56 -- to be sound
and reasonable.
We therefore conclude that there is nothing inherently wrong in the fiscal regime of the WMCP
FTAA, and certainly nothing to warrant the invalidation of the FTAA in its entirety.
Section 3.3 of the WMCP
FTAA Constitutional
Section 3.3 of the WMCP FTAA is assailed for violating supposed constitutional restrictions on the term of
FTAAs. The provision in question reads:
"3.3 This Agreement shall be renewed by the Government for a further period of twenty-five (25)
years under the same terms and conditions provided that the Contractor lodges a request for renewal
with the Government not less than sixty (60) days prior to the expiry of the initial term of this
Agreement and provided that the Contractor is not in breach of any of the requirements of this
Agreement."
Allegedly, the above provision runs afoul of Section 2 of Article XII of the 1987 Constitution, which states:
"Sec. 2. 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. The exploration, development and utilization of natural resources shall be
under the full control and supervision of the State. The State may directly undertake such activities,
or it may enter into co-production, joint venture or production-sharing agreements with Filipino
citizens or corporations or associations at least sixty per centum of whose capital is owned by such
citizens. Such agreements may be for a period not exceeding twenty-five years, renewable
for not more than twenty-five years, and under such terms and conditions as may be
provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses
other than the development of water power, beneficial use may be the measure and limit of the
grant.

"The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea, and
exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens.
"The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as
well as cooperative fish farming, with priority to subsistence fishermen and fish-workers in rivers,
lakes, bays and lagoons.
"The President may enter into agreements with foreign-owned corporations involving either technical
or financial assistance for large-scale exploration, development, and utilization of minerals,
petroleum, and other mineral oils according to the general terms and conditions provided by law,
based on real contributions to the economic growth and general welfare of the country. In such
agreements, the State shall promote the development and use of local scientific and technical
resources.
"The President shall notify the Congress of every contract entered into in accordance with this
provision, within thirty days from its execution."93
We hold that the term limitation of twenty-five years does not apply to FTAAs. The reason is that the above
provision is found within paragraph 1 of Section 2 of Article XII, which refers to mineral agreements -- coproduction agreements, joint venture agreements and mineral production-sharing agreements -- which the
government may enter into with Filipino citizens and corporations, at least 60 percent owned by Filipino
citizens. The word "such" clearly refers to these three mineral agreements -- CPAs, JVAs and MPSAs -- not to
FTAAs.
Specifically, FTAAs are covered by paragraphs 4 and 5 of Section 2 of Article XII of the Constitution. It will be
noted that there are no term limitations provided for in the said paragraphs dealing with FTAAs. This shows
that FTAAs aresui generis, in a class of their own. This omission was obviously a deliberate move on the part
of the framers. They probably realized that FTAAs would be different in many ways from MPSAs, JVAs and
CPAs. The reason the framers did not fix term limitations applicable to FTAAs is that they preferred to leave
the matter to the discretion of the legislature and/or the agencies involved in implementing the laws
pertaining to FTAAs, in order to give the latter enough flexibility and elbow room to meet changing
circumstances.
Note also that, as previously stated, the exploratory phrases of an FTAA lasts up to eleven years. Thereafter,
a few more years would be gobbled up in start-up operations. It may take fifteen years before an FTAA
contractor can start earning profits. And thus, the period of 25 years may really be short for an FTAA.
Consider too that in this kind of agreement, the contractor assumes all entrepreneurial risks. If no
commercial quantities of minerals are found, the contractor bears all financial losses. To compensate for this
long gestation period and extra business risks, it would not be totally unreasonable to allow it to continue
EDU activities for another twenty five years.
In any event, the complaint is that, in essence, Section 3.3 gives the contractor the power to compel the
government to renew the WMCP FTAA for another 25 years and deprives the State of any say on whether to
renew the contract.
While we agree that Section 3.3 could have been worded so as to prevent it from favoring the contractor,
this provision does not violate any constitutional limits, since the said term limitation does not apply at all to
FTAAs. Neither can the provision be deemed in any manner to be illegal, as no law is being violated thereby.
It is certainly not illegal for the government to waive its option to refuse the renewal of a commercial
contract.
Verily, the government did not have to agree to Section 3.3. It could have said "No" to the stipulation, but it
did not. It appears that, in the process of negotiations, the other contracting party was able to convince the
government to agree to the renewal terms. Under the circumstances, it does not seem proper for this Court
to intervene and step in to undo what might have perhaps been a possible miscalculation on the part of the
State. If government believes that it is or will be aggrieved by the effects of Section 3.3, the remedy is the
renegotiation of the provision in order to provide the State the option to not renew the FTAA.
Financial Benefits for Foreigners
Not Forbidden by the Constitution
Before leaving this subject matter, we find it necessary for us to rid ourselves of the false belief that the
Constitution somehow forbids foreign-owned corporations from deriving financial benefits from the
development of our natural or mineral resources.
The Constitution has never prohibited foreign corporations from acquiring and enjoying "beneficial interest"
in the development of Philippine natural resources. The State itself need not directly undertake exploration,
development, and utilization activities. Alternatively, the Constitution authorizes the government to enter
into joint venture agreements (JVAs), co-production agreements (CPAs) and mineral production sharing
agreements (MPSAs) with contractors who are Filipino citizens or corporations that are at least 60 percent
Filipino-owned. They may do the actual "dirty work" -- the mining operations.
In the case of a 60 percent Filipino-owned corporation, the 40 percent individual and/or corporate nonFilipino stakeholders obviously participate in the beneficial interest derived from the development and
utilization of our natural resources. They may receive by way of dividends, up to 40 percent of the

contractor's earnings from the mining project. Likewise, they may have a say in the decisions of the board of
directors, since they are entitled to representation therein to the extent of their equity participation, which
the Constitution permits to be up to 40 percent of the contractor's equity. Hence, the non-Filipino
stakeholders may in that manner also participate in the management of the contractor's natural resource
development work. All of this is permitted by our Constitution, for any natural resource, and without
limitation even in regard to the magnitude of the mining project or operations (see paragraph 1 of Section 2
of Article XII).
It is clear, then, that there is nothing inherently wrong with or constitutionally objectionable about the idea
of foreign individuals and entities having or enjoying "beneficial interest" in -- and participating in the
management of operations relative to -- the exploration, development and utilization of our natural
resources.
FTAA More Advantageous
Than Other Schemes
Like CPA, JVA and MPSA
A final point on the subject of beneficial interest. We believe the FTAA is a more advantageous proposition
for the government as compared with other agreements permitted by the Constitution. In a CPA that the
government enters into with one or more contractors, the government shall provide inputs to the mining
operations other than the mineral resource itself.94
In a JVA, a JV company is organized by the government and the contractor, with both parties having equity
shares (investments); and the contractor is granted the exclusive right to conduct mining operations and to
extract minerals found in the area.95 On the other hand, in an MPSA, the government grants the contractor
the exclusive right to conduct mining operations within the contract area and shares in the gross output; and
the contractor provides the necessary financing, technology, management and manpower.
The point being made here is that, in two of the three types of agreements under consideration,
the government has to ante up some risk capital for the enterprise. In other words, government funds
(public moneys) are withdrawn from other possible uses, put to work in the venture and placed at risk in
case the venture fails. This notwithstanding, management and control of the operations of the enterprise are
-- in all three arrangements -- in the hands of the contractor, with the government being mainly a silent
partner. The three types of agreement mentioned above apply to any natural resource, without limitation
and regardless of the size or magnitude of the project or operations.
In contrast to the foregoing arrangements, and pursuant to paragraph 4 of Section 2 of Article XII, the FTAA
is limited to large-scale projects and only for minerals, petroleum and other mineral oils. Here, the
Constitution removes the 40 percent cap on foreign ownership and allows the foreign corporation to own up
to 100 percent of the equity. Filipino capital may not be sufficient on account of the size of the project, so the
foreign entity may have to ante up all the risk capital.
Correlatively, the foreign stakeholder bears up to 100 percent of the risk of loss if the project fails. In respect
of the particular FTAA granted to it, WMCP (then 100 percent foreign owned) was responsible, as contractor,
for providing the entire equity, including all the inputs for the project. It was to bear 100 percent of the risk
of loss if the project failed, but its maximum potential "beneficial interest" consisted only of 40 percent of
the net beneficial interest, because the other 60 percent is the share of the government, which will never be
exposed to any risk of loss whatsoever.
In consonance with the degree of risk assumed, the FTAA vested in WMCP the day-to-day management of
the mining operations. Still such management is subject to the overall control and supervision of the State in
terms of regular reporting, approvals of work programs and budgets, and so on.
So, one needs to consider in relative terms, the costs of inputs for, degree of risk attendant to, and benefits
derived or to be derived from a CPA, a JVA or an MPSA vis--vis those pertaining to an FTAA. It may not be
realistically asserted that the foreign grantee of an FTAA is being unduly favored or benefited as compared
with a foreign stakeholder in a corporation holding a CPA, a JVA or an MPSA. Seen the other way around, the
government is definitely better off with an FTAA than a CPA, a JVA or an MPSA.
Developmental Policy on the Mining Industry
During the Oral Argument and in their Final Memorandum, petitioners repeatedly urged the Court to
consider whether mining as an industry and economic activity deserved to be accorded priority, preference
and government support as against, say, agriculture and other activities in which Filipinos and the
Philippines may have an "economic advantage." For instance, a recent US study 96 reportedly examined the
economic performance of all local US counties that were dependent on mining and 20 percent of whose
labor earnings between 1970 and 2000 came from mining enterprises.
The study -- covering 100 US counties in 25 states dependent on mining -- showed that per capita income
grew about 30 percent less in mining-dependent communities in the 1980s and 25 percent less for the entire
period 1980 to 2000; the level of per capita income was also lower. Therefore, given the slower rate of
growth, the gap between these and other local counties increased.
Petitioners invite attention to the OXFAM America Report's warning to developing nations that mining brings
with it serious economic problems, including increased regional inequality, unemployment and poverty. They

also cite the final report97 of the Extractive Industries Review project commissioned by the World Bank (the
WB-EIR Report), which warns of environmental degradation, social disruption, conflict, and uneven sharing of
benefits with local communities that bear the negative social and environmental impact. The Report
suggests that countries need to decide on the best way to exploit their natural resources, in order to
maximize the value added from the development of their resources and ensure that they are on the path to
sustainable development once the resources run out.
Whatever priority or preference may be given to mining vis--vis other economic or non-economic activities
is a question of policy that the President and Congress will have to address; it is not for this Court to
decide. This Court declares what the Constitution and the laws say, interprets only when necessary, and
refrains from delving into matters of policy.
Suffice it to say that the State control accorded by the Constitution over mining activities assures a proper
balancing of interests. More pointedly, such control will enable the President to demand the best mining
practices and the use of the best available technologies to protect the environment and to rehabilitate
mined-out areas. Indeed, under the Mining Law, the government can ensure the protection of the
environment during and after mining. It can likewise provide for the mechanisms to protect the rights of
indigenous communities, and thereby mold a more socially-responsive, culturally-sensitive and sustainable
mining industry.
Early on during the launching of the Presidential Mineral Industry Environmental Awards on February 6,
1997, then President Fidel V. Ramos captured the essence of balanced and sustainable mining in these
words:
"Long term, high profit mining translates into higher revenues for government, more decent jobs for
the population, more raw materials to feed the engines of downstream and allied industries, and
improved chances of human resource and countryside development by creating self-reliant
communities away from urban centers.
xxxxxxxxx
"Against a fragile and finite environment, it is sustainability that holds the key. In sustainable mining,
we take a middle ground where both production and protection goals are balanced, and where
parties-in-interest come to terms."
Neither has the present leadership been remiss in addressing the concerns of sustainable mining operations.
Recently, on January 16, 2004 and April 20, 2004, President Gloria Macapagal Arroyo issued Executive
Orders Nos. 270 and 270-A, respectively, "to promote responsible mineral resources exploration,
development and utilization, in order to enhance economic growth, in a manner that adheres to the
principles of sustainable development and with due regard for justice and equity, sensitivity to the culture of
the Filipino people and respect for Philippine sovereignty." 98
REFUTATION OF DISSENTS
The Court will now take up a number of other specific points raised in the dissents of Justices Carpio and
Morales.
1. Justice Morales introduced us to Hugh Morgan, former president and chief executive officer of Western
Mining Corporation (WMC) and former president of the Australian Mining Industry Council, who spearheaded
the vociferous opposition to the filing by aboriginal peoples of native title claims against mining companies
in Australia in the aftermath of the landmark Mabo decision by the Australian High Court. According to
sources quoted by our esteemed colleague, Morgan was also a racist and a bigot. In the course of
protesting Mabo, Morgan allegedly uttered derogatory remarks belittling the aboriginal culture and race.
An unwritten caveat of this introduction is that this Court should be careful not to permit the entry of the
likes of Hugh Morgan and his hordes of alleged racist-bigots at WMC. With all due respect, such scare tactics
should have no place in the discussion of this case. We are deliberating on the constitutionality of RA 7942,
DAO 96-40 and the FTAA originally granted to WMCP, which had been transferred to Sagittarius Mining, a
Filipino corporation. We are not discussing the apparition of white Anglo-Saxon racists/bigots massing at our
gates.
2. On the proper interpretation of the phrase agreements involving either technical or financial
assistance, Justice Morales points out that at times we "conveniently omitted" the use of the
disjunctive eitheror, which according to her denotes restriction; hence the phrase must be deemed to
connote restriction and limitation.
But, as Justice Carpio himself pointed out during the Oral Argument, the disjunctive phrase either technical
or financial assistance would, strictly speaking, literally mean that a foreign contractor may provide only one
or the other, but not both. And if both technical and financial assistance were required for a project, the
State would have to deal with at least two different foreign contractors -- one for financial and the other for
technical assistance. And following on that, a foreign contractor, though very much qualified to provide both
kinds of assistance, would nevertheless be prohibited from providing one kind as soon as it shall have
agreed to provide the other.

But if the Court should follow this restrictive and literal construction, can we really find two (or more)
contractors who are willing to participate in one single project -- one to provide the "financial assistance"
only and the other the "technical assistance" exclusively; it would be excellent if these two or more
contractors happen to be willing and are able to cooperate and work closely together on the same project
(even if they are otherwise competitors). And it would be superb if no conflicts would arise between or
among them in the entire course of the contract. But what are the chances things will turn out this way in
the real world? To think that the framers deliberately imposed this kind of restriction is to say that they were
either exceedingly optimistic, or incredibly nave. This begs the question -- What laudable objective or
purpose could possibly be served by such strict and restrictive literal interpretation?
3. Citing Oposa v. Factoran Jr., Justice Morales claims that a service contract is not a contract or property
right which merits protection by the due process clause of the Constitution, but merely a license or privilege
which may be validly revoked, rescinded or withdrawn by executive action whenever dictated by public
interest or public welfare.
Oposa cites Tan v. Director of Forestry and Ysmael v. Deputy Executive Secretary as authority. The latter
cases dealt specifically with timber licenses only. Oposa allegedly reiterated that a license is merely a
permit or privilege to do what otherwise would be unlawful, and is not a contract between the authority,
federal, state or municipal, granting it and the person to whom it is granted; neither is it property or a
property right, nor does it create a vested right; nor is it taxation. Thus this Court held that the granting of
license does not create irrevocable rights, neither is it property or property rights.
Should Oposa be deemed applicable to the case at bar, on the argument that natural resources are also
involved in this situation? We do not think so. A grantee of a timber license, permit or license agreement
gets to cut the timber already growing on the surface; it need not dig up tons of earth to get at the logs. In a
logging concession, the investment of the licensee is not as substantial as the investment of a large-scale
mining contractor. If a timber license were revoked, the licensee packs up its gear and moves to a new area
applied for, and starts over; what it leaves behind are mainly the trails leading to the logging site.
In contrast, the mining contractor will have sunk a great deal of money (tens of millions of dollars) into the
ground, so to speak, for exploration activities, for development of the mine site and infrastructure, and for
the actual excavation and extraction of minerals, including the extensive tunneling work to reach the ore
body. The cancellation of the mining contract will utterly deprive the contractor of its investments (i.e.,
prevent recovery of investments), most of which cannot be pulled out.
To say that an FTAA is just like a mere timber license or permit and does not involve contract or property
rights which merit protection by the due process clause of the Constitution, and may therefore be revoked or
cancelled in the blink of an eye, is to adopt a well-nigh confiscatory stance; at the very least, it is downright
dismissive of the property rights of businesspersons and corporate entities that have investments in the
mining industry, whose investments, operations and expenditures do contribute to the general welfare of
the people, the coffers of government, and the strength of the economy. Such a pronouncement will surely
discourage investments (local and foreign) which are critically needed to fuel the engine of economic growth
and move this country out of the rut of poverty. In sum, Oposa is not applicable.
4. Justice Morales adverts to the supposedly "clear intention" of the framers of the Constitution to reserve
our natural resources exclusively for the Filipino people. She then quoted from the records of the ConCom
deliberations a passage in which then Commissioner Davide explained his vote, arguing in the process that
aliens ought not be allowed to participate in the enjoyment of our natural resources. One passage does not
suffice to capture the tenor or substance of the entire extensive deliberations of the commissioners, or to
reveal the clear intention of the framers as a group. A re-reading of the entire deliberations (quoted here
earlier) is necessary if we are to understand the true intent of the framers.
5. Since 1935, the Filipino people, through their Constitution, have decided that the retardation or delay in
the exploration, development or utilization of the nation's natural resources is merely secondary to the
protection and preservation of their ownership of the natural resources, so says Justice Morales, citing
Aruego. If it is true that the framers of the 1987 Constitution did not care much about alleviating the
retardation or delay in the development and utilization of our natural resources, why did they bother to write
paragraph 4 at all? Were they merely paying lip service to large-scale exploration, development and
utilization? They could have just completely ignored the subject matter and left it to be dealt with through a
future constitutional amendment. But we have to harmonize every part of the Constitution and to interpret
each provision in a manner that would give life and meaning to it and to the rest of the provisions. It is
obvious that a literal interpretation of paragraph 4 will render it utterly inutile and inoperative.
6. According to Justice Morales, the deliberations of the Constitutional Commission do not support our
contention that the framers, by specifying such agreements involving financial or technical assistance,
necessarily gave implied assent to everything that these agreements implicitly entailed, or that could
reasonably be deemed necessary to make them tenable and effective, including management authority in
the day-to-day operations. As proof thereof, she quotes one single passage from the ConCom deliberations,
consisting of an exchange among Commissioners Tingson, Garcia and Monsod.
However, the quoted exchange does not serve to contradict our argument; it even bolsters it. Comm.
Christian Monsod was quoted as saying: "xxx I think we have to make a distinction that it is not really
realistic to say that we will borrow on our own terms. Maybe we can say that we inherited unjust loans, and
we would like to repay these on terms that are not prejudicial to our own growth. But the general statement
that we should only borrow on our own terms is a bit unrealistic." Comm. Monsod is one who knew whereof
he spoke.

7. Justice Morales also declares that the optimal time for the conversion of an FTAA into an MPSA is after
completion of the exploration phase and just before undertaking the development and construction phase,
on account of the fact that the requirement for a minimum investment of $50 million is applicable only
during the development, construction and utilization phase, but not during the exploration phase, when the
foreign contractor need merely comply with minimum ground expenditures. Thus by converting, the foreign
contractor maximizes its profits by avoiding its obligation to make the minimum investment of $50 million.
This argument forgets that the foreign contractor is in the game precisely to make money. In order to come
anywhere near profitability, the contractor must first extract and sell the mineral ore. In order to do that, it
must also develop and construct the mining facilities, set up its machineries and equipment and dig the
tunnels to get to the deposit. The contractor is thus compelled to expend funds in order to make profits. If it
decides to cut back on investments and expenditures, it will necessarily sacrifice the pace of development
and utilization; it will necessarily sacrifice the amount of profits it can make from the mining operations. In
fact, at certain less-than-optimal levels of operation, the stream of revenues generated may not even be
enough to cover variable expenses, let alone overhead expenses; this is a dismal situation anyone would
want to avoid. In order to make money, one has to spend money. This truism applies to the mining industry
as well.
8. Mortgaging the minerals to secure a foreign FTAA contractor's obligations is anomalous, according to
Justice Morales since the contractor was from the beginning obliged to provide all financing needed for the
mining operations. However, the mortgaging of minerals by the contractor does not necessarily signify that
the contractor is unable to provide all financing required for the project, or that it does not have the financial
capability to undertake large-scale operations. Mortgaging of mineral products, just like the assignment (by
way of security) of manufactured goods and goods in inventory, and the assignment of receivables, is an
ordinary requirement of banks, even in the case of clients with more than sufficient financial resources. And
nowadays, even the richest and best managed corporations make use of bank credit facilities -- it does not
necessarily signify that they do not have the financial resources or are unable to provide the financing on
their own; it is just a manner of maximizing the use of their funds.
9. Does the contractor in reality acquire the surface rights "for free," by virtue of the fact that it is entitled to
reimbursement for the costs of acquisition and maintenance, adjusted for inflation? We think not. The
"reimbursement" is possible only at the end of the term of the contract, when the surface rights will no
longer be needed, and the land previously acquired will have to be disposed of, in which case the contractor
gets reimbursement from the sales proceeds. The contractor has to pay out the acquisition price for the
land. That money will belong to the seller of the land. Only if and when the land is finally sold off will the
contractor get any reimbursement. In other words, the contractor will have been cash-out for the entire
duration of the term of the contract -- 25 or 50 years, depending. If we calculate the cost of money at say 12
percent per annum, that is the cost or opportunity loss to the contractor, in addition to the amount of the
acquisition price. 12 percent per annum for 50 years is 600 percent; this, without any compounding yet. The
cost of money is therefore at least 600 percent of the original acquisition cost; it is in addition to the
acquisition cost. "For free"? Not by a long shot.
10. The contractor will acquire and hold up to 5,000 hectares? We doubt it. The acquisition by the State of
land for the contractor is just to enable the contractor to establish its mine site, build its facilities, establish a
tailings pond, set up its machinery and equipment, and dig mine shafts and tunnels, etc. It is impossible that
the surface requirement will aggregate 5,000 hectares. Much of the operations will consist of the tunneling
and digging underground, which will not require possessing or using any land surface. 5,000 hectares is way
too much for the needs of a mining operator. It simply will not spend its cash to acquire property that it will
not need; the cash may be better employed for the actual mining operations, to yield a profit.
11. Justice Carpio claims that the phrase among other things (found in the second paragraph of Section 81
of the Mining Act) is being incorrectly treated as a delegation of legislative power to the DENR secretary to
issue DAO 99-56 and prescribe the formulae therein on the State's share from mining operations. He adds
that the phrase among other things was not intended as a delegation of legislative power to the DENR
secretary, much less could it be deemed a valid delegation of legislative power, since there is nothing in the
second paragraph of Section 81 which can be said to grant any delegated legislative power to the DENR
secretary. And even if there were, such delegation would be void, for lack of any standards by which the
delegated power shall be exercised.
While there is nothing in the second paragraph of Section 81 which can directly be construed as a delegation
of legislative power to the DENR secretary, it does not mean that DAO 99-56 is invalid per se, or that the
secretary acted without any authority or jurisdiction in issuing DAO 99-56. As we stated earlier in our
Prologue, "Who or what organ of government actually exercises this power of control on behalf of the State?
The Constitution is crystal clear: the President. Indeed, the Chief Executive is the official constitutionally
mandated to 'enter into agreements with foreign owned corporations.' On the other hand, Congress may
review the action of the President once it is notified of 'every contract entered into in accordance with this
[constitutional] provision within thirty days from its execution.'"It is the President who is constitutionally
mandated to enter into FTAAs with foreign corporations, and in doing so, it is within the President's
prerogative to specify certain terms and conditions of the FTAAs, for example, the fiscal regime of
FTAAs -- i.e., the sharing of the net mining revenues between the contractor and the State.
Being the President's alter ego with respect to the control and supervision of the mining industry, the DENR
secretary, acting for the President, is necessarily clothed with the requisite authority and power to draw up
guidelines delineating certain terms and conditions, and specifying therein the terms of sharing of benefits
from mining, to be applicable to FTAAs in general. It is important to remember that DAO 99-56 has been in
existence for almost six years, and has not been amended or revoked by the President.

The issuance of DAO 99-56 did not involve the exercise of delegated legislative power. The legislature did
not delegate the power to determine the nature, extent and composition of the items that would come under
the phraseamong other things. The legislature's power pertains to the imposition of taxes, duties and fees.
This power was not delegated to the DENR secretary. But the power to negotiate and enter into FTAAs was
withheld from Congress, and reserved for the President. In determining the sharing of mining benefits, i.e., in
specifying what the phraseamong other things include, the President (through the secretary acting in his/her
behalf) was not determining the amount or rate of taxes, duties and fees, but rather the amount of INCOME
to be derived from minerals to be extracted and sold, income which belongs to the State as owner of the
mineral resources. We may say that, in the second paragraph of Section 81, the legislature in a sense
intruded partially into the President's sphere of authority when the former provided that
"The Government share in financial or technical assistance agreement shall consist of, among other
things, the contractor's corporate income tax, excise tax, special allowance, withholding tax due from
the contractor's foreign stockholders arising from dividend or interest payments to the said foreign
stockholder in case of a foreign national and all such other taxes, duties and fees as provided for
under existing laws." (Italics supplied)
But it did not usurp the President's authority since the provision merely included the enumerated items as
part of the government share, without foreclosing or in any way preventing (as in fact Congress could not
validly prevent) the President from determining what constitutes the State's compensation derived from
FTAAs. In this case, the President in effect directed the inclusion or addition of "other things," viz., INCOME
for the owner of the resources, in the government's share, while adopting the items enumerated by
Congress as part of the government share also.
12. Justice Carpio's insistence on applying the ejusdem generis rule of statutory construction to the
phrase among other things is therefore useless, and must fall by the wayside. There is no point trying to
construe that phrase in relation to the enumeration of taxes, duties and fees found in paragraph 2 of Section
81, precisely because "the constitutional power to prescribe the sharing of mining income
between the State and mining companies,"to quote Justice Carpio pursuant to an FTAA
is constitutionally lodged with the President, not with Congress. It thus makes no sense to persist in
giving the phrase among other things a restricted meaning referring only to taxes, duties and fees.
13. Strangely, Justice Carpio claims that the DENR secretary can change the formulae in DAO 99-56 any time
even without the approval of the President, and the secretary is the sole authority to determine the amount
of consideration that the State shall receive in an FTAA, because Section 5 of the DAO states that "xxx any
amendment of an FTAA other than the provision on fiscal regime shall require the negotiation with the
Negotiation Panel and the recommendation of the Secretary for approval of the President xxx". Allegedly,
because of that provision, if an amendment in the FTAA involves non-fiscal matters, the amendment requires
approval of the President, but if the amendment involves a change in the fiscal regime, the DENR secretary
has the final authority, and approval of the President may be dispensed with; hence the secretary is more
powerful than the President.
We believe there is some distortion resulting from the quoted provision being taken out of context. Section 5
of DAO 99-56 reads as follows:
"Section 5. Status of Existing FTAAs. All FTAAs approved prior to the effectivity of this Administrative
Order shall remain valid and be recognized by the Government: Provided, That should a Contractor
desire to amend its FTAA, it shall do so by filing a Letter of Intent (LOI) to the Secretary thru the
Director. Provided, further, That if the Contractor desires to amend the fiscal regime of its FTAA, it
may do so by seeking for the amendment of its FTAA's whole fiscal regime by adopting the fiscal
regime provided hereof: Provided, finally, That any amendment of an FTAA other than the provision
on fiscal regime shall require the negotiation with the Negotiating Panel and the recommendation of
the Secretary for approval of the President of the Republic of the Philippines." (underscoring supplied)
It looks like another case of misapprehension. The proviso being objected to by Justice Carpio is actually
preceded by a phrase that requires a contractor desiring to amend the fiscal regime of its FTAA, to amend
the same by adopting the fiscal regime prescribed in DAO 99-56 -- i.e., solely in that manner, and in no
other. Obviously, since DAO 99-56 was issued by the secretary under the authority and with the
presumed approval of the President, the amendment of an FTAA by merely adopting the fiscal
regime prescribed in said DAO 99-56 (and nothing more) need not have the express clearance of
the President anymore. It is as if the same had been pre-approved. We cannot fathom the complaint that
that makes the secretary more powerful than the President, or that the former is trying to hide things from
the President or Congress.
14. Based on the first sentence of Section 5 of DAO 99-56, which states "[A]ll FTAAs approved prior to the
effectivity of this Administrative Order shall remain valid and be recognized by the Government", Justice
Carpio concludes that said Administrative Order allegedly exempts FTAAs approved prior to its effectivity -like the WMCP FTAA -- from having to pay the State any share from their mining income, apart from taxes,
duties and fees.
We disagree. What we see in black and white is the statement that the FTAAs approved before the DAO
came into effect are to continue to be valid and will be recognized by the State. Nothing is said about their
fiscal regimes.Certainly, there is no basis to claim that the contractors under said FTAAs were being
exempted from paying the government a share in their mining incomes.

For the record, the WMCP FTAA is NOT and has never been exempt from paying the government share. The
WMCP FTAA has its own fiscal regime -- Section 7.7 -- which gives the government a 60 percent
share in the net mining revenues of WMCP from the commencement of commercial production.
For that very reason, we have never said that DAO 99-56 is the basis for claiming that the WMCP FTAA has a
consideration. Hence, we find quite out of place Justice Carpio's statement that ironically, DAO 99-56, the
very authority cited to support the claim that the WMCP FTAA has a consideration, does not apply to the
WMCP FTAA. By its own express terms, DAO 99-56 does not apply to FTAAs executed before the issuance of
DAO 99-56, like the WMCP FTAA. The majority's position has allegedly no leg to stand on since even DAO 9956, assuming it is valid, cannot save the WMCP FTAA from want of consideration. Even
assuming arguendo that DAO 99-56 does not apply to the WMCP FTAA, nevertheless, the WMCP FTAA has its
own fiscal regime, found in Section 7.7 thereof. Hence, there is no such thing as "want of consideration"
here.
Still more startling is this claim: The majority supposedly agrees that the provisions of the WMCP FTAA,
which grant a sham consideration to the State, are void. Since the majority agrees that the WMCP FTAA has
a sham consideration, the WMCP FTAA thus lacks the third element of a valid contract. The Decision should
declare the WMCP FTAA void for want of consideration unless it treats the contract as an MPSA under
Section 80. Indeed the only recourse of WMCP to save the validity of its contract is to convert it into an
MPSA.
To clarify, we said that Sections 7.9 and 7.8(e) of the WMCP FTAA are provisions grossly disadvantageous to
government and detrimental to the interests of the Filipino people, as well as violative of public policy, and
must therefore be stricken off as invalid. Since the offending provisions are very much separable from
Section 7.7 and the rest of the FTAA, the deletion of Sections 7.9 and 7.8(e) can be done without affecting or
requiring the invalidation of the WMCP FTAA itself, and such deletion will preserve for government its due
share of the 60 percent benefits. Therefore, the WMCP FTAA is NOT bereft of a valid consideration (assuming
for the nonce that indeed this is the "consideration" of the FTAA).
SUMMATION
To conclude, a summary of the key points discussed above is now in order.
The Meaning of "Agreements Involving
Either Technical or Financial Assistance"
Applying familiar principles of constitutional construction to the phrase agreements involving either
technical or financial assistance, the framers' choice of words does not indicate the intent to exclude other
modes of assistance, but rather implies that there are other things being included or possibly being made
part of the agreement, apart from financial or technical assistance. The drafters avoided the use of
restrictive and stringent phraseology; a verba legis scrutiny of Section 2 of Article XII of the Constitution
discloses not even a hint of a desire to prohibit foreign involvement in the management or operation of
mining activities, or to eradicate service contracts. Such moves would necessarily imply an underlying
drastic shift in fundamental economic and developmental policies of the State. That change requires a much
more definite and irrefutable basis than mere omission of the words "service contract" from the new
Constitution.
Furthermore, a literal and restrictive interpretation of this paragraph leads to logical inconsistencies. A
constitutional provision specifically allowing foreign-owned corporations to render financial or
technical assistance in respect of mining or any other commercial activity was clearly unnecessary; the
provision was meant to refer to more than mere financial or technical assistance.
Also, if paragraph 4 permits only agreements for financial or technical assistance, there would be no point in
requiring that they be "based on real contributions to the economic growth and general welfare of the
country." And considering that there were various long-term service contracts still in force and effect at the
time the new Charter was being drafted, the absence of any transitory provisions to govern the termination
and closing-out of the then existing service contracts strongly militates against the theory that the mere
omission of "service contracts" signaled their prohibition by the new Constitution.
Resort to the deliberations of the Constitutional Commission is therefore unavoidable, and a careful scrutiny
thereof conclusively shows that the ConCom members discussed agreements involving either technical or
financial assistance in the same sense as service contracts and used the terms interchangeably. The drafters
in fact knew that the agreements with foreign corporations were going to entail not mere technical or
financial assistance but, rather, foreign investment in and management of an enterprise for largescale exploration, development and utilization of minerals.
The framers spoke about service contracts as the concept was understood in the 1973 Constitution. It is
obvious from their discussions that they did not intend to ban or eradicate service contracts. Instead, they
were intent on crafting provisions to put in place safeguards that would eliminate or minimize the abuses
prevalent during the martial law regime. In brief, they were going to permit service contracts with
foreign corporations as contractors, but with safety measures to prevent abuses, as an
exception to the general norm established in the first paragraph of Section 2 of Article XII,
which reserves or limits to Filipino citizens and corporations at least 60 percent owned by such
citizens the exploration, development and utilization of mineral or petroleum resources. This was

prompted by the perceived insufficiency of Filipino capital and the felt need for foreign expertise in the EDU
of mineral resources.
Despite strong opposition from some ConCom members during the final voting, the Article on the National
Economy and Patrimony -- including paragraph 4 allowing service contracts with foreign corporations as an
exception to the general norm in paragraph 1 of Section 2 of the same Article -- was resoundingly and
overwhelmingly approved.
The drafters, many of whom were economists, academicians, lawyers, businesspersons and politicians knew
that foreign entities will not enter into agreements involving assistance without requiring measures of
protection to ensure the success of the venture and repayment of their investments, loans and other
financial assistance, and ultimately to protect the business reputation of the foreign corporations. The
drafters, by specifying such agreements involving assistance, necessarily gave implied assent to everything
that these agreements entailed or that could reasonably be deemed necessary to make them tenable and
effective -- including management authority with respect to the day-to-day operations of the enterprise, and
measures for the protection of the interests of the foreign corporation, at least to the extent that they are
consistent with Philippine sovereignty over natural resources, the constitutional requirement of State control,
and beneficial ownership of natural resources remaining vested in the State.
From the foregoing, it is clear that agreements involving either technical or financial assistance referred to in
paragraph 4 are in fact service contracts, but such new service contracts are between foreign corporations
acting as contractors on the one hand, and on the other hand government as principal or "owner" (of the
works), whereby the foreign contractor provides the capital, technology and technical know-how, and
managerial expertise in the creation and operation of the large-scale mining/extractive enterprise, and
government through its agencies (DENR, MGB) actively exercises full control and supervision over the entire
enterprise.
Such service contracts may be entered into only with respect to minerals, petroleum and other mineral oils.
The grant of such service contracts is subject to several safeguards, among them: (1) that the service
contract be crafted in accordance with a general law setting standard or uniform terms, conditions and
requirements; (2) the President be the signatory for the government; and (3) the President report the
executed agreement to Congress within thirty days.
Ultimate Test: Full State Control
To repeat, the primacy of the principle of the State's sovereign ownership of all mineral resources, and its full
control and supervision over all aspects of exploration, development and utilization of natural resources
must be upheld. But "full control and supervision" cannot be taken literally to mean that the State controls
and supervises everything down to the minutest details and makes all required actions, as this would render
impossible the legitimate exercise by the contractor of a reasonable degree of management prerogative and
authority, indispensable to the proper functioning of the mining enterprise. Also, government need not
micro-manage mining operations and day-to-day affairs of the enterprise in order to be considered as
exercising full control and supervision.
Control, as utilized in Section 2 of Article XII, must be taken to mean a degree of control sufficient to enable
the State to direct, restrain, regulate and govern the affairs of the extractive enterprises. Control by the
State may be on a macro level, through the establishment of policies, guidelines, regulations, industry
standards and similar measures that would enable government to regulate the conduct of affairs in various
enterprises, and restrain activities deemed not desirable or beneficial, with the end in view of ensuring that
these enterprises contribute to the economic development and general welfare of the country, conserve the
environment, and uplift the well-being of the local affected communities. Such a degree of control would be
compatible with permitting the foreign contractor sufficient and reasonable management authority over the
enterprise it has invested in, to ensure efficient and profitable operation.
Government Granted Full Control
by RA 7942 and DAO 96-40
Baseless are petitioners' sweeping claims that RA 7942 and its Implementing Rules and Regulations make it
possible for FTAA contracts to cede full control and management of mining enterprises over to fully foreign
owned corporations. Equally wobbly is the assertion that the State is reduced to a passive regulator
dependent on submitted plans and reports, with weak review and audit powers and little say in the decisionmaking of the enterprise, for which reasons "beneficial ownership" of the mineral resources is allegedly
ceded to the foreign contractor.
As discussed hereinabove, the State's full control and supervision over mining operations are ensured
through the following provisions in RA 7942: Sections 8, 9, 16, 19, 24, 35[(b), (e), (f), (g), (h), (k), (l), (m) and
(o)], 40, 57, 66, 69, 70, and Chapters XI and XVII; as well as the following provisions of DAO 96-40:
Sections7[(d) and (f)], 35(a-2), 53[(a-4) and (d)], 54, 56[(g), (h), (l), (m) and (n)], 56(2), 60, 66, 144, 168,
171 and 270, and also Chapters XV, XVI and XXIV.
Through the foregoing provisions, the government agencies concerned are empowered to approve or
disapprove -- hence, in a position to influence, direct, and change -- the various work programs and the
corresponding minimum expenditure commitments for each of the exploration, development and utilization
phases of the enterprise. Once they have been approved, the contractor's compliance with its commitments
therein will be monitored. Figures for mineral production and sales are regularly monitored and subjected to

government review, to ensure that the products and by-products are disposed of at the best prices; copies of
sales agreements have to be submitted to and registered with MGB.
The contractor is mandated to open its books of accounts and records for scrutiny, to enable the State to
determine that the government share has been fully paid. The State may likewise compel compliance by the
contractor with mandatory requirements on mine safety, health and environmental protection, and the use
of anti-pollution technology and facilities. The contractor is also obligated to assist the development of the
mining community, and pay royalties to the indigenous peoples concerned. And violation of any of the
FTAA's terms and conditions, and/or non-compliance with statutes or regulations, may be penalized by
cancellation of the FTAA. Such sanction is significant to a contractor who may have yet to recover the tens or
hundreds of millions of dollars sunk into a mining project.
Overall, the State definitely has a pivotal say in the operation of the individual enterprises, and can set
directions and objectives, detect deviations and non-compliances by the contractor, and enforce compliance
and impose sanctions should the occasion arise. Hence, RA 7942 and DAO 96-40 vest in government more
than a sufficient degree of control and supervision over the conduct of mining operations.
Section 3(aq) of RA 7942 was objected to as being unconstitutional for allowing a foreign contractor to apply
for and hold an exploration permit. During the exploration phase, the permit grantee (and prospective
contractor) is spending and investing heavily in exploration activities without yet being able to extract
minerals and generate revenues. The exploration permit issued under Sections 3(aq), 20 and 23 of RA 7942,
which allows exploration but not extraction, serves to protect the interests and rights of the exploration
permit grantee (and would-be contractor), foreign or local. Otherwise, the exploration works already
conducted, and expenditures already made, may end up only benefiting claim-jumpers. Thus, Section 3(aq)
of RA 7942 is not unconstitutional.
WMCP FTAA Likewise Gives the
State Full Control and Supervision
The WMCP FTAA obligates the contractor to account for the value of production and sale of minerals (Clause
1.4); requires that the contractor's work program, activities and budgets be approved by the State (Clause
2.1); gives the DENR secretary power to extend the exploration period (Clause 3.2-a); requires approval by
the State for incorporation of lands into the contract area (Clause 4.3-c); requires Bureau of Forest
Development approval for inclusion of forest reserves as part of the FTAA contract area (Clause 4.5);
obligates the contractor to periodically relinquish parts of the contract area not needed for exploration and
development (Clause 4.6); requires submission of a declaration of mining feasibility for approval by the State
(Clause 4.6-b); obligates the contractor to report to the State the results of its exploration activities (Clause
4.9); requires the contractor to obtain State approval for its work programs for the succeeding two year
periods, containing the proposed work activities and expenditures budget related to exploration (Clause
5.1); requires the contractor to obtain State approval for its proposed expenditures for exploration activities
(Clause 5.2); requires the contractor to submit an annual report on geological, geophysical, geochemical and
other information relating to its explorations within the FTAA area (Clause 5.3-a); requires the contractor to
submit within six months after expiration of exploration period a final report on all its findings in the contract
area (Clause 5.3-b); requires the contractor after conducting feasibility studies to submit a declaration of
mining feasibility, along with a description of the area to be developed and mined, a description of the
proposed mining operations and the technology to be employed, and the proposed work program for the
development phase, for approval by the DENR secretary (Clause 5.4); obligates the contractor to complete
the development of the mine, including construction of the production facilities, within the period stated in
the approved work program (Clause 6.1); requires the contractor to submit for approval a work program
covering each period of three fiscal years (Clause 6.2); requires the contractor to submit reports to the
secretary on the production, ore reserves, work accomplished and work in progress, profile of its work force
and management staff, and other technical information (Clause 6.3); subjects any expansions, modifications,
improvements and replacements of mining facilities to the approval of the secretary (Clause 6.4); subjects to
State control the amount of funds that the contractor may borrow within the Philippines (Clause 7.2);
subjects to State supervisory power any technical, financial and marketing issues (Clause 10.1-a); obligates
the contractor to ensure 60 percent Filipino equity in the contractor within ten years of recovering specified
expenditures unless not so required by subsequent legislation (Clause 10.1); gives the State the right to
terminate the FTAA for unremedied substantial breach thereof by the contractor (Clause 13.2); requires
State approval for any assignment of the FTAA by the contractor to an entity other than an affiliate (Clause
14.1).
In short, the aforementioned provisions of the WMCP FTAA, far from constituting a surrender of control and a
grant of beneficial ownership of mineral resources to the contractor in question, vest the State with control
and supervision over practically all aspects of the operations of the FTAA contractor, including the charging
of pre-operating and operating expenses, and the disposition of mineral products.
There is likewise no relinquishment of control on account of specific provisions of the WMCP FTAA. Clause 8.2
provides a mechanism to prevent the mining operations from grinding to a complete halt as a result of
possible delays of more than 60 days in the government's processing and approval of submitted work
programs and budgets. Clause 8.3 seeks to provide a temporary, stop-gap solution in case a disagreement
between the State and the contractor (over the proposed work program or budget submitted by the
contractor) should result in a deadlock or impasse, to avoid unreasonably long delays in the performance of
the works.

The State, despite Clause 8.3, still has control over the contract area, and it may, as sovereign authority,
prohibit work thereon until the dispute is resolved, or it may terminate the FTAA, citing substantial breach
thereof. Hence, the State clearly retains full and effective control.
Clause 8.5, which allows the contractor to make changes to approved work programs and budgets without
the prior approval of the DENR secretary, subject to certain limitations with respect to the variance/s, merely
provides the contractor a certain amount of flexibility to meet unexpected situations, while still guaranteeing
that the approved work programs and budgets are not abandoned altogether. And if the secretary disagrees
with the actions taken by the contractor in this instance, he may also resort to cancellation/termination of
the FTAA as the ultimate sanction.
Clause 4.6 of the WMCP FTAA gives the contractor discretion to select parts of the contract area to be
relinquished. The State is not in a position to substitute its judgment for that of the contractor, who knows
exactly which portions of the contract area do not contain minerals in commercial quantities and should be
relinquished. Also, since the annual occupation fees paid to government are based on the total hectarage of
the contract area, net of the areas relinquished, the contractor's self-interest will assure proper and efficient
relinquishment.
Clause 10.2(e) of the WMCP FTAA does not mean that the contractor can compel government to use its
power of eminent domain. It contemplates a situation in which the contractor is a foreign-owned
corporation, hence, not qualified to own land. The contractor identifies the surface areas needed for it to
construct the infrastructure for mining operations, and the State then acquires the surface rights on behalf
of the former. The provision does not call for the exercise of the power of eminent domain (or determination
of just compensation); it seeks to avoid a violation of the anti-dummy law.
Clause 10.2(l) of the WMCP FTAA giving the contractor the right to mortgage and encumber the mineral
products extracted may have been a result of conditions imposed by creditor-banks to secure the loan
obligations of WMCP. Banks lend also upon the security of encumbrances on goods produced, which can be
easily sold and converted into cash and applied to the repayment of loans. Thus, Clause 10.2(l) is not
something out of the ordinary. Neither is it objectionable, because even though the contractor is allowed to
mortgage or encumber the mineral end-products themselves, the contractor is not thereby relieved of its
obligation to pay the government its basic and additional shares in the net mining revenue. The contractor's
ability to mortgage the minerals does not negate the State's right to receive its share of net mining
revenues.
Clause 10.2(k) which gives the contractor authority "to change its equity structure at any time," means that
WMCP, which was then 100 percent foreign owned, could permit Filipino equity ownership. Moreover, what is
important is that the contractor, regardless of its ownership, is always in a position to render the services
required under the FTAA, under the direction and control of the government.
Clauses 10.4(e) and (i) bind government to allow amendments to the FTAA if required by banks and other
financial institutions as part of the conditions of new lendings. There is nothing objectionable here, since
Clause 10.4(e) also provides that such financing arrangements should in no event reduce the contractor's
obligations or the government's rights under the FTAA. Clause 10.4(i) provides that government shall
"favourably consider" any request for amendments of this agreement necessary for the contractor to
successfully obtain financing. There is no renunciation of control, as the proviso does not say that
government shall automatically grant any such request. Also, it is up to the contractor to prove the need for
the requested changes. The government always has the final say on whether to approve or disapprove such
requests.
In fine, the FTAA provisions do not reduce or abdicate State control.
No Surrender of Financial Benefits
The second paragraph of Section 81 of RA 7942 has been denounced for allegedly limiting the State's share
in FTAAs with foreign contractors to just taxes, fees and duties, and depriving the State of a share in the
after-tax income of the enterprise. However, the inclusion of the phrase "among other things" in the second
paragraph of Section 81 clearly and unmistakably reveals the legislative intent to have the State
collect more than just the usual taxes, duties and fees.
Thus, DAO 99-56, the "Guidelines Establishing the Fiscal Regime of Financial or Technical Assistance
Agreements," spells out the financial benefits government will receive from an FTAA, as consisting of not
only abasic government share, comprised of all direct taxes, fees and royalties, as well as other payments
made by the contractor during the term of the FTAA, but also an additional government share, being a
share in the earnings or cash flows of the mining enterprise, so as to achieve a fifty-fifty sharing of
net benefits from mining between the government and the contractor.
The additional government share is computed using one of three (3) options or schemes detailed in DAO
99-56,viz., (1) the fifty-fifty sharing of cumulative present value of cash flows; (2) the excess profit-related
additional government share; and (3) the additional sharing based on the cumulative net mining revenue.
Whichever option or computation is used, the additional government share has nothing to do with taxes,
duties, fees or charges. The portion of revenues remaining after the deduction of the basic and additional
government shares is what goes to the contractor.

The basic government share and the additional government share do not yet take into account the indirect
taxes and other financial contributions of mining projects, which are real and actual benefits enjoyed by the
Filipino people; if these are taken into account, total government share increases to 60 percent or higher (as
much as 77 percent, and 89 percent in one instance) of the net present value of total benefits from the
project.
The third or last paragraph of Section 81 of RA 7942 is slammed for deferring the payment of the
government share in FTAAs until after the contractor shall have recovered its pre-operating expenses,
exploration and development expenditures. Allegedly, the collection of the State's share is rendered
uncertain, as there is no time limit in RA 7942 for this grace period or recovery period. But although RA 7942
did not limit the grace period, the concerned agencies (DENR and MGB) in formulating the 1995 and 1996
Implementing Rules and Regulations provided that the period of recovery, reckoned from the date of
commercial operation, shall be for a period not exceeding five years, or until the date of actual recovery,
whichever comes earlier.
And since RA 7942 allegedly does not require government approval for the pre-operating, exploration and
development expenses of the foreign contractors, it is feared that such expenses could be bloated to wipe
out mining revenues anticipated for 10 years, with the result that the State's share is zero for the first 10
years. However, the argument is based on incorrect information.
Under Section 23 of RA 7942, the applicant for exploration permit is required to submit a proposed work
program for exploration, containing a yearly budget of proposed expenditures, which the State passes upon
and either approves or rejects; if approved, the same will subsequently be recorded as pre-operating
expenses that the contractor will have to recoup over the grace period.
Under Section 24, when an exploration permittee files with the MGB a declaration of mining project
feasibility, it must submit a work program for development, with corresponding budget, for approval by the
Bureau, before government may grant an FTAA or MPSA or other mineral agreements; again, government
has the opportunity to approve or reject the proposed work program and budgeted expenditures
for development works, which will become the pre-operating and development costs that will have to be
recovered. Government is able to know ahead of time the amounts of pre-operating and other expenses to
be recovered, and the approximate period of time needed therefor. The aforecited provisions have
counterparts in Section 35, which deals with the terms and conditions exclusively applicable to FTAAs. In
sum, the third or last paragraph of Section 81 of RA 7942 cannot be deemed defective.
Section 80 of RA 7942 allegedly limits the State's share in a mineral production-sharing agreement (MPSA)
to just the excise tax on the mineral product, i.e., only 2 percent of market value of the minerals.
The colatilla in Section 84 reiterates the same limitation in Section 80. However, these two provisions
pertain only to MPSAs, and have no application to FTAAs. These particular provisions do not
come within the issues defined by this Court. Hence, on due process grounds, no
pronouncement can be made in this case in respect of the constitutionality of Sections 80 and
84.
Section 112 is disparaged for reverting FTAAs and all mineral agreements to the old "license, concession or
lease" system, because it allegedly effectively reduces the government share in FTAAs to just the 2 percent
excise tax which pursuant to Section 80 comprises the government share in MPSAs. However, Section 112
likewise does not come within the issues delineated by this Court, and was never touched upon by the
parties in their pleadings. Moreover, Section 112 may not properly apply to FTAAs. The mining law obviously
meant to treat FTAAs as a breed apart from mineral agreements. There is absolutely no basis to believe that
the law intends to exact from FTAA contractors merely the same government share (i.e., the 2 percent
excise tax) that it apparently demands from contractors under the three forms of mineral agreements.
While there is ground to believe that Sections 80, 84 and 112 are indeed unconstitutional, they cannot be
ruled upon here. In any event, they are separable; thus, a later finding of nullity will not affect the rest of RA
7942.
In fine, the challenged provisions of RA 7942 cannot be said to surrender financial benefits from
an FTAA to the foreign contractors.
Moreover, there is no concrete basis for the view that, in FTAAs with a foreign contractor, the State must
receive at least 60 percent of the after-tax income from the exploitation of its mineral resources, and that
such share is the equivalent of the constitutional requirement that at least 60 percent of the capital, and
hence 60 percent of the income, of mining companies should remain in Filipino hands. Even if the State is
entitled to a 60 percent share from other mineral agreements (CPA, JVA and MPSA), that would not create a
parallel or analogous situation for FTAAs. We are dealing with an essentially different equation. Here we have
the old apples and oranges syndrome.
The Charter did not intend to fix an iron-clad rule of 60 percent share, applicable to all situations, regardless
of circumstances. There is no indication of such an intention on the part of the framers. Moreover, the terms
and conditions of petroleum FTAAs cannot serve as standards for mineral mining FTAAs, because the
technical and operational requirements, cost structures and investment needs of off-shore
petroleum exploration and drilling companies do not have the remotest resemblance to those of
on-shore mining companies.

To take the position that government's share must be not less than 60 percent of after-tax income of FTAA
contractors is nothing short of this Court dictating upon the government. The State resultantly ends up
losing control.To avoid compromising the State's full control and supervision over the exploitation of mineral
resources, there must be no attempt to impose a "minimum 60 percent" rule. It is sufficient that the State
has the power and means, should it so decide, to get a 60 percent share (or greater); and it is not necessary
that the State does so in every case.
Invalid Provisions of the WMCP FTAA
Section 7.9 of the WMCP FTAA clearly renders illusory the State's 60 percent share of WMCP's revenues.
Under Section 7.9, should WMCP's foreign stockholders (who originally owned 100 percent of the equity) sell
60 percent or more of their equity to a Filipino citizen or corporation, the State loses its right to receive its
share in net mining revenues under Section 7.7, without any offsetting compensation to the State. And what
is given to the State in Section 7.7 is by mere tolerance of WMCP's foreign stockholders, who can at any time
cut off the government's entire share by simply selling 60 percent of WMCP's equity to a Philippine citizen or
corporation.
In fact, the sale by WMCP's foreign stockholder on January 23, 2001 of the entire outstanding equity in
WMCP to Sagittarius Mines, Inc., a domestic corporation at least 60 percent Filipino owned, can be deemed
to have automatically triggered the operation of Section 7.9 and removed the State's right to receive its 60
percent share. Section 7.9 of the WMCP FTAA has effectively given away the State's share without anything
in exchange.
Moreover, it constitutes unjust enrichment on the part of the local and foreign stockholders in WMCP,
because by the mere act of divestment, the local and foreign stockholders get a windfall, as their share in
the net mining revenues of WMCP is automatically increased, without having to pay anything for it.
Being grossly disadvantageous to government and detrimental to the Filipino people, as well as violative of
public policy, Section 7.9 must therefore be stricken off as invalid. The FTAA in question does not involve
mere contractual rights but, being impressed as it is with public interest, the contractual provisions and
stipulations must yield to the common good and the national interest. Since the offending provision is very
much separable from the rest of the FTAA, the deletion of Section 7.9 can be done without affecting or
requiring the invalidation of the entire WMCP FTAA itself.
Section 7.8(e) of the WMCP FTAA likewise is invalid, since by allowing the sums spent by government for the
benefit of the contractor to be deductible from the State's share in net mining revenues, it results in
benefiting the contractor twice over. This constitutes unjust enrichment on the part of the contractor, at the
expense of government. For being grossly disadvantageous and prejudicial to government and contrary to
public policy, Section 7.8(e) must also be declared without effect. It may likewise be stricken off without
affecting the rest of the FTAA.
EPILOGUE
AFTER ALL IS SAID AND DONE, it is clear that there is unanimous agreement in the Court upon the key
principle that the State must exercise full control and supervision over the exploration, development and
utilization of mineral resources.
The crux of the controversy is the amount of discretion to be accorded the Executive Department,
particularly the President of the Republic, in respect of negotiations over the terms of FTAAs, particularly
when it comes to the government share of financial benefits from FTAAs. The Court believes that it is not
unconstitutional to allow a wide degree of discretion to the Chief Executive, given the nature and complexity
of such agreements, the humongous amounts of capital and financing required for large-scale mining
operations, the complicated technology needed, and the intricacies of international trade, coupled with the
State's need to maintain flexibility in its dealings, in order to preserve and enhance our country's
competitiveness in world markets.
We are all, in one way or another, sorely affected by the recently reported scandals involving corruption in
high places, duplicity in the negotiation of multi-billion peso government contracts, huge payoffs to
government officials, and other malfeasances; and perhaps, there is the desire to see some measures put in
place to prevent further abuse. However, dictating upon the President what minimum share to get
from an FTAA is not the solution.It sets a bad precedent since such a move institutionalizes the very
reduction if not deprivation of the State's control. The remedy may be worse than the problem it was meant
to address. In any event, provisions in such future agreements which may be suspected to be grossly
disadvantageous or detrimental to government may be challenged in court, and the culprits haled before
the bar of justice.
Verily, under the doctrine of separation of powers and due respect for co-equal and coordinate branches of
government, this Court must restrain itself from intruding into policy matters and must allow the President
and Congress maximum discretion in using the resources of our country and in securing the assistance of
foreign groups to eradicate the grinding poverty of our people and answer their cry for viable employment
opportunities in the country.
"The judiciary is loath to interfere with the due exercise by coequal branches of government of their official
functions."99 As aptly spelled out seven decades ago by Justice George Malcolm, "Just as the Supreme Court,
as the guardian of constitutional rights, should not sanction usurpations by any other department of

government, so should it as strictly confine its own sphere of influence to the powers expressly or by
implication conferred on it by the Organic Act."100 Let the development of the mining industry be the
responsibility of the political branches of government. And let not this Court interfere inordinately and
unnecessarily.
The Constitution of the Philippines is the supreme law of the land. It is the repository of all the aspirations
and hopes of all the people. We fully sympathize with the plight of Petitioner La Bugal B'laan and other tribal
groups, and commend their efforts to uplift their communities. However, we cannot justify the invalidation of
an otherwise constitutional statute along with its implementing rules, or the nullification of an otherwise
legal and binding FTAA contract.
We must never forget that it is not only our less privileged brethren in tribal and cultural communities who
deserve the attention of this Court; rather, all parties concerned -- including the State itself, the contractor
(whether Filipino or foreign), and the vast majority of our citizens -- equally deserve the protection of the law
and of this Court. To stress, the benefits to be derived by the State from mining activities must ultimately
serve the great majority of our fellow citizens. They have as much right and interest in the proper and wellordered development and utilization of the country's mineral resources as the petitioners.
Whether we consider the near term or take the longer view, we cannot overemphasize the need for
an appropriate balancing of interests and needs -- the need to develop our stagnating mining industry
and extract what NEDA Secretary Romulo Neri estimates is some US$840 billion (approx. PhP47.04 trillion)
worth of mineral wealth lying hidden in the ground, in order to jumpstart our floundering economy on the
one hand, and on the other, the need to enhance our nationalistic aspirations, protect our indigenous
communities, and prevent irreversible ecological damage.
This Court cannot but be mindful that any decision rendered in this case will ultimately impact not only the
cultural communities which lodged the instant Petition, and not only the larger community of the Filipino
people now struggling to survive amidst a fiscal/budgetary deficit, ever increasing prices of fuel, food, and
essential commodities and services, the shrinking value of the local currency, and a government hamstrung
in its delivery of basic services by a severe lack of resources, but also countless future generations of
Filipinos.
For this latter group of Filipinos yet to be born, their eventual access to education, health care and basic
services, their overall level of well-being, the very shape of their lives are even now being determined and
affected partly by the policies and directions being adopted and implemented by government today. And in
part by the this Resolution rendered by this Court today.
Verily, the mineral wealth and natural resources of this country are meant to benefit not merely a select
group of people living in the areas locally affected by mining activities, but the entire Filipino nation, present
and future, to whom the mineral wealth really belong. This Court has therefore weighed carefully the rights
and interests of all concerned, and decided for the greater good of the greatest number. JUSTICE FOR ALL,
not just for some; JUSTICE FOR THE PRESENT AND THE FUTURE, not just for the here and now.
WHEREFORE, the Court RESOLVES to GRANT the respondents' and the intervenors' Motions for
Reconsideration; to REVERSE and SET ASIDE this Court's January 27, 2004 Decision; to DISMISS the Petition;
and to issue this new judgment declaring CONSTITUTIONAL (1) Republic Act No. 7942 (the Philippine Mining
Law), (2) its Implementing Rules and Regulations contained in DENR Administrative Order (DAO) No. 9640 -insofar as they relate to financial and technical assistance agreements referred to in paragraph 4 of Section
2 of Article XII of the Constitution; and (3) the Financial and Technical Assistance Agreement (FTAA) dated
March 30, 1995 executed by the government and Western Mining Corporation Philippines Inc. (WMCP),
except Sections 7.8 and 7.9 of the subject FTAA which are hereby INVALIDATED for being contrary to public
policy and for being grossly disadvantageous to the government.
SO ORDERED.

FELISA R. FERRER,
Petitioner,

G.R. No. 170956

Present:

- versus -

CARPIO, J., Chairperson,

BRION,
DEL CASTILLO,
ABAD, and
PEREZ, JJ.

DOMINGO CARGANILLO,
SERGIO CARGANILLO,
SOLEDAD AGUSTIN and
MARCELINA SOLIS,
Promulgated:
Respondents.
May 12, 2010
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - x

DECISION
DEL CASTILLO, J.:
The concept of social function of private property which today is presented as
one of the possible justifications for agrarian and urban land reform has its roots in the
cosmogenic and philosophical concept which maintains that man must answer to the
Creator for the use of the resources entrusted to him. It is an old concept and is
ultimately related to the genesis of society itself. Hence, the use, enjoyment,
occupation or disposition of private property is not absolute. It is predicated on the
social functions of property. It is restricted in a sense so as to bring about maximum
benefits to all and not to a few chosen individuals.[1]
This petition concerns four cases, involving herein petitioner Felisa R. Ferrer,
jointly heard by the Provincial Agrarian Reform Adjudicator (PARAD), appealed to the

Department of Agrarian Reform Adjudication Board (DARAB) and subsequently further

appealed to the Court of Appeals (CA), to wit:
1.

DARAB Case No. 7862 Felisa R. Ferrer v. Domingo Carganillo and Sergio
Carganillo for Ejectment and Damages;

2.

DARAB Case No. 7863 Felisa R. Ferrer v. Soledad Agustin for Ejectment and
Damages;

3.

DARAB Case No. 7864 Rosa Pajarito, Elvira Madolora and Anastacia Lagado
represented by Felisa R. Ferrer v. Marcelina Solis for Ejectment and Damages;

4.

DARAB Case No. 7865 Irene Aguinaldo and Felisa R. Ferrer v. Marcelina Solis for
Ejectment and Damages.

For clarity, each case will be tackled independently as each involved different set
of facts.
Factual Antecedents
a) DARAB Case No. 7862
In her Complaint,[2] petitioner Felisa R. Ferrer (Felisa) alleged that she is the
owner of a 6,000-square meters lot under Tax Declaration No. 42-06462, situated
at Brgy. Legaspi, Tayug, Pangasinan and being tenanted by respondent Domingo
Carganillo (Domingo). Without her knowledge and consent, Domingo subleased the
subject landholding to his brother, herein respondent Sergio Carganillo (Sergio)
for P15,000.00. Felisa only knew of this fact when she visited the place and found
Sergio in actual possession and cultivation of the landholding in question.
In his Answer,[3] Domingo denied that he mortgaged his possessory rights to
Sergio and asserted that he is still in actual, continuous and peaceful possession of
subject property.
Meanwhile, upon a verbal complaint lodged by Felisa with the Municipal
Agrarian Reform Office (MARO) of Tayug, Pangasinan, MARO Legal Officer Dionisio G.
Estimada (Estimada) conducted an investigation on the matter.
In his December 19, 1997 Investigation Report,[4] Estimada stated that based on
the testimony he had gathered from other people, the cultivation and possession of
the subject landholding was subleased by Domingo to Sergio as the former was
applying for work abroad.[5] In fact, Domingo admitted the existence of the sublease.
[6]
Thus, based on the foregoing, Estimada recommended that Sergio and Domingo be
ejected from the subject landholding.[7]
The Affidavit of Angela N. Clarion (Clarion) was also submitted to corroborate the
Investigation Report.[8] Clarion averred that Domingo mortgaged his tenancy rights
over the subject agricultural land to Sergio, and that the latter is presently cultivating
the said land by virtue of such mortgage.[9]

Ruling of the PARAD

In an Order[10] dated January 20, 1998, the PARAD required the parties to submit
their respective position papers within 20 days from said date. Felisa filed her position
paper for all the four cases, attaching thereto the Investigation Report of Estimada, as
well as the corroborating affidavits of Clarion and Gelacio Gano (Gano). Sergio, on the
other hand, admitted that he helps his older brother, Domingo, in cultivating the
landholding[11] but he denied subleasing the same from Domingo.[12]
In addition, respondents presented the affidavits of (1) Mariano Orina
(Mariano), tenant of the adjacent agricultural land, who attested that Domingo is the
one who supervises the activities in his tenanted land;[13] (2) Barangay Agrarian
Reform Council (BARC) Chairman Valentin Costales (Costales), who stated that he
does not know of any violation that Domingo has committed against the landowner;
[14]
and (3)Barangay Kagawad Arsenio R. Frago (Frago), who maintained that Domingo
has not violated any provision of the Land Reform Code.[15]
On April 8, 1998,
Decision[16] holding that:

PARAD

Rodolfo

A.

Caddarao

(Caddarao)

issued

In a situation such as this, the complainant has the burden of proof to show by
convincing evidence the truth of her allegations. In the case at bar the complainant
failed to prove by clear and convincing evidence that there is subleasing or mortgage of
the property by the respondent tenant. Hence, the herein action must necessarily fail.
WHEREFORE, premises considered, the complaint in the instant case is hereby
DISMISSED for lack of evidence and merit.
SO ORDERED.

Aggrieved, Felisa appealed to the DARAB.

Ruling of the DARAB
In her appeal memorandum[17] dated October 7, 1998, Felisa asserted that the
PARAD erred in failing to give credence to the Investigation Report of the MARO legal
officer.She likewise presented for the first time an original copy of
the Katulagan[18] (Agreement) to prove that Domingo obtained a loan in the amount
of P15,000.00 from Sergio. Felisa argued that she has established, by more than
substantial evidence, that Domingo has indeed conveyed his leasehold rights to
Sergio for said amount.
On January 27, 2004, the DARAB rendered its Decision[19] affirming the findings
of the PARAD that Felisa failed to substantiate her allegation of subleasing.
Felisa thence elevated the matter to the CA through a Petition for
Review[20] dated December 6, 2004.

Ruling of the Court of Appeals

On August 22, 2005, the CA rendered a Decision[21] affirming the DARAB
Decision. The dispositive portion of the CA Decision reads:
WHEREFORE, premises considered, the petition is hereby DISMISSED. The assailed
Decision dated January 27, 2004 and the Resolution dated October 18, 2004 are hereby
AFFIRMED.[22]

Our Ruling
a) DARAB Case No. 7862
Petitioner argues that the CA erred in not finding that Domingo subleased or
mortgaged his landholding rights to Sergio which warrants their ejectment from the
subject landholding. Petitioner asserts that: (1) the law is explicit that the tenant and
his immediate family must work directly on the land; (2) Sergio cannot pass as
Domingos immediate family; (3) as evidenced by the Katulagan, Sergio has been
cultivating the land for more than two years prior to the filing of the complaint; and (4)
when Domingo subleased the land to Sergio, he is considered as having abandoned
the land as a tenant.[23] She further stresses that respondents admission, coupled with
the finding of the DARAB that Sergio is tilling the land, proved
subtenancy. Consequently, she prays that the lease tenancy relationship between the
contending parties be declared terminated.
Domingo, on the other hand, denies that he subleased or mortgaged his tenancy
rights to anyone. He claims that he complied with all his obligations under the
leasehold agreement over the subject agricultural land, and thus prays for the
dismissal of the case.
The petition is impressed with merit.
The DARAB erred in disregarding
Katulagan (Agreement) as evidence.

the

The DARAB held that the Katulagan is inadmissible in evidence because it was
not formally offered before the PARAD, citing our ruling in People v. Mongado.[24] On
appeal, however, the CA considered the Katulagan, but found the same to be a mere
promissory note tending to prove indebtedness and not as an evidence of mortgage.
We cannot subscribe with the reasoning of the DARAB. The Rules of Court,
particularly the Revised Rules on Evidence, are specifically applicable to judicial
proceedings, to wit:
Section 1. Evidence defined. Evidence is the means, sanctioned by these rules, of
ascertaining in a judicial proceeding the truth respecting a matter of fact.
Sec. 2. Scope. The rules of evidence shall be the same in all courts and in all trials and
hearings except as otherwise provided by law or these rules.[25] (Emphasis supplied)

In quasi judicial proceedings, the said rules shall not apply except by analogy or
in a suppletory character and whenever practicable and convenient. [26] In the instant
case, the then prevailing DARAB Rules of Procedures[27] provide that:
Section 2. Construction. These Rules shall be liberally construed to carry out the
objectives of agrarian reform and to promote just, expeditious and inexpensive
adjudication and settlement of agrarian cases, disputes or controversies.
xxxx
Section 3. Technical Rules Not Applicable. The Board and its Regional and Provincial
Adjudicators shall not be bound by technical rules of procedure and evidence as
prescribed in the Rules of Court, but shall proceed to hear and decide all agrarian cases,
disputes or controversies in a most expeditious manner, employing all reasonable means
to ascertain the facts of every case in accordance with justice and equity.
a) If and when a case comes up for adjudication wherein there is no applicable provision
under these rules, the procedural law and jurisprudence generally applicable to agrarian
disputes shall be applied;
b) The Adjudication Board (Board), and its Regional Agrarian Reform Adjudicators
(RARADs) and Provincial Agrarian Reform Adjudicators (PARADs) hereinafter referred to
as Adjudicators, shall have the authority to adopt any appropriate measure or procedure
in any given situation or matter not covered by these Rules. All such special measures or
procedures and the situations to which they have been applied must be reported to the
Board; and
c) The provisions of the Rules of Court shall not apply even in a suppletory
character unless adopted herein or by resolution of the Board. However, due process of
the law shall be observed and followed in all instances. (Emphasis supplied)

The DARAB Rules of Procedures explicitly provides that the Agrarian Reform
Adjudicators are not bound by technical rules of procedure and evidence in the Rules
of Court nor shall the latter apply even in a suppletory manner. Thus, we find that the
DARAB erred in holding the Katulagan as inadmissible since it was not formally offered
and admitted.[28] Moreover, reliance on our ruling in People v. Mongado, i.e., that
"[t]he court shall consider no evidence which has not been formally offered," is
misplaced. We simply cannot find any legal basis for the DARAB to cite our ruling in
a criminal case;[29] the fundamental rule found in Rule 132 of the Rules of Court does
not find any application in this agrarian case.
Petitioner has sufficiently proven by clear and
convincing evidence the fact of subleasing.
The PARAD summed up the evidence presented by both parties as follows:
In the instant case, the evidence for the complainant are as follows:
1. Exhibit 1 Photocopy of an Investigation Report dated December 19, 1997 submitted
by Legal Officer I Dionisio Estimada to the Legal Services Division of DAR wherein he
stated in his findings that Verily, the tenants, particularly Domingo Carganillo, who
actually and finally accepted that he subleased the land to another is clear and blatant
violation against the landowner and co-owner for that matter. Hence, he recommended
that Domingo Carganillo and Sergio Carganillo be ejected from the landholding.
2. Exhibit 2 Affidavit dated January 21, 1998 of one Angela [Clarion] wherein she stated
that she knew for a fact that Domingo Carganillo mortgaged his tenancy rights in 1995
to his brother Sergio Carganillo.
On the part of the respondent Domingo Carganillo, his evidence are:

1. Exhibit 1 The affidavit of one Sergio Carganillo, the other respondent and brother of
respondent Domingo Carganillo denying that the land was mortgaged by his brother to
him and stated that he usually help his brother to do some works in the landholding.
2. Exhibit 2 Affidavit dated February 3, 1998 of one Mariano Orina stating that being a
tenant in the adjoining landholding, he knows that Domingo Carganillo is always present
doing or supervising the activities in his field.
3. Exhibit 3 Sworn statement of Valentin Costales, the incumbent Barangay Agrarian
Reform Council Chairman of the place where the property is located attesting that
Domingo and Sergio Carganillo never violated any agrarian laws.
4. Exhbit 4 Sworn statement issued by one of the incumbent Barangay Kagawads having
jurisdiction of the land in suit, stating also to the fact that respondents never violated any
agrarian laws.

The PARAD assessed the evidence submitted and held that Felisa failed to
discharge the burden of proof of establishing her allegations, to wit:
After a careful assessment of the facts and evidence presented, the Board is of the view
and so holds that there is no evidence showing that respondent Domingo Carganillo
subleased the land to his brother Sergio Carganillo. The investigation report
dated December 19, 1997 of Legal Officer I Dionisio Estimada (Exhibit 1 of complaint) is
not conclusive. His conclusion that Domingo Carganillo accepted to him that he
subleased the property could not be accepted by this Board as fact. There is no evidence
showing that Domingo Carganillo accepted said matter to him. The Board cannot be
compelled to accept the report as true since, in the first place it had not ordered such
investigation.

On appeal, the DARAB concurred with the findings of the PARAD stating that:
One of the contentions invoked by the complainant-appellant is that the landholding in
question was subleased by herein respondent-appellee to his co-respondent Sergio
Carganillo, who is in actual possession and cultivation thereof. This contention, however,
cannot be given due consideration. The Honorable Adjudicator a quo correctly ruled that
there was no subleasing in this case.
At this juncture, it is better to define what a sub-lessee means. In the case
of Santiago vs. Rodrigo, et al., CA-G.R. No. 33651-R, June 3, 1965, sub-tenant or sublessee has been defined as a person who rents all, or a portion of the leased premises,
from the lessor for a term less than the original one, leaving a reversionary interest in
the first lessee. Sub-leasing therefore, creates a new estate dependent upon, out of, and
distinct from, the original leasehold. However, this is not true in the case at bar. Granting
that Sergio Carganillo is working on the land tenanted by respondent-appellee, such is
not in the nature of being a sub-lessee, but is merely helping his brother as an
immediate member of the family to cultivate the land. The employment of respondentappellees brother to cultivate the landholding in question is not in any way prejudicial to
the interest of the landowner. Also, it was ruled that the employment by the lessee of the
members of his immediate farm household does not come within the prohibition (De
Guzman v. Santos, 6 SCRA 796, November 30, 1962).
Since the issue of sub-leasing was not properly proved by substantial evidence, the
same cannot be given favorable consideration.

On further appeal, the CA held thus:

Clearly, petitioners assertion that respondent Domingo subleased the subject
landholding to respondent Sergio cannot be given weight. She failed to prove with
sufficient evidence neither the fact of subleasing the subject landholding nor the
mortgaging of the possessory rights thereof to respondent Sergio. The document

belatedly presented by petitioner and denominated as Katulagan, is merely a promissory

note which is a proof of indebtedness and not as evidence to prove mortgage.

We disagree with the findings of fact of the CA and the agencies below. The
confluence of evidence shows that Felisa has clearly and convincingly established her
allegation that Domingo subleased his landholding to Sergio, to wit:
a) The investigation conducted by MARO Legal Officer Estimada shows that
Domingo admitted that the cultivation and possession of the subject landholding was
subleased to Sergio as he was then applying for work abroad.[30]
b) In her complaint, Felisa stressed that in one of her visits to the subject
landholding prior to the filing of the said complaint, she discovered that Sergio, the
sublessee, was in actual possession and cultivation of the landholding in question.
[31]
Petitioner further contended that Domingo subleased the said agricultural
leasehold to Sergio for the amount ofP15,000.00.[32]
c) The Katulagan or Agreement establishes that indeed Domingo was indebted
to Sergio in the amount of P15,000.00.
d) The affidavit of Clarion, a resident of the municipality where the subject
landholding lies, further corroborates the said facts when she narrated the series of
events leading up to Sergios possession of said agricultural land:
xxxx
That I know for a fact that the above-described parcel of land was under cultivation by
one RICARDO PADILLO of Brgy. Amistad, Tayug, Pangasinan, formerly, but when the
same went abroad, he transferred his tenancy right to DOMINGO CARGANILLO, who in
the year 1995 mortgaged his tenancy rights to SERGIO CARGANILLO, his own brother;
That at present, the said parcel of land is under the cultivation of said SERGIO
CARGANILLO;
xxxx

Domingo did not even affirm or deny in his answer that Estimada conducted an
investigation and during such investigation, he admitted that he subleased subject
landholding.It is totally against our human nature to just remain reticent and say
nothing in the face of false accusations. The natural instinct of man impels him to
resist an unfounded imputation.Hence, silence in such cases is almost always
construed as implied admission of the truth thereof.
Likewise, the attestations of BARC Chairman Costales and Barangay
Kagawad Frago that Domingo never violated his agreement with Felisa or any
provision of the Land Reform Code, are conclusions of law bereft of any factual
basis. Time and again, we have held that general statements, which are
mere conclusions of law and not factual proof, are unavailing and do not suffice.
In view of the sublease, Domingo and Sergio
should be dispossessed of the subject
agricultural landholding.

Republic Act (RA) No. 3844 or the Agricultural Land Reform Code[33] is the
governing statute in actions involving leasehold of agricultural land. The pertinent
provisions thereof state as follows:
Sec. 36. Possession of Landholding; Exceptions. Notwithstanding any agreement as to
the period or future surrender of the land, an agricultural lessee shall continue in the
enjoyment and possession of his landholding except when his dispossession has
been authorized by the Court in a judgment that is final and executory if after
due hearing it is shown that:
xxxx
(7) the lessee employed a sub-lessee on his landholding in violation of the terms
of paragraph 2 of Section twenty seven.[34] (Emphasis supplied)
Sec. 37. Burden of Proof. The burden of proof to show the existence of a lawful cause for
the ejectment of an agricultural lessee shall rest upon the agricultural lessor.

The prohibition against subleasing an agricultural lease has already been in our
statute books even prior to the enactment of RA 3844. RA 1199, of The Agricultural
Tenancy Act enacted in 1954, similarly provides that:
SECTION 24. Prohibitions to Tenant:
xxxx
(2) It shall be unlawful for a share-tenant to employ a sub-tenant to furnish
labor or any phase of the work required of him under this Act, except in cases of
illness or any temporary incapacity on his part, in which eventuality the tenant or any
member of his immediate farm household is under obligation to report such illness or
incapacity to the landholder. Payment to the sub-tenant, in whatever form, for services
rendered on the land under this circumstance, shall be for the account of the tenant.
(Emphasis supplied)

However, Section 4[35] of RA 3844 declared all share tenancy to be contrary to

public policy and, in its stead, provided for the compulsory conversion of the sharing
system into leasehold system where the tenant continues in possession of the land for
cultivation.
In this case, Domingo subleased his agricultural landholding to Sergio. It is
prohibited, except in the case of illness or temporary incapacity where he may employ
laborers.Domingo does not claim illness or temporary incapacity in his
Answer. Therefore, we hereby declare the dispossession of Domingo and Sergio from
the subject agricultural land of the leaseholder.
b) DARAB Case No. 7863
Felisa is the owner of a parcel of land with an approximate area of 4,667 square
meters registered under Transfer Certificate of Title No. T-51201. [36] She alleged that
the duly instituted lessee of the agricultural land is the late Isabelo Ramirez (Isabelo).
[37]
During Isabelos lifetime, he subleased said landholding to Soledad Agustin
(Soledad), without Felisas knowledge and consent.[38] She argued that the said act of

her now deceased tenant is a ground for ejectment of Soledad, who is a mere
sublessee.[39]

Ruling of the PARAD

After service of summons, Soledad filed her Answer dated January 20,
1998 affirming that Isabelo was the duly instituted tenant of the subject
landholding. [40] Upon his death, his possessory rights passed on to his surviving
spouse, who was not named in the Answer.[41] Soledad likewise alleged that said
surviving spouse continues to cultivate the subject landholding.[42]
In compliance with the PARADs Order dated January 20, 1998[43] requiring the
parties to submit their respective position papers, Felisa filed a position paper for all
four cases,[44] attaching thereto a copy of the Investigation Report of Estimada[45] and
corroborating affidavit of Gano.[46]
The Investigation Report of the MARO Legal Officer Estimada stated that the
lawful tenant was the late Isabelo and not Soledad. Meanwhile, Gano declared in his
affidavit that he knew that Isabelo mortgaged his tenancy rights and possession
to Soledad. He further averred that Soledad is presently cultivating said landholding,
having acquired her tenancy rights from Isabelo through the alleged mortgage.
On the other hand, Soledad submitted the following affidavits: (1) her own
affidavit wherein she denied that she is Felisas tenant and contended that the true
tenant is her sister-in-law Marina O. Ramirez (Marina), the widow of her brother, the
deceased Isabelo; (2) Marina, who affirmed that she is the true tenant of Felisa as
evidenced by the renewal of their leasehold contract dated May 30, 1997 and
corroborated Soledads statement that the latter does not possess any landholding
owned or administered by Felisa; (3) BARC Chairman Costales, who declared that as
per their records, Soledad is not the registered tenant of the petitioner nor has
Soledad managed the activities of the said landholding; (4) Timoteo Orina, owner of
the adjoining agricultural land, who attested that Soledad never became a tenant,
tiller or manager of subject landholding; and (5) Silverio C. Bugayong,
incumbent Barangay Kagawad of Brgy. Amistad, who stated that Marina continued
tilling
the
subject
land
after
the
death
of
her
husband. [47] In
addition, Soledad submitted the leasehold contract dated May 30, 1997 (Tulag ti
Panagabang ti Talon), which showed that the leasehold formerly held by the deceased
Isabelo is now with his widow, Marina.
On April 13, 1998, PARAD Caddarao, dismissed the complaint for lack of merit.[48]
Aggrieved, petitioner filed a Notice of Appeal dated April 30, 1998 with the
PARAD signifying her intention to elevate the latters April 13, 1998 Decision.[49]

Ruling of the DARAB

On January 7, 2004, the DARAB promulgated a Decision dismissing the appeal
for lack of merit.[50]
Ruling of the Court of Appeals
In her Memorandum, petitioner asserted that the DARAB failed to resolve the
issue of non-payment of lease raised in the companion cases.[51] The respondents did
not file their memorandum.
On August 22, 2005, the CA rendered a Decision affirming the DARAB Decision.
Our Ruling
b) DARAB Case No. 7863
Felisa submits that the CA gravely erred in affirming the DARAB Decision
dated January 7, 2004 by assuming that the case against Soledad was already
subsumed in the said Decision and in not ordering or remanding the case to the
DARAB for disposition or decision. Hence, Felisa now prays that we take a second hard
look at the assailed CA Decision and Resolution in order to avoid a miscarriage of
justice.
The new evidence presented by the petitioner
in
the
Supplemental
Motion
for
Reconsideration with Manifestation to the
DARAB cannot be admitted.

On March 24, 2004, Felisa filed a Supplemental Motion for Reconsideration with
Manifestation with the DARAB, allegedly as an expanded discussion on what she
averred in her Motion for Reconsideration.[52]
We note though that aside from amplifying her arguments, petitioner likewise
attached and referred to new pieces of evidence in the form of: (1) affidavit of Rudy O.
Tubiera dated September 14, 2001;[53] (2) affidavit of Liberato Cabigas;[54] (3) affidavit
of Alberto A. Millan dated July 26, 2002[55] and (4) survey plan.[56]
Section 12, Rule VIII of the 1994 DARAB New Rules of Procedures provide that
only one motion for reconsideration shall be allowed a party which shall be based on
theground that: (a) the findings of facts in the said decision, order or
resolution are not supported by substantial evidence, or (b) the conclusions
stated therein are against the law and jurisprudence. As expressed by the
Rule, the office of the Motion for Reconsideration is not for the reception of new
evidence. Hence, when Felisa submitted new pieces of evidence in her Supplemental
Motion for Reconsideration, she went beyond the stated purpose of the Motion for

Reconsideration. In which case, we rule that the new evidence presented by Felisa in
the Supplemental Motion for Reconsideration with Manifestation to the DARAB cannot
be admitted.
Petitioner has not established her claim of
sublease.

We exhaustively went over the Petition for Review and Felisas Memorandum
submitted to the CA and found the same bereft of any issue, whether of fact or law,
involving the case against Soledad. In her petition before the CA, Felisa presented the
following arguments: (1) The DARAB erred in holding that there exists no valid ground
to warrant the ejectment of Domingo and Sergio; and (2) The DARAB erred in
considering only the issue of subleasing without giving credence to the issue of nonpayment of lease rentals as ground for ejectment. Nowhere in the discussion portion
of either pleadings can the name Soledad be found. Moreover, the issue presented in
the case against Soledad is alleged subleasing and not non-payment of lease
rentals. If there is no issue presented, then there is no controversy to resolve.
Similarly, in her appeal by certiorari before this Court, Felisa did not expound
specifically on her issues with the decisions of the agencies below with respect
to Soledad.Petitioner, however, questions the CAs affirmation of the DARAB Decision
dated January 27, 2004.
We reiterate that the petitioner, as agricultural lessor, has the burden of
proof to show the existence of a lawful cause for the ejectment of an agricultural
lessee.[57] In support of her allegations, Felisa presented the Investigation Report of
MARO Legal Officer Estimada and an affidavit of a resident of the barangay where
both the original leaseholder Isabelo and the alleged sublessee, Soledad, reside. The
full text of the Investigation Report with respect to his factual findings on the case
against Soledad is as follows:
In the dispute against Soledad Agustin, the lawful tenant was Isabelo Ramirez and not
Soledad Agustin. In the conference/mediation that was conducted it was discovered that
the cultivator and possessor of the land is actually Isabelo Ramirez. This is also being
covered by an Agricultural leasehold Contract.

The findings of fact as expressed above are not relevant and material to the
question of sublease which the petitioner alleges.
On the other hand, the affidavit of Gano reads as follows:
xxxx
That I know for a fact that the above-described parcel of land was being cultivated
formerly by the late, Isabelo Ramirez, a resident of Brgy. Amistad,
Tayug, Pangasinan, Philippines;
That I also have the knowledge that prior to the death of said Isabelo Ramirez, the same
mortgaged his tenancy rights and possession to Soledad Agustin and in fact, said

Soledad Agustin is at present cultivating and in possession of the above-described

landholding;
That to the best of my knowledge, the transfer of tenancy rights and possession from
Isabelo Ramirez to Soledad Agustin by way of mortgage was made without the
knowledge and consent of the owners thereof;
That I know of the above facts because being a resident of the same barangay with the
former tenant and the present tenant of the said landholding, it is of common knowledge
in our community that Soledad Agustin is presently cultivating the same landholding and
that she acquired such tenancy rights from its former tenant by way of mortgage;
xxxx

In contrast to the Carganillo case above, the evidence presented by Felisa with
respect to Soledad is uncorroborated and unsubstantial. Hence, we rule that Felisa
has not discharged her burden of establishing her claim of sublease.
c) DARAB Case No. 7864 and d) DARAB Case No. 7865
In DARAB Case No. 7864, the first case against respondent Marcelina Solis
(Marcelina), Felisa represented that the tenant of the landholding, Pedro Solis (Pedro),
died in June 1997 and was survived by his wife, Marcelina.[58] She further alleged that
Marcelina took over the cultivation of the 14,000-square meter landholding without
her knowledge and consent.[59] In addition, during the lifetime of Pedro, the latter
failed to pay lease rentals for three consecutive years from 1995 to 1997. [60] Hence,
the case for ejectment against Marcelina.[61]
With respect to the second case (DARAB Case No. 7865), Irene Aguinaldo and
Felisa co-owned a 6,830.5-square meter landholding tenanted by Marcelina. [62] Felisa
averred that Marcelina has not fully paid the rental for the use of the land on the third
cropping season.[63] Hence, the second case for ejectment against Marcelina.[64]
Ruling of the PARAD
In her Answer, Marcelina specifically denied Felisas allegation of arrears in lease
rentals from 1995 to 1997.[65] With respect to the second complaint, she admitted that
while it is true that there were times that the subject landholding were planted
with palay on third cropping, this is not regular.[66] Moreover, she averred that if ever
the said landholding were planted with palay on third cropping and yields produce,
the landowner is given her due share.[67]
After submission of their respective position papers, the PARAD promulgated a
Decision dated April 14, 1998 dismissing both cases for lack of merit and evidence.[68]
Rulings of the DARAB and the Court of Appeals
The DARAB dismissed the appeal for lack of merit and affirmed the Decision of
the PARAD in toto.[69] On Petition for Review under Rule 43 to the CA, the appellate

court affirmed the ruling of the DARAB with respect to the issue of non-payment of
lease rentals. On which basis, the CA dismissed the petition.
Our Ruling
c) DARAB Case No. 7864 and d) DARAB Case No. 7865
DARAB Case No. 7864 should be dismissed for
failure of Felisa to properly indicate the
appealing party.

With respect to the first case against Marcelina, we resolve to dismiss the appeal
of Felisa. Section 5 of Rule 45 provides that the failure of the petitioner to comply,
among others, with the contents of the petition for review on certiorari shall be
sufficient ground for the dismissal thereof. Section 4 of the same rule mandates,
among others, that the petition should state the full name of the appealing party as
the petitioner. In this case, Felisa indicated in the caption as well as in the parties
portion of the petition that she is the landowner. Even in the verification and
certification of non-forum shopping, Felisa attested that she is the petitioner in the
instant case. However, it appears in the PARAD records that the owners of the subject
14,000-square meter agricultural land are Rosa R. Pajarito (Pajarito), Elvira A.
Madolora (Madolora) and Anastacia F. Lagado (Lagado).[70] Felisa is only the
representative of the said landowners with respect to the first case against Marcelina.
[71]
Thus, for failure of Felisa to indicate the appealing party with respect to the said
case, the appeal must perforce be dismissed. However, such failure does not affect
the appeal on the other three cases as Felisa is the owner/co-owner of the
landholdings subject of said three cases.
Procedural lapse aside, DARAB Case No. 7864
should still be dismissed for failure of Felisa to
establish her principals claim.

In her Complaint dated October 6, 1997, Felisa, in representation of landowners

Pajarito, Madolora and Lagado, alleged that Pedro failed to pay the lease rental for the
14,000-square meter land for agricultural years 1995, 1996 and 1997.
[72]
Subsequently, Pedro died and his widow, Marcelina took over the tenancy and
cultivation of the said land.[73] On the other hand, Marcelina sufficiently rebutted the
allegation of non-payment by presenting evidence to show that the landowners share
was received by therein complainants administrator, to wit:
Exhibit 1 Receipt dated March 30, 1995 issued by Irene M. Aguinaldo evidencing receipt
of their share of the produce of the subject land;
Exhibit 4 Receipt dated October 21, 1995 issued by Irene M. Aguinaldo evidencing
receipt of their share of the produce;
Exhibit 5 Receipt dated March 23, 1996 issued by Irene M. Aguinaldo evidencing receipt
of their share of the produce;
Exhibit 7 Receipt dated November 17, 1996 issued by Irene M. Aguinaldo evidencing
receipt of their share of the produce;
Exhibit 8 Receipt dated April 10, 1997 issued by Irene M. Aguinaldo evidencing receipt of
their share of the produce;

We hence agree with the PARAD that therein complainants were unable to
produce substantial proof to support their allegation of non-payment.
DARAB Case No. 7865 should likewise be
dismissed for failure of Felisa to establish her
claim.

With respect to the second case against Marcelina, Felisa alleged that the
landholding in question is principally devoted to the planting of palay three times a
year.[74]However, Marcelina did not deliver her share in the third cropping.[75]
In her Answer, Marcelina admitted that she is the tenant of the subject parcel of
land co-owned by Felisa and Irene Aguinaldo.[76] Marcelina, however, averred that
while it was true that there were times that the landholding was planted with palay on
third cropping, this was not regular.[77] She further asserted that she would give to the
landowners their due shares if ever there was third cropping.[78]
In an Order dated January 20, 1998, the PARAD directed the parties to submit
their position papers, affidavits of witnesses and other evidence to support their
respective claims.[79]
Felisa submitted her position paper[80] for the four cases subject of this Decision,
together with the Investigation Report of Estimada [81] and the affidavit of Camilo G.
Taganas.[82] The Investigation Report declared that the former tenant who was the
husband of Marcelina did not pay any rental to Felisa [83] because he recognized only
the other co-owners of the land, who among others are the sisters of Felisa. [84] In
addition, in the affidavit of Camilo G. Taganas, the authorized administrator of the
subject parcel of land, he declared that Marcelina did not deliver the share of the
landowners on the subject landholding.[85]
On the other hand, Marcelina filed her individual compliance, supported by the
following affidavits and the purposes for which they were offered:
Exhibit 1 Notice of threshing and reaping dated March 14, 1995 addressed to Mrs. Irene
Aguinaldo, administrator and landowner of the property in question.
Exhibit 2 -- Receipt dated March 30, 1995 issued by Mrs. Irene Aguinaldo acknowledging
that respondent has duly complied with her obligations for this season.
Exhibit 3 -- Notice of reaping and threshing dated Nov. 6, 1995 to the landowner.
Exhibit 4 Receipt issued to respondent by Mrs. Irene Aguinaldo dated Nov. 10,
1995 acknowledging the fact that shares due to them was duly given and
delivered.
Exhibit 5 Receipt dated March 19, 1996 duly issued by Mrs. Irene Aguinaldo, the
landowner/administrator of the subject property.
Exhibit 6 -- Notice of reaping and threshing dated March 5, 1996 to prove that
respondent has been religiously fulfilling her obligations.
Exhibit 7 -- Notice sent to Mrs. Aguinaldo dated Sept. 2, 1996 informing him that since
they unreasonably refused to receive the shares due them, it was sold and
the proceeds thereof was deposited in the bank.
Exhibit 8 -- Notice of reaping and threshing dated Nov. 7, 1996 proving that respondent
has been faithfully complying with her obligations.

Exhibit 9 -- Acknowledgment and/or receipt duly issued by the landowner/administrator,

Mrs. Irene Aguinaldo dated November 17, 1996 to prove that the
obligations of the respondent for this date has been faithfully complied with.
Exhibit 10 -- Receipt dated April 4, 1997 issued and signed by the
landowner/administrator, Mrs. Irene Aguinaldo, acknowledging the delivery
of the legal shares due them;
Exhibit 11 -- Notice of threshing and reaping dated March 26, 1997 showing that
obligations to do so was [sic]complied with.
Exhibit 12 -- Notice of reaping and threshing dated Oct. 14, 1997 to prove that
landowner of the landholding in question was duly notified.
Exhibit 13 -- Certification from the office of the BARC and issued by the BARC Chairman
himself attesting to the fact that shares due to landowners for Oct., 1997
was sold and deposited because of the unjustified refusal to receive them.
Exhibit 14 -- Receipt bearing the amount which represents the legal shares of the
landowners and deposited in the bank.
Exhibit 15 -- The name of the bank ROSBANK from which the proceeds of the sold shares
due to the landowner was deposited and it was deposited by Pedro Solis
and/or Marcelina Solis in the name of Irene Aguinaldo.
Exhibit 16 -- The passbook with account no. T-01689-5, containing the amount deposited
due to the landowners for those years stated therein.
Exhibit 17 -- Leasehold contract or Tulag ti Panagabang ti Talon, executed by and
between Irene Aguinaldo and Pedro Solis, landowner and tenant,
respectively. The purpose is to prove that tenancy relationships exists and
the same passes to respondent Marclina Solis, the surviving spouse of Pedro
Solis upon his death.
Exhibit 18 -- Investigation report conducted by the office of the BARC. The purpose of
which is to show that the then tenant and now succeeded by his wife
Marcelina Solis, has been duly complying with their obligations as bonafide
tenant thereof.
Exhibit 19 -- A sworn statement made by one Herminigildo P. Vinluan, a resident and
landowner of the lot adjacent or adjoining to the subject property, attesting
to the fact that the then tenant and now succeeded by herein respondent
never failed to comply with their obligations.
Exhibit 20 -- A sworn statement made by one Arsenio B. Orina, incumbent Brgy. Kgd. of
the barangay where the property is located attesting that respondent is
indeed the bonafide tenant of Mrs. Irene Aguinaldo.
Exhibit 21 -- Affidavit of Valentine O. Costales, the incumbent BARC Chairman of Brgy.
Amistad, Tayug, Pangasinan, proving and attesting the fact that Pedro Solis
and now succeeded by his wife Marcelina Solis is the bonafide tenant of the
subject landholding and that they are complying faithfully and religiously
with their obligations as such.
Exhibit 22 -- The sworn statement of Marcelina Solis, the respondent and successor of
the former tenant, swearing to the Hon. Board and to the public, that she
never failed or neglected any of the obligations imposed by law.

As held earlier, the petitioner, as agricultural lessor, has the burden of proof to
show the existence of a lawful cause for the ejectment of an agricultural lessee. In the
instant case, we have carefully studied the evidence presented by the petitioner and
found the same wanting on the matter of third cropping over the subject land. Other
than the bare allegations in her complaint before the PARAD, Felisa did not present
any evidence to establish her claim that the subject agricultural land can regularly
support a third cropping.Neither did she present evidence to establish that their
leasehold agreement includes a provision on third cropping. Hence, her allegation of
non-payment of the leasehold rentals for the third cropping likewise finds no support
in evidence.
In addition, we find that the evidence presented by Felisa is inconsistent on
major points. In her Complaint dated October 3, 1997, Felisa alleged that Marcelina is
not delivering the shares of the land with respect to the third cropping. [86] However,

the said statement is contradicted in the Estimada Investigation Report where it was
indicated that Marcelina is not giving any rentals/shares to Felisa.
The contention of non-payment of the leasehold shares of the landowner has
been effectively rebutted by the evidence presented by Marcelina. Through
Marcelinas evidence, we have established that she had regularly complied with the
leasehold contract, as supported by:
1. Notice of Reaping dated March 14, 1995
Receipt of Rental dated March 30, 1995 for 2nd crop 94-95
2. Notice of Reaping dated Nov. 6, 1995
Receipt of Rental dated November 10, 1995 for 1st crop 95
3. Notice of Reaping dated March 5, 1996
Receipt of Rental dated March 19, 1996 for 2nd crop 95-96
4. Notice of Reaping dated November 7, 1996
Receipt of Rental dated November 17, 1996 for 1st crop 96
5. Notice of Reaping dated March 26, 1997
Receipt of Rental dated April 5, 1997 for 2nd crop 96-97
6. Notice of Reaping dated October 14, 1997
Rental for 1st crop 1997 deposited in bank in land co-owner Irene Aguinaldos
name, as per BARC Certification dated October 27, 1997.

In addition, we have held earlier that the additional pieces of evidence Felisa
attached and referred to in her Supplemental Motion for Reconsideration with
Manifestation cannot be admitted as reception of new evidence is not within the office
of a Motion for Reconsideration.
On the basis of the evidence presented, we cannot find sufficient evidence to
support Felisas claims. Hence, we agree with the factual findings of the CA and the
agrarian tribunals that Felisa failed to discharge the burden of proving her claim with
the necessary quantum of proof.
With respect to all four cases, petitioner further alleges that (1) the Decision of
the DARAB dated January 27, 2004 and of the CA dated August 22, 2005 only
disposed of the first case; and (2) the DARAB failed to issue a consolidation order
informing the parties of the consolidation of the four appealed cases considering that
these four cases have different parties and causes of action.[87]
Article VIII, Section 14 of the Constitution states that no decision shall be
rendered by any court without expressing clearly and distinctly the facts and the law
on which it is based. Petitioner argues that the CA practically closed its eyes in
affirming the Boards Decision.[88]
We do not agree. The Decision of the CA detailed the evidence presented by the
parties. Thereafter, it weighed the respective pieces of evidence submitted by the
petitioner and the respondent and chose the one that to its mind, deserved
credence. Said Decision contained findings of facts as well as an application of case
law. The Decision states, thus:
With respect to the issue of non-payment of lease rentals, We affirm the ruling of the
DARAB as follows:

With respect to Case No. 01-1567, we find [that] the allegations of complainant
that respondents husband, Pedro Solis, deliberately failed to pay lease rentals for
the crop years 1995, 1996 and 1997 bereft of any evidence. The complainants
were unable to produce any proof to prove their accusations.
On the other hand, respondent has shown (be) substantial evidence that she or
her husband have complied with the duties of lawful tenant. The evidence
submitted by respondents (Exhibits 1 to 10) duly show that the representatives of
the complainants, Mrs. Irene R. Aguinaldo, received the landowners share for
agricultural year 1995 to 1997. This is shown specifically by Exhibits 1, 4, 5, 7 and
8. Moreover, the complainants were informed of the date of reaping and threshing
as shown by other evidence.
As to case No. 01-1568, the Board again fails to find any evidence showing that
respondent Marcelina Solis deliberately failed to deliver the produce for the third
cropping. The bare allegations of the complainant are insufficient to prove that the
said tenants have been remiss [sic] in her duties.
Respondent Marcelina Solis, on the other hand, has substantially proven by her
evidence her compliance with her obligation as a tenant. She has informed the
complainants through their administrator, Mrs. Irene Aguinaldo, the date of
threshing and reaping (Exhibits 1, 3, 6, 8, 11 and 12). She also submitted
evidence to show that the landowners share is received by complainants
administrator (Exhibit 2, 4, 5, 9 and 10). Other evidence submitted by respondent
is Exh. 7, wherein she informed Mrs. Aguinaldo that she deposited the proceeds of
the landowners share with the bank because she (Mrs. Aguinaldo) refused to
received (sic) it (Decision dated April 14, 1998, pp. 4-5, Rollo pp. 61-62).
In appeals of agrarian cases, this Court cannot make its own factual findings and
substitute the same for that of the DARAB, as the only function of this Court is to
determine whether the DARABs findings of fact are supported by substantial
evidence (Reyes vs. Reyes, 388 SCRA 471). Substantial Evidence is that amount of
relevant evidence that a reasonable mind might accept as adequate to support a
conclusion (Resngit-Marquez vs. Llamas, Jr., 385 SCRA 6). [89]

In any event, there was an earlier statement of the facts and the law involved in
the decisions rendered by the PARAD dated April 8, 1998, April 13, 1998 and April 14,
1998.In these decisions, the facts and the law on which they were based were clearly
and distinctly stated. Furthermore, in this case, the Court has exhaustively gone
through the records and made its own findings of facts, rather than further delay the
disposition of the case by remanding the records for further proceedings.
With regard to the issue of consolidation, we find in the records that although
petitioner filed separate notices of appeal for the four cases, she but filed one
consolidated Appeal Memorandum dated October 7, 1998 to the DARAB, putting into
the caption all the appealed cases.[90] She persisted in consolidating the said cases in
her Motion for Reconsideration of the DARAB Decision, Supplemental Motion for
Reconsideration with Manifestation dated March 24, 2004,[91] Petition for Review
dated December 6, 2004 to the CA,[92] Motion for Reconsideration (ad cautelam)
dated September 13 2005[93] and the Petition for Review on Certiorari dated January
20, 2006 to this Court.[94] In all of these pleadings where petitioner consolidated the
said four cases, petitioner sought the jurisdiction of this Court and the agencies below
for relief. Gainsaid on equitable ground ofestoppel, she cannot now come to this Court
assailing the consolidation of said cases, which was brought about by her own acts.

WHEREFORE, we partially GRANT the petition.

1.
In DARAB
Case
No.
7862,
we
hereby AUTHORIZE
THE
DISPOSSESSION of respondents Domingo and Sergio Carganillo from the subject
landholding.
2. In DARAB Case No. 7863, we AFFIRM the dismissal of the complaint
against respondent Soledad Agustin for failure of the petition to establish her claim.
3. In DARAB Case No. 7864, we AFFIRM the dismissal of the complaint
against respondent Marcelina Solis for failure of the petitioner to establish her claim
and to properly indicate the appealing party in violation of Section 4 in relation to
Section 5 Rule 45 of the Rules of Court.
4. In DARAB Case No. 7865, we AFFIRM the dismissal of the complaint
against respondent Marcelina Solis for failure of the petitioner to establish her
claim.
SO ORDERED.

HACIENDA LUISITA,
INCORPORATED,
Petitioner,

G.R. No. 171101

LUISITA INDUSTRIAL PARK

CORPORATION and RIZAL
COMMERCIAL BANKING
CORPORATION,
Petitioners-inIntervention,

CORONA, C.J.,
CARPIO,
VELASCO, JR.,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ,
MENDOZA,
SERENO,
REYES, and
PERLAS-BERNABE, JJ.

- versus -

Present:

PRESIDENTIAL AGRARIAN
REFORM COUNCIL;
SECRETARY NASSER
PANGANDAMAN OF THE
DEPARTMENT OF AGRARIAN
REFORM; ALYANSA NG MGA
MANGGAGAWANG BUKID NG
HACIENDA LUISITA, RENE
GALANG, NOEL MALLARI, and
JULIO SUNIGA[1] and his
SUPERVISORY GROUP OF THE Promulgated:
HACIENDA LUISITA, INC. and
WINDSOR ANDAYA,
April 24, 2012
Respondents.
x-----------------------------------------------------------------------------------------x
RESOLUTION
VELASCO, JR., J.:
Before the Court are the Motion to Clarify and Reconsider Resolution of
November 22, 2011 dated December 16, 2011 filed by petitioner Hacienda
Luisita, Inc. (HLI) and the Motion for Reconsideration/Clarification dated
December 9, 2011 filed by private respondents Noel Mallari, Julio Suniga,
Supervisory Group of Hacienda Luisita, Inc. and Windsor Andaya (collectively
referred to as Mallari, et al.).
In Our July 5, 2011 Decision[2] in the above-captioned case, this Court denied
the petition for review filed by HLI and affirmed the assailed Presidential Agrarian
Reform Council (PARC) Resolution No. 2005-32-01 dated December 22, 2005 and
PARC Resolution No. 2006-34-01 dated May 3, 2006 with the modification that
the original 6,296 qualified farmworker-beneficiaries of Hacienda Luisita (FWBs)
shall have the option to remain as stockholders of HLI.
Upon separate motions of the parties for reconsideration, the Court, by
Resolution[3] of November 22, 2011, recalled and set aside the option thus
granted to the original FWBs to remain as stockholders of HLI, while maintaining
that all the benefits and homelots received by all the FWBs shall be respected
with no obligation to refund or return them.

HLI invokes the following grounds in support of its instant Motion to Clarify
and Reconsider Resolution of November 22, 2011 dated December 16, 2011:
A
WITH DUE RESPECT, THE HONORABLE COURT ERRED IN RULING THAT IN
DETERMINING THE JUST COMPENSATION, THE DATE OF TAKING IS
NOVEMBER 21, 1989, WHEN PARC APPROVED HLIs SDP [STOCK
DISPTRIBUTION PLAN] IN VIEW OF THE FACT THAT THIS IS THE TIME
THAT THE FWBs WERE CONSIDERED TO OWN AND POSSESS THE
AGRICULTURAL LANDS IN HACIENDA LUISITA BECAUSE:
(1) THE SDP IS PRECISELY A MODALITY WHICH THE AGRARIAN LAW GIVES
THE LANDOWNER AS ALTERNATIVE TO COMPULSORY COVERAGE IN
WHICH CASE, THEREFORE, THE FWBs CANNOT BE CONSIDERED AS
OWNERS AND POSSESSORS OF THE AGRICULTURAL LANDS AT THE TIME
THE SDP WAS APPROVED BY PARC;
(2) THE APPROVAL OF THE SDP CANNOT BE AKIN TO A NOTICE OF
COVERAGE IN COMPULSORY COVERAGE OR ACQUISITION BECAUSE SDP
AND COMPULSORY COVERAGE ARE TWO DIFFERENT MODALITIES WITH
INDEPENDENT AND SEPARATE RULES AND MECHANISMS;
(3) THE NOTICE OF COVERAGE OF JANUARY 02, 2006 MAY, AT THE VERY
LEAST, BE CONSIDERED AS THE TIME WHEN THE FWBs CAN BE
CONSIDERED TO OWN AND POSSESS THE AGRICULTURAL LANDS OF
HACIENDA LUISITA BECAUSE THAT IS THE ONLY TIME WHEN HACIENDA
LUISITA WAS PLACED UNDER COMPULSORY ACQUISITION IN VIEW OF
FAILURE OF HLI TO PERFORM CERTAIN OBLIGATIONS OF THE SDP, OR
SDOA [STOCK DISTRIBUTION OPTION AGREEMENT];
(4) INDEED, THE IMMUTABLE RULE AND THE UNBENDING JURISPRUDENCE
IS THAT TAKING TAKES PLACE WHEN THE OWNER IS ACTUALLY
DEPRIVED OR DISPOSSESSED OF HIS PROPERTY;
(5) TO INSIST THAT THE TAKING IS WHEN THE SDP WAS APPROVED BY
PARC ON NOVEMBER 21, 1989 AND THAT THE SAME BE CONSIDERED AS
THE RECKONING PERIOD TO DETERMINE THE JUST COMPENSATION IS
DEPRIVATION OF LANDOWNERS PROPERTY WITHOUT DUE PROCESS OF
LAW;
(6) HLI SHOULD BE ENTITLED TO PAYMENT OF INTEREST ON THE JUST
COMPENSATION.
B
WITH DUE RESPECT, THE HONORABLE COURT ERRED WHEN IT REVERSED
ITS DECISION GIVING THE FWBs THE OPTION TO REMAIN AS HLI
STOCKHOLDERS OR NOT, BECAUSE:
(1) IT IS AN EXERCISE OF A RIGHT OF THE FWB WHICH THE HONORABLE
COURT HAS DECLARED IN ITS DECISION AND EVEN IN ITS RESOLUTION
AND THAT HAS TO BE RESPECTED AND IMPLEMENTED;
(2) NEITHER THE CONSTITUTION NOR THE CARL [COMPREHENSIVE
AGRARIAN REFORM LAW] REQUIRES THAT THE FWBs SHOULD HAVE
CONTROL OVER THE AGRICULTURAL LANDS;

(3) THE OPTION HAS NOT BEEN SHOWN TO BE DETRIMENTAL BUT

INSTEAD BENEFICIAL TO THE FWBs AS FOUND BY THE HONORABLE
COURT.
C
WITH DUE RESPECT, THE HONORABLE COURT ERRED IN RULING THAT
THE PROCEEDS FROM THE SALES OF THE 500-HECTARE CONVERTED LOT
AND THE 80.51-HECTARE SCTEX CANNOT BE RETAINED BY HLI BUT
RETURNED TO THE FWBs AS BY SUCH MANNER; HLI IS USING THE
CORPORATION CODE TO AVOID ITS LIABILITY TO THE FWBs FOR THE
PRICE IT RECEIVED FROM THE SALES, BECAUSE:
(1) THE PROCEEDS OF THE SALES BELONG TO THE CORPORATION AND
NOT TO EITHER HLI/TADECO OR THE FWBs, BOTH OF WHICH ARE
STOCKHOLDERS ENTITLED TO THE EARNINGS OF THE CORPORATION AND
TO THE NET ASSETS UPON LIQUIDATION;
(2) TO ALLOW THE RETURN OF THE PROCEEDS OF THE SALES TO FWBs IS
TO IMPOSE ALL LIABILITIES OF THE CORPORATION ON HLI/TADECO WHICH
IS UNFAIR AND VIOLATIVE OF THE CORPORATION CODE.

Mallari, et al. similarly put forth the following issues in its Motion for
Reconsideration/Clarification dated December 9, 2011:
I
REPUBLIC ACT NO. 6657 [RA 6657] OR THE COMPREHENSIVE AGRARIAN
REFORM LAW [CARL] DOES NOT PROVIDE THAT THE FWBs WHO OPT FOR
STOCK DISTRIBUTION OPTION SHOULD RETAIN MAJORITY SHAREHOLDING
OF THE COMPANY TO WHICH THE AGRICULTURAL LAND WAS GIVEN.
II
IF THE NOVEMBER 22, 2011 DECISION OF THIS HONORABLE COURT
ORDERING LAND DISTRIBUTION WOULD BE FOLLOWED, THIS WOULD
CAUSE MORE HARM THAN GOOD TO THE LIVES OF THOSE PEOPLE LIVING
IN THE HACIENDA, AND MORE PARTICULARLY TO THE WELFARE OF THE
FWBs.
III
ON THE CONCLUSION BY THIS HONORABLE COURT THAT THE OPERATIVE
FACT DOCTRINE IS APPLICABLE TO THE CASE AT BAR, THEN FWBs WHO
MERELY RELIED ON THE PARC APPROVAL SHOULD NOT BE PREJUDICED BY
ITS SUBSEQUENT NULLIFICATION.
IV
THOSE WHO CHOOSE LAND SHOULD RETURN WHATEVER THEY GOT
FROM THE SDOA [STOCK DISTRIBUTION OPTION AGREEMENT] AND TURN
OVER THE SAME TO HLI FOR USE IN THE OPERATIONS OF THE COMPANY,
WHICH IN TURN WILL REDOUND TO THE BENEFIT OF THOSE WHO WILL
OPT TO STAY WITH THE SDO.
V
FOR THOSE WHO CHOOSE LAND, THE TIME OF TAKING FOR PURPOSES OF
JUST COMPENSATION SHOULD BE AT THE TIME HLI WAS DISPOSSESSED
OF CONTROL OVER THE PROPERTY, AND THAT PAYMENT BY [THE
GOVERNMENT] OF THE LAND SHOULD BE TURNED OVER TO HLI FOR THE
BENEFIT AND USE OF THE COMPANYS OPERATIONS THAT WILL, IN TURN,

REDOUND TO THE BENEFIT OF FWBs WHO WILL OPT TO STAY WITH THE
COMPANY.

Basically, the issues raised by HLI and Mallari, et al. boil down to the
following: (1) determination of the date of taking; (2) propriety of the
revocation of the option on the part of the original FWBs to remain as
stockholders of HLI; (3) propriety of distributing to the qualified FWBs the
proceeds from the sale of the converted land and of the 80.51-hectare SubicClark-Tarlac Expressway (SCTEX ) land; and (4) just compensation for the
homelots given to the FWBs.
Payment of just compensation
HLI contends that since the SDP is a modality which the agrarian reform law
gives the landowner as alternative to compulsory coverage, then the FWBs
cannot be considered as owners and possessors of the agricultural lands of
Hacienda Luisita at the time the SDP was approved by PARC. [4] It further claims
that the approval of the SDP is not akin to a Notice of Coverage in compulsory
coverage situations because stock distribution option and compulsory acquisition
are two (2) different modalities with independent and separate rules and
mechanisms. Concomitantly, HLI maintains that the Notice of Coverage issued
on January 2, 2006 may, at the very least, be considered as the date of taking
as this was the only time that the agricultural lands of Hacienda Luisita were
placed under compulsory acquisition in view of its failure to perform certain
obligations under the SDP.[5]
Mallari, et al. are of a similar view. They contend that Tarlac Development
Corporation (Tadeco), having as it were majority control over HLI, was never
deprived of the use and benefit of the agricultural lands of Hacienda Luisita.
Upon this premise, Mallari, et al. claim the date of taking could not be at the
time of the approval of the SDP.[6]
A view has also been advanced that the date of the taking should be left
to the determination of the Department of Agrarian Reform (DAR) in conjunction
with its authority to preliminarily determine the just compensation for the land
made subject of CARP.
Alyansa ng mga Manggagawang Bukid sa Hacienda Luisita (AMBALA), in
its Comment/Opposition (to the Motion to Clarify and Reconsider Resolution of
November 22, 2011) dated January 30, 2012, on the other hand, alleges that HLI
should not be paid just compensation altogether. [7] It argues that when the Court
of Appeals (CA) dismissed the case [8] the government of then President Ferdinand
E. Marcos initially instituted and won against Tadeco, the CA allegedly imposed as
a condition for its dismissal of the action that should the stock distribution
program fail, the lands should be distributed to the FWBs, with Tadeco receiving
by way of compensation only the amount of PhP 3,988,000. [9]
AMBALA further contends that if HLI or Tadeco is, at all, entitled to just
compensation, the taking should be reckoned as of November 21, 1989, the
date when the SDP was approved, and the amount of compensation should be
PhP 40,000 per hectare as this was the same value declared in 1989 by Tadeco to
ensure that the FWBs will not control the majority stockholdings in HLI. [10]

At the outset, it should be noted that Section 2, Rule 52 of the Rules of

Court states, No second motion for reconsideration of a judgment or final
resolution by the same party shall be entertained. A second motion for
reconsideration, as a rule, is prohibited for being a mere reiteration of the issues
assigned and the arguments raised by the parties. [11]
In the instant case, the issue on just compensation and the grounds HLI and
Mallari, et al. rely upon in support of their respective stance on the matter had
been previously raised by them in their first motion for reconsideration and fully
passed upon by the Court in its November 22, 2011 Resolution. The similarities in
the issues then and now presented and the grounds invoked are at once easily
discernible from a perusal of the November 22, 2011 Resolution, the pertinent
portions of which read:
In Our July 5, 2011 Decision, We stated that HLI shall be paid just
compensation for the remaining agricultural land that will be transferred
to DAR for land distribution to the FWBs. We also ruled that the date of
the taking is November 21, 1989, when PARC approved HLIs SDP per
PARC Resolution No. 89-12-2.
In its Motion for Clarification and Partial Reconsideration, HLI
disagrees with the foregoing ruling and contends that the taking
should be reckoned from finality of the Decision of this Court, or at the
very least, the reckoning period may be tacked to January 2, 2006, the
date when the Notice of Coverage was issued by the DAR pursuant to
PARC Resolution No. 2006-34-01 recalling/revoking the approval of the
SDP.
For their part, Mallari, et al. argue that the valuation of the land
cannot be based on November 21, 1989, the date of approval of the SDP.
Instead, they aver that the date of taking for valuation purposes is a
factual issue best left to the determination of the trial courts.
At the other end of the spectrum, AMBALA alleges that HLI should no
longer be paid just compensation for the agricultural land that will be
distributed to the FWBs, since the Manila Regional Trial Court (RTC)
already rendered a decision ordering the Cojuangcos to transfer the
control of Hacienda Luisita to the Ministry of Agrarian Reform, which will
distribute the land to small farmers after compensating the landowners
P3.988 million. In the event, however, that this Court will rule that HLI is
indeed entitled to compensation, AMBALA contends that it should be
pegged at forty thousand pesos (PhP 40,000) per hectare, since this was
the same value that Tadeco declared in 1989 to make sure that the
farmers will not own the majority of its stocks.
Despite the above propositions, We maintain that the date of
taking is November 21, 1989, the date when PARC approved HLIs
SDP per PARC Resolution No. 89-12-2, in view of the fact that this is the
time that the FWBs were considered to own and possess the agricultural
lands in Hacienda Luisita. To be precise, these lands became subject of
the agrarian reform coverage through the stock distribution scheme only
upon the approval of the SDP, that is, November 21, 1989. Thus, such
approval is akin to a notice of coverage ordinarily issued under
compulsory acquisition. Further, any doubt should be resolved in favor of
the FWBs. As this Court held in Perez-Rosario v. CA:
It is an established social and economic fact that the escalation
of poverty is the driving force behind the political disturbances that

have in the past compromised the peace and security of the people
as well as the continuity of the national order. To subdue these acute
disturbances, the legislature over the course of the history of the
nation passed a series of laws calculated to accelerate agrarian
reform, ultimately to raise the material standards of living and
eliminate discontent. Agrarian reform is a perceived solution to
social instability. The edicts of social justice found in the Constitution
and the public policies that underwrite them, the extraordinary
national experience, and the prevailing national consciousness, all
command the great departments of government to tilt the balance
in favor of the poor and underprivileged whenever reasonable doubt
arises in the interpretation of the law. But annexed to the great and
sacred charge of protecting the weak is the diametric function to put
every effort to arrive at an equitable solution for all parties
concerned: the jural postulates of social justice cannot shield illegal
acts, nor do they sanction false sympathy towards a certain class,
nor yet should they deny justice to the landowner whenever truth
and justice happen to be on her side. In the occupation of the legal
questions in all agrarian disputes whose outcomes can significantly
affect societal harmony, the considerations of social advantage must
be weighed, an inquiry into the prevailing social interests is
necessary in the adjustment of conflicting demands and
expectations of the people, and the social interdependence of these
interests, recognized. (Emphasis and citations omitted.)

Considering that the issue on just compensation has already been passed
upon and denied by the Court in its November 22, 2011 Resolution, a subsequent
motion touching on the same issue undeniably partakes of a second motion for
reconsideration, hence, a prohibited pleading, and as such, the motion or plea
must be denied. Sec. 3 of Rule 15 of the Internal Rules of the Supreme Court is
clear:
SEC. 3. Second motion for reconsideration. The Court shall not
entertain a second motion for reconsideration, and any exception to this
rule can only be granted in the higher interest of justice by the Court en
banc upon a vote of at least two-thirds of its actual membership. There is
reconsideration in the higher interest of justice when the assailed
decision is not only legally erroneous, but is likewise patently unjust and
potentially capable of causing unwarranted and irremediable injury or
damage to the parties. A second motion for reconsideration can only be
entertained before the ruling sought to be reconsidered becomes final by
operation of law or by the Courts declaration.
In the Division, a vote of three Members shall be required to elevate
a second motion for reconsideration to the Court En Banc.

Nonetheless, even if we entertain said motion and examine the arguments

raised by HLI and Mallari, et al. one last time, the result will be the same.
Sec. 4, Article XIII of the 1987 Constitution expressly provides that the
taking of land for use in the agrarian reform program of the government is
conditioned on the payment of just compensation. As stated:
Section 4.
The State shall, by law, undertake an agrarian reform
program founded on the right of farmers and regular farm workers, who
are landless, to own directly or collectively the lands they till or, in the

case of other farm workers, to receive a just share of the fruits thereof. To
this end, the State shall encourage and undertake the just distribution of
all agricultural lands, subject to such priorities and reasonable retention
limits as the Congress may prescribe, taking into account ecological,
developmental, or equity considerations, and subject to the payment
of just compensation. (Emphasis supplied.)

Just compensation has been defined as the full and fair equivalent of the
property taken from its owner by the expropriator. [12] The measure is not the
takers gain, but the owners loss. [13] In determining just compensation, the
price or value of the property at the time it was taken from the owner and
appropriated by the government shall be the basis. If the government takes
possession of the land before the institution of expropriation proceedings, the
value should be fixed as of the time of the taking of said possession, not of the
filing of the complaint.[14]
In Land Bank of the Philippines v. Livioco, the Court held that the time of
taking is the time when the landowner was deprived of the use and benefit of
his property, such as when title is transferred to the Republic. [15] It should be
noted, however, that taking does not only take place upon the issuance of title
either in the name of the Republic or the beneficiaries of the Comprehensive
Agrarian Reform Program (CARP). Taking also occurs when agricultural lands
are voluntarily offered by a landowner and approved by PARC for CARP coverage
through the stock distribution scheme, as in the instant case. Thus, HLIs
submitting its SDP for approval is an acknowledgment on its part that the
agricultural lands of Hacienda Luisita are covered by CARP. However, it was the
PARC approval which should be considered as the effective date of taking as it
was only during this time that the government officially confirmed the CARP
coverage of these lands.
Indeed, stock distribution option and compulsory land acquisition are two
(2) different modalities under the agrarian reform program. Nonetheless, both
share the same end goal, that is, to have a more equitable distribution and
ownership of land, with due regard to the rights of landowners to just
compensation.[16]
The fact that Sec. 31 of Republic Act No. 6657 (RA 6657) gives corporate
landowners the option to give qualified beneficiaries the right to avail of a stock
distribution or, in the phraseology of the law, the right to purchase such
proportion of the capital stock of the corporation that the agricultural land,
actually devoted to agricultural activities, bears in relation to the companys
total assets, does not detract from the avowed policy of the agrarian reform law
of equitably distributing ownership of land. The difference lies in the fact that
instead of actually distributing the agricultural lands to the farmer-beneficiaries,
these lands are held by the corporation as part of the capital contribution of the
farmer-beneficiaries, not of the landowners, under the stock distribution scheme.
The end goal of equitably distributing ownership of land is, therefore, undeniable.
And since it is only upon the approval of the SDP that the agricultural lands
actually came under CARP coverage, such approval operates and takes the place
of a notice of coverage ordinarily issued under compulsory acquisition.

Moreover, precisely because due regard is given to the rights of landowners

to just compensation, the law on stock distribution option acknowledges that
landowners can require payment for the shares of stock corresponding to the
value of the agricultural lands in relation to the outstanding capital stock of the
corporation.
Although Tadeco did not require compensation for the shares of stock
corresponding to the value of the agricultural lands in relation to the outstanding
capital stock of HLI, its inability to receive compensation cannot be attributed to
the government. The second paragraph of Sec. 31 of RA 6657 explicitly states
that [u]pon certification by DAR, corporations owning agricultural lands may
give their qualified beneficiaries the right to purchase such proportion of the
capital stock of the corporation that the agricultural land, actually devoted to
agricultural activities, bears in relation to the companys total assets, under
such terms and conditions as may be agreed upon by them. x x x [17] On the
basis of this statutory provision, Tadeco could have exacted payment for such
shares of stock corresponding to the value of the agricultural lands of Hacienda
Luisita in relation to the outstanding capital stock of HLI, but it did not do so.
What is notable, however, is that the divestment by Tadeco of the
agricultural lands of Hacienda Luisita and the giving of the shares of stock for
free is nothing but an enticement or incentive for the FWBs to agree with the
stock distribution option scheme and not further push for land distribution. And
the stubborn fact is that the man days scheme of HLI impelled the FWBs to
work in the hacienda in exchange for such shares of stock.
Notwithstanding the foregoing considerations, the suggestion that there is
taking only when the landowner is deprived of the use and benefit of his
property is not incompatible with Our conclusion that taking took place on
November 21, 1989. As mentioned in Our July 5, 2011 Decision, even from the
start, the stock distribution scheme appeared to be Tadecos preferred option in
complying with the CARP when it organized HLI as its spin-off corporation in order
to facilitate stock acquisition by the FWBs. For this purpose, Tadeco assigned and
conveyed to HLI the agricultural lands of Hacienda Luisita, set at 4,915.75
hectares, among others. These agricultural lands constituted as the capital
contribution of the FWBs in HLI. In effect, Tadeco deprived itself of the ownership
over these lands when it transferred the same to HLI.
While it is true that Tadeco has majority control over HLI, the Court cannot
subscribe to the view Mallari, et al. espouse that, on the basis of such majority
stockholding, Tadeco was never deprived of the use and benefit of the
agricultural lands of Hacienda Luisita it divested itself in favor of HLI.
It bears stressing that [o]wnership is defined as a relation in law by virtue
of which a thing pertaining to one person is completely subjected to his will in
everything not prohibited by law or the concurrence with the rights of
another.[18] The attributes of ownership are: jus utendi or the right to possess
and enjoy, jus fruendi or the right to the fruits, jus abutendi or the right to abuse
or consume, jus disponendi or the right to dispose or alienate, and jus
vindicandi or the right to recover or vindicate.[19]
When the agricultural lands of Hacienda Luisita were transferred by Tadeco
to HLI in order to comply with CARP through the stock distribution option scheme,

sealed with the imprimatur of PARC under PARC Resolution No. 89-12-2 dated
November 21, 1989, Tadeco was consequently dispossessed of the aforementioned attributes of ownership. Notably, Tadeco and HLI are two different
entities with separate and distinct legal personalities. Ownership by one cannot
be considered as ownership by the other.
Corollarily, it is the official act by the government, that is, the PARCs
approval of the SDP, which should be considered as the reckoning point for the
taking of the agricultural lands of Hacienda Luisita. Although the transfer of
ownership over the agricultural lands was made prior to the SDPs approval, it is
this Courts consistent view that these lands officially became subject of the
agrarian reform coverage through the stock distribution scheme only upon the
approval of the SDP. And as We have mentioned in Our November 22, 2011
Resolution, such approval is akin to a notice of coverage ordinarily issued under
compulsory acquisition.
Further, if We adhere to HLIs view that the Notice of Coverage issued on
January 2, 2006 should, at the very least, be considered as the date of taking
as this was the only time that the agricultural portion of the hacienda was placed
under compulsory acquisition in view of HLIs failure to perform certain
obligations under the SDP, this Court would, in effect, be penalizing the qualified
FWBs twice for acceding to the adoption of the stock distribution scheme: first,
by depriving the qualified FWBs of the agricultural lands that they should have
gotten early on were it not for the adoption of the stock distribution scheme of
which they only became minority stockholders; and second, by making them pay
higher amortizations for the agricultural lands that should have been given to
them decades ago at a much lower cost were it not for the landowners initiative
of adopting the stock distribution scheme for free.
Reiterating what We already mentioned in Our November 22, 2011
Resolution, [e]ven if it is the government which will pay the just compensation
to HLI, this will also affect the FWBs as they will be paying higher amortizations
to the government if the taking will be considered to have taken place only on
January 2, 2006. As aptly observed by Justice Leonardo-De Castro in her
Concurring Opinion, this will put the land beyond the capacity of the [FWBs] to
pay, which this Court should not countenance.
Considering the above findings, it cannot be gainsaid that effective
taking took place in the case at bar upon the approval of the SDP, that is, on
November 21, 1989.
HLI postulates that just compensation is a question of fact that should be
left to the determination by the DAR, Land Bank of the Philippines (LBP) or even
the special agrarian court (SAC). [20] As a matter of fact, the Court, in its
November 22, 2011 Resolution, dispositively ordered the DAR and the LBP to
determine the compensation due to HLI. And as indicated in the body of said
Resolution:
The foregoing notwithstanding, it bears stressing that the DARs
land valuation is only preliminary and is not, by any means, final and
conclusive upon the landowner. The landowner can file an original action
with the RTC acting as a special agrarian court to determine just

compensation. The court has the right to review with finality the
determination in the exercise of what is admittedly a judicial function.

As regards the issue on when taking occurred with respect to the

agricultural lands in question, We, however, maintain that this Court can rule, as
it has in fact already ruled on its reckoning date, that is, November 21, 1989, the
date of issuance of PARC Resolution No. 89-12-2, based on the above-mentioned
disquisitions. The investment on SACs of original and exclusive jurisdiction over
all petitions for the determination of just compensation to landowners [21] will not
preclude the Court from ruling upon a matter that may already be resolved based
on the records before Us. By analogy, Our ruling in Heirs of Dr. Jose Deleste v.
LBP is applicable:
Indeed, it is the Office of the DAR Secretary which is vested with the
primary and exclusive jurisdiction over all matters involving the
implementation of the agrarian reform program. However, this will not
prevent the Court from assuming jurisdiction over the petition
considering that the issues raised in it may already be resolved
on the basis of the records before Us. Besides, to allow the
matter to remain with the Office of the DAR Secretary would only
cause unnecessary delay and undue hardship on the
parties. Applicable, by analogy, is Our ruling in the recent Bagong
Pagkakaisa ng Manggagawa ng Triumph International v. Department of
Labor and Employment Secretary, where We held:
But as the CA did, we similarly recognize that undue hardship,
to the point of injustice, would result if a remand would be ordered
under a situation where we are in the position to resolve the case
based on the records before us. As we said in Roman Catholic
Archbishop of Manila v. Court of Appeals:
[w]e have laid down the rule that the remand of the case to the
lower court for further reception of evidence is not necessary where
the Court is in a position to resolve the dispute based on the records
before it. On many occasions, the Court, in the public interest and
for the expeditious administration of justice, has resolved actions on
the merits instead of remanding them to the trial court for further
proceedings, such as where the ends of justice, would not be
subserved by the remand of the case. [22](Emphasis supplied;
citations omitted.)

Even though the compensation due to HLI will still be preliminarily

determined by DAR and LBP, subject to review by the RTC acting as a SAC, the
fact that the reckoning point of taking is already fixed at a certain date should
already hasten the proceedings and not further cause undue hardship on the
parties, especially the qualified FWBs.
By a vote of 8-6, the Court affirmed its ruling that the date of taking in
determining just compensation is November 21, 1989 when PARC approved
HLIs stock option plan.
As regards the issue of interest on just compensation, We also leave this
matter to the DAR and the LBP, subject to review by the RTC acting as a SAC.
Option will not ensure

control over agricultural lands

In Our November 22, 2011 Resolution, this Court held:
After having discussed and considered the different contentions
raised by the parties in their respective motions, We are now left to
contend with one crucial issue in the case at bar, that is, control over the
agricultural lands by the qualified FWBs.
Upon a review of the facts and circumstances, We realize that the
FWBs will never have control over these agricultural lands for as long as
they remain as stockholders of HLI. In Our July 5, 2011 Decision, this
Court made the following observations:
There is, thus, nothing unconstitutional in the formula
prescribed by RA 6657. The policy on agrarian reform is that
control over the agricultural land must always be in the
hands of the farmers. Then it falls on the shoulders of DAR and
PARC to see to it the farmers should always own majority of the
common shares entitled to elect the members of the board of
directors to ensure that the farmers will have a clear majority in the
board. Before the SDP is approved, strict scrutiny of the proposed
SDP must always be undertaken by the DAR and PARC, such that the
value of the agricultural land contributed to the corporation must
always be more than 50% of the total assets of the corporation to
ensure that the majority of the members of the board of directors
are composed of the farmers. The PARC composed of the President
of thePhilippines and cabinet secretaries must see to it that control
over the board of directors rests with the farmers by rejecting the
inclusion of non-agricultural assets which will yield the majority in
the board of directors to non-farmers. Any deviation, however, by
PARC or DAR from the correct application of the formula prescribed
by the second paragraph of Sec. 31 of RA 6675 does not make said
provision constitutionally infirm. Rather, it is the application of said
provision that can be challenged. Ergo, Sec. 31 of RA 6657 does not
trench on the constitutional policy of ensuring control by the
farmers.
In line with Our finding that control over agricultural lands must
always be in the hands of the farmers, We reconsider our ruling that the
qualified FWBs should be given an option to remain as stockholders of
HLI, inasmuch as these qualified FWBs will never gain control given the
present proportion of shareholdings in HLI.
A revisit of HLIs Proposal for Stock Distribution under CARP and the
Stock Distribution Option Agreement (SDOA) upon which the proposal was
based reveals that the total assets of HLI is PhP 590,554,220, while the
value of the 4,915.7466 hectares is PhP 196,630,000. Consequently, the
share of the farmer-beneficiaries in the HLI capital stock is 33.296%
(196,630,000 divided by 590,554.220); 118,391,976.85 HLI shares
represent 33.296%. Thus, even if all the holders of the 118,391,976.85
HLI shares unanimously vote to remain as HLI stockholders, which is
unlikely, control will never be placed in the hands of the farmerbeneficiaries. Control, of course, means the majority of 50% plus at least
one share of the common shares and other voting shares. Applying the
formula to the HLI stockholdings, the number of shares that will constitute
the majority is 295,112,101 shares (590,554,220 divided by 2 plus one
[1] HLI share). The 118,391,976.85 shares subject to the SDP approved
by PARC substantially fall short of the 295,112,101 shares needed by the
FWBs to acquire control over HLI. Hence, control can NEVER be attained

by the FWBs. There is even no assurance that 100% of the

118,391,976.85 shares issued to the FWBs will all be voted in favor of
staying in HLI, taking into account the previous referendum among the
farmers where said shares were not voted unanimously in favor of
retaining the SDP. In light of the foregoing consideration, the option to
remain in HLI granted to the individual FWBs will have to be recalled and
revoked.
Moreover, bearing in mind that with the revocation of the approval
of the SDP, HLI will no longer be operating under SDP and will only be
treated as an ordinary private corporation; the FWBs who remain as
stockholders of HLI will be treated as ordinary stockholders and will no
longer be under the protective mantle of RA 6657. (Emphasis in the
original.)

HLI, however, takes exception to the above-mentioned ruling and contends

that [t]here is nothing in the Constitution nor in the agrarian laws which require
that control over the agricultural lands must always be in the hands of the
farmers.[23] Moreover, both HLI and Mallari, et al. claim that the option given to
the qualified FWBs to remain as stockholders of HLI is neither iniquitous nor
prejudicial to the FWBs.[24]
The Court agrees that the option given to the qualified FWBs whether to
remain as stockholders of HLI or opt for land distribution is neither iniquitous nor
prejudicial to the FWBs. Nonetheless, the Court is not unmindful of the policy on
agrarian reform that control over the agricultural land must always be in the
hands of the farmers. Contrary to the stance of HLI, both the Constitution and RA
6657 intended the farmers, individually or collectively, to have control over the
agricultural lands of HLI; otherwise, all these rhetoric about agrarian reform will
be rendered for naught. Sec. 4, Art. XIII of the 1987 Constitution provides:
Section 4. The State shall, by law, undertake an agrarian reform
program founded on the right of farmers and regular farmworkers
who are landless, to own directly or collectively the lands they
till or, in the case of other farmworkers, to receive a just share of the
fruits thereof. To this end, the State shall encourage and undertake the
just distribution of all agricultural lands, subject to such priorities and
reasonable retention limits as the Congress may prescribe, taking into
account ecological, developmental, or equity considerations, and subject
to the payment of just compensation. In determining retention limits, the
State shall respect the right of small landowners. The State shall further
provide incentives for voluntary land-sharing. (Emphasis supplied.)

Pursuant to and as a mechanism to carry out the above-mentioned

constitutional directive, RA 6657 was enacted. In consonance with the
constitutional policy on agrarian reform, Sec. 2 of RA 6657 also states:
SECTION 2. Declaration of Principles and Policies. - It is the policy of
the State to pursue a Comprehensive Agrarian Reform Program (CARP).
The welfare of the landless farmers and farm workers will receive the
highest consideration to promote social justice and to move the nation
towards sound rural development and industrialization, and the
establishment of owner cultivatorship of economic-sized farms as the
basis of Philippine agriculture.

To this end, a more equitable distribution and ownership of land,

with due regard to the rights of landowners to just compensation and to
the ecological needs of the nation, shall be undertaken to provide farmers
and farm workers with the opportunity to enhance their dignity and
improve the quality of their lives through greater productivity of
agricultural lands.
The agrarian reform program is founded on the right of
farmers and regular farm workers, who are landless, to own
directly or collectively the lands they till or, in the case of other
farm workers, to receive a share of the fruits thereof. To this end,
the State shall encourage the just distribution of all agricultural lands,
subject to the priorities and retention limits set forth in this Act, having
taken into account ecological, developmental, and equity considerations,
and subject to the payment of just compensation. The State shall respect
the right of small landowners and shall provide incentives for voluntary
land-sharing.
The State shall recognize the right of farmers, farm workers and
landowners, as well as cooperatives and other independent farmers
organization, to participate in the planning, organization, and
management of the program, and shall provide support to agriculture
through appropriate technology and research, and adequate financial,
production, marketing and other support services.
The State shall apply the principles of agrarian reform or
stewardship, whenever applicable, in accordance with law, in the
disposition or utilization of other natural resources, including lands of the
public domain, under lease or concession, suitable to agriculture, subject
to prior rights, homestead rights of small settlers and the rights of
indigenous communities to their ancestral lands.
The State may resettle landless farmers and farm workers in its own
agricultural estates, which shall be distributed to them in the manner
provided by law.
By means of appropriate incentives, the State shall encourage the
formation and maintenance of economic-sized family farms to be
constituted by individual beneficiaries and small landowners.
The State shall protect the rights of subsistence fishermen,
especially of local communities, to the preferential use of communal
marine and fishing resources, both inland and offshore. It shall provide
support to such fishermen through appropriate technology and research,
adequate financial, production and marketing assistance and other
services, The State shall also protect, develop and conserve such
resources. The protection shall extend to offshore fishing grounds of
subsistence fishermen against foreign intrusion. Fishworkers shall receive
a just share from their labor in the utilization of marine and fishing
resources.
The State shall be guided by the principles that land has a social
function and land ownership has a social responsibility. Owners of
agricultural land have the obligation to cultivate directly or through labor
administration the lands they own and thereby make the land productive.
The State shall provide incentives to landowners to invest the
proceeds of the agrarian reform program to promote industrialization,
employment and privatization of public sector enterprises. Financial

instruments used as payment for lands shall contain features that shall
enhance negotiability and acceptability in the marketplace.
The State may lease undeveloped lands of the public domain to
qualified entities for the development of capital-intensive farms,
traditional and pioneering crops especially those for exports subject to
the prior rights of the beneficiaries under this Act. (Emphasis supplied.)

Based on the above-quoted provisions, the notion of farmers and regular

farmworkers having the right to own directly or collectively the lands they till is
abundantly clear. We have extensively discussed this ideal in Our July 5, 2011
Decision:
The wording of the provision is unequivocal the farmers and
regular farmworkers have a right TO OWN DIRECTLY OR COLLECTIVELY
THE LANDS THEY TILL. The basic law allows two (2) modes of land
distributiondirect and indirect ownership. Direct transfer to individual
farmers is the most commonly used method by DAR and widely
accepted. Indirect transfer through collective ownership of the
agricultural land is the alternative to direct ownership of agricultural land
by individual farmers. The aforequoted Sec. 4 EXPRESSLY authorizes
collective ownership by farmers. No language can be found in the 1987
Constitution that disqualifies or prohibits corporations or cooperatives of
farmers from being the legal entity through which collective ownership
can be exercised. The word collective is defined as indicating a
number of persons or things considered as constituting one group or
aggregate, while collectively is defined as in a collective sense or
manner; in a mass or body. By using the word collectively, the
Constitution allows for indirect ownership of land and not just outright
agricultural land transfer. This is in recognition of the fact that land
reform may become successful even if it is done through the medium of
juridical entities composed of farmers.
Collective ownership is permitted in two (2) provisions of RA 6657.
Its Sec. 29 allows workers cooperatives or associations to collectively
own the land, while the second paragraph of Sec. 31 allows corporations
or associations to own agricultural land with the farmers becoming
stockholders or members. Said provisions read:
SEC. 29. Farms owned or operated by corporations or other
business associations.In the case of farms owned or operated by
corporations or other business associations, the following rules shall
be observed by the PARC.
In general, lands shall be distributed directly to the individual
worker-beneficiaries.
In case it is not economically feasible and sound to divide the
land, then it shall be owned collectively by the worker
beneficiaries who shall form a workers cooperative or
association which will deal with the corporation or business
association. x x x
SEC. 31. Corporate Landowners. x x x
xxxx

Upon certification by the DAR, corporations owning agricultural

lands may give their qualified beneficiaries the right to purchase
such proportion of the capital stock of the corporation that the
agricultural land, actually devoted to agricultural activities, bears in
relation to the companys total assets, under such terms and
conditions as may be agreed upon by them. In no case shall the
compensation received by the workers at the time the shares of
stocks are distributed be reduced. The same principle shall be
applied to associations, with respect to their equity or
participation. x x x
Clearly, workers cooperatives or associations under Sec. 29 of RA
6657 and corporations or associations under the succeeding Sec. 31, as
differentiated from individual farmers, are authorized vehicles for the
collective ownership of agricultural land. Cooperatives can be registered
with the Cooperative Development Authority and acquire legal personality
of their own, while corporations are juridical persons under the
Corporation Code. Thus, Sec. 31 is constitutional as it simply implements
Sec. 4 of Art. XIII of the Constitution that land can be owned
COLLECTIVELY by farmers. Even the framers of the l987 Constitution are
in unison with respect to the two (2) modes of ownership of agricultural
lands tilled by farmersDIRECT and COLLECTIVE, thus:
MR. NOLLEDO. And when we talk of the phrase to own directly,
we mean the principle of direct ownership by the tiller?
MR. MONSOD. Yes.
MR. NOLLEDO. And when we talk of collectively, we mean
communal ownership, stewardship or State ownership?
MS. NIEVA. In this section, we conceive of cooperatives; that is
farmers cooperatives owning the land, not the State.
MR. NOLLEDO. And when we talk of collectively, referring to
farmers cooperatives, do the farmers own specific areas of land
where they only unite in their efforts?
MS. NIEVA. That is one way.
MR. NOLLEDO. Because I understand that there are two basic
systems involved: the moshave type of agriculture and the
kibbutz. So are both contemplated in the report?
MR.
TADEO. Ang
dalawa
kasing
pamamaraan
ng
pagpapatupad ng tunay na reporma sa lupa ay ang
pagmamay-ari ng lupa na hahatiin sa individual na
pagmamay-ari directly at ang tinatawag na samasamang gagawin ng mga magbubukid. Tulad sa Negros, ang
gusto ng mga magbubukid ay gawin nila itong cooperative or
collective farm. Ang ibig sabihin ay sama-sama nilang sasakahin.
xxxx
MR. TINGSON. x x x When we speak here of to own directly or
collectively the lands they till, is this land for the tillers rather than
land for the landless? Before, we used to hear land for the
landless, but now the slogan is land for the tillers. Is that right?
MR. TADEO. Ang prinsipyong umiiral dito ay iyong land for the
tillers. Ang ibig sabihin ng directly ay tulad sa

implementasyon sa rice and corn lands kung saan

ng mga magsasaka ang lupang binubungkal nila.
sabihin naman ng collectively ay sama-samang
sa isang lupain o isang bukid, katulad ng sitwasyon sa

inaari na
Ang ibig
paggawa
Negros.

As Commissioner Tadeo explained, the farmers will work on the

agricultural land sama-sama or collectively. Thus, the main requisite
for collective ownership of land is collective or group work by farmers of
the agricultural land. Irrespective of whether the landowner is a
cooperative, association or corporation composed of farmers, as long as
concerted group work by the farmers on the land is present, then it falls
within the ambit of collective ownership scheme. (Emphasis in the
original; underscoring supplied.)

As aforequoted, there is collective ownership as long as there is a concerted

group work by the farmers on the land, regardless of whether the landowner is a
cooperative, association or corporation composed of farmers. However, this
definition of collective ownership should be read in light of the clear policy of the
law on agrarian reform, which is to emancipate the tiller from the bondage of the
soil and empower the common people. Worth noting too is its noble goal of
rectifying the acute imbalance in the distribution of this precious resource
among our people.[25] Accordingly, HLIs insistent view that control need not be
in the hands of the farmers translates to allowing it to run roughshod against the
very reason for the enactment of agrarian reform laws and leave the farmers in
their shackles with sheer lip service to look forward to.
Notably, it has been this Courts consistent stand that control over the
agricultural land must always be in the hands of the farmers. As We wrote in Our
July 5, 2011 Decision:
There is, thus, nothing unconstitutional in the formula prescribed by
RA 6657. The policy on agrarian reform is that control over the
agricultural land must always be in the hands of the
farmers. Then it falls on the shoulders of DAR and PARC to see to it the
farmers should always own majority of the common shares entitled to
elect the members of the board of directors to ensure that the farmers
will have a clear majority in the board. Before the SDP is approved, strict
scrutiny of the proposed SDP must always be undertaken by the DAR and
PARC, such that the value of the agricultural land contributed to the
corporation must always be more than 50% of the total assets of the
corporation to ensure that the majority of the members of the board of
directors are composed of the farmers. The PARC composed of the
President of the Philippines and cabinet secretaries must see to
it that control over the board of directors rests with the farmers
by rejecting the inclusion of non-agricultural assets which will
yield the majority in the board of directors to non-farmers. Any
deviation, however, by PARC or DAR from the correct application
of the formula prescribed by the second paragraph of Sec. 31 of
RA 6675 does not make said provision constitutionally infirm.
Rather, it is the application of said provision that can be
challenged. Ergo, Sec. 31 of RA 6657 does not trench on the
constitutional policy of ensuring control by the farmers. (Emphasis
supplied.)

There is an aphorism that what has been done can no longer be undone.
That may be true, but not in this case. The SDP was approved by PARC even if
the qualified FWBs did not and will not have majority stockholdings in HLI,
contrary to the obvious policy by the government on agrarian reform. Such an
adverse situation for the FWBs will not and should not be permitted to stand. For
this reason, We maintain Our ruling that the qualified FWBs will no longer have
the option to remain as stockholders of HLI.
FWBs Entitled
to Proceeds of Sale
HLI reiterates its claim over the proceeds of the sales of the 500 hectares
and 80.51 hectares of the land as corporate owner and argues that the return of
said proceeds to the FWBs is unfair and violative of the Corporation Code.
This claim is bereft of merit.
It cannot be denied that the adverted 500-hectare converted land and the
SCTEX lot once formed part of what would have been agrarian-distributable
lands, in fine subject to compulsory CARP coverage. And, as stated in our July 5,
2011 Decision, were it not for the approval of the SDP by PARC, these large
parcels of land would have been distributed and ownership transferred to the
FWBs, subject to payment of just compensation, given that, as of 1989, the
subject 4,915 hectares of Hacienda Luisita were already covered by CARP.
Accordingly, the proceeds realized from the sale and/or disposition thereof should
accrue for the benefit of the FWBs, less deductions of the 3% of the proceeds of
said transfers that were paid to the FWBs, the taxes and expenses relating to the
transfer of titles to the transferees, and the expenditures incurred by HLI and
Centennary Holdings, Inc. for legitimate corporate purposes, as prescribed in our
November 22, 2011 Resolution.
Homelots
In the present recourse, HLI also harps on the fact that since the homelots
given to the FWBs do not form part of the 4,915.75 hectares covered by the SDP,
then the value of these homelots should, with the revocation of the SDP, be paid
to Tadeco as the landowner.[26]
We disagree. As We have explained in Our July 5, 2011 Decision, the
distribution of homelots is required under RA 6657 only for corporations or
business associations owning or operating farms which opted for land
distribution. This is provided under Sec. 30 of RA 6657. Particularly:
SEC.
30. Homelots
and
Farmlots
for
Members
of
Cooperatives. The individual members of the cooperatives or
corporations mentioned in the preceding section shall be provided with
homelots and small farmlots for their family use, to be taken from the
land owned by the cooperative or corporation. (Italics supplied.)

The preceding section referred to in the above-quoted provision is Sec.

29 of RA 6657, which states:

SEC. 29. Farms Owned or Operated by Corporations or Other

Business Associations.In the case of farms owned or operated by
corporations or other business associations, the following rules shall be
observed by the PARC.
In general, lands shall be distributed directly to the individual
worker-beneficiaries.
In case it is not economically feasible and sound to divide the land,
then it shall be owned collectively by the worker-beneficiaries who shall
form a workers cooperative or association which will deal with the
corporation or business association. Until a new agreement is entered
into by and between the workers cooperative or association and the
corporation or business association, any agreement existing at the time
this Act takes effect between the former and the previous landowner shall
be respected by both the workers cooperative or association and the
corporation or business association.

Since none of the above-quoted provisions made reference to corporations

which opted for stock distribution under Sec. 31 of RA 6657, then it is apparent
that said corporations are not obliged to provide for homelots. Nonetheless, HLI
undertook to subdivide and allocate for free and without charge among the
qualified family-beneficiaries x x x residential or homelots of not more than 240
sq. m. each, with each family beneficiary being assured of receiving and owning
a homelot in the barrio or barangay where it actually resides. In fact, HLI was
able to distribute homelots to some if not all of the FWBs. Thus, in our November
22, 2011 Resolution, We declared that the homelots already received by the
FWBs shall be respected with no obligation to refund or to return them.
The Court, by a unanimous vote, resolved to maintain its ruling that the
FWBs shall retain ownership of the homelots given to them with no obligation to
pay for the value of said lots. However, since the SDP was already revoked with
finality, the Court directs the government through the DAR to pay HLI the just
compensation for said homelots in consonance with Sec. 4, Article XIII of the
1987 Constitution that the taking of land for use in the agrarian reform program
is subject to the payment of just compensation. Just compensation should be
paid to HLI instead of Tadeco in view of the Deed of Assignment and Conveyance
dated March 22, 1989 executed between Tadeco and HLI, where Tadeco
transferred and conveyed to HLI the titles over the lots in question. DAR is
ordered to compute the just compensation of the homelots in accordance with
existing laws, rules and regulations.
To recapitulate, the Court voted on the following issues in this manner:
1.

In determining the date of taking, the Court voted 8-6 to maintain

the ruling fixing November 21, 1989 as the date of taking, the value
of the affected lands to be determined by the LBP and the DAR;

2.

On the propriety of the revocation of the option of the FWBs to

remain as HLI stockholders, the Court, by unanimous vote, agreed to
reiterate its ruling in its November 22, 2011 Resolution that the option
granted to the FWBs stays revoked;

3.

On the propriety of returning to the FWBs the proceeds of the sale of

the 500-hectare converted land and of the 80.51-hectare SCTEX land,

the Court unanimously voted to maintain its ruling to order the

payment of the proceeds of the sale of the said land to the FWBs less
the 3% share, taxes and expenses specified in the fallo of the
November 22, 2011 Resolution;
4.

On the payment of just compensation for the homelots to HLI, the

Court, by unanimous vote, resolved to amend its July 5, 2011 Decision
and November 22, 2011 Resolution by ordering the government,
through the DAR, to pay to HLI the just compensation for the homelots
thus distributed to the FWBS.

WHEREFORE, the Motion to Clarify and Reconsider Resolution of November

22, 2011 dated December 16, 2011 filed by petitioner Hacienda Luisita, Inc. and
the Motion for Reconsideration/Clarification dated December 9, 2011 filed by
private respondents Noel Mallari, Julio Suniga, Supervisory Group of Hacienda
Luisita, Inc. and Windsor Andaya are hereby DENIED with this qualification: the
July 5, 2011 Decision, as modified by the November 22, 2011 Resolution,
is FURTHER MODIFIED in that the government, through DAR, is ordered to pay
Hacienda Luisita, Inc. the just compensation for the 240-square meter homelots
distributed to the FWBs.
The July 5, 2011 Decision, as modified by the November 22, 2011
Resolution
and
further
modified
by
this
Resolution
is
declared FINAL and EXECUTORY. The entry of judgment of said decision shall
be made upon the time of the promulgation of this Resolution.
No further pleadings shall be entertained in this case.
SO ORDERED.

EN BANC
[G.R. No. 110249. August 21, 1997]

ALFREDO TANO vs. GOV. SALVADOR P. SOCRATES

DECISION
DAVIDE, JR., J.:

Petitioners caption their petition as one for Certiorari, Injunction With Preliminary
Mandatory Injunction,with Prayer for Temporary Restraining Order and pray that this
Court: (1) declare as unconstitutional: (a) Ordinance No. 15-92, dated 15 December
1992, of the Sangguniang Panlungsod of Puerto Princesa; (b) Office Order No. 23,
Series of 1993, dated 22 January 1993, issued by Acting City Mayor Amado L. Lucero
of Puerto Princesa City; and (c) Resolution No. 33, Ordinance No. 2, Series of 1993,
dated 19 February 1993, of the Sangguniang Panlalawigan of Palawan; (2) enjoin the
enforcement thereof; and (3) restrain respondents Provincial and City Prosecutors of
Palawan and Puerto Princesa City and Judges of Regional Trial Courts, Metropolitan
Trial Courts and Municipal Circuit Trial Courts in Palawan from assuming jurisdiction
over and hearing cases concerning the violation of the Ordinances and of the Office
Order.
[1]

More appropriately, the petition is, and shall be treated as, a special civil action
for certiorari and prohibition.
The following is petitioners summary of the factual antecedents giving rise to the
petition:
1. On December 15, 1992, the Sangguniang Panlungsod ng Puerto Princesa City
enacted Ordinance No. 15-92 which took effect on January 1, 1993 entitled: AN
ORDINANCE BANNING THE SHIPMENT OF ALL LIVE FISH AND LOBSTER OUTSIDE
PUERTO PRINCESA CITY FROM JANUARY 1, 1993 TO JANUARY 1, 1998 AND
PROVIDING EXEMPTIONS, PENALTIES AND FOR OTHER PURPOSES THEREOF, the full
text of which reads as follows:
Section 1. Title of the Ordinance. - This Ordinance is entitled: AN ORDINANCE
BANNING THE SHIPMENT OF ALL LIVE FISH AND LOBSTER OUTSIDE PUERTO
PRINCESA CITY FROM JANUARY 1, 1993 TO JANUARY 1, 1998 AND PROVIDING
EXEMPTIONS, PENALTIES AND FOR OTHER PURPOSES THEREOF.
Section 2. Purpose, Scope and Coverage. - To effectively free our City Sea Waters
from Cyanide and other Obnoxious substance, and shall cover all persons and/or
entities operating within and outside the City of Puerto Princesa who is are [sic]
directly or indirectly in the business or shipment of live fish and lobster outside the
City.
Section 3. Definition of terms. - For purpose of this Ordinance the following are
hereby defined:
A. SEA BASS - A kind of fish under the family of Centropomidae, better known as
APAHAP;

B. CATFISH - A kind of fish under the family of Plotosidae, better known as HITOHITO;
C. MUDFISH - A kind of fish under the family of Orphicaphalisae better known as
DALAG
D. ALL LIVE FISH - All alive, breathing not necessarily moving of all specie[s] use for
food and for aquarium purposes.
E. LIVE LOBSTER - Several relatively, large marine crustaceans of the genus
Homarus that are alive and breathing not necessarily moving.
Section 4. It shall be unlawful [for] any person or any business enterprise or
company to ship out from Puerto Princesa City to any point of destination either via
aircraft or seacraft of any live fish and lobster except SEA BASS, CATFISH, MUDFISH,
AND MILKFISH FRIES.
Section 5. Penalty Clause. - Any person/s and or business entity violating this
Ordinance shall be penalized with a fine of not more than P5,000.00 or
imprisonment of not more than twelve (12) months, cancellation of their permit to
do business in the City of Puerto Princesa or all of the herein stated penalties, upon
the discretion of the court.
Section 6. If the owner and/or operator of the establishment found vilating the
provisions of this ordinance is a corporation or a partnership, the penalty prescribed
in Section 5 hereof shall be imposed upon its president and/or General Manager or
Managing Partner and/or Manager, as the case maybe [sic].
Section 7. Any existing ordinance or any provision of any ordinance inconsistent to
[sic] this ordinance is deemed repealed.
Section 8. This Ordinance shall take effect on January 1, 1993.
SO ORDAINED.
xxx
2. To implement said city ordinance, then Acting City Mayor Amado L. Lucero issued
Office Order No. 23, Series of 1993 dated January 22, 1993 which reads as follows:
In the interest of public service and for purposes of City Ordinance No. PD426-14-74,
otherwise known as AN ORDINANCE REQUIRING ANY PERSON ENGAGED OR
INTENDING TO ENGAGE IN ANY BUSINESS, TRADE, OCCUPATION, CALLING OR
PROFESSION OR HAVING IN HIS POSSESSION ANY OF THE ARTICLES FOR WHICH A
PERMIT IS REQUIRED TO BE HAD, TO OBTAIN FIRST A MAYORS PERMIT and City
Ordinance No. 15-92, AN ORDINANCE BANNING THE SHIPMENT OF ALL LIVE FISH
AND LOBSTER OUTSIDE PUERTO PRINCESA CITY FROM JANUARY 1, 1993 TO JANUARY
1, 1998, you are hereby authorized and directed to check or conduct necessary
inspections on cargoes containing live fish and lobster being shipped out from the
Puerto Princesa Airport, Puerto Princesa Wharf or at any port within the jurisdiction
of the City to any point of destinations [sic] either via aircraft or seacraft.
The purpose of the inspection is to ascertain whether the shipper possessed the
required Mayors Permit issued by this Office and the shipment is covered by invoice
or clearance issued by the local office of the Bureau of Fisheries and Aquatic
Resources and as to compliance with all other existing rules and regulations on the
matter.
Any cargo containing live fish and lobster without the required documents as stated
herein must be held for proper disposition.

In the pursuit of this Order, you are hereby authorized to coordinate with the PAL
Manager, the PPA Manager, the local PNP Station and other offices concerned for the
needed support and cooperation. Further, that the usual courtesy and diplomacy
must be observed at all times in the conduct of the inspection.
Please be guided accordingly.
xxx
3. On February 19, 1993, the Sangguniang Panlalawigan, Provincial Government of
Palawan enacted Resolution No. 33 entitled: A RESOLUTION PROHIBITING THE
CATCHING, GATHERING, POSSESSING, BUYING, SELLING AND SHIPMENT OF LIVE
MARINE CORAL DWELLING AQUATIC ORGANISMS, TO WIT:
FAMILY: SCARIDAE (MAMENG),EPINE PHELUS FASCIATUS (SUNO). CROMILEPTES
ALTIVELIS (PANTHER OR SENORITA), LOBSTER BELOW 200 GRAMS AND
SPAWNING, TRADACNA GIGAS (TAKLOBO),PINCTADA MARGARITEFERA (MOTHER
PEARL, OYSTERS, GIANT CLAMS AND OTHER SPECIES), PENAEUS MONODON (TIGER
PRAWN-BREEDER SIZE OR MOTHER),EPINEPHELUS SUILLUS (LOBA OR GREEN
GROUPER) AND FAMILY: BALISTIDAE (TROPICAL AQUARIUM FISHES) FOR A PERIOD
FIVE (5) YEARS IN AND COMING FROM PALAWAN WATERS, the full text of which
reads as follows:
WHEREAS, scientific and factual researches [sic] and studies disclose that only five
(5) percent of the corals of our province remain to be in excellent condition as [a]
habitat of marine coral dwelling aquatic organisms;
WHEREAS, it cannot be gainsaid that the destruction and devastation of the corals
of our province were principally due to illegal fishing activities like dynamite fishing,
sodium cyanide fishing, use of other obnoxious substances and other related
activities;
WHEREAS, there is an imperative and urgent need to protect and preserve the
existence of the remaining excellent corals and allow the devastated ones to
reinvigorate and regenerate themselves into vitality within the span of five (5)
years;
WHEREAS, Sec. 468, Par. 1, Sub-Par. VI of the [sic] R.A. 7160 otherwise known as the
Local Government Code of 1991 empowers the Sangguniang Panlalawigan to protect
the environment and impose appropriate penalties [upon] acts which endanger the
environment such as dynamite fishing and other forms of destructive fishing, among
others.
NOW, THEREFORE, on motion by Kagawad Nelson P. Peneyra and upon unanimous
decision of all the members present;
Be it resolved as it is hereby resolved, to approve Resolution No. 33, Series of 1993
of the Sangguniang Panlalawigan and to enact Ordinance No. 2 for the purpose, to
wit:
ORDINANCE NO. 2
Series of 1993
BE IT ORDAINED BY THE SANGGUNIANG PANLALAWIGAN IN SESSION ASSEMBLED:
Section 1. TITLE - This Ordinance shall be known as an Ordinance Prohibiting the
catching, gathering, possessing, buying, selling and shipment of live marine coral
dwelling aquatic organisms, to wit: 1. Family: Scaridae (Mameng), 2. Epinephelus
Fasciatus (Suno), 3. Cromileptes altivelis (Panther or Senorita), lobster below 200
grams and spawning), 4. Tridacna Gigas (Taklobo), 5. Pinctada Margaretefera
(Mother Pearl, Oysters, Giant Clams and other species), 6. Penaeus Monodon (Tiger

Prawn-breeder size or mother), 7. Epinephelus Suillus (Loba or Green Grouper) and

8. Family: Balistidae (Topical Aquarium Fishes) for a period of five (5) years in and
coming from Palawan Waters.
Section II. PRELIMINARY CONSIDERATIONS
1. Sec. 2-A (Rep. Act 7160). It is hereby declared, the policy of the state that the
territorial and political subdivisions of the State shall enjoy genuine and meaningful
local autonomy to enable them to attain their fullest development as self reliant
communities and make them more effective partners in the attainment of national
goals. Toward this end, the State shall provide for [a] more responsive and
accountable local government structure instituted through a system of
decentralization whereby local government units shall be given more powers,
authority, responsibilities and resources.
2. Sec. 5-A (R.A. 7160). Any provision on a power of [a] local Government Unit shall
be liberaly interpreted in its favor, and in case of doubt, any question thereon shall
be resolved in favor of devolution of powers and of the lower government units. Any
fair and reasonable doubts as to the existence of the power shall be interpreted in
favor of the Local Government Unit concerned.
3. Sec. 5-C (R.A. 7160). The general welfare provisions in this Code shall be liberally
interpreted to give more powers to local government units in accelerating economic
development and upgrading the quality of life for the people in the community.
4. Sec. 16 (R.A. 7160). General Welfare. - Every local government unit shall exercise
the powers expressly granted, those necessarily implied therefrom, as well as
powers necessary, appropriate, or incidental for its efficient and effective
governance; and those which are essential to the promotion of the general welfare.
Section III. DECLARATION OF POLICY. - It is hereby declared to be the policy of the
Province of Palawan to protect and conserve the marine resources of Palawan not
only for the greatest good of the majority of the present generation but with [the]
proper perspective and consideration of [sic] their prosperity, and to attain this end,
the Sangguniang Panlalawigan henceforth declares that is [sic] shall be unlawful for
any person or any business entity to engage in catching, gathering, possessing,
buying, selling and shipment of live marine coral dwelling aquatic organisms as
enumerated in Section 1 hereof in and coming out of Palawan Waters for a period of
five (5) years;
Section IV. PENALTY CLAUSE. - Any person and/or business entity violating this
Ordinance shall be penalized with a fine of not more than Five Thousand Pesos
(P5,000.00), Philippine Currency, and/or imprisonment of six (6) months to twelve
(12) months and confiscation and forfeiture of paraphernalias [sic] and equipment in
favor of the government at the discretion of the Court;
Section V. SEPARABILITY CLAUSE. - If for any reason, a Section or provision of this
Ordinance shall be held as unconditional [sic] or invalid, it shall not affect the other
provisions hereof.
Section VI. REPEALING CLAUSE. - Any existing Ordinance or a provision of any
ordinance inconsistent herewith is deemed modified, amended or repealed.
Section VII. EFFECTIVITY. - This Ordinance shall take effect ten (10) days after its
publication.
SO ORDAINED.
xxx

4. The respondents implemented the said ordinances, Annexes A and C hereof

thereby depriving all the fishermen of the whole province of Palawan and the City of
Puerto Princesa of their only means of livelihood and the petitioners Airline Shippers
Association of Palawan and other marine merchants from performing their lawful
occupation and trade;
5. Petitioners Alfredo Tano, Baldomero Tano, Teocenes Midello, Angel de Mesa,
Eulogio Tremocha, and Felipe Ongonion, Jr. were even charged criminally under
criminal case no. 93-05-C in the 1st Municipal Circuit Trial Court of Cuyo-AgutayaMagsaysay, an original carbon copy of the criminal complaint dated April 12, 1993 is
hereto attached as Annex D; while xerox copies are attached as Annex D to the
copies of the petition;
6. Petitioners Robert Lim and Virginia Lim, on the other hand, were charged by the
respondent PNP with the respondent City Prosecutor of Puerto Princesa City, a xerox
copy of the complaint is hereto attached as Annex E;
Without seeking redress from the concerned local government units, prosecutors
office and courts, petitioners directly invoked our original jurisdiction by filing this
petition on 4 June 1993. In sum, petitioners contend that:
First, the Ordinances deprived them of due process of law, their livelihood, and
unduly restricted them from the practice of their trade, in violation of Section 2,
Article XII and Sections 2 and 7 of Article XIII of the 1987 Constitution.
Second, Office Order No. 23 contained no regulation nor condition under which
the Mayors permit could be granted or denied; in other words, the Mayor had the
absolute authority to determine whether or not to issue permit.
Third, as Ordinance No. 2 of the Province of Palawan altogether prohibited the
catching, gathering, possession, buying, selling and shipping of live marine coral
dwelling organisms, without any distinction whether it was caught or gathered
through lawful fishing method, the Ordinance took away the right of petitionersfishermen to earn their livelihood in lawful ways; and insofar as petitioners-members
of Airline Shippers Association are concerned, they were unduly prevented from
pursuing their vocation and entering into contracts which are proper, necessary, and
essential to carry out their business endeavors to a successful conclusion.
Finally, as Ordinance No. 2 of the Sangguniang Panlalawigan is null and void, the
criminal cases based thereon against petitioners Tano and the others have to be
dismissed.
In the Resolution of 15 June 1993 we required respondents to comment on the
petition, and furnished the Office of the Solicitor General with a copy thereof.
In their comment filed on 13 August 1993, public respondents Governor Socrates
and Members of the Sangguniang Panlalawigan of Palawan defended the validity of
Ordinance No.2, Series of 1993, as a valid exercise of the Provincial Governments
power under the general welfare clause (Section 16 of the Local Government Code
of 1991 [hereafter, LGC]), and its specific power to protect the environment and
impose appropriate penalties for acts which endanger the environment, such as
dynamite fishing and other forms of destructive fishing under Section 447 (a) (1)
(vi), Section 458 (a) (1) (vi), and Section 468 (a) (1) (vi), of the LGC. They claimed
that in the exercise of such powers, the Province of Palawan had the right and
responsibilty to insure that the remaining coral reefs, where fish dwells [sic], within
its territory remain healthy for the future generation. The Ordinance, they further
asserted, covered only live marine coral dwelling aquatic organisms which were
enumerated in the ordinance and excluded other kinds of live marine aquatic
organisms not dwelling in coral reefs; besides the prohibition was for only five (5)
years to protect and preserve the pristine coral and allow those damaged to
regenerate.

Aforementioned respondents likewise maintained that there was no violation of

due process and equal protection clauses of the Constitution. As to the former,
public hearings were conducted before the enactment of the Ordinance which,
undoubtedly, had a lawful purpose and employed reasonable means; while as to the
latter, a substantial distinction existed between a fisherman who catches live fish
with the intention of selling it live, and a fisherman who catches live fish with no
intention at all of selling it live, i.e., the former uses sodium cyanide while the latter
does not. Further, the Ordinance applied equally to all those belonging to one class.
On 25 October 1993 petitioners filed an Urgent Plea for the Immediate Issuance
of a Temporary Restraining Order claiming that despite the pendency of this case,
Branch 50 of the Regional Trial Court of Palawan was bent on proceeding with
Criminal Case No. 11223 against petitioners Danilo Tano, Alfredo Tano, Eulogio
Tremocha, Romualdo Tano, Baldomero Tano, Andres Lemihan and Angel de Mesa for
violation of Ordinance No. 2 of the Sangguniang Panlalawigan of Palawan. Acting on
said plea, we issued on 11 November 1993 a temporary restraining order directing
Judge Angel Miclat of said court to cease and desist from proceeding with the
arraignment and pre-trial of Criminal Case No. 11223.
On 12 July 1994, we excused the Office of the Solicitor General from filing a
comment, considering that as claimed by said office in its Manifestation of 28 June
1994, respondents were already represented by counsel.
The rest of the respondents did not file any comment on the petition.
In the resolution of 15 September 1994, we resolved to consider the comment on
the petition as the Answer, gave due course to the petition and required the parties
to submit their respective memoranda.
[2]

On 22 April 1997 we ordered impleaded as party respondents the Department of

Agriculture and the Bureau of Fisheries and Aquatic Resources and required the
Office of the Solicitor General to comment on their behalf. But in light of the latters
motion of 9 July 1997 for an extension of time to file the comment which would only
result in further delay, we dispensed with said comment.
After due deliberation on the pleadings filed, we resolved to dismiss this petition
for want of merit, on 22 July 1997, and assigned it to the ponente for the writing of
the opinion of the Court.
I

There are actually two sets of petitioners in this case. The first is composed of
Alfredo Tano, Baldomero Tano, Danilo Tano, Romualdo Tano, Teocenes Midello, Angel
de Mesa, Eulogio Tremocha, Felipe Ongonion, Jr., Andres Linijan, and Felimon de
Mesa,
who
were
criminally
charged
with
violating Sangguniang
Panlalawigan Resolution No. 33 and Ordinance No. 2, Series of 1993, of the Province
of Palawan, in Criminal Case No. 93-05-C of the 1 Municipal Circuit Trial Court
(MCTC) of Palawan; and Robert Lim and Virginia Lim who were charged with
violating City Ordinance No. 15-92 of Puerto Princesa City and Ordinance No. 2,
Series of 1993, of the Province of Palawan before the Office of the City Prosecutor of
Puerto Princesa. All of them, with the exception of Teocenes Midello, Felipe
Ongonion, Jr., Felimon de Mesa, Robert Lim and Virginia Lim, are likewise the
accused in Criminal Case No. 11223 for the violation of Ordinance No. 2 of
the Sangguniang Panlalawigan of Palawan, pending before Branch 50 of the
Regional Trial Court of Palawan.
st

[3]

[4]

[5]

The second set of petitioners is composed of the rest of the petitioners

numbering seventy-seven (77), all of whom, except the Airline Shippers Association
of Palawan -- an alleged private association of several marine merchants -- are
natural persons who claim to be fishermen.

The primary interest of the first set of petitioners is, of course, to prevent the
prosecution, trial and determination of the criminal cases until the constitutionality
or legality of the Ordinances they allegedly violated shall have been resolved. The
second set of petitioners merely claim that they being fishermen or marine
merchants, they would be adversely affected by the ordinances.
As to the first set of petitioners, this special civil for certiorari must fail on the
ground of prematurity amounting to a lack of cause of action. There is no showing
that the said petitioners, as the accused in the criminal cases, have filed motions to
quash the informations therein and that the same were denied. The ground
available for such motions is that the facts charged therein do not constitute an
offense because the ordinances in question are unconstitutional. It cannot then be
said that the lower courts acted without or in excess of jurisdiction or with grave
abuse of discretion to justify recourse to the extraordinary remedy of certiorari or
prohibition. It must further be stressed that even if the petitioners did file motions to
quash, the denial thereof would not forthwith give rise to a cause of action under
Rule 65 of the Rules of Court. The general rule is that where a motion to quash is
denied, the remedy therefrom is not certiorari, but for the party aggrieved thereby
to go to trial without prejudice to reiterating special defenses involved in said
motion, and if, after trial on the merits of adverse decision is rendered, to appeal
therefrom in the manner authorized by law. And , even where in an exceptional
circumstance such denial may be the subject of a special civil action for certiorari, a
motion for reconsideration must have to be filed to allow the court concerned an
opportunity to correct its errors, unless such motion may be dispensed with because
of existing exceptional circumstances. Finally, even if a motion for reconsideration
has been filed and denied, the remedy under Rule 65 is still unavailable absent any
showing of the grounds provided for in Section 1 thereof. For obvious reasons, the
petition at bar does not, and could not have , alleged any of such grounds.
[6]

[7]

[8]

[9]

As to the second set of petitioners, the instant petition is obviously one for
DECLARATORY RELIEF, i.e., for a declaration that the Ordinances in question are a
nullity ... for being unconstitutional. As such, their petition must likewise fail, as
this Court is not possessed of original jurisdiction over petitions for declaratory relief
even if only questions of law are involved, it being settled that the Court merely
exercises appellate jurisdiction over such petitions.
[10]

[11]

[12]

II

Even granting arguendo that the first set of petitioners have a cause of action
ripe for the extraordinary writ of certiorari, there is here a clear disregard of the
hierarchy of courts, and no special and important reason or exceptional or
compelling circumstance has been adduced why direct recourse to us should be
allowed. While we have concurrent jurisdiction with Regional Trial courts and with
the Court of Appeals to issue writs of certiorari, prohibition, mandamus, quo
warranto, habeas corpus and injunction, such concurrence gives petitioners no
unrestricted freedom of choice of court forum, so we held in People v. Cuaresma:
[13]

This concurrence of jurisdiction is not to be taken as according to parties seeking

any of the writs an absolute unrestrained freedom of choice of the court to which
application therefor will be directed. There is after all hierarchy of courts. That
hierarchy is determinative of the venue of appeals, and should also serve as a
general determinant of the appropriate forum for petitions for the extraordinary
writs. A becoming regard for that judicial hierarchy most certainly indicates that
petitions for the issuance of extraordinary writs against first level (inferior) courts
should be filed with the Regional Trial Court, and those against the latter, with the
Court of Appeals. A direct invocation of the Supreme Courts original jurisdiction to
issue these writs should be allowed only when there are special and important
reasons therefor, clearly and specifically set out in the petition. This is established
policy. It is a policy necessary to prevent inordinate demands upon the Courts time
and attention which are better devoted to those matters within its exclusive
jurisdiction, and to prevent further over-crowding of the Courts docket.

The Court feels the need to reaffirm that policy at this time, and to enjoin strict
adherence thereto in the light of what it perceives to be a growing tendency on the
part of litigants and lawyers to have their applications for the so-called
extraordinary writs, and sometimes even their appeals, passed upon and
adjudicated directly and immediately by the highest tribunal of the land.
In Santiago v. Vasquez, this Court forcefully expressed that the propensity of
litigants and lawyers to disregard the hierarchy of courts must be put to a halt, not
only because of the imposition upon the precious time of this Court, but also
because of the inevitable and resultant delay, intended or otherwise, in the
adjudication of the case which often has to be remanded or referred to the lower
court, the proper forum under the rules of procedure, or as better equipped to
resolve the issues since this Court is not a trier of facts. We reiterated the judicial
policy that this Court will not entertain direct resort to it unless the redress desired
cannot be obtained in the appropriate courts or where exceptional and compelling
circumstances justify availment of a remedy within and calling for the exercise of
[its] primary jurisdiction.
[14]

III

Notwithstanding the foregoing procedural obstacles against the first set of

petitioners, we opt to resolve this case on its merits considering that the lifetime of
the challenged Ordinances is about to end. Ordinance No. 15-92 of the City of Puerto
Princesa is effective only up to 1 January 1998, while Ordinance No. 2 of the
Province of Palawan, enacted on 19 February 1993, is effective for only five (5)
years. Besides, these Ordinances were undoubtedly enacted in the exercise of
powers under the new LGC relative to the protection and preservation of the
environment and are thus novel and of paramount importance. No further delay
then may be allowed in the resolution of the issues raised.
It is of course settled that laws (including ordinances enacted by local
government units) enjoy the presumption of constitutionality. To overthrow this
presumption, there must be a clear and unequivocal breach of the Constitution, not
merely a doubtful or argumentative contradiction. In short, the conflict with the
Constitution must be shown beyond reasonable doubt. Where doubt exists, even if
well founded, there can be no finding of unconstitutionality. To doubt is to sustain.
[15]

[16]

[17]

After a scrunity of the challenged Ordinances and the provisions of the

Constitution petitioners claim to have been violated, we find petitioners contentions
baseless and so hold that the former do not suffer from any infirmity, both under the
Constitution and applicable laws.
Petitioners specifically point to Section 2, Article XII and Sections 2 and 7, Article
XIII of the Constitution as having been transgressed by the Ordinances.
The pertinent portion of Section 2 of Article XII reads:
SEC. 2. x x x
The State shall protect the nation's marine wealth in its archipelagic waters,
territorial sea, and exclusive economic zone, and reserve its use and enjoyment
exclusively to Filipino citizens.
The Congress may, by law, allow small-scale utilization of natural resources by
Filipino citizens, as well as cooperative fish farming, with priority to subsistence
fishermen and fishworkers in rivers, lakes, bays, and lagoons.
Sections 2 and 7 of Article XIII provide:
Sec. 2. The promotion of social justice shall include the commitment to create
economic opportunities based on freedom of initiative and self-reliance.

xxx
SEC. 7. The State shall protect the rights of subsistence fishermen, especially of
local communities, to the preferential use of the communal marine and fishing
resources, both inland and offshore. It shall provide support to such fishermen
through appropriate technology and research, adequate financial, production, and
marketing assistance, and other services. The State shall also protect, develop, and
conserve such resources. The protection shall extend to offshore fishing grounds of
subsistence fishermen against foreign intrusion. Fishworkers shall receive a just
share from their labor in the utilization of marine and fishing resources.
There is absolutely no showing that any of the petitioners qualifies as a
subsistence or marginal fisherman. In their petition, petitioner Airline Shippers
Association of Palawan is described as a private association composed of Marine
Merchants; petitioners Robert Lim and Virginia Lim, as merchants; while the rest of
the petitioners claim to be fishermen, without any qualification, however, as to their
status.
Since the Constitution does not specifically provide a definition of the terms
subsistence or marginal fishermen, they should be construed in their general and
ordinary sense. A marginal fisherman is an individual engaged in fishing whose
margin of return or reward in his harvest of fish as measured by existing price levels
is barely sufficient to yield a profit or cover the cost of gathering the fish, while
a subsistence fisherman is one whose catch yields but the irreducible minimum for
his livelihood. Section 131(p) of the LGC (R.A. No. 7160) defines a marginal farmer
or fisherman as an individual engaged in subsistence farming or fishing which shall
be limited to the sale, barter or exchange of agricultural or marine products
produced by himself and his immediate family. It bears repeating that nothing in the
record supports a finding that any petitioner falls within these definitions.
[18]

[19]

[20]

Besides, Section 2 of Article XII aims primarily not to bestow any right to
subsistence fishermen, but to lay stress on the duty of the State to protect the
nations marine wealth.What the provision merely recognizes is that the State may
allow, by law, cooperative fish farming, with priority to subsistence fishermen and
fishworkers in rivers, lakes, bays, and lagoons. Our survey of the statute books
reveals that the only provision of law which speaks of the preferential right of
marginal fishermen is Section 149 of the LGC of 1991 which pertinently provides:
SEC. 149. Fishery Rentals, Fees and Charges. -- x x x
(b) The sangguniang bayan may:
(1) Grant fishery privileges to erect fish corrals, oyster, mussels or other aquatic
beds or bangus fry areas, within a definite zone of the municipal waters, as
determined by it: Provided, however, That duly registered organizations and
cooperatives of marginal fishermen shall have preferential right to such fishery
privileges ....
In a Joint Administrative Order No. 3, dated 25 April 1996, the Secretary of the
Department of Agriculture and the Secretary of the Department of Interior and Local
Government prescribed the guidelines on the preferential treatment of small
fisherfolk relative to the fishery right mentioned in Section 149. This case, however,
does not involve such fishery right.
Anent Section 7 of Article XIII, it speaks not only of the use of communal marine
and fishing resources, but of their protection, development, and conservation. As
hereafter shown, the ordinances in question are meant precisely to protect and
conserve our marine resources to the end that their enjoyment by the people may
be guaranteed not only for the present generation, but also for the generations to
come.

The so-called preferential right of subsistence or marginal fishermen to the use of

marine resources is not at all absolute. In accordance with the Regalian Doctrine,
marine resources belong to the State, and, pursuant to the first paragraph of
Section 2, Article XII of the Constitution, their exploration, development and
utilization ... shall be under the full control and supervision of the State. Moreover,
their mandated protection, development, and conservation as necessarily
recognized by the framers of the Constitution, imply certain restrictions on whatever
right of enjoyment there may be in favor of anyone. Thus, as to the curtailment of
the preferential treatment of marginal fisherman, the following exchange between
Commissioner Francisco Rodrigo and Commissioner Jose F.S. Bengzon, Jr., took place
at the plenary session of the Constitutional Commission:
MR. RODRIGO:
Let us discuss the implementation of this because I would not raise the hopes
of our people, and afterwards fail in the implementation. How will this be
implemented? Will there be a licensing or giving of permits so that
government officials will know that one is really a marginal fisherman? Or if
policeman say that a person is not a marginal fisherman, he can show his
permit, to prove that indeed he is one.
MR. BENGZON:
Certainly, there will be some mode of licensing insofar as this is concerned
and this particular question could be tackled when we discuss the Article on
Local Governments -- whether we will leave to the local governments or to
Congress on how these things will be implemented. But certainly, I think our
Congressmen and our local officials will not be bereft of ideas on how to
implement this mandate.
xxx
MR. RODRIGO:
So, once one is licensed as a marginal fisherman, he can go anywhere in the
Philippines and fish in any fishing grounds.
MR. BENGZON:
Subject to whatever rules and regulations and local laws that may be
passed, may be existing or will be passed. (underscoring supplied for
emphasis).
[21]

What must likewise be borne in mind is the state policy enshrined in the
Constitution regarding the duty of the State to protect and advance the right of the
people to a balanced and healthful ecology in accord with the rhythm and harmony
of nature. On this score, in Oposa v. Factoran, this Court declared:
[22]

[23]

While the right to balanced and healthful ecology is to be found under the
Declaration of Principles the State Policies and not under the Bill of Rights, it does
not follow that it is less important than any of the civil and political rights
enumerated in the latter. Such a right belongs to a different category of rights
altogether for it concerns nothing less than self-preservation and self-perpetuation aptly and fittingly stressed by the petitioners - the advancement of which may even
be said to predate all governments and constitutions. As a matter of fact, these
basic rights need not even be written in the Constitution for they are assumed to
exist from the inception of humankind. If they are now explicitly mentioned in the
fundamental charter, it is because of the well-founded fear of its framers that unless
the rights to a balanced and healthful ecology and to health are mandated as state
policies by the Constitution itself, thereby highlighting their continuing importance
and imposing upon the state a solemn obligation to preserve the first and protect

and advance the second , the day would not be too far when all else would be lost
not only for the present generation, but also for those to come - generations which
stand to inherit nothing but parched earth incapable of sustaining life.
The right to a balanced and healthful ecology carries with it a correlative duty to
refrain from impairing the environment ...
The LGC provisions invoked by private respondents merely seek to give flesh and
blood to the right of the people to a balanced and healthful ecology. In fact, the
General Welfare Clause, expressly mentions this right:
SEC. 16. General Welfare.-- Every local government unit shall exercise the powers
expressly granted, those necessarily implied therefrom, as well as powers
necessary, appropriate, or incidental for its efficient and effective governance, and
those which are essential to the promotion of the general welfare. Within their
respective territorial jurisdictions, local government units shall ensure and support,
among other things, the preservation and enrichment of culture, promote health and
safety, enhance the right of the people to a balanced ecology, encourage and
support the development of appropriate and self-reliant scientific and technological
capabilities, improve public morals, enhance economic prosperity and social justice,
promote full employment among their residents, maintain peace and order, and
preserve the comfort and convenience of their inhabitants. (underscoring supplied).
Moreover, Section 5(c) of the LGC explicitly mandates that the general welfare
provisions of the LGC shall be liberally interpreted to give more powers to the local
government units in accelerating economic development and upgrading the quality
of life for the people of the community.
The LGC vests municipalities with the power to grant fishery privileges in
municipal waters and to impose rentals, fees or charges therefor; to penalize, by
appropriate ordinances, the use of explosives, noxious or poisonous substances,
electricity, muro-ami, and other deleterious methods of fishing; and to prosecute
any violation of the provisions of applicable fishery laws. Further, the sangguniang
bayan, the sangguniang panlungsod and the sangguniang panlalawigan are directed
to enact ordinances for the general welfare of the municipality and its inhabitants,
which shall include, inter alia, ordinances that [p]rotect the environment and impose
appropriate penalties for acts which endanger the environment such as dynamite
fishing and other forms of destructive fishing ... and such other activities which
result in pollution, acceleration of eutrophication of rivers and lakes or of ecological
imbalance.
[24]

[25]

Finally, the centerpiece of LGC is the system of decentralization as expressly

mandated by the Constitution. Indispensable thereto is devolution and the LGC
expressly provides that [a]ny provision on a power of a local government unit shall
be liberally interpreted in its favor, and in case of doubt, any question thereon shall
be resolved in favor of devolution of powers and of the lower local government unit.
Any fair and reasonable doubt as to the existence of the power shall be interpreted
in favor of the local government unit concerned, Devolution refers to the act by
which the National Government confers power and authority upon the various local
government units to perform specific functions and responsibilities.
[26]

[27]

[28]

[29]

One of the devolved powers enumerated in the section of the LGC on devolution
is the enforcement of fishery laws in municipal waters including the conservation of
mangroves. This necessarily includes enactment of ordinances to effectively carry
out such fishery laws within the municipal waters.
[30]

The term municipal waters, in turn, include not only streams, lakes, and tidal
waters within the municipality, not being the subject of private ownership and not
comprised within the national parks, public forest, timber lands, forest reserves, or
fishery reserves, but also marine waters included between two lines drawn
perpendicularly to the general coastline from points where the boundary lines of the

municipality or city touch the sea at low tide and a third line parallel with the
general coastline and fifteen kilometers from it. Under P.D. No. 704, the marine
waters included in municipal waters is limited to three nautical miles from the
general coastline using the above perpendicular lines and a third parallel line.
[31]

These fishery laws which local government units may enforce under Section
17(b), (2), (i) in municipal waters include: (1) P.D. No. 704; (2) P.D. No. 1015
which, inter alia, authorizes the establishment of a closed season in any Philippine
water if necessary for conservation or ecological purposes; (3) P.D. No. 1219 which
provides for the exploration, exploitation, utilization, and conservation of coral
resources; (4) R.A. No. 5474, as amended by B.P. Blg. 58, which makes it unlawful
for any person, association, or corporation to catch or cause to be caught, sell, offer
to sell, purchase, or have in possession any of the fish specie
called gobiidae or ipon during closed season; and (5) R.A. No. 6451 which prohibits
and punishes electrofishing, as well as various issuances of the BFAR.
To those specifically devolved insofar as the control and regulation of fishing in
municipal waters and the protection of its marine environment are concerned, must
be added the following:
1. Issuance of permits to construct fish cages within municipal waters;
2. Issuance of permits to gather aquarium fishes within municipal waters;
3. Issuance of permits to gather kapis shells within municipal waters;
4. Issuance of permits to gather/culture shelled mollusks within municipal waters;
5. Issuance of licenses to establish seaweed farms within municipal waters;
6. Issuance of licenses to establish culture pearls within municipal waters;
7. Issuance of auxiliary invoice to transport fish and fishery products; and
8. Establishment of closed season in municipal waters.

These functions are covered in the Memorandum of Agreement of 5 April 1994

between the Department of Agriculture and the Department of Interior and Local
Government.
In light then of the principles of decentralization and devolution enshrined in the
LGC and the powers granted to local government units under Section 16 (the
General Welfare Clause), and under Sections 149, 447 (a) (1) (vi), 458 (a) (1) (vi)
and 468 (a) (1) (vi), which unquestionably involve the exercise of police power, the
validity of the questioned Ordinances cannot be doubted.
Parenthetically, we wish to add that these Ordinances find full support under R.A.
No. 7611, otherwise known as the Strategic Environmental Plan (SEP) for Palawan
Act, approved on 19 July 1992. This statute adopts a comprehensive framework for
the sustainable development of Palawan compatible with protecting and enhancing
the natural resources and endangered environment of the province, which shall
serve to guide the local government of Palawan and the government agencies
concerned in the formulation and implementation of plans, programs and projects
affecting said province.
[32]

At this time then, it would be appropriate to determine the relation between the
assailed Ordinances and the aforesaid powers of the Sangguniang Panlungsod of the
City of Puerto Princesa and the Sangguniang Panlalawigan of the Province of
Palawan to protect the environment. To begin, we ascertain the purpose of the
Ordinances as set forth in the statement of purposes or declaration of policies
quoted earlier.

It is clear to the Court that both Ordinances have two principal objectives or
purposes: (1) to establish a closed season for the species of fish or aquatic animals
covered therein for a period of five years, and (2) to protect the corals of the marine
waters of the City of Puerto Princesa and the Province of Palawan from further
destruction due to illegal fishing activities.
The accomplishment of the first objective is well within the devolved power to
enforce fishery laws in municipal waters, such as P.D. No. 1015, which allows the
establishment of closed seasons. The devolution of such power has been expressly
confirmed in the Memorandum of Agreement of 5 April 1994 between the
Department of Agriculture and the Department of Interior and Local Government.
The realization of the second objective falls within both the general welfare
clause of the LGC and the express mandate thereunder to cities and provinces to
protect the environment and impose appropriate penalties for acts which endanger
the environment.
[33]

The destruction of the coral reefs results in serious, if not irreparable, ecological
imbalance, for coral reefs are among the natures life-support systems. They
collect, retain, and recycle nutrients for adjacent nearshore areas such as
mangroves, seagrass beds, and reef flats; provide food for marine plants and
animals; and serve as a protective shelter for aquatic organisms. It is said that
[e]cologically, the reefs are to the oceans what forests are to continents: they are
shelter and breeding grounds for fish and plant species that will disappear without
them.
[34]

[35]

[36]

The prohibition against catching live fish stems, in part, from the modern
phenomenon of live-fish trade which entails the catching of so-called exotic tropical
species of fish not only for aquarium use in the West, but also for the market for live
banquet fish [which] is virtually insatiable in ever more affluent Asia. These exotic
species are coral-dwellers, and fishermen catch them by diving in shallow water with
corraline habitats and squirting sodium cyanide poison at passing fish directly or
onto coral crevices; once affected the fish are immobilized [merely stunned] and
then scooped by hand. The diver then surfaces and dumps his catch into a
submerged net attached to the skiff . Twenty minutes later, the fish can swim
normally. Back on shore, they are placed in holding pens, and within a few weeks,
they expel the cyanide from their system and are ready to be hauled. Then they are
placed in saltwater tanks or packaged in plastic bags filled with seawater for
shipment by air freight to major markets for live food fish. While the fish are meant
to survive, the opposite holds true for their former home as [a]fter the fisherman
squirts the cyanide, the first thing to perish is the reef algae, on which fish
feed. Days later, the living coral starts to expire. Soon the reef loses its function as
habitat for the fish, which eat both the algae and invertebrates that cling to the
coral. The reef becomes an underwater graveyard, its skeletal remains brittle,
bleached of all color and vulnerable to erosion from the pounding of the waves. It
has been found that cyanide fishing kills most hard and soft corals within three
months of repeated application.
[37]

[38]

[39]

[40]

[41]

The nexus then between the activities barred by Ordinance No. 15-92 of the City
of Puerto Princesa and the prohibited acts provided in Ordinance No. 2, Series of
1993 of the Province of Palawan, on one hand, and the use of sodium cyanide, on
the other, is painfully obvious. In sum, the public purpose and reasonableness of the
Ordinances may not then be controverted.
As to Office Order No. 23, Series of 1993, issued by Acting City Mayor Amado L.
Lucero of the City of Puerto Princesa, we find nothing therein violative of any
constitutional or statutory provision. The Order refers to the implementation of the
challenged ordinance and is not the Mayors Permit.
The dissenting opinion of Mr. Justice Josue N. Bellosillo relies upon the lack of
authority on the part of the Sangguniang Panlungsod of Puerto Princesa to enact

Ordinance No. 15, Series of 1992, on the theory that the subject thereof is within the
jurisdiction and responsibility of the Bureau of Fisheries and Aquatic Resources
(BFAR) under P.D. No. 704, otherwise known as the Fisheries Decree of 1975; and
that, in any event, the Ordinance is unenforceable for lack of approval by the
Secretary of the Department of Natural Resources (DNR), likewise in accordance
with P.D. No. 704.
The majority is unable to accommodate this view. The jurisdiction and
responsibility of the BFAR under P. D. no. 704, over the management, conservation,
development, protection, utilization and disposition of all fishery and aquatic
resources of the country is not all-encompassing. First, Section 4 thereof excludes
from such jurisdiction and responsibility municipal waters, which shall be under the
municipal or city government concerned, except insofar as fishpens and seaweed
culture in municipal in municipal centers are concerned. This section provides,
however, that all municipal or city ordinances and resolutions affecting fishing and
fisheries and any disposition thereunder shall be submitted to the Secretary of the
Department of Natural Resources for appropriate action and shall have full force and
effect only upon his approval.
[42]

Second, it must at once be pointed out that the BFAR is no longer under the
Department of Natural Resources (now Department of Environment and Natural
Resources). Executive Order No. 967 of 30 June 1984 transferred the BFAR from the
control and supervision of the Minister (formerly Secretary) of Natural Resources to
the Ministry of Agriculture and Food (MAF) and converted it into a mere staff agency
thereof, integrating its functions with the regional offices of the MAF.
In Executive Order No. 116 of 30 January 1987, which reorganized the MAF, the
BFAR was retained as an attached agency of the MAF. And under the Administrative
Code of 1987, the BFAR is placed under the Title concerning the Department of
Agriculture.
[43]

[44]

Therefore, it is incorrect to say that the challenged Ordinance of the City of

Puerto Princesa is invalid or unenforceable because it was not approved by the
Secretary of the DENR. If at all, the approval that should be sought would be that of
the Secretary of the Department of Agriculture (not DENR) of municipal ordinances
affecting fishing and fisheries in municipal waters has been dispensed with in view
of the following reasons:
(1) Section 534 (Repealing Clause) of the LGC expressly repeals or amends
Section 16 and 29 of P.D. No. 704 insofar that they are inconsistent with the
provisions of the LGC.
[45]

(2) As discussed earlier, under the general welfare clause of the LGC, local
government units have the power, inter alia, to enact ordinances to enhance the
right of the people to a balanced ecology. It likewise specifically vests municipalities
with the power to grant fishery privileges in municipal waters, and impose rentals,
fees or charges therefor; to penalize, by appropriate ordinances, the use of
explosives, noxious or poisonous substances, electricity, muro-ami, and other
deleterious methods of fishing; and to prosecute other methods of fishing; and to
prosecute any violation of the provisions of applicable fishing laws. Finally, it
imposes
upon
the sangguniang
bayan, the sangguniang
panlungsod, and
the sangguniang panlalawigan the duty to enact ordinances to [p]rotect the
environment and impose appropriate penalties for acts which endanger the
environment such as dynamite fishing and other forms of destructive fishing and
such other activities which result in pollution, acceleration of eutrophication of rivers
and lakes or of ecological imbalance.
[46]

[47]

In closing, we commend the Sangguniang Panlungsod of the City of Puerto

Princesa and Sangguniang Panlalawigan of the Province of Palawan for exercising
the requisite political will to enact urgently needed legislation to protect and
enhance the marine environment, thereby sharing in the herculean task of arresting

the tide of ecological destruction. We hope that other local government units shall
now be roused from their lethargy and adopt a more vigilant stand in the battle
against the decimation of our legacy to future generations. At this time, the
repercussions of any further delay in their response may prove disastrous, if not,
irreversible.
WHEREFORE, the instant petition is DISMISSED for lack of merit and the
temporary restraining order issued on 11 November 1993 is LIFTED.
No pronouncement as to costs.
SO ORDERED.

G.R. No. 101083 July 30, 1993

JUAN ANTONIO, ANNA ROSARIO and JOSE ALFONSO, all surnamed OPOSA, minors, and
represented by their parents petitioners,
vs.
THE HONORABLE FULGENCIO S. FACTORAN, JR., in his capacity as the Secretary of the
Department of Environment and Natural Resources, and THE HONORABLE ERIBERTO U.
ROSARIO, Presiding Judge of the RTC, Makati, Branch 66, respondents.
DAVIDE, JR., J.:
In a broader sense, this petition bears upon the right of Filipinos to a balanced and healthful ecology which
the petitioners dramatically associate with the twin concepts of "inter-generational responsibility" and "intergenerational justice." Specifically, it touches on the issue of whether the said petitioners have a cause of
action to "prevent the misappropriation or impairment" of Philippine rainforests and "arrest the unabated
hemorrhage of the country's vital life support systems and continued rape of Mother Earth."
The controversy has its genesis in Civil Case No. 90-77 which was filed before Branch 66 (Makati, Metro
Manila) of the Regional Trial Court (RTC), National Capital Judicial Region. The principal plaintiffs therein, now
the principal petitioners, are all minors duly represented and joined by their respective parents. Impleaded
as an additional plaintiff is the Philippine Ecological Network, Inc. (PENI), a domestic, non-stock and nonprofit corporation organized for the purpose of, inter alia, engaging in concerted action geared for the
protection of our environment and natural resources. The original defendant was the Honorable Fulgencio S.
Factoran, Jr., then Secretary of the Department of Environment and Natural Resources (DENR). His
substitution in this petition by the new Secretary, the Honorable Angel C. Alcala, was subsequently ordered
upon proper motion by the petitioners. 1 The complaint 2 was instituted as a taxpayers' class suit 3 and alleges
that the plaintiffs "are all citizens of the Republic of the Philippines, taxpayers, and entitled to the full benefit, use
and enjoyment of the natural resource treasure that is the country's virgin tropical forests." The same was filed for
themselves and others who are equally concerned about the preservation of said resource but are "so numerous
that it is impracticable to bring them all before the Court." The minors further asseverate that they "represent
their generation as well as generations yet unborn." 4 Consequently, it is prayed for that judgment be rendered:
. . . ordering defendant, his agents, representatives and other persons acting in his behalf to
(1) Cancel all existing timber license agreements in the country;
(2) Cease and desist from receiving, accepting, processing, renewing or approving new timber
license agreements.
and granting the plaintiffs ". . . such other reliefs just and equitable under the premises." 5
The complaint starts off with the general averments that the Philippine archipelago of 7,100 islands has a
land area of thirty million (30,000,000) hectares and is endowed with rich, lush and verdant rainforests in
which varied, rare and unique species of flora and fauna may be found; these rainforests contain a genetic,
biological and chemical pool which is irreplaceable; they are also the habitat of indigenous Philippine
cultures which have existed, endured and flourished since time immemorial; scientific evidence reveals that
in order to maintain a balanced and healthful ecology, the country's land area should be utilized on the basis
of a ratio of fifty-four per cent (54%) for forest cover and forty-six per cent (46%) for agricultural, residential,
industrial, commercial and other uses; the distortion and disturbance of this balance as a consequence of
deforestation have resulted in a host of environmental tragedies, such as (a) water shortages resulting from
drying up of the water table, otherwise known as the "aquifer," as well as of rivers, brooks and streams, (b)
salinization of the water table as a result of the intrusion therein of salt water, incontrovertible examples of
which may be found in the island of Cebu and the Municipality of Bacoor, Cavite, (c) massive erosion and the
consequential loss of soil fertility and agricultural productivity, with the volume of soil eroded estimated at
one billion (1,000,000,000) cubic meters per annum approximately the size of the entire island of

Catanduanes, (d) the endangering and extinction of the country's unique, rare and varied flora and fauna,
(e) the disturbance and dislocation of cultural communities, including the disappearance of the Filipino's
indigenous cultures, (f) the siltation of rivers and seabeds and consequential destruction of corals and other
aquatic life leading to a critical reduction in marine resource productivity, (g) recurrent spells of drought as is
presently experienced by the entire country, (h) increasing velocity of typhoon winds which result from the
absence of windbreakers, (i) the floodings of lowlands and agricultural plains arising from the absence of the
absorbent mechanism of forests, (j) the siltation and shortening of the lifespan of multi-billion peso dams
constructed and operated for the purpose of supplying water for domestic uses, irrigation and the
generation of electric power, and (k) the reduction of the earth's capacity to process carbon dioxide gases
which has led to perplexing and catastrophic climatic changes such as the phenomenon of global warming,
otherwise known as the "greenhouse effect."
Plaintiffs further assert that the adverse and detrimental consequences of continued and deforestation are
so capable of unquestionable demonstration that the same may be submitted as a matter of judicial notice.
This notwithstanding, they expressed their intention to present expert witnesses as well as documentary,
photographic and film evidence in the course of the trial.
As their cause of action, they specifically allege that:
CAUSE OF ACTION
7. Plaintiffs replead by reference the foregoing allegations.
8. Twenty-five (25) years ago, the Philippines had some sixteen (16) million hectares of
rainforests constituting roughly 53% of the country's land mass.
9. Satellite images taken in 1987 reveal that there remained no more than 1.2 million hectares
of said rainforests or four per cent (4.0%) of the country's land area.
10. More recent surveys reveal that a mere 850,000 hectares of virgin old-growth rainforests
are left, barely 2.8% of the entire land mass of the Philippine archipelago and about 3.0 million
hectares of immature and uneconomical secondary growth forests.
11. Public records reveal that the defendant's, predecessors have granted timber license
agreements ('TLA's') to various corporations to cut the aggregate area of 3.89 million hectares
for commercial logging purposes.
A copy of the TLA holders and the corresponding areas covered is hereto attached as Annex
"A".
12. At the present rate of deforestation, i.e. about 200,000 hectares per annum or 25 hectares
per hour nighttime, Saturdays, Sundays and holidays included the Philippines will be
bereft of forest resources after the end of this ensuing decade, if not earlier.
13. The adverse effects, disastrous consequences, serious injury and irreparable damage of
this continued trend of deforestation to the plaintiff minor's generation and to generations yet
unborn are evident and incontrovertible. As a matter of fact, the environmental damages
enumerated in paragraph 6 hereof are already being felt, experienced and suffered by the
generation of plaintiff adults.
14. The continued allowance by defendant of TLA holders to cut and deforest the remaining
forest stands will work great damage and irreparable injury to plaintiffs especially plaintiff
minors and their successors who may never see, use, benefit from and enjoy this rare and
unique natural resource treasure.
This act of defendant constitutes a misappropriation and/or impairment of the natural resource
property he holds in trust for the benefit of plaintiff minors and succeeding generations.
15. Plaintiffs have a clear and constitutional right to a balanced and healthful ecology and are
entitled to protection by the State in its capacity as the parens patriae.
16. Plaintiff have exhausted all administrative remedies with the defendant's office. On March
2, 1990, plaintiffs served upon defendant a final demand to cancel all logging permits in the
country.
A copy of the plaintiffs' letter dated March 1, 1990 is hereto attached as Annex "B".
17. Defendant, however, fails and refuses to cancel the existing TLA's to the continuing serious
damage and extreme prejudice of plaintiffs.
18. The continued failure and refusal by defendant to cancel the TLA's is an act violative of the
rights of plaintiffs, especially plaintiff minors who may be left with a country that is desertified
(sic), bare, barren and devoid of the wonderful flora, fauna and indigenous cultures which the
Philippines had been abundantly blessed with.

19. Defendant's refusal to cancel the aforementioned TLA's is manifestly contrary to the public
policy enunciated in the Philippine Environmental Policy which, in pertinent part, states that it
is the policy of the State
(a) to create, develop, maintain and improve conditions under which man and nature can
thrive in productive and enjoyable harmony with each other;
(b) to fulfill the social, economic and other requirements of present and future generations of
Filipinos and;
(c) to ensure the attainment of an environmental quality that is conductive to a life of dignity
and well-being. (P.D. 1151, 6 June 1977)
20. Furthermore, defendant's continued refusal to cancel the aforementioned TLA's is
contradictory to the Constitutional policy of the State to
a. effect "a more equitable distribution of opportunities, income and wealth" and "make full
and efficient use of natural resources (sic)." (Section 1, Article XII of the Constitution);
b. "protect the nation's marine wealth." (Section 2, ibid);
c. "conserve and promote the nation's cultural heritage and resources (sic)" (Section 14, Article
XIV,id.);
d. "protect and advance the right of the people to a balanced and healthful ecology in accord
with the rhythm and harmony of nature." (Section 16, Article II, id.)
21. Finally, defendant's act is contrary to the highest law of humankind the natural law
and violative of plaintiffs' right to self-preservation and perpetuation.
22. There is no other plain, speedy and adequate remedy in law other than the instant action
to arrest the unabated hemorrhage of the country's vital life support systems and continued
rape of Mother Earth. 6
On 22 June 1990, the original defendant, Secretary Factoran, Jr., filed a Motion to Dismiss the complaint
based on two (2) grounds, namely: (1) the plaintiffs have no cause of action against him and (2) the issue
raised by the plaintiffs is a political question which properly pertains to the legislative or executive branches
of Government. In their 12 July 1990 Opposition to the Motion, the petitioners maintain that (1) the
complaint shows a clear and unmistakable cause of action, (2) the motion is dilatory and (3) the action
presents a justiciable question as it involves the defendant's abuse of discretion.
On 18 July 1991, respondent Judge issued an order granting the aforementioned motion to dismiss. 7 In the
said order, not only was the defendant's claim that the complaint states no cause of action against him and
that it raises a political question sustained, the respondent Judge further ruled that the granting of the relief
prayed for would result in the impairment of contracts which is prohibited by the fundamental law of the land.
Plaintiffs thus filed the instant special civil action for certiorari under Rule 65 of the Revised Rules of Court
and ask this Court to rescind and set aside the dismissal order on the ground that the respondent Judge
gravely abused his discretion in dismissing the action. Again, the parents of the plaintiffs-minors not only
represent their children, but have also joined the latter in this case. 8
On 14 May 1992, We resolved to give due course to the petition and required the parties to submit their
respective Memoranda after the Office of the Solicitor General (OSG) filed a Comment in behalf of the
respondents and the petitioners filed a reply thereto.
Petitioners contend that the complaint clearly and unmistakably states a cause of action as it contains
sufficient allegations concerning their right to a sound environment based on Articles 19, 20 and 21 of the
Civil Code (Human Relations), Section 4 of Executive Order (E.O.) No. 192 creating the DENR, Section 3 of
Presidential Decree (P.D.) No. 1151 (Philippine Environmental Policy), Section 16, Article II of the 1987
Constitution recognizing the right of the people to a balanced and healthful ecology, the concept of
generational genocide in Criminal Law and the concept of man's inalienable right to self-preservation and
self-perpetuation embodied in natural law. Petitioners likewise rely on the respondent's correlative obligation
per Section 4 of E.O. No. 192, to safeguard the people's right to a healthful environment.
It is further claimed that the issue of the respondent Secretary's alleged grave abuse of discretion in
granting Timber License Agreements (TLAs) to cover more areas for logging than what is available involves a
judicial question.
Anent the invocation by the respondent Judge of the Constitution's non-impairment clause, petitioners
maintain that the same does not apply in this case because TLAs are not contracts. They likewise submit
that even if TLAs may be considered protected by the said clause, it is well settled that they may still be
revoked by the State when the public interest so requires.
On the other hand, the respondents aver that the petitioners failed to allege in their complaint a specific
legal right violated by the respondent Secretary for which any relief is provided by law. They see nothing in

the complaint but vague and nebulous allegations concerning an "environmental right" which supposedly
entitles the petitioners to the "protection by the state in its capacity as parens patriae." Such allegations,
according to them, do not reveal a valid cause of action. They then reiterate the theory that the question of
whether logging should be permitted in the country is a political question which should be properly
addressed to the executive or legislative branches of Government. They therefore assert that the petitioners'
resources is not to file an action to court, but to lobby before Congress for the passage of a bill that would
ban logging totally.
As to the matter of the cancellation of the TLAs, respondents submit that the same cannot be done by the
State without due process of law. Once issued, a TLA remains effective for a certain period of time usually
for twenty-five (25) years. During its effectivity, the same can neither be revised nor cancelled unless the
holder has been found, after due notice and hearing, to have violated the terms of the agreement or other
forestry laws and regulations. Petitioners' proposition to have all the TLAs indiscriminately cancelled without
the requisite hearing would be violative of the requirements of due process.
Before going any further, We must first focus on some procedural matters. Petitioners instituted Civil Case
No. 90-777 as a class suit. The original defendant and the present respondents did not take issue with this
matter. Nevertheless, We hereby rule that the said civil case is indeed a class suit. The subject matter of the
complaint is of common and general interest not just to several, but to all citizens of the Philippines.
Consequently, since the parties are so numerous, it, becomes impracticable, if not totally impossible, to
bring all of them before the court. We likewise declare that the plaintiffs therein are numerous and
representative enough to ensure the full protection of all concerned interests. Hence, all the requisites for
the filing of a valid class suit under Section 12, Rule 3 of the Revised Rules of Court are present both in the
said civil case and in the instant petition, the latter being but an incident to the former.
This case, however, has a special and novel element. Petitioners minors assert that they represent their
generation as well as generations yet unborn. We find no difficulty in ruling that they can, for themselves, for
others of their generation and for the succeeding generations, file a class suit. Their personality to sue in
behalf of the succeeding generations can only be based on the concept of intergenerational responsibility
insofar as the right to a balanced and healthful ecology is concerned. Such a right, as hereinafter
expounded, considers
the "rhythm and harmony of nature." Nature means the created world in its entirety. 9 Such rhythm and
harmony indispensably include, inter alia, the judicious disposition, utilization, management, renewal and
conservation of the country's forest, mineral, land, waters, fisheries, wildlife, off-shore areas and other natural
resources to the end that their exploration, development and utilization be equitably accessible to the present as
well as future generations. 10 Needless to say, every generation has a responsibility to the next to preserve that
rhythm and harmony for the full enjoyment of a balanced and healthful ecology. Put a little differently, the minors'
assertion of their right to a sound environment constitutes, at the same time, the performance of their obligation
to ensure the protection of that right for the generations to come.
The locus standi of the petitioners having thus been addressed, We shall now proceed to the merits of the
petition.
After a careful perusal of the complaint in question and a meticulous consideration and evaluation of the
issues raised and arguments adduced by the parties, We do not hesitate to find for the petitioners and rule
against the respondent Judge's challenged order for having been issued with grave abuse of discretion
amounting to lack of jurisdiction. The pertinent portions of the said order reads as follows:
xxx xxx xxx
After a careful and circumspect evaluation of the Complaint, the Court cannot help but agree
with the defendant. For although we believe that plaintiffs have but the noblest of all
intentions, it (sic) fell short of alleging, with sufficient definiteness, a specific legal right they
are seeking to enforce and protect, or a specific legal wrong they are seeking to prevent and
redress (Sec. 1, Rule 2, RRC). Furthermore, the Court notes that the Complaint is replete with
vague assumptions and vague conclusions based on unverified data. In fine, plaintiffs fail to
state a cause of action in its Complaint against the herein defendant.
Furthermore, the Court firmly believes that the matter before it, being impressed with political
color and involving a matter of public policy, may not be taken cognizance of by this Court
without doing violence to the sacred principle of "Separation of Powers" of the three (3) coequal branches of the Government.
The Court is likewise of the impression that it cannot, no matter how we stretch our
jurisdiction, grant the reliefs prayed for by the plaintiffs, i.e., to cancel all existing timber
license agreements in the country and to cease and desist from receiving, accepting,
processing, renewing or approving new timber license agreements. For to do otherwise would
amount to "impairment of contracts" abhored (sic) by the fundamental law. 11
We do not agree with the trial court's conclusions that the plaintiffs failed to allege with sufficient
definiteness a specific legal right involved or a specific legal wrong committed, and that the complaint is
replete with vague assumptions and conclusions based on unverified data. A reading of the complaint itself
belies these conclusions.

The complaint focuses on one specific fundamental legal right the right to a balanced and healthful
ecology which, for the first time in our nation's constitutional history, is solemnly incorporated in the
fundamental law. Section 16, Article II of the 1987 Constitution explicitly provides:
Sec. 16. The State shall protect and advance the right of the people to a balanced and
healthful ecology in accord with the rhythm and harmony of nature.
This right unites with the right to health which is provided for in the preceding section of the
same article:
Sec. 15. The State shall protect and promote the right to health of the people and instill health
consciousness among them.
While the right to a balanced and healthful ecology is to be found under the Declaration of Principles and
State Policies and not under the Bill of Rights, it does not follow that it is less important than any of the civil
and political rights enumerated in the latter. Such a right belongs to a different category of rights altogether
for it concerns nothing less than self-preservation and self-perpetuation aptly and fittingly stressed by the
petitioners the advancement of which may even be said to predate all governments and constitutions. As
a matter of fact, these basic rights need not even be written in the Constitution for they are assumed to
exist from the inception of humankind. If they are now explicitly mentioned in the fundamental charter, it is
because of the well-founded fear of its framers that unless the rights to a balanced and healthful ecology
and to health are mandated as state policies by the Constitution itself, thereby highlighting their continuing
importance and imposing upon the state a solemn obligation to preserve the first and protect and advance
the second, the day would not be too far when all else would be lost not only for the present generation, but
also for those to come generations which stand to inherit nothing but parched earth incapable of
sustaining life.
The right to a balanced and healthful ecology carries with it the correlative duty to refrain from impairing the
environment. During the debates on this right in one of the plenary sessions of the 1986 Constitutional
Commission, the following exchange transpired between Commissioner Wilfrido Villacorta and Commissioner
Adolfo Azcuna who sponsored the section in question:
MR. VILLACORTA:
Does this section mandate the State to provide sanctions against all forms of
pollution air, water and noise pollution?
MR. AZCUNA:
Yes, Madam President. The right to healthful (sic) environment necessarily carries
with it the correlative duty of not impairing the same and, therefore, sanctions
may be provided for impairment of environmental balance. 12
The said right implies, among many other things, the judicious management and conservation of the
country's forests.
Without such forests, the ecological or environmental balance would be irreversiby disrupted.
Conformably with the enunciated right to a balanced and healthful ecology and the right to health, as well as
the other related provisions of the Constitution concerning the conservation, development and utilization of
the country's natural resources, 13 then President Corazon C. Aquino promulgated on 10 June 1987 E.O. No.
192, 14 Section 4 of which expressly mandates that the Department of Environment and Natural Resources "shall
be the primary government agency responsible for the conservation, management, development and proper use
of the country's environment and natural resources, specifically forest and grazing lands, mineral, resources,
including those in reservation and watershed areas, and lands of the public domain, as well as the licensing and
regulation of all natural resources as may be provided for by law in order to ensure equitable sharing of the
benefits derived therefrom for the welfare of the present and future generations of Filipinos." Section 3 thereof
makes the following statement of policy:
Sec. 3. Declaration of Policy. It is hereby declared the policy of the State to ensure the
sustainable use, development, management, renewal, and conservation of the country's forest,
mineral, land, off-shore areas and other natural resources, including the protection and
enhancement of the quality of the environment, and equitable access of the different
segments of the population to the development and the use of the country's natural resources,
not only for the present generation but for future generations as well. It is also the policy of the
state to recognize and apply a true value system including social and environmental cost
implications relative to their utilization, development and conservation of our natural
resources.
This policy declaration is substantially re-stated it Title XIV, Book IV of the Administrative Code of
1987, 15specifically in Section 1 thereof which reads:
Sec. 1. Declaration of Policy. (1) The State shall ensure, for the benefit of the Filipino people,
the full exploration and development as well as the judicious disposition, utilization,
management, renewal and conservation of the country's forest, mineral, land, waters,

fisheries, wildlife, off-shore areas and other natural resources, consistent with the necessity of
maintaining a sound ecological balance and protecting and enhancing the quality of the
environment and the objective of making the exploration, development and utilization of such
natural resources equitably accessible to the different segments of the present as well as
future generations.
(2) The State shall likewise recognize and apply a true value system that takes into account
social and environmental cost implications relative to the utilization, development and
conservation of our natural resources.
The above provision stresses "the necessity of maintaining a sound ecological balance and protecting and
enhancing the quality of the environment." Section 2 of the same Title, on the other hand, specifically
speaks of the mandate of the DENR; however, it makes particular reference to the fact of the agency's being
subject to law and higher authority. Said section provides:
Sec. 2. Mandate. (1) The Department of Environment and Natural Resources shall be
primarily responsible for the implementation of the foregoing policy.
(2) It shall, subject to law and higher authority, be in charge of carrying out the State's
constitutional mandate to control and supervise the exploration, development, utilization, and
conservation of the country's natural resources.
Both E.O. NO. 192 and the Administrative Code of 1987 have set the objectives which will serve as the bases
for policy formulation, and have defined the powers and functions of the DENR.
It may, however, be recalled that even before the ratification of the 1987 Constitution, specific statutes
already paid special attention to the "environmental right" of the present and future generations. On 6 June
1977, P.D. No. 1151 (Philippine Environmental Policy) and P.D. No. 1152 (Philippine Environment Code) were
issued. The former "declared a continuing policy of the State (a) to create, develop, maintain and improve
conditions under which man and nature can thrive in productive and enjoyable harmony with each other, (b)
to fulfill the social, economic and other requirements of present and future generations of Filipinos, and (c)
to insure the attainment of an environmental quality that is conducive to a life of dignity and wellbeing." 16 As its goal, it speaks of the "responsibilities of each generation as trustee and guardian of the
environment for succeeding generations." 17 The latter statute, on the other hand, gave flesh to the said policy.
Thus, the right of the petitioners (and all those they represent) to a balanced and healthful ecology is as
clear as the DENR's duty under its mandate and by virtue of its powers and functions under E.O. No. 192
and the Administrative Code of 1987 to protect and advance the said right.
A denial or violation of that right by the other who has the corelative duty or obligation to respect or protect
the same gives rise to a cause of action. Petitioners maintain that the granting of the TLAs, which they claim
was done with grave abuse of discretion, violated their right to a balanced and healthful ecology; hence, the
full protection thereof requires that no further TLAs should be renewed or granted.
A cause of action is defined as:
. . . an act or omission of one party in violation of the legal right or rights of the other; and its
essential elements are legal right of the plaintiff, correlative obligation of the defendant, and
act or omission of the defendant in violation of said legal right. 18
It is settled in this jurisdiction that in a motion to dismiss based on the ground that the complaint fails to
state a cause of action, 19 the question submitted to the court for resolution involves the sufficiency of the facts
alleged in the complaint itself. No other matter should be considered; furthermore, the truth of falsity of the said
allegations is beside the point for the truth thereof is deemed hypothetically admitted. The only issue to be
resolved in such a case is: admitting such alleged facts to be true, may the court render a valid judgment in
accordance with the prayer in the complaint? 20 In Militante vs. Edrosolano, 21 this Court laid down the rule that
the judiciary should "exercise the utmost care and circumspection in passing upon a motion to dismiss on the
ground of the absence thereof [cause of action] lest, by its failure to manifest a correct appreciation of the facts
alleged and deemed hypothetically admitted, what the law grants or recognizes is effectively nullified. If that
happens, there is a blot on the legal order. The law itself stands in disrepute."
After careful examination of the petitioners' complaint, We find the statements under the introductory
affirmative allegations, as well as the specific averments under the sub-heading CAUSE OF ACTION, to be
adequate enough to show, prima facie, the claimed violation of their rights. On the basis thereof, they may
thus be granted, wholly or partly, the reliefs prayed for. It bears stressing, however, that insofar as the
cancellation of the TLAs is concerned, there is the need to implead, as party defendants, the grantees
thereof for they are indispensable parties.
The foregoing considered, Civil Case No. 90-777 be said to raise a political question. Policy formulation or
determination by the executive or legislative branches of Government is not squarely put in issue. What is
principally involved is the enforcement of a right vis-a-vis policies already formulated and expressed in
legislation. It must, nonetheless, be emphasized that the political question doctrine is no longer, the
insurmountable obstacle to the exercise of judicial power or the impenetrable shield that protects executive
and legislative actions from judicial inquiry or review. The second paragraph of section 1, Article VIII of the
Constitution states that:

Judicial power includes the duty of the courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable, and to determine whether or not there
has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of
any branch or instrumentality of the Government.
Commenting on this provision in his book, Philippine Political Law,
member of this Court, says:

22

Mr. Justice Isagani A. Cruz, a distinguished

The first part of the authority represents the traditional concept of judicial power, involving the
settlement of conflicting rights as conferred as law. The second part of the authority represents
a broadening of judicial power to enable the courts of justice to review what was before
forbidden territory, to wit, the discretion of the political departments of the government.
As worded, the new provision vests in the judiciary, and particularly the Supreme Court, the
power to rule upon even the wisdom of the decisions of the executive and the legislature and
to declare their acts invalid for lack or excess of jurisdiction because tainted with grave abuse
of discretion. The catch, of course, is the meaning of "grave abuse of discretion," which is a
very elastic phrase that can expand or contract according to the disposition of the judiciary.
In Daza vs. Singson,

23

Mr. Justice Cruz, now speaking for this Court, noted:

In the case now before us, the jurisdictional objection becomes even less tenable and decisive.
The reason is that, even if we were to assume that the issue presented before us was political
in nature, we would still not be precluded from revolving it under the expanded jurisdiction
conferred upon us that now covers, in proper cases, even the political question. Article VII,
Section 1, of the Constitution clearly provides: . . .
The last ground invoked by the trial court in dismissing the complaint is the non-impairment of contracts
clause found in the Constitution. The court a quo declared that:
The Court is likewise of the impression that it cannot, no matter how we stretch our
jurisdiction, grant the reliefs prayed for by the plaintiffs, i.e., to cancel all existing timber
license agreements in the country and to cease and desist from receiving, accepting,
processing, renewing or approving new timber license agreements. For to do otherwise would
amount to "impairment of contracts" abhored (sic) by the fundamental law. 24
We are not persuaded at all; on the contrary, We are amazed, if not shocked, by such a sweeping
pronouncement. In the first place, the respondent Secretary did not, for obvious reasons, even invoke in his
motion to dismiss the non-impairment clause. If he had done so, he would have acted with utmost infidelity
to the Government by providing undue and unwarranted benefits and advantages to the timber license
holders because he would have forever bound the Government to strictly respect the said licenses according
to their terms and conditions regardless of changes in policy and the demands of public interest and welfare.
He was aware that as correctly pointed out by the petitioners, into every timber license must be read
Section 20 of the Forestry Reform Code (P.D. No. 705) which provides:
. . . Provided, That when the national interest so requires, the President may amend, modify,
replace or rescind any contract, concession, permit, licenses or any other form of privilege
granted herein . . .
Needless to say, all licenses may thus be revoked or rescinded by executive action. It is not a
contract, property or a property right protested by the due process clause of the Constitution. In Tan
vs. Director of Forestry, 25 this Court held:
. . . A timber license is an instrument by which the State regulates the utilization and
disposition of forest resources to the end that public welfare is promoted. A timber license is
not a contract within the purview of the due process clause; it is only a license or privilege,
which can be validly withdrawn whenever dictated by public interest or public welfare as in this
case.
A license is merely a permit or privilege to do what otherwise would be unlawful, and is not a
contract between the authority, federal, state, or municipal, granting it and the person to
whom it is granted; neither is it property or a property right, nor does it create a vested right;
nor is it taxation (37 C.J. 168). Thus, this Court held that the granting of license does not create
irrevocable rights, neither is it property or property rights (People vs. Ong Tin, 54 O.G. 7576).
We reiterated this pronouncement in Felipe Ysmael, Jr. & Co., Inc. vs. Deputy Executive Secretary:

26

. . . Timber licenses, permits and license agreements are the principal instruments by which
the State regulates the utilization and disposition of forest resources to the end that public
welfare is promoted. And it can hardly be gainsaid that they merely evidence a privilege
granted by the State to qualified entities, and do not vest in the latter a permanent or
irrevocable right to the particular concession area and the forest products therein. They may
be validly amended, modified, replaced or rescinded by the Chief Executive when national
interests so require. Thus, they are not deemed contracts within the purview of the due

process of law clause [See Sections 3(ee) and 20 of Pres. Decree No. 705, as amended. Also,
Tan v. Director of Forestry, G.R. No. L-24548, October 27, 1983, 125 SCRA 302].
Since timber licenses are not contracts, the non-impairment clause, which reads:
Sec. 10. No law impairing, the obligation of contracts shall be passed.

27

cannot be invoked.
In the second place, even if it is to be assumed that the same are contracts, the instant case does not
involve a law or even an executive issuance declaring the cancellation or modification of existing timber
licenses. Hence, the non-impairment clause cannot as yet be invoked. Nevertheless, granting further that a
law has actually been passed mandating cancellations or modifications, the same cannot still be stigmatized
as a violation of the non-impairment clause. This is because by its very nature and purpose, such as law
could have only been passed in the exercise of the police power of the state for the purpose of advancing
the right of the people to a balanced and healthful ecology, promoting their health and enhancing the
general welfare. In Abe vs. Foster Wheeler
Corp. 28 this Court stated:
The freedom of contract, under our system of government, is not meant to be absolute. The
same is understood to be subject to reasonable legislative regulation aimed at the promotion
of public health, moral, safety and welfare. In other words, the constitutional guaranty of nonimpairment of obligations of contract is limited by the exercise of the police power of the State,
in the interest of public health, safety, moral and general welfare.
The reason for this is emphatically set forth in Nebia vs. New York,
Insurance Co. vs. Auditor General, 30 to wit:

29

quoted in Philippine American Life

Under our form of government the use of property and the making of contracts are normally
matters of private and not of public concern. The general rule is that both shall be free of
governmental interference. But neither property rights nor contract rights are absolute; for
government cannot exist if the citizen may at will use his property to the detriment of his
fellows, or exercise his freedom of contract to work them harm. Equally fundamental with the
private right is that of the public to regulate it in the common interest.
In short, the non-impairment clause must yield to the police power of the state.

31

Finally, it is difficult to imagine, as the trial court did, how the non-impairment clause could apply with
respect to the prayer to enjoin the respondent Secretary from receiving, accepting, processing, renewing or
approving new timber licenses for, save in cases of renewal, no contract would have as of yet existed in the
other instances. Moreover, with respect to renewal, the holder is not entitled to it as a matter of right.
WHEREFORE, being impressed with merit, the instant Petition is hereby GRANTED, and the challenged Order
of respondent Judge of 18 July 1991 dismissing Civil Case No. 90-777 is hereby set aside. The petitioners
may therefore amend their complaint to implead as defendants the holders or grantees of the questioned
timber license agreements.
No pronouncement as to costs.
SO ORDERED.

FIRST DIVISION
[G.R. No. 148622. September 12, 2002]

REPUBLIC OF THE PHILIPPINES vs. THE CITY OF DAVAO

DECISION
YNARES-SANTIAGO, J.:

Before us is a petition for review on certiorari assailing the decision dated May
28, 2001 of the Regional Trial Court of Davao City, Branch 33, which granted the writ
of mandamus and injunction in favor of respondent, the City of Davao, and against
petitioner, the Republic, represented by the Department of Environment and Natural
Resources (DENR). The trial court also directed petitioner to issue a Certificate of
Non-Coverage in favor of respondent.
[1]

[2]

The antecedent facts of the case are as follows:

On August 11, 2000, respondent filed an application for a Certificate of NonCoverage (CNC) for its proposed project, the Davao City Artica Sports Dome, with
the Environmental Management Bureau (EMB), Region XI. Attached to the
application were the required documents for its issuance, namely, a) detailed
location map of the project site; b) brief project description; and c) a certification
from the City Planning and Development Office that the project is not located in an
environmentally critical area (ECA). The EMB Region XI denied the application after
finding that the proposed project was within an environmentally critical area and
ruled that, pursuant to Section 2, Presidential Decree No. 1586, otherwise known as
the Environmental Impact Statement System, in relation to Section 4 of Presidential
Decree No, 1151, also known as the Philippine Environment Policy, the City of Davao
must undergo the environmental impact assessment (EIA) process to secure an
Environmental Compliance Certificate (ECC), before it can proceed with the
construction of its project.
Believing that it was entitled to a Certificate of Non-Coverage, respondent filed a
petition for mandamus and injunction with the Regional Trial Court of Davao,
docketed as Civil Case No. 28,133-2000. It alleged that its proposed project was
neither an environmentally critical project nor within an environmentally critical
area; thus it was outside the scope of the EIS system. Hence, it was the ministerial
duty of the DENR, through the EMB-Region XI, to issue a CNC in favor of respondent
upon submission of the required documents.
The Regional Trial Court rendered judgment in favor of respondent, the
dispositive portion of which reads as follows:
WHEREFORE, finding the petition to be meritorious, judgment granting the writ of
mandamus and injunction is hereby rendered in favor of the petitioner City of Davao
and against respondents Department of Environment and Natural Resources and the
other respondents by:
1) directing the respondents to issue in favor of the petitioner City of Davao a
Certificate of Non-Coverage, pursuant to Presidential Decree No. 1586 and related
laws, in connection with the construction by the City of Davao of the Artica Sports
Dome;
2) making the preliminary injunction issued on December 12, 2000 permanent.
Costs de oficio.
SO ORDERED.

[3]

The trial court ratiocinated that there is nothing in PD 1586, in relation to PD

1151 and Letter of Instruction No. 1179 (prescribing guidelines for compliance with
the EIA system), which requires local government units (LGUs) to comply with the
EIS law. Only agencies and instrumentalities of the national government, including
government owned or controlled corporations, as well as private corporations, firms
and entities are mandated to go through the EIA process for their proposed projects
which have significant effect on the quality of the environment. A local government
unit, not being an agency or instrumentality of the National Government, is deemed
excluded under the principle ofexpressio unius est exclusio alterius.
The trial court also declared, based on the certifications of the DENR-Community
Environment and Natural Resources Office (CENRO)-West, and the data gathered
from the Philippine Institute of Volcanology and Seismology (PHIVOLCS), that the
site for the Artica Sports Dome was not within an environmentally critical
area. Neither was the project an environmentally critical one. It therefore becomes
mandatory for the DENR, through the EMB Region XI, to approve respondents
application for CNC after it has satisfied all the requirements for its
issuance. Accordingly, petitioner can be compelled by a writ of mandamus to issue
the CNC, if it refuses to do so.
Petitioner filed a motion for reconsideration,
denied. Hence, the instant petition for review.

however,

the

same

was

With the supervening change of administration, respondent, in lieu of a

comment, filed a manifestation expressing its agreement with petitioner that,
indeed, it needs to secure an ECC for its proposed project. It thus rendered the
instant petition moot and academic. However, for the guidance of the implementors
of the EIS law and pursuant to our symbolic function to educate the bench and bar,
we are inclined to address the issue raised in this petition.
[4]

Section 15 of Republic Act 7160, otherwise known as the Local Government

Code, defines a local government unit as a body politic and corporate endowed with
powers to be exercised by it in conformity with law. As such, it performs dual
functions, governmental and proprietary. Governmental functions are those that
concern the health, safety andthe advancement of the public good or welfare as
affecting the public generally. Proprietary functions are those that seek to obtain
special corporate benefits or earn pecuniary profit and intended for private
advantage and benefit. When exercising governmental powers and performing
governmental duties, an LGU is an agency of the national government. When
engaged in corporate activities, it acts as an agent of the community in the
administration of local affairs.
[5]

[6]

[7]

[8]

[9]

Found in Section 16 of the Local Government Code is the duty of the LGUs to
promote the peoples right to a balanced ecology. Pursuant to this, an LGU, like the
City of Davao, can not claim exemption from the coverage of PD 1586. As a body
politic endowed with governmental functions, an LGU has the duty to ensure the
quality of the environment, which is the very same objective of PD 1586.
[10]

Further, it is a rule of statutory construction that every part of a statute must be

interpreted with reference to the context, i.e., that every part must be considered
with other parts, and kept subservient to the general intent of the enactment. The
trial court, in declaring local government units as exempt from the coverage of the
EIS law, failed to relate Section 2 of PD 1586 to the following provisions of the
same law:
[11]

[12]

WHEREAS, the pursuit of a comprehensive and integrated environmental protection

program necessitates the establishment and institutionalization of a system
whereby the exigencies of socio-economic undertakings can be reconciled with the
requirements of environmental quality; x x x.

Section 1. Policy. It is hereby declared the policy of the State to attain and maintain
a rational and orderly balance between socio-economic growth and environmental
protection.
xxxxxxxxx
Section 4. Presidential Proclamation of Environmentally Critical Areas and
Projects. The President of the Philippines may, on his own initiative or upon
recommendation of the National Environmental Protection Council, by proclamation
declare certain projects, undertakings or areas in the country as environmentally
critical. No person, partnership or corporation shall undertake or operate any such
declared environmentally critical project or area without first securing an
Environmental Compliance Certificate issued by the President or his duly authorized
representative. For the proper management of said critical project or area, the
President may by his proclamation reorganize such government offices, agencies,
institutions, corporations or instrumentalities including the realignment of
government personnel, and their specific functions and responsibilities.
Section 4 of PD 1586 clearly states that no person, partnership or corporation
shall undertake or operate any such declared environmentally critical project or area
without first securing an Environmental Compliance Certificate issued by the
President or his duly authorized representative. The Civil Code defines a person as
either natural or juridical. The state and its political subdivisions, i.e., the local
government units are juridical persons. Undoubtedly therefore, local government
units are not excluded from the coverage of PD 1586.
[13]

[14]

[15]

Lastly, very clear in Section 1 of PD 1586 that said law intends to implement the
policy of the state to achieve a balance between socio-economic development and
environmental protection, which are the twin goals of sustainable development. The
above-quoted first paragraph of the Whereas clause stresses that this can only be
possible
if
we
adopt
a
comprehensive
and integrated environmental protection program where all the sectors of the
community are involved, i.e., the government and the private sectors. The local
government units, as part of the machinery of the government, cannot therefore be
deemed as outside the scope of the EIS system.
[16]

The foregoing arguments, however, presuppose that a project, for which an

Environmental Compliance Certificate is necessary, is environmentally critical or
within an environmentally critical area. In the case at bar, respondent has
sufficiently shown that the Artica Sports Dome will not have a significant negative
environmental impact because it is not an environmentally critical project and it is
not located in an environmentally critical area. In support of this contention,
respondent submitted the following:
1. Certification from the City Planning and Development Office that the project is not
located in an environmentally critical area;
2. Certification from the Community Environment and Natural Resources Office
(CENRO-West) that the project area is within the 18-30% slope, is outside the scope
of the NIPAS (R.A. 7586), and not within a declared watershed area; and
3. Certification from PHILVOCS that the project site is thirty-seven (37) kilometers
southeast of the southernmost extension of the Davao River Fault and forty-five (45)
kilometers west of the Eastern Mindanao Fault; and is outside the required minimum
buffer zone of five (5) meters from a fault zone.
The trial court, after a consideration of the evidence, found that the Artica Sports
Dome is not within an environmentally critical area. Neither is it an environmentally
critical project. It is axiomatic that factual findings of the trial court, when fully
supported by the evidence on record, are binding upon this Court and will not be
disturbed on appeal. This Court is not a trier of facts.
[17]

[18]

There are exceptional instances when this Court may disregard factual findings of
the trial court, namely: a) when the conclusion is a finding grounded entirely on
speculations, surmises, or conjectures; b) when the inference made is manifestly
mistaken, absurd, or impossible; c) where there is a grave abuse of discretion; d)
when the judgment is based on a misapprehension of facts; e) when the findings of
fact are conflicting; f) when the Court of Appeals, in making its findings, went
beyond the issues of the case and the same are contrary to the admissions of both
appellant and appellee; g) when the findings of the Court of Appeals are contrary to
those of the trial court; h) when the findings of fact are conclusions without citation
of specific evidence on which they are based; i) when the finding of fact of the Court
of Appeals is premised on the supposed absence of evidence but is contradicted by
the evidence on record; and j) when the Court of Appeals manifestly overlooked
certain relevant facts not disputed by the parties and which, if properly considered,
would justify a different conclusion. None of these exceptions, however, obtain in
this case.
[19]

The Environmental Impact Statement System, which ensures environmental

protection and regulates certain government activities affecting the environment,
was established by Presidential Decree No. 1586. Section 2 thereof states:
There is hereby established an Environmental Impact Statement System founded
and based on the environmental impact statement required under Section 4 of
Presidential Decree No. 1151, of all agencies and instrumentalities of the national
government, including government-owned or controlled corporations, as well as
private corporations, firms and entities, for every proposed project and undertaking
which significantly affect the quality of the environment.
Section 4 of PD 1151, on the other hand, provides:
Environmental Impact Statements. Pursuant to the above enunciated policies and
goals, all agencies and instrumentalities of the national government, including
government-owned or controlled corporations, as well as private corporations, firms
and entities shall prepare, file and include in every action, project or undertaking
which significantly affects the quality of the environment a detailed statement on
(a) the environmental impact of the proposed action, project or undertaking
(b) any adverse environmental effect which cannot be avoided should the proposal
be implemented
(c) alternative to the proposed action
(d) a determination that the short-term uses of the resources of the environment are
consistent with the maintenance and enhancement of the long-term productivity of
the same; and
(e) whenever a proposal involves the use of depletable or nonrenewable resources,
a finding must be made that such use and commitment are warranted.
Before an environmental impact statement is issued by a lead agency, all agencies
having jurisdiction over, or special expertise on, the subject matter involved shall
comment on the draft environmental impact statement made by the lead agency
within thirty (30) days from receipt of the same.
Under Article II, Section 1, of the Rules and Regulations Implementing PD 1586,
the declaration of certain projects or areas as environmentally critical, and which
shall fall within the scope of the Environmental Impact Statement System, shall be
by Presidential Proclamation, in accordance with Section 4 of PD 1586 quoted above.
Pursuant thereto, Proclamation No. 2146 was issued on December 14, 1981,
proclaiming the following areas and types of projects as environmentally critical and

within the scope of the Environmental Impact Statement System established under
PD 1586:
A. Environmentally Critical Projects
I. Heavy Industries
a. Non-ferrous metal industries
b. Iron and steel mills
c. Petroleum and petro-chemical industries including oil and gas
d. Smelting plants
II. Resource Extractive Industries
a. Major mining and quarrying projects
b. Forestry projects
1. Logging
2. Major wood processing projects
3. Introduction of fauna (exotic-animals) in public/private forests
4. Forest occupancy
5. Extraction of mangrove products
6. Grazing
c. Fishery Projects
1. Dikes for/and fishpond development projects
III. Infrastructure Projects
a. Major dams
b. Major power plants (fossil-fueled, nuclear fueled, hydroelectric or
geothermal)
c. Major reclamation projects
d. Major roads and bridges
B. Environmentally Critical Areas
1. All areas declared by law as national parks, watershed reserves, wildlife
preserves and sanctuaries;
2. Areas set aside as aesthetic potential tourist spots;
3. Areas which constitute the habitat for any endangered or threatened
species of indigenous Philippine Wildlife (flora and fauna);
4. Areas of unique historic, archaeological, or scientific interests;
5. Areas which are traditionally occupied by cultural communities or tribes;

6. Areas frequently visited and/or hard-hit by natural calamities (geologic

hazards, floods, typhoons, volcanic activity, etc.);
7. Areas with critical slopes;
8. Areas classified as prime agricultural lands;
9. Recharged areas of aquifers;
10. Water bodies characterized by one or any combination of the following
conditions;
a. tapped for domestic purposes
b. within the controlled and/or protected areas declared by
appropriate authorities
c. which support wildlife and fishery activities
11. Mangrove areas characterized by one or any combination of the following
conditions:
a. with primary pristine and dense young growth;
b. adjoining mouth of major river systems;
c. near or adjacent to traditional productive fry or fishing grounds;
d. which act as natural buffers against shore erosion, strong winds
and storm floods;
e. on which people are dependent for their livelihood.
12. Coral reefs, characterized by one or any combinations of the following
conditions:
a. with 50% and above live coralline cover;
b. spawning and nursery grounds for fish;
c. which act as natural breakwater of coastlines.
In this connection, Section 5 of PD 1586 expressly states:
Environmentally Non-Critical Projects. All other projects, undertakings and areas not
declared by the President as environmentally critical shall be considered as noncritical and shall not be required to submit an environmental impact statement. The
National Environmental Protection Council, thru the Ministry of Human Settlements
may however require non-critical projects and undertakings to provide additional
environmental safeguards as it may deem necessary.
The Artica Sports Dome in Langub does not come close to any of the projects or
areas enumerated above. Neither is it analogous to any of them. It is clear,
therefore, that the said project is not classified as environmentally critical, or within
an environmentally critical area. Consequently, the DENR has no choice but to issue
the Certificate of Non-Coverage. It becomes its ministerial duty, the performance of
which can be compelled by writ of mandamus, such as that issued by the trial court
in the case at bar.
WHEREFORE, in view of the foregoing, the instant petition is DENIED. The
decision of the Regional Trial Court of Davao City, Branch 33, in Civil Case No.
28,133-2000, granting the writ of mandamus and directing the Department of

Environment and Natural Resources to issue in favor of the City of Davao a

Certificate of Non-Coverage, pursuant to Presidential Decree No. 1586 and related
laws, in connection with the construction of the Artica Sports Dome, is AFFIRMED.
SO ORDERED.

FIRST DIVISION

[G.R. No. 131442. July 10, 2003]

BANGUS FRY FISHERFOLK vs. THE HONORABLE ENRICO LANZANAS

DECISION
CARPIO, J.:

The Case
This is a petition for review [1] of the Order[2] dated 7 November 1997 of the
Regional Trial Court of Manila, Branch 7 (Manila RTC), dismissing petitioners
complaint for lack of cause of action and lack of jurisdiction.
The Facts
On 30 June 1997, Regional Executive Director Antonio G. Principe (RED Principe)
of Region IV, Department of Environment and Natural Resources (DENR), issued an
Environmental Clearance Certificate (ECC) in favor of respondent National Power
Corporation (NAPOCOR). The ECC authorized NAPOCOR to construct a temporary
mooring facility in Minolo Cove, Sitio Minolo, Barangay San Isidro, Puerto Galera,
Oriental Mindoro. The Sangguniang Bayan of Puerto Galera has declared Minolo
Cove, a mangrove area and breeding ground for bangus fry, an eco-tourist zone. [3]
The mooring facility would serve as the temporary docking site of NAPOCORs
power barge, which, due to turbulent waters at its former mooring site in Calapan,
Oriental Mindoro, required relocation to a safer site like Minolo Cove. The 14.4
megawatts power barge would provide the main source of power for the entire
province of Oriental Mindoro pending the construction of a land-based power plant
in Calapan, Oriental Mindoro. The ECC for the mooring facility was valid for two
years counted from its date of issuance or until 30 June 1999.[4]
Petitioners, claiming to be fisherfolks from Minolo, San Isidro, Puerto Galera,
sought reconsideration of the ECC issuance. RED Principe, however, denied
petitioners plea on 15 July 1997. On 21 July 1997, petitioners filed a complaint with
the Regional Trial Court of Manila, Branch 7, for the cancellation of the ECC and for
the issuance of a writ of injunction to stop the construction of the mooring facility.
Impleaded as defendants were the following: (1) NAPOCOR, (2) RED Principe, (3)
DENR Region IV Technical Director for Environment Oscar Dominguez, (4) Oriental
Mindoro Electric Cooperative (ORMECO), which is engaged in the distribution of
electricity in Oriental Mindoro, and (5) certain officials of Puerto Galera. [6] Petitioners
subsequently amended their complaint to include as additional defendants the
elective officials of Oriental Mindoro represented by then Governor Rodolfo G.
Valencia. Petitioners further prayed for the demolition of mooring structures that
respondents had already built.
[5]

On 28 July 1997, prior to the filing of the amended complaint, the trial court
issued a 20-day temporary restraining order enjoining the construction of the

mooring facility. However, the trial court lifted the same on 6 August 1997 on
NAPOCORs manifestation that the provincial government of Oriental Mindoro was
the one undertaking the construction of the mooring facility. [7]
On 28 August 1997, before filing their answers, respondents ORMECO and the
provincial officials of Oriental Mindoro moved to dismiss the complaint. These
respondents claimed that petitioners failed to exhaust administrative remedies,
rendering the complaint without cause of action. They also asserted that the Manila
RTC has no jurisdiction to enjoin the construction of the mooring facility in Oriental
Mindoro, which lies outside the Manila RTCs territorial jurisdiction.
Petitioners opposed the motion on the ground that there was no need to exhaust
administrative remedies. They argued that the issuance of the ECC was in patent
violation of Presidential Decree No. 1605,[8] Sections 26 and 27 of Republic Act No.
7160,[9] and the provisions of DENR Department Administrative Order No. 96-37
(DAO 96-37) on the documentation of ECC applications. Petitioners also claimed that
the implementation of the ECC was in patent violation of its terms.
In its order of 7 November 1997, the trial court granted the motion and dismissed
petitioners complaint.
Hence, this petition.
The Ruling of the Trial Court
The trial courts order dismissing the complaint reads in part:
After careful evaluation and analysis, this Court finds the Motion to Dismiss tenable
and meritorious.
Petitioners have clearly failed to exhaust all administrative remedies before taking
this legal action in Court x x x.
It is x x x worth mentioning that the decision of the Regional Director may still be x x
x elevated to the Office of the Secretary of the DENR to fully comply with the
process of exhaustion of administrative remedies. And well settled is the rule in our
jurisdiction that before bringing an action in or resorting to the Courts of Justice, all
remedies of administrative character affecting or determinative of the controversy
at that level should first be exhausted by the aggrieved party (Pestanas vs. Dyogi, L25786, February 27, 1978). And petitioners failure to exhaust administrative
remedies renders his [sic] petition dismissible (Chia vs. Acting Collector of Customs,
177 SCRA 755). And a dismissal on the ground of failure to exhaust administrative
remedies is tantamount to a dismissal based on lack of cause of action (Baguiro vs.
Basa, Jr., 214 SCRA 437; Pineda vs. CFI of Davao, 111 Phil. 643; Sarabia vs.
Secretary of Agriculture & Natural Resources, L-16002, May 23, 1961; Gone, et al.
vs. District Engineer, et. al., L-22782, August 29, 1975; Abe-Abe, et al. vs. Manta, et.
al., L-4827, May 31, 1979) although it does not affect the jurisdiction of the court
over the subject matter (Mun. of La Trinidad, et al. vs. CFI of Baguio-Benguet, et al.,
L-33889, June 28, 1983).
Moreover, this Court finds the Opposition of the Petitioners highly untenable and
bereft of merits that the controverted act in question is patently illegal and there
was an immediate need for judicial intervention.
The ECC in question was issued by the Regional Office of the DENR which has
jurisdiction and authority over the same x x x. And corollary to this, the issue as to
whether or not the Minolo Cove is within the enclosed coves and waters embraced
by Puerto Galera bay and protected by Medio island is a clear question of fact which
the DENR may appropriately resolve before resorting to [the] Court[s].

This Court is likewise aware and cognizant of its territorial jurisdiction in the
enforcement of Writ of Injunction. That truly, [a] writ of injunction can only be
enforced within [the] territorial jurisdiction of this Court but not for acts which are
being or about to be committed outside its territorial jurisdiction. Thus, in Philippine
National Bank vs. Pineda, 197 SCRA 1, the Honorable Supreme Court ruled: Regional
Trial Courts can only enforce their writs of injunction within their respective
designated territories. Furthermore, we find the issuance of the preliminary
injunction directed against the Provincial Sheriff of Negros Occidental a jurisdictional
paux [sic] pas (from Black Dictionary means jurisdictional falsity) as the Courts of
First Instance now Regional TrialCourt[s], can only enforce their writs of injunction
within their respective designated territories.
And finally, this Court is not unmindful of the relevant and square application in the
case at bar of Presidential Decree No. 1818, Executive Order No. 380 dated
November 27, 1989, and Circular No. 2-91 of the Supreme Court that the National
Power Corporation (NPC) is a public utility, created under special legislation,
engaged in the generation and distribution of electric power and energy. The
mooring site of NPC in Puerto Galera, Oriental Mindoro is one of its infrastructure
projects falling within the mantle of Executive Order No. 380, November 27, 1989 x
x x.
And as held by the Supreme Court in the case of National Power Corporation vs.
Honorable Abraham P. Vera, et al., 170 SCRA 721, courts are without jurisdiction to
issue injunctive writs against [the] National Power Corporation. The latter enjoys the
protective mantle of P.D. 1818, (Circular No. 2-91).
xxx
Injunction in this case is not a mere ancillary [sic] writ but the main action itself
together with the Annulment of the Environmental Clearance Certificate (ECC). Even
assuming arguendo that the court [can] annul the ECC how can the latter enforce
the same against the Provincial Government of Oriental Mindoro which was
impleaded by the petitioners as a necessary party together with the Oriental
Mindoro Electric Cooperative and the government officials of Puerto Galera,
Oriental Mindoro, whose acts and functions are being performed outside the
territorial jurisdiction of this court? x x x Indisputably, the injunction and annulment
of ECC as prayed for in the petition are inseparable x x x.
The conclusion, therefore, is inescapable that petitioners have failed to exhaust all
the available administrative remedies and this Court has no jurisdiction to issue the
injunctive writ prayed for in the Amended [Complaint]. [10]
The Issue
The issue is whether the trial court erred in dismissing petitioners complaint for
lack of cause of action and lack of jurisdiction.
The Ruling of the Court
The petition has no merit.
Jurisdiction of the Manila RTC over the Case
Jurisdiction over the subject matter of a case is conferred by law. Such
jurisdiction is determined by the allegations in the complaint, irrespective of
whether the plaintiff is entitled to all or some of the reliefs sought. [11]

A perusal of the allegations in the complaint shows that petitioners principal

cause of action is the alleged illegality of the issuance of the ECC. The violation of
laws on environmental protection and on local government participation in the
implementation of environmentally critical projects is an issue that involves the
validity of NAPOCORs ECC.If the ECC is void, then as a necessary consequence,
NAPOCOR or the provincial government of Oriental Mindoro could not construct the
mooring facility. The subsidiary issue of non-compliance with pertinent local
ordinances in the construction of the mooring facility becomes immaterial for
purposes of granting petitioners main prayer, which is the annulment of the
ECC. Thus, if the court has jurisdiction to determine the validity of the issuance of
the ECC, then it has jurisdiction to hear and decide petitioners complaint.
Petitioners complaint is one that is not capable of pecuniary estimation. It falls
within the exclusive and original jurisdiction of the Regional Trial Courts under
Section 19(1) of Batas Pambansa Blg. 129, as amended by Republic Act No.
7691. The question of whether petitioners should file their complaint in the Regional
Trial Court of Manila or Oriental Mindoro then becomes a matter of venue, to be
determined by the residence of the parties.[12]
Petitioners main prayer is the annulment of the ECC. The principal respondent,
DENR Region IV, has its main office at the L & S Building, Roxas Boulevard,
Manila. Regional Executive Director Principe of the DENR Region IV, who issued the
ECC, holds office there. Plainly, the principal respondent resides in Manila, which is
within the territorial jurisdiction of the Manila RTC. Thus, petitioners filed their
complaint in the proper venue.
On the other hand, the jurisdiction of Regional Trial Courts to issue injunctive
writs is limited to acts committed or about to be committed within their judicial
region.[13]Moreover, Presidential Decree No. 1818 (PD No. 1818) prohibited [14] courts
from issuing injunctive writs against government infrastructure projects like the
mooring facility in the present case. Republic Act No. 8975 (RA No. 8975), which
took effect on 26 November 2000, superseded PD No. 1818 and delineates more
clearly the coverage of the prohibition, reserves the power to issue such writs
exclusively with this Court, and provides penalties for its violation. [15] Obviously,
neither the Manila RTC nor the Oriental Mindoro RTC can issue an injunctive writ to
stop the construction of the mooring facility. Only this Court can do so under PD No.
1818 and later under RA No. 8975. Thus, the question of whether the Manila RTC has
jurisdiction over the complaint considering that its injunctive writ is not enforceable
in Oriental Mindoro is academic.
Clearly, the Manila RTC has jurisdiction to determine the validity of the issuance
of the ECC, although it could not issue an injunctive writ against the DENR or
NAPOCOR. However, since the construction of the mooring facility could not proceed
without a valid ECC, the validity of the ECC remains the determinative issue in
resolving petitioners complaint.
Exhaustion of Administrative Remedies
The settled rule is before a party may seek the intervention of the courts, he
should first avail of all the means afforded by administrative processes. Hence, if a
remedy within the administrative machinery is still available, with a procedure
prescribed pursuant to law for an administrative officer to decide the controversy, a
party should first exhaust such remedy before resorting to the courts. The
premature invocation of a courts intervention renders the complaint without cause
of action and dismissible on such ground.[16]
RED Principe of the DENR Region IV Office issued the ECC based on (1)
Presidential Decree No. 1586 (PD No. 1586) and its implementing rules establishing
the Environmental Impact Statement System, (2) DAO 96-37 [17] and (3) the
Procedural Manual of DAO 96-37. Section 4[18] of PD No. 1586 requires a proponent
of an environmentally critical project, or a project located within an environmentally

critical area as declared by the President, to secure an ECC prior to the projects
operation.[19]NAPOCOR thus secured the ECC because the mooring facility in Minolo
Cove, while not an environmentally critical project, is located within an
environmentally critical area under Presidential Proclamation No. 2146, issued on 14
December 1981.[20]
The rules on administrative appeals from rulings of the DENR Regional Directors
on the implementation of PD No. 1586 are found in Article VI of DAO 96-37, which
provides:
SECTION 1.0. Appeal to the Office of the Secretary. Any party aggrieved by the final
decision of the RED may, within 15 days from receipt of such decision, file an appeal
with the Office of the Secretary. The decision of the Secretary shall be immediately
executory.
SECTION 2.0. Grounds for Appeal. The grounds for appeal shall be limited to grave
abuse of discretion and serious errors in the findings of fact which would cause
grave or irreparable injury to the aggrieved party. Frivolous appeals shall not be
countenanced.
SECTION 3.0. Who May Appeal. The proponent or any stakeholder, including but not
limited to, the LGUs concerned and affected communities, may file an appeal.
The DENR Procedural Manual for DAO 96-37 explains these provisions thus:
Final decisions of the RED may be appealed. These decisions include those relating
to the issuance or non-issuance of an ECC, and the imposition of fines and
penalties. By inference, the decision of the Secretary on the issuance or nonissuance of the ECC may also be appealed based on this provision. Resort to courts
prior to availing of this remedy would make the appellants action dismissible on the
ground of non-exhaustion of administrative remedies.
The right to appeal must be exercised within 15 days from receipt by the aggrieved
party of such decision. Failure to file such appeal within the requisite period will
result in the finality of the REDs or Secretarys decision(s), which can no longer be
disturbed.
An appeal shall not stay the effectivity of the REDs decision, unless the Secretary
directs otherwise.
The right to appeal does not prevent the aggrieved party from first resorting to the
filing of a motion for reconsideration with the RED, to give the RED an opportunity to
re-evaluate his decision. (Emphasis added)
Instead of following the foregoing procedure, petitioners bypassed the DENR
Secretary and immediately filed their complaint with the Manila RTC, depriving the
DENR Secretary the opportunity to review the decision of his subordinate, RED
Principe. Under the Procedural Manual for DAO 96-37 and applicable jurisprudence,
petitioners omission renders their complaint dismissible for lack of cause of action.
[21]
Consequently, the Manila RTC did not err in dismissing petitioners complaint for
lack of cause of action.
On the Alleged Patent Illegality of the ECC
Petitioners nevertheless contend that they are exempt from filing an appeal with
the DENR Secretary because the issuance of the ECC was in patent violation of
existing laws and regulations. These are (1) Section 1 of Presidential Decree No.
1605, as amended, (2) Sections 26 and 27 of Republic Act No. 7160 (Local
Government Code of 1991), and (3) the provisions of DAO 96-37 on the

documentary requirements for the zoning permit and social acceptability of the
mooring facility.
Petitioners contention is without merit. While the patent illegality of an act
exempts a party from complying with the rule on exhaustion of administrative
remedies,[22] this does not apply in the present case.
Presidential Decree No. 1605
Presidential Decree No. 1605 (PD No. 1605), [23] as amended by Presidential
Decrees Nos. 1605-A and 1805, declares as ecologically threatened zone the coves
and waters embraced by Puerto Galera Bay as protected by Medio Island. This
decree provides in part:
Section 1. Any provision of law to the contrary notwithstanding, the construction of
marinas, hotels, restaurants, other commercial structures; commercial or semicommercial wharfs [sic]; commercial docking within the enclosed coves of Puerto
Galera; the destruction of its mangrove stands; the devastation of its corals and
coastline by large barges, motorboats, tugboat propellers, and any form of
destruction by other human activities are hereby prohibited.
Section 2. x x x
No permit for the construction of any wharf, marina, hotel, restaurants and other
commercial structures in Puerto Galera shall be issued without prior approval of the
Office of the President upon the recommendation of the Philippine Tourism Authority.
(Emphasis supplied)
NAPOCOR claims that since Minolo Cove lies outside of Puerto Galera Bay as
protected by Medio Island,[24] PD No. 1605 does not apply to this case. However,
petitioners assert that Minolo Cove is one of the enclosed coves of Puerto
Galera[25] and thus protected under PD No. 1605. This is a question of fact that the
DENR Secretary should have first resolved. In any event, there is no dispute that
NAPOCOR will use the mooring facility for its power barge that will supply 14.4
megawatts of electricity to the entire province of Oriental Mindoro, including Puerto
Galera. The mooring facility is obviously a government-owned public infrastructure
intended to serve a basic need of the people of Oriental Mindoro. The mooring
facility is not a commercial structure; commercial or semi-commercial wharf or
commercial docking as contemplated in Section 1 of PD No. 1605. Therefore, the
issuance of the ECC does not violate PD No. 1605 which applies only to commercial
structures like wharves, marinas, hotels and restaurants.

Sections 26 and 27 of RA No. 7160

Congress introduced Sections 26 and 27 in the Local Government Code to
emphasize the legislative concern for the maintenance of a sound ecology and clean
environment.[26] These provisions require every national government agency or
government-owned and controlled corporation to hold prior consultations with the
local government unit concerned and to secure the prior approval of
its sanggunian before implementing any project or program that may cause
pollution, climatic change, depletion of non-renewable resources, loss of cropland,
rangeland, or forest cover and extinction of animal or plant species. Sections 26 and
27 respectively provide:

Section 26. Duty of National Government Agencies in the Maintenance of

Ecological Balance. - It shall be the duty of every national agency or governmentowned or controlled corporation authorized or involved in the planning and
implementation of any project or program that may cause pollution, climatic
change, depletion of non-renewable resources, loss of crop land, rangeland, or forest
cover and extinction of animal or plant species, to consult with the local government
units, non-governmental organizations, and other sectors concerned and explain the
goals and objectives of the project or program, its impact upon the people and the
community in terms of environmental or ecological balance, and the measures that
will be undertaken to prevent or minimize the adverse effects thereof.
Section 27. Prior Consultations Required. - No project or program shall be
implemented by government authorities unless the consultations mentioned in
Section x x x 26 hereof are complied with, and prior approval of the sanggunian
concerned is obtained: Provided, That occupants in areas where such projects are to
be implemented shall not be evicted unless appropriate relocation sites have been
provided, in accordance with the provisions of the Constitution.
In Lina, Jr. v. Pao,[27] the Court interpreted these provisions in this manner:
Section 27 of the Code should be read in conjunction with Section 26 thereof x x x.
Thus, the projects and programs mentioned in Section 27 should be interpreted to
mean projects and programs whose effects are among those enumerated in
Sections 26 and 27, to wit, those that: (1) may cause pollution; (2) may bring about
climatic change; (3) may cause the depletion of non-renewable resources; (4) may
result in loss of crop land, rangeland, or forest cover; (5) may eradicate certain
animal or plant species; and (6) other projects or programs that may call for the
eviction of a particular group of people residing in the locality where these will be
implemented.
Again, Sections 26 and 27 do not apply to this case because as petitioners admit,
the mooring facility itself is not environmentally critical and hence does not
belong to any of the six types of projects mentioned in the law. There is no statutory
requirement for the concerned sanggunian to approve the construction of the
mooring facility. It is another matter if the operation of the power barge is at issue.
As an environmentally critical project that causes pollution, the operation of the
power barge needs the prior approval of the concerned sanggunian. However, what
is before this Court is only the construction of the mooring facility, not the operation
of the power barge. Thus, the issuance of the ECC does not violate Sections 26 and
27 of RA No. 7160.
[28]

Documentary Requirements for

ECC Applications
Under DAO 96-37, an ECC applicant for a project located within an
environmentally critical area is required to submit an Initial Environment
Examination, which must contain a brief description of the environmental setting
and a documentation of the consultative process undertaken, when appropriate.
[29]
As part of the description of the environmental setting, the ECC applicant must
submit a certificate of locational clearance or zoning certificate.
Petitioners further contend that NAPOCOR, in applying for the ECC, did not
submit to the DENR Region IV Office the documents proving the holding of
consultations and the issuance of a locational clearance or zoning certificate.
Petitioners assert that this omission renders the issuance of the ECC patently illegal.
The contention is also without merit. While such documents are part of the
submissions required from a project proponent, their mere absence does not render
the issuance of the ECC patently illegal. To justify non-exhaustion of administrative

remedies due to the patent illegality of the ECC, the public officer must have issued
the ECC [without any] semblance of compliance, or even an attempt to comply, with
the pertinent laws; when manifestly, the officer has acted without jurisdiction or has
exceeded his jurisdiction, or has committed a grave abuse of discretion; or when his
act is clearly and obviously devoid of any color of authority. [30]
RED Principe, as chief of DENR Region IV, is the officer duly authorized under
DAO 96-37[31] to issue ECCs for projects located within environmentally critical
areas. RED Principe issued the ECC on the recommendation of Amelia Supetran, the
Director of the Environmental Management Bureau. Thus, RED Principe acted with
full authority pursuant to DENR regulations. Moreover, the legal presumption is that
he acted with the requisite authority.[32] This clothes RED Principes acts with
presumptive validity and negates any claim that his actions are patently illegal or
that he gravely abused his discretion. While petitioners may present proof to the
contrary, they must do so before the proper administrative forum before resorting to
judicial remedies.
On the Alleged Non-Compliance with the Terms of the ECC
Lastly, petitioners claim that they are justified in immediately seeking judicial
recourse because NAPOCOR is guilty of violating the conditions of the ECC, which
requires it to secure a separate ECC for the operation of the power barge. The ECC
also mandates NAPOCOR to secure the usual local government permits, like zoning
and building permits, from the municipal government of Puerto Galera.
The contention is similarly without merit. The fact that NAPOCORs ECC is subject
to cancellation for non-compliance with its conditions does not justify petitioners
conduct in ignoring the procedure prescribed in DAO 96-37 on appeals from the
decision of the DENR Executive Director. Petitioners vigorously insist that NAPOCOR
should comply with the requirements of consultation and locational clearance
prescribed in DAO 96-37. Ironically, petitioners themselves refuse to abide with the
procedure for filing complaints and appealing decisions laid down in DAO 96-37.
DAO 96-37 provides for a separate administrative proceeding to address
complaints for the cancellation of an ECC. Under Article IX of DAO 96-37, complaints
to nullify an ECC must undergo an administrative investigation, after which the
hearing officer will submit his report to the EMB Director or the Regional Executive
Director, who will then render his decision. The aggrieved party may file an appeal
to the DENR Secretary, who has authority to issue cease and desist orders. Article IX
also classifies the types of violations covered under DAO 96-37, including projects
operating without an ECC or violating the conditions of the ECC. This is the
applicable procedure to address petitioners complaint on NAPOCORs alleged
violations and not the filing of the instant case in court.
A Final Word
The Court commends petitioners for their courageous efforts to safeguard and
maintain the ecological balance of Minolo Cove. This Court recognizes the utmost
importance of protecting the environment. [33] Indeed, we have called for the
vigorous prosecution of violators of environmental laws. [34] Legal actions to achieve
this end, however, must be done in accordance with established rules of procedure
that were intended, in the first place, to achieve orderly and efficient administration
of justice.
WHEREFORE, we DENY the petition for lack of merit.
SO ORDERED.

G.R. No. 110120 March 16, 1994

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,
vs.
COURT OF APPEALS, HON. MANUEL JN. SERAPIO, Presiding Judge RTC, Branch 127, Caloocan
City, HON. MACARIO A. ASISTIO, JR., City Mayor of Caloocan and/or THE CITY GOVERNMENT OF
CALOOCAN,respondents.
Alberto N. Hidalgo and Ma. Teresa T. Oledan for petitioner.
The City Legal Officer & Chief, Law Department for Mayor Macario A. Asistio, Jr. and the City Government of
Caloocan.

ROMERO, J.:
The clash between the responsibility of the City Government of Caloocan to dispose off the 350 tons of
garbage it collects daily and the growing concern and sensitivity to a pollution-free environment of the
residents of Barangay Camarin, Tala Estate, Caloocan City where these tons of garbage are dumped
everyday is the hub of this controversy elevated by the protagonists to the Laguna Lake Development
Authority (LLDA) for adjudication.
The instant case stemmed from an earlier petition filed with this Court by Laguna Lake Development
Authority (LLDA for short) docketed as G.R.
No. 107542 against the City Government of Caloocan, et al. In the Resolution of November 10, 1992, this
Court referred G.R. No. 107542 to the Court of Appeals for appropriate disposition. Docketed therein as CAG.R. SP
No. 29449, the Court of Appeals, in a decision 1 promulgated on January 29, 1993 ruled that the LLDA has no
power and authority to issue a cease and desist order enjoining the dumping of garbage in Barangay Camarin,
Tala Estate, Caloocan City. The LLDA now seeks, in this petition, a review of the decision of the Court of Appeals.
The facts, as disclosed in the records, are undisputed.
On March 8, 1991, the Task Force Camarin Dumpsite of Our Lady of Lourdes Parish, Barangay Camarin,
Caloocan City, filed a letter-complaint 2 with the Laguna Lake Development Authority seeking to stop the
operation of the 8.6-hectare open garbage dumpsite in Tala Estate, Barangay Camarin, Caloocan City due to its
harmful effects on the health of the residents and the possibility of pollution of the water content of the
surrounding area.
On November 15, 1991, the LLDA conducted an on-site investigation, monitoring and test sampling of the
leachate 3that seeps from said dumpsite to the nearby creek which is a tributary of the Marilao River. The LLDA
Legal and Technical personnel found that the City Government of Caloocan was maintaining an open dumpsite at
the Camarin area without first securing an Environmental Compliance Certificate (ECC) from the Environmental
Management Bureau (EMB) of the Department of Environment and Natural Resources, as required under
Presidential Decree No. 1586, 4 and clearance from LLDA as required under Republic Act No. 4850, 5 as amended
by Presidential Decree No. 813 and Executive Order No. 927, series of 1983. 6
After a public hearing conducted on December 4, 1991, the LLDA, acting on the complaint of Task Force
Camarin Dumpsite, found that the water collected from the leachate and the receiving streams could
considerably affect the quality, in turn, of the receiving waters since it indicates the presence of bacteria,
other than coliform, which may have contaminated the sample during collection or handling. 7 On December
5, 1991, the LLDA issued a Cease and Desist Order 8 ordering the City Government of Caloocan, Metropolitan
Manila Authority, their contractors, and other entities, to completely halt, stop and desist from dumping any form
or kind of garbage and other waste matter at the Camarin dumpsite.
The dumping operation was forthwith stopped by the City Government of Caloocan. However, sometime in
August 1992 the dumping operation was resumed after a meeting held in July 1992 among the City
Government of Caloocan, the representatives of Task Force Camarin Dumpsite and LLDA at the Office of
Environmental Management Bureau Director Rodrigo U. Fuentes failed to settle the problem.
After an investigation by its team of legal and technical personnel on August 14, 1992, the LLDA issued
another order reiterating the December 5, 1991, order and issued an Alias Cease and Desist Order enjoining
the City Government of Caloocan from continuing its dumping operations at the Camarin area.
On September 25, 1992, the LLDA, with the assistance of the Philippine National Police, enforced its Alias
Cease and Desist Order by prohibiting the entry of all garbage dump trucks into the Tala Estate, Camarin
area being utilized as a dumpsite.
Pending resolution of its motion for reconsideration earlier filed on September 17, 1992 with the LLDA, the
City Government of Caloocan filed with the Regional Trial Court of Caloocan City an action for the declaration
of nullity of the cease and desist order with prayer for the issuance of writ of injunction, docketed as Civil

Case No. C-15598. In its complaint, the City Government of Caloocan sought to be declared as the sole
authority empowered to promote the health and safety and enhance the right of the people in Caloocan City
to a balanced ecology within its territorial jurisdiction. 9
On September 25, 1992, the Executive Judge of the Regional Trial Court of Caloocan City issued a temporary
restraining order enjoining the LLDA from enforcing its cease and desist order. Subsequently, the case was
raffled to the Regional Trial Court, Branch 126 of Caloocan which, at the time, was presided over by Judge
Manuel Jn. Serapio of the Regional Trial Court, Branch 127, the pairing judge of the recently-retired presiding
judge.
The LLDA, for its part, filed on October 2, 1992 a motion to dismiss on the ground, among others, that under
Republic Act No. 3931, as amended by Presidential Decree No. 984, otherwise known as the Pollution Control
Law, the cease and desist order issued by it which is the subject matter of the complaint is reviewable both
upon the law and the facts of the case by the Court of Appeals and not by the Regional Trial Court. 10
On October 12, 1992 Judge Manuel Jn. Serapio issued an order consolidating Civil Case No. C-15598 with
Civil Case No. C-15580, an earlier case filed by the Task Force Camarin Dumpsite entitled "Fr. John Moran, et
al. vs. Hon. Macario Asistio." The LLDA, however, maintained during the trial that the foregoing cases, being
independent of each other, should have been treated separately.
On October 16, 1992, Judge Manuel Jn. Serapio, after hearing the motion to dismiss, issued in the
consolidated cases an order 11 denying LLDA's motion to dismiss and granting the issuance of a writ of
preliminary injunction enjoining the LLDA, its agent and all persons acting for and on its behalf, from enforcing or
implementing its cease and desist order which prevents plaintiff City of Caloocan from dumping garbage at the
Camarin dumpsite during the pendency of this case and/or until further orders of the court.
On November 5, 1992, the LLDA filed a petition for certiorari, prohibition and injunction with prayer for
restraining order with the Supreme Court, docketed as G.R. No. 107542, seeking to nullify the aforesaid
order dated October 16, 1992 issued by the Regional Trial Court, Branch 127 of Caloocan City denying its
motion to dismiss.
The Court, acting on the petition, issued a Resolution 12 on November 10, 1992 referring the case to the Court
of Appeals for proper disposition and at the same time, without giving due course to the petition, required the
respondents to comment on the petition and file the same with the Court of Appeals within ten (10) days from
notice. In the meantime, the Court issued a temporary restraining order, effective immediately and continuing
until further orders from it, ordering the respondents: (1) Judge Manuel Jn. Serapio, Presiding Judge, Regional Trial
Court, Branch 127, Caloocan City to cease and desist from exercising jurisdiction over the case for declaration of
nullity of the cease and desist order issued by the Laguna Lake Development Authority (LLDA); and (2) City Mayor
of Caloocan and/or the City Government of Caloocan to cease and desist from dumping its garbage at the Tala
Estate, Barangay Camarin, Caloocan City.
Respondents City Government of Caloocan and Mayor Macario A. Asistio, Jr. filed on November 12, 1992 a
motion for reconsideration and/or to quash/recall the temporary restraining order and an urgent motion for
reconsideration alleging that ". . . in view of the calamitous situation that would arise if the respondent city
government fails to collect 350 tons of garbage daily for lack of dumpsite (i)t is therefore, imperative that
the issue be resolved with dispatch or with sufficient leeway to allow the respondents to find alternative
solutions to this garbage problem."
On November 17, 1992, the Court issued a Resolution 13 directing the Court of Appeals to immediately set the
case for hearing for the purpose of determining whether or not the temporary restraining order issued by the
Court should be lifted and what conditions, if any, may be required if it is to be so lifted or whether the restraining
order should be maintained or converted into a preliminary injunction.
The Court of Appeals set the case for hearing on November 27, 1992, at 10:00 in the morning at the Hearing
Room, 3rd Floor, New Building, Court of Appeals. 14 After the oral argument, a conference was set on December
8, 1992 at 10:00 o'clock in the morning where the Mayor of Caloocan City, the General Manager of LLDA, the
Secretary of DENR or his duly authorized representative and the Secretary of DILG or his duly authorized
representative were required to appear.
It was agreed at the conference that the LLDA had until December 15, 1992 to finish its study and review of
respondent's technical plan with respect to the dumping of its garbage and in the event of a rejection of
respondent's technical plan or a failure of settlement, the parties will submit within 10 days from notice their
respective memoranda on the merits of the case, after which the petition shall be deemed submitted for
resolution. 15Notwithstanding such efforts, the parties failed to settle the dispute.
On April 30, 1993, the Court of Appeals promulgated its decision holding that: (1) the Regional Trial Court
has no jurisdiction on appeal to try, hear and decide the action for annulment of LLDA's cease and desist
order, including the issuance of a temporary restraining order and preliminary injunction in relation thereto,
since appeal therefrom is within the exclusive and appellate jurisdiction of the Court of Appeals under
Section 9, par. (3), of Batas Pambansa Blg. 129; and (2) the Laguna Lake Development Authority has no
power and authority to issue a cease and desist order under its enabling law, Republic Act No. 4850, as
amended by P.D. No. 813 and Executive Order
No. 927, series of 1983.
The Court of Appeals thus dismissed Civil Case No. 15598 and the preliminary injunction issued in the said
case was set aside; the cease and desist order of LLDA was likewise set aside and the temporary restraining

order enjoining the City Mayor of Caloocan and/or the City Government of Caloocan to cease and desist from
dumping its garbage at the Tala Estate, Barangay Camarin, Caloocan City was lifted, subject, however, to the
condition that any future dumping of garbage in said area, shall be in conformity with the procedure and
protective works contained in the proposal attached to the records of this case and found on pages 152-160
of the Rollo, which was thereby adopted by reference and made an integral part of the decision, until the
corresponding restraining and/or injunctive relief is granted by the proper Court upon LLDA's institution of
the necessary legal proceedings.
Hence, the Laguna Lake Development Authority filed the instant petition for review on certiorari, now
docketed as G.R. No. 110120, with prayer that the temporary restraining order lifted by the Court of Appeals
be re-issued until after final determination by this Court of the issue on the proper interpretation of the
powers and authority of the LLDA under its enabling law.
On July, 19, 1993, the Court issued a temporary restraining order 16 enjoining the City Mayor of Caloocan and/or
the City Government of Caloocan to cease and desist from dumping its garbage at the Tala Estate, Barangay
Camarin, Caloocan City, effective as of this date and containing until otherwise ordered by the Court.
It is significant to note that while both parties in this case agree on the need to protect the environment and
to maintain the ecological balance of the surrounding areas of the Camarin open dumpsite, the question as
to which agency can lawfully exercise jurisdiction over the matter remains highly open to question.
The City Government of Caloocan claims that it is within its power, as a local government unit, pursuant to
the general welfare provision of the Local Government Code, 17 to determine the effects of the operation of the
dumpsite on the ecological balance and to see that such balance is maintained. On the basis of said contention, it
questioned, from the inception of the dispute before the Regional Trial Court of Caloocan City, the power and
authority of the LLDA to issue a cease and desist order enjoining the dumping of garbage in the Barangay
Camarin over which the City Government of Caloocan has territorial jurisdiction.
The Court of Appeals sustained the position of the City of Caloocan on the theory that Section 7 of
Presidential Decree No. 984, otherwise known as the Pollution Control law, authorizing the defunct National
Pollution Control Commission to issue an ex-parte cease and desist order was not incorporated in
Presidential Decree No. 813 nor in Executive Order No. 927, series of
1983. The Court of Appeals ruled that under Section 4, par. (d), of Republic Act No. 4850, as amended, the
LLDA is instead required "to institute the necessary legal proceeding against any person who shall
commence to implement or continue implementation of any project, plan or program within the Laguna de
Bay region without previous clearance from the Authority."
The LLDA now assails, in this partition for review, the abovementioned ruling of the Court of Appeals,
contending that, as an administrative agency which was granted regulatory and adjudicatory powers and
functions by Republic Act No. 4850 and its amendatory laws, Presidential Decree No. 813 and Executive
Order No. 927, series of 1983, it is invested with the power and authority to issue a cease and desist order
pursuant to Section 4 par. (c), (d), (e), (f) and (g) of Executive Order No. 927 series of 1983 which provides,
thus:
Sec. 4. Additional Powers and Functions. The authority shall have the following powers and
functions:
xxx xxx xxx
(c) Issue orders or decisions to compel compliance with the provisions of this Executive Order
and its implementing rules and regulations only after proper notice and hearing.
(d) Make, alter or modify orders requiring the discontinuance of pollution specifying the
conditions and the time within which such discontinuance must be accomplished.
(e) Issue, renew, or deny permits, under such conditions as it may determine to be reasonable,
for the prevention and abatement of pollution, for the discharge of sewage, industrial waste, or
for the installation or operation of sewage works and industrial disposal system or parts
thereof.
(f) After due notice and hearing, the Authority may also revoke, suspend or modify any permit
issued under this Order whenever the same is necessary to prevent or abate pollution.
(g) Deputize in writing or request assistance of appropriate government agencies or
instrumentalities for the purpose of enforcing this Executive Order and its implementing rules
and regulations and the orders and decisions of the Authority.
The LLDA claims that the appellate court deliberately suppressed and totally disregarded the above
provisions of Executive Order No. 927, series of 1983, which granted administrative quasi-judicial functions
to LLDA on pollution abatement cases.
In light of the relevant environmental protection laws cited which are applicable in this case, and the
corresponding overlapping jurisdiction of government agencies implementing these laws, the resolution of
the issue of whether or not the LLDA has the authority and power to issue an order which, in its nature and
effect was injunctive, necessarily requires a determination of the threshold question: Does the Laguna Lake

Development Authority, under its Charter and its amendatory laws, have the authority to entertain the
complaint against the dumping of garbage in the open dumpsite in Barangay Camarin authorized by the City
Government of Caloocan which is allegedly endangering the health, safety, and welfare of the residents
therein and the sanitation and quality of the water in the area brought about by exposure to pollution
caused by such open garbage dumpsite?
The matter of determining whether there is such pollution of the environment that requires control, if not
prohibition, of the operation of a business establishment is essentially addressed to the Environmental
Management Bureau (EMB) of the DENR which, by virtue of Section 16 of Executive Order No. 192, series of
1987, 18 has assumed the powers and functions of the defunct National Pollution Control Commission created
under Republic Act No. 3931. Under said Executive Order, a Pollution Adjudication Board (PAB) under the Office of
the DENR Secretary now assumes the powers and functions of the National Pollution Control Commission with
respect to adjudication of pollution cases. 19
As a general rule, the adjudication of pollution cases generally pertains to the Pollution Adjudication Board
(PAB), except in cases where the special law provides for another forum. It must be recognized in this regard
that the LLDA, as a specialized administrative agency, is specifically mandated under Republic Act No. 4850
and its amendatory laws to carry out and make effective the declared national policy 20 of promoting and
accelerating the development and balanced growth of the Laguna Lake area and the surrounding provinces of
Rizal and Laguna and the cities of San Pablo, Manila, Pasay, Quezon and Caloocan 21 with due regard and
adequate provisions for environmental management and control, preservation of the quality of human life and
ecological systems, and the prevention of undue ecological disturbances, deterioration and pollution. Under such
a broad grant and power and authority, the LLDA, by virtue of its special charter, obviously has the responsibility
to protect the inhabitants of the Laguna Lake region from the deleterious effects of pollutants emanating from the
discharge of wastes from the surrounding areas. In carrying out the aforementioned declared policy, the LLDA is
mandated, among others, to pass upon and approve or disapprove all plans, programs, and projects proposed by
local government offices/agencies within the region, public corporations, and private persons or enterprises where
such plans, programs and/or projects are related to those of the LLDA for the development of the region. 22
In the instant case, when the complainant Task Force Camarin Dumpsite of Our Lady of Lourdes Parish,
Barangay Camarin, Caloocan City, filed its letter-complaint before the LLDA, the latter's jurisdiction under its
charter was validly invoked by complainant on the basis of its allegation that the open dumpsite project of
the City Government of Caloocan in Barangay Camarin was undertaken without a clearance from the LLDA,
as required under Section 4, par. (d), of Republic Act. No. 4850, as amended by P.D. No. 813 and Executive
Order No. 927. While there is also an allegation that the said project was without an Environmental
Compliance Certificate from the Environmental Management Bureau (EMB) of the DENR, the primary
jurisdiction of the LLDA over this case was recognized by the Environmental Management Bureau of the
DENR when the latter acted as intermediary at the meeting among the representatives of the City
Government of Caloocan, Task Force Camarin Dumpsite and LLDA sometime in July 1992 to discuss the
possibility of
re-opening the open dumpsite.
Having thus resolved the threshold question, the inquiry then narrows down to the following issue: Does the
LLDA have the power and authority to issue a "cease and desist" order under Republic Act No. 4850 and its
amendatory laws, on the basis of the facts presented in this case, enjoining the dumping of garbage in Tala
Estate, Barangay Camarin, Caloocan City.
The irresistible answer is in the affirmative.
The cease and desist order issued by the LLDA requiring the City Government of Caloocan to stop dumping
its garbage in the Camarin open dumpsite found by the LLDA to have been done in violation of Republic Act
No. 4850, as amended, and other relevant environment laws, 23 cannot be stamped as an unauthorized
exercise by the LLDA of injunctive powers. By its express terms, Republic Act No. 4850, as amended by P.D. No.
813 and Executive Order No. 927, series of 1983, authorizes the LLDA to "make, alter or modify order requiring
the discontinuance or pollution." 24 (Emphasis supplied) Section 4, par. (d) explicitly authorizes the LLDA
to make whatever order may be necessary in the exercise of its jurisdiction.
To be sure, the LLDA was not expressly conferred the power "to issue and ex-parte cease and desist order" in
a language, as suggested by the City Government of Caloocan, similar to the express grant to the defunct
National Pollution Control Commission under Section 7 of P.D. No. 984 which, admittedly was not reproduced
in P.D. No. 813 and E.O. No. 927, series of 1983. However, it would be a mistake to draw therefrom the
conclusion that there is a denial of the power to issue the order in question when the power "to make, alter
or modify orders requiring the discontinuance of pollution" is expressly and clearly bestowed upon the LLDA
by Executive Order No. 927, series of 1983.
Assuming arguendo that the authority to issue a "cease and desist order" were not expressly conferred by
law, there is jurisprudence enough to the effect that the rule granting such authority need not necessarily be
express. 25 While it is a fundamental rule that an administrative agency has only such powers as are expressly
granted to it by law, it is likewise a settled rule that an administrative agency has also such powers as are
necessarily implied in the exercise of its express powers. 26 In the exercise, therefore, of its express powers under
its charter as a regulatory and quasi-judicial body with respect to pollution cases in the Laguna Lake region, the
authority of the LLDA to issue a "cease and desist order" is, perforce, implied. Otherwise, it may well be reduced
to a "toothless" paper agency.
In this connection, it must be noted that in Pollution Adjudication Board v. Court of Appeals, et al., 27 the
Court ruled that the Pollution Adjudication Board (PAB) has the power to issue an ex-parte cease and desist order

when there is prima facie evidence of an establishment exceeding the allowable standards set by the antipollution laws of the country. Theponente, Associate Justice Florentino P. Feliciano, declared:

Ex parte cease and desist orders are permitted by law and regulations in situations like that
here presented precisely because stopping the continuous discharge of pollutive and untreated
effluents into the rivers and other inland waters of the Philippines cannot be made to wait until
protracted litigation over the ultimate correctness or propriety of such orders has run its full
course, including multiple and sequential appeals such as those which Solar has taken, which
of course may take several years. The relevant pollution control statute and implementing
regulations were enacted and promulgated in the exercise of that pervasive, sovereign power
to protect the safety, health, and general welfare and comfort of the public, as well as the
protection of plant and animal life, commonly designated as the police power. It is a
constitutional commonplace that the ordinary requirements of procedural due process yield to
the necessities of protecting vital public interests like those here involved, through the exercise
of police power. . . .
The immediate response to the demands of "the necessities of protecting vital public interests" gives vitality
to the statement on ecology embodied in the Declaration of Principles and State Policies or the 1987
Constitution. Article II, Section 16 which provides:
The State shall protect and advance the right of the people to a balanced and healthful
ecology in accord with the rhythm and harmony of nature.
As a constitutionally guaranteed right of every person, it carries the correlative duty of non-impairment. This
is but in consonance with the declared policy of the state "to protect and promote the right to health of the
people and instill health consciousness among them." 28 It is to be borne in mind that the Philippines is party to
the Universal Declaration of Human Rights and the Alma Conference Declaration of 1978 which recognize health
as a fundamental human right. 29
The issuance, therefore, of the cease and desist order by the LLDA, as a practical matter of procedure under
the circumstances of the case, is a proper exercise of its power and authority under its charter and its
amendatory laws. Had the cease and desist order issued by the LLDA been complied with by the City
Government of Caloocan as it did in the first instance, no further legal steps would have been necessary.
The charter of LLDA, Republic Act No. 4850, as amended, instead of conferring upon the LLDA the means of
directly enforcing such orders, has provided under its Section 4 (d) the power to institute "necessary legal
proceeding against any person who shall commence to implement or continue implementation of any
project, plan or program within the Laguna de Bay region without previous clearance from the LLDA."
Clearly, said provision was designed to invest the LLDA with sufficiently broad powers in the regulation of all
projects initiated in the Laguna Lake region, whether by the government or the private sector, insofar as the
implementation of these projects is concerned. It was meant to deal with cases which might possibly arise
where decisions or orders issued pursuant to the exercise of such broad powers may not be obeyed,
resulting in the thwarting of its laudabe objective. To meet such contingencies, then the writs
of mandamus and injunction which are beyond the power of the LLDA to issue, may be sought from the
proper courts.
Insofar as the implementation of relevant anti-pollution laws in the Laguna Lake region and its surrounding
provinces, cities and towns are concerned, the Court will not dwell further on the related issues raised which
are more appropriately addressed to an administrative agency with the special knowledge and expertise of
the LLDA.
WHEREFORE, the petition is GRANTED. The temporary restraining order issued by the Court on July 19, 1993
enjoining the City Mayor of Caloocan and/or the City Government of Caloocan from dumping their garbage at
the Tala Estate, Barangay Camarin, Caloocan City is hereby made permanent.
SO ORDERED.

THIRD DIVISION
[G.R. No. 137174. July 10, 2000]
REPUBLIC OF THE PHILIPPINES, Represented by the POLLUTION ADJUDICATION
BOARD (DENR), petitioner, vs. MARCOPPER MINING CORPORATION, respondent.
DECISION
GONZAGA-REYES, J.:

In this petition for review on certiorari, petitioner REPUBLIC OF THE PHILIPPINES through the Pollution
Adjudication Board of the Department of Environment and Natural Resources seeks to annul the
Decision[1] of the Court of Appeals[2] in CA-G.R. SP No. 44656 setting aside the Order[3] of the Pollution
Adjudication Board[4] in DENR-PAB Case No. 04-00597-96; as well as the Resolution [5] denying
reconsideration of said Decision.
The following antecedent facts are undisputed:
Respondent Marcopper Mining Corporation (MMC) was issued a temporary permit to operate a
tailings[6] sea disposal system under TPO No. POW-85-454-EJ for the period October 31, 1985 to October
21, 1986. Before it expired, MMC filed an application for the renewal thereof with the National Pollution
Control Commission (NPCC). On September 20, 1986, MMC received a telegraphic order from the
NPCC directing the former to (i)mmediately cease and desist from discharging mine tailings into Calancan
Bay. The directive was brought about through the efforts of certain religious groups which had been
protesting MMCs tailings sea disposal system. MMC requested the NPCC to refrain from implementing the
aforesaid directive until its adoption of an alternative tailings disposal system. The NPCC granted MMCs
request and called a conference to discuss possible alternative disposal systems. Consequently, an
Environmental Technical Committee, composed of representatives from the NPCC, the Bureau of Mines and
Geo-Sciences, and MMC was created to study the feasibility of various tailings disposal systems that may
be appropriate for utilization by MMC and to submit its findings and recommendations thereon.
Meanwhile, after the expiration of MMCs TPO No. POW-85-454-EJ on October 21, 1986, the NPCC
issued to MMC a new temporary permit, TPO No. POW-86-454-EJ dated November 11, 1986, to expire on
February 10, 1987, with the condition that [t]he tailings disposal system shall be transferred to San Antonio
Pond within two (2) months from the date of this permit. MMC moved for the deletion of the condition stating
that it needed to develop and mine the ore deposits underneath the San Antonio pond for it to continue its

mining operations. In a letter-manifestation dated February 5, 1987, MMC requested the NPCC for an
extension of TPO No. POW-86-454-EJ and the indefinite suspension of the condition in said permit until
such time that the NPCC shall have finally resolved the NPCC case entitled Msgr. Rolly Oliverio, et al. vs.
Marcopper Mining Corporation.
In the meantime, the NPCC was abolished by Executive Order No. 192 [7] dated June 10, 1987, and its
powers and functions were integrated into the Environmental Management Bureau and into the Pollution
Adjudication Board (PAB).[8]
On April 11, 1988, the Secretary of Environment and Natural Resources, in his capacity as Chairman of
the PAB, issued an Order directing MMC to cease and desist from discharging mine tailings into Calancan
Bay. The order reads:

The Temporary Permit to Operate issued to Marcopper Mining Corporation expired on February
10, 1987.
Section 96 of the National Pollution Control Commission (NPCC) Rules and Regulations, which
were adopted by the Board, provides that in no case can a permit be valid for more than one (1)
year.
Records show that Marcopper Mining Corporation has not filed any application for renewal of
the permit.
Marcopper Mining Corporation is hereby ordered to cease and desist from discharging mine
tailings into Calancan Bay immediately upon receipt of this Order.
SO ORDERED.[9]
Immediately thereafter, the DENR Undersecretary for Environment and Research issued a telegraphic
order dated April 15, 1988, enjoining immediate compliance by MMC of the cease and desist order of April
11, 1988.
MMC appealed the above orders of April 11, 1988 and April 15, 1988 to the Office of the President,
docketed as O.P. Case No. 3802. In an Order dated May 2, 1988, the Office of the President denied MMCs
requests for issuance of restraining orders against the orders of the PAB. Consequently, MMC filed an
Urgent Ex-Parte Partial Motion for Reconsideration dated May 6, 1988, seeking the reconsideration of the
above Order. In an Order dated May 13, 1988, the Office of the President granted the above partial motion
for reconsideration, thus:

WHEREFORE, the instant Urgent Ex-Parte Motion for Reconsideration is hereby GRANTED,
and the Order of this Office, dated May 2, 1988, is hereby set aside insofar as it denies
respondent-appellants requests for issuance of restraining orders.
Accordingly, the Pollution Adjudication Board, its agents, deputies or representatives are hereby
enjoined from enforcing its cease and desist order of April 15, 1988 pending resolution by this
Office of respondent-appellants appeal from said orders.
It is further directed that the status quo obtaining prior to the issuance of said cease and desist
order be maintained until further orders from this Office.
It is understood, however, that during the efficacy of this restraining order, respondent-appellant
shall immediately undertake, at a cost of not less than P30,000.00 a day, the building of artificial
reefs and planting of sea grass, mangroves and vegetation on the causeway of Calancan Bay
under the supervision of the Pollution Adjudication Board and subject to such guidelines as the
Board may impose.
SO ORDERED.[10]
In line with the directive from the Office of the President, the Calancan Bay Rehabilitation Project
(CBRP) was created, and MMC remitted the amount of P30,000.00 a day, starting from May 13, 1988 to the
Ecology Trust Fund (ETF) thereof. However, on June 30, 1991, MMC stopped discharging its tailings in the
Bay, hence, it likewise ceased from making further deposits to the ETF.
From the issuance of the Order on May 13, 1988 until the cessation of the tailings disposal on June 30,
1991, MMC made its contribution to the ETF in the total amount of Thirty-Two Million Nine Hundred and

Seventy-Five Thousand Pesos (P32,975,000.00). Thereafter, MMC filed a Motion dated July 9, 1991
manifesting that it would discontinue its contributions/deposits to the ETF since it had stopped dumping
tailings in the Bay. MMC prayed that the Order issued by the Office of the President on May 13, 1988 be
lifted.
On February 5, 1993, the Office of the President rendered a decision in O.P. Case No. 3802 dismissing
the appeal; affirming the cease and desist Order issued by the PAB; and lifting the TRO dated May 13,
1988. The Office of the President resolved the appeal in this wise:

This brings to the fore the primordial issue of whether or not the Secretary of Environment and
Natural Resources gravely erred in declaring the TPO No. POW-86-454-EJ issued to
respondent-appellant MMC expired on February 10, 1987, and in ordering the latter to cease
and desist from discharging mine tailings into Calancan Bay.
Respondent-appellant argues that the cease and desist orders were issued by the PAB exparte, in violation of its procedural and substantive rights provided for under Section 7 (a) of P.D.
No. 984 requiring a public hearing before any order or decision for the discontinuance of
discharge of a sewage or industrial wastes into the water, air or land could be issued by the
PAB.
We are not persuaded.
Section 7(a) of P.D. No. 984, reads in part:
Sec. 7(a) Public Hearing. Public hearing shall be conducted by the Commissioner, Deputy
Commissioner or any senior official duly designated by the Commissioner prior to issuance or
promulgation of any order or decision by the Commissioner requiring the discontinuance of
discharge of sewage, industrial wastes and other wastes into the water, air or land resources of
the Philippines as provided in the Decree: provided, that whenever the Commission finds
a prima facie evidence that the discharged sewage or wastes are of immediate threat to life,
public health, safety or welfare, or to animal or plant life, or exceeds the allowable standards set
by the Commission, the Commissioner may issue an ex-parte order directing the discontinuance
of the same or the temporary suspension or cessation of operation of the establishment or
person generating such sewage or wasteswithout the necessity of a prior public hearing. x x x .
(underscoring supplied).
Clearly then, it is self-indulgent nonsense to assume that the DENR Secretary, acting as PAB
Chairman, is absolutely without authority to issue an ex-parte order requiring the discontinuance
of discharge of sewage or other industrial wastes without public hearing. As can be gleaned
from the afroequoted proviso, this authority to issue an ex-parte order suspending the discharge
of industrial wastes is postulated upon his finding of prima-facie evidence of an imminent threat
to life, public health, safety or welfare, to animal or plant life or exceeds the allowable standards
set by the Commission.[11]
In a letter dated January 22, 1997 [12], Municipal Mayor Wilfredo A. Red of Sta. Cruz, Marinduque
informed the PAB that MMC stopped remitting the amount of 30,000.00 per day as of July 1, 1991 to the
ETF of the CBRP. This letter-complaint of Mayor Red was docketed as DENR-PAB Case No. 04-00597-96,
for violation of P.D. 984[13] and its implementing Rules and Regulations.
In an order dated April 23, 1997, the PAB ruled that the obligation of MMC to deposit P30,000.00 per
day to the ETF of the CBRP subsists, as provided for in the Order of theOffice of the President dated May
13, 1988, during the efficacy of said order restraining the PAB from enforcing its cease and desist order
against MMC. Since the Order was lifted only on February 5, 1993, the obligation of MMC to remit was
likewise extinguished only on said date and not earlier as contended by MMC from the time it ceased
dumping tailings into the Bay on July 1, 1991. We quote in part:

The issue before this Board is whether Marcopper Mining Corporation is still obliged to remit the
amount of P30,000.00 to the CBRP. The answer by the Order from the Office of the President
dated 13 May 1988, which states that the obligation on the part of Marcopper Mining to pay the
amount of P30,000.00 per day for the rehabilitation of Calancan Bay is binding only during the
efficacy of the said Order.
The record further shows that on 05 February 1993, the Office of the President lifted its Order
dated 13 May 1988. This means that as of the date of the lifting, Marcopper Mining Corporation

no longer had any obligation to remit the amount of P30,000.00 to the CBRP. Thus, Marcoppers
obligation only runs from 13 May 1988 to 05 February 1993. Beyond the cut-off date of 05
February 1993, Marcopper is no longer obligated to remit the amount of P30,000.00 per day to
the CBRP.
It does not matter whether Marcopper was no longer dumping its tail minings into the sea even
before the cut-off date of 05 February 1993. The obligation of Marcopper to pay the amount of
P30,000.00 to the CBRP arises from the Office of the President Order dated 13 May 1988, not
from it dumping of mine tailings.
WHEREFORE, Marcopper Mining Corporation is hereby ordered to pay the CBRP the amount
of P30,000.00 per day, computed from the date Marcopper Mining Corporation stopped paying
on 01 July 1991, up to the formal lifting of the subject Order from the Office of the President on
05 February 1993.
SO ORDERED.[14]
MMC assailed the aforequoted Order dated April 23, 1997 of the PAB as null and void for having been
issued without jurisdiction or with grave abuse of discretion in a petition for Certiorari and Prohibition (with
prayer for temporary restraining order and preliminary injunction) before the Court of Appeals which was
docketed as CA-G.R. No. SP-44656. In a Resolution dated July 15, 1997, the Court of Appeals required the
PAB and its members to comment on said petition.
On November 19, 1997, the Office of the Solicitor General, on behalf of the PAB and its members, filed
with the Court of Appeals the required comment.
On September 15, 1997, for purposes of determining whether or not to grant MMCs prayer for a
temporary restraining order and preliminary injunction, the Court of Appeals conducted a hearing where
counsel for the parties were heard on oral arguments.
In a Resolution dated September 19, 1997, the Court of Appeals issued a writ of preliminary injunction,
conditioned upon the filing of a bond by MMC in the amount of P500,000.00 enjoining the PAB and its
members to cease and desist from enforcing the assailed Order dated April 23, 1997, until it had made a full
determination on the merits of the case.
On January 7, 1998, the Court of Appeals promulgated a Decision in CA-G.R. SP No. 44656, the
dispositive portion of which reads:

In view of the foregoing, the instant petition is hereby GRANTED and, accordingly, the
questioned Order of respondent Pollution Adjudication Board dated 23 April 1997 is hereby SET
ASIDE. Respondents are ordered to REFRAIN and DESIST from enforcing aforesaid Order. The
injunctive bond filed by the petitioner in the amount of Five Hundred Thousand (P500,000.00) is
hereby RELEASED.
The motion for reconsideration of the above decision was denied in a Resolution dated January 13,
1999 of the Court of Appeals.
Hence, the instant petition on the following grounds:
I

The Court of Appeals erred in ruling that Republic Act No. 7942 (otherwise known as the
Philippine Mining Act of 1995) repealed the provisions of Republic Act No. 3931, as amended by
Presidential Decree No. 984, (otherwise known as the National Pollution Control Decree of
1976), with respect to the power and function of petitioner Pollution Adjudication Board to issue,
renew or deny permits for the discharge of the mine tailings.
II

Respondent Marcopper Mining Corporation bound itself to pay the amount of P30,000.00 a day
for the duration of the period starting May 13, 1988 up to February 5, 1993.
III

Respondent Marcopper Mining Corporation was not deprived of due process of law when
petitioner Pollution Adjudication Board directed it to comply with its long-existing P30,000.00 per
day obligation under the Order of the Office of the President dated May 13, 1988.[15]
In setting aside the Order of the PAB dated April 23, 1997, requiring MMC to pay its arrears in deposits,
the Court of Appeals ruled that the PAB exceeded its power and authority in issuing the subject Order for the
following reasons:

The applicable and governing law in this petition is Republic Act No. 7942 otherwise known as
the Philippine Mining Act of 1995 (Mining Act, approved on March 3, 1995).
Chapter XI of the Mining Act contains a series of provisions relating to safety and environmental
protection on mining and quarrying operations. More specifically, Section 67 of the Mining Act in
essence, grants the mines regional director the power to issue orders or to take appropriate
measures to remedy any practice connected with mining or quarrying operations which is not in
accordance with safety and anti-pollution laws and regulations.
From a reading of that provision, it would appear therefore that prior to the passage of
the Mining Act, the Pollution Adjudication Board had jurisdiction to act on pollution-related
matters in the mining business. With the effectivity of the Mining Act and in congruence with its
Sec. 115 (i.e., Repealing and Amending Clause), the power to impose measures against
violations of environmental policies by mining operators is now vested on the mines regional
director. Be that as it may, we are constrained to enunciate that the PAB had no authority to
issue the challenged Order dated 23 April 1997. More so, respondent PAB as petitioner
argued and We note, had remained perplexingly silent on the matter for almost six (6) years
from July 1991 when MMC ceased to make its deposits up to April 1997 when respondent PAB
precipitately issued the Order requiring MMC to pay its arrears in deposits to the ETF. And PAB,
apparently oblivious to MMCs economic quandary had issued said Order ex-parte without
hearing or notice.
xxx

As a general rule, the adjudication of pollution cases pertains to the Pollution Adjudication Board
(PAB), except in cases where the special law, expressly or impliedly, provides for another forum,
as in the instant petition.
Thus under Republic Act No. 7942 and its implementing rules and regulations, the mines
regional director, in consultation with the Environmental Management Bureau (italics ours), is
specifically mandated to carry out and make effective the declared national policy that the State
shall promote the rational exploration, development, utilization and conservation of all mineral
resources in public and private lands within the territory and exclusive economic zone of the
Republic of the Philippines, through the combined efforts of government and the private sector
in order to enhance national growth and protect the rights of affected communities. (Sec. 2, R.A.
7942).
Under this expansive authority, the Mines Regional Director, by virtue of this special law, has the
primary responsibility to protect the communities surrounding a mining site from the deleterious
effects of pollutants emanating from the dumping of tailing wastes from the surrounding
areas. Thus, in the exercise of its express powers under this special law, the authority of the
Mines Regional Director to impose appropriate protective and/or preventive measures with
respect to pollution cases within mining operations is perforce, implied. Otherwise, the special
law granting this authority may well be relegated to a mere paper tiger talking protection but
allowing pollution.
It bears mention that the Pollution Adjudication Board has the power to issue an ex-parte order
when there is prima facie evidence of an establishment exceeding the allowable standards set
by the anti-pollution laws of the country. (Pollution Adjudication Board v. Court of Appeals, et al.,
195 SCRA 112). However, with the passage of R.A. 7942, insofar as the regulation, monitoring
and enforcement of anti-pollution laws are concerned with respect to mining establishments, the
Mines Regional Director has a broad grant of power and authority. Clearly, pollution-related
issues in mining operations are addressed to the Mines Regional Director, not the Pollution
Adjudication Board.

This being the case, the questioned Order dated 23 April 1997 requiring MMC to pay its arrears
in deposits was beyond the power and authority of the Pollution Adjudication Board to issue and
as such, petitioner may seek appropriate injunctive relief from the court. Thus, certiorari lies
against public respondent PAB.[16]
The Court of Appeals likewise ruled that the obligation of MMC to contribute to the ETF of the CBRP
ceased inasmuch as the latter discontinued dumping tailings into the Bay and the actual funds in the ETF
are sufficient to rehabilitate the Bay. It ratiocinated thus:

In the instant case, it is of record that petitioner MMC undertakes its obligation to provide for the
rehabilitation of the Bay waters. This obligation, through its monetary contribution to the ETF, is
however anchored on its continuing disposal of the mines tailings waste into the Bay. Hence,
since it ceased its mining operations in the affected area as of July 1991 and had not been
discharging any tailings wastes since then, its consequent duty to rehabilitate the polluted
waters, if any, no longer exists.
xxx

Be that as it may, this Court observes that out of the approximate sum of thirty-two (32) million
pesos contributed by the petitioner to the ETF there is admittedly an existing estimated balance
of fourteen (14) million pesos in the Fund. For its part, petitioner does not renege on its
obligation to rehabilitate and in fact undertakes to continue the rehabilitation process until its
completion within two (2) years time and which would only cost six (6) million pesos. Thus, as
petitioner convincingly argued and which respondent unsatisfactorily rebuked, the existing
fourteen (14) million pesos in the ETF is more than enough to complete the rehabilitation
project. (TSN, Hearing dated 15 September 1997, at pp. 56 to 62, Rollo).
xxx. Without much ado, the Court concurs with the finding that to demand a daily deposit of
thirty thousand (P30, 000.00) pesos even if the root of the obligation, that is, the dumping of
tailings waste, had ceased to exist, is indubitably of a herculean and onerous burden on the part
of petitioner amounting to a deprivation of its property and a denial of its right to due process.[17]
Unsatisfied, the OSG argues that the Philippine Mining Act of 1995 did not amend or repeal the
provisions of Republic Act No. 3931, as amended by Presidential Decree No. 984 (otherwise known as the
National Pollution Control Decree of 1976); that the Mines Regional Director has no power over areas
outside mining installations and over areas which are not part of the mining or quarrying operations such as
Calancan Bay; that the powers of the Mines Regional Director cannot be exercised to the exclusion of other
government agencies; that the jurisdiction of a Mines Regional Director with respect to anti-pollution laws is
limited to practices committed within the confines of a mining or quarrying installation; that the dumping of
mine tailings into Calancan Bay occurred long before the effectivity of the Philippine Mining Act and that
MMC cannot hide under cover of this new law. The OSG further argues that the portion of the Order of May
13, 1988, setting the period of time within which MMC shall pay P30,000.00 per day, which is during the
efficacy of the restraining order was never questioned or appealed by MMC. Finally, the OSG argues that
PAB did not violate MMCs right to due process by the issuance of the Order dated April 23, 1988 without
notice and hearing as it was simply requiring MMC to comply with an obligation in an Order which has long
become final and executory.
In the context of the established facts, the issue that actually emerges is: Has the PAB under RA 3931
as amended by PD 984 (National Pollution Control Decree of 1976)been divested of its authority to try and
hear pollution cases connected with mining operations by virtue of the subsequent enactment of RA 7942
(Philippine Mining Act of 1995)?As mentioned earlier, the PAB took cognizance and ruled on the lettercomplaint (for violation of PD 984 and its implementing rules and regulations) filed against MMC by
Marinduque Mayor Wilfredo Red. In the subject Order dated April 23, 1997, the PAB ruled that MMC should
pay its arrears in deposits to the ETF of the CBRP computed from the day it stopped dumping and paying on
July 1, 1991 up to the lifting of the Order of the Office of the President dated May 13, 1988 on February 5,
1993.
The answer is in the negative. We agree with the Solicitor General that the Court of Appeals committed
reversible error in ruling that the PAB had no authority to issue the Order dated April 23, 1997.
Republic Act No. 3931 (An Act Creating The National Water And Air Pollution Control Commission) was
passed in June 18, 1964 to maintain reasonable standards of purity for the waters and air of the country with
their utilization for domestic, agricultural, industrial and other legitimate purposes. Said law was revised in
1976 by Presidential Decree No. 984 (Providing For The Revision Of Republic Act No. 3931, Commonly
Known As The Pollution Control Law, And For Other Purposes) to strengthen the National Pollution Control

Commission to best protect the people from the growing menace of environmental pollution. Subsequently,
Executive Order No. 192, s. 1987 (The Reorganization Act of the DENR) was passed. The internal
structure, organization and description of the functions of the new DENR, particularly the Mines and
Geosciences Bureau, reveals no provision pertaining to the resolution of cases involving violations of the
pollution laws.[18] The Mines and Geo-Sciences Bureau was created under the said EO 192 to absorb the
functions of the abolished Bureau of Mines and Geo-Sciences, Mineral Reservations Development Board
and the Gold Mining Industry Development Board to, among others, recommend policies, regulations and
programs pertaining to mineral resources development; assist in the monitoring and evaluation of the
Bureaus programs and projects; and to develop and promulgate standards and operating procedures on
mineral resources development.[19]
On the other hand, the PAB was created and granted under the same EO 192 broad powers to
adjudicate pollution cases in general. Thus,

SEC. 19. Pollution Adjudication Board. There is hereby created a Pollution Adjudication Board
under the Office of the Secretary. The Board shall be composed of the Secretary as Chairman,
two (2) Undersecretaries as may be designated by the Secretary, the Director of Environmental
management, and three (3) others to be designated by the Secretary as members. The Board
shall assume the powers and functions of the Commission/Commissioners of the National
Pollution Control Commission with respect to the adjudication of pollution cases under Republic
Act 3931 and Presidential Decree 984, particularly with respect to Section 6 letters e, f, g, j, k,
and p of P.D. 984. The Environmental Management Bureau shall serve as the Secretariat of the
Board. These powers and functions may be delegated to the regional offices of the Department
in accordance with rules and regulations to be promulgated by the Board.[20]
Section 6 letters e, f, g, j, k, and p of PD 984 referred to above are quoted as follows:
SEC. 6. Powers and Functions. The Commission shall have the following powers and functions:
(e) Issue orders or decision to compel compliance with the provisions of this Decree and its implementing
rules and regulations only after proper notice and hearing.
(f) Make, alter or modify orders requiring the discontinuance of pollution specifying the conditions and the
time within which such discontinuance must be accomplished.
(g) Issue, renew, or deny permits, under such conditions as it may determine to be reasonable, for the
prevention and abatement of pollution, for the discharge of sewage, industrial waste, or for the installation
or operation of sewage works and industrial disposal system or parts thereof: Provided, however, That the
Commission, by rules and regulations, may require subdivisions, condominium, hospitals, public buildings
and other similar human settlements to put up appropriate central sewerage system and sewage
treatment works, except that no permits shall be required to any sewage works or changes to or
extensions of existing works that discharge only domestic or sanitary wastes from a singles residential
building provided with septic tanks or their equivalent. The Commission may impose reasonable fees and
charges for the issuance or renewal of all permits required herein.
(h)
(i)
(j) Serve as arbitrator for the determination of reparations, or restitution of the damages and losses resulting
from pollution.
(k) Deputize in writing or request assistance of appropriate government agencies or instrumentalities for the
purpose of enforcing this Decree and its implementing rules and regulations and the orders and decisions
of the Commission.
(l)
(m)
(n)
(o)
(p) Exercise such powers and perform such other functions as may be necessary to carry out its duties and
responsibilities under this Decree.

Section 7(a) of P.D. No. 984 further provides in part:

Sec. 7(a) Public Hearing. Public hearing shall be conducted by the Commissioner, Deputy
Commissioner or any senior official duly designated by the Commissioner prior to issuance or
promulgation of any order or decision by the Commissioner requiring the discontinuance of
discharge of sewage, industrial wastes and other wastes into the water, air or land resources of
the Philippines as provided in the Decree: provided, that whenever the Commission finds
a prima facie evidence that the discharged sewage or wastes are of immediate threat to life,
public health, safety or Welfare, or to animal or plant life, or exceeds the allowable standards set
by the Commission, the Commissioner may issue and ex-parte order directing the
discontinuance of the same or the temporary suspension or cessation of operation of the
establishment or person generating such sewage or wasteswithout the necessity of a prior
public hearing. x x x . (underscoring supplied).
The ruling of the Court of Appeals that the PAB has been divested of authority to act on pollution-related
matters in mining operations is anchored on the following provisions of RA 7942 (Philippine Mining Act of
1995):

SEC. 67. Power to Issue Orders. The mines regional director shall, in consultation with the
Environmental Management Bureau, forthwith or within such time as specified in his order,
require the contractor to remedy any practice connected with mining or quarrying operations,
which is not in accordance with safety and anti-pollution laws and regulations.In case of
imminent danger to life or property, the mines regional director may summarily suspend the
mining or quarrying operations until the danger is removed, or appropriate measures are taken
by the contractor or permittee.
And

SEC. 115. Repealing and Amending Clause. All laws, executive orders, presidential decrees,
rules and regulations, or parts thereof which are inconsistent with any of the provisions of this
Act are hereby repealed or amended accordingly.
The other provisions in Chapter XI on Safety and Environmental Protection found in RA 7942 promote the
safe and sanitary upkeep of mining areas to achieve waste-free and efficient mine development with
particular concern for the physical and social rehabilitation of areas and communities affected by mining
activities[21], without however, arrogating unto the mines regional director any adjudicative responsibility.
From a careful reading of the foregoing provisions of law, we hold that the provisions of RA 7942 do not
necessarily repeal RA 3931, as amended by PD 984 and EO 192. RA 7942 does not contain any provision
which categorically and expressly repeals the provisions of the Pollution Control Law. Neither could there be
an implied repeal. It is well-settled that repeals of laws by implication are not favored and that courts must
generally assume their congruent application. Thus, it has been held:

The two laws must be absolutely incompatible, and a clear finding thereof must surface, before
the inference of implied repeal may be drawn. The rule is expressed in the maxim,interpretare et
concordare leqibus est optimus interpretendi, i.e., every statute must be so interpreted and
brought into accord with other laws aas to form a uniform system of jurisprudence. The
fundament is that the legislature should be presumed to have known the existing laws on the
subject and not have enacted conflicting statutes. Hence, all doubts must be resolved against
any implied repeal, and all efforts should be exerted in order to harmonize and give effect to all
laws on the subject.[22]
There is no irreconcilable conflict between the two laws. Section 19 of EO 192 vested the PAB with the
specific power to adjudicate pollution cases in general. Sec. 2, par. (a) of PD 984 defines the term pollution
as referring to any alteration of the physical, chemical and biological properties of any water, air and/or land
resources of the Philippines , or any discharge thereto of any liquid, gaseous or solid wastes as will or is
likely to create or to render such water, air and land resources harmful, detrimental or injurious to public
health, safety or welfare or which will adversely affect their utilization for domestic, commercial, industrial,
agricultural, recreational or other legitimate purposes.
On the other hand, the authority of the mines regional director is complementary to that of the
PAB. Section 66 of RA 7942 gives the mines regional director exclusive jurisdiction over the safety
inspection of all installations, surface or underground in mining operations. Section 67 thereof vests upon
the regional director power to issue orders requiring a contractor to remedy any practice connected with
mining or quarrying operations which is not in accordance with safety and anti-pollution laws and
regulations; and to summarily suspend mining or quarrying operations in case of imminent danger to life or

property. The law likewise requires every contractor to undertake an environmental protection and
enhancement program which shall be incorporated in the work program which the contractor shall submit as
an accompanying document to the application for a mineral agreement or permit. In addition, an
environmental clearance certificate is required based on an environment impact assessment. The law also
requires contractors and permittees to rehabilitate the mined-out areas, and set up a mine rehabilitation
fund. Significantly, the law allows and encourages peoples organizations and non-governmental
organizations to participate in ensuring that contractors/permittees shall observe all the requirements of
environmental protection.
From the foregoing, it readily appears that the power of the mines regional director does not foreclose
PABs authority to determine and act on complaints filed before it. The power granted to the mines regional
director to issue orders requiring the contractor to remedy any practice connected with mining or quarrying
operations or to summarily suspend the same in cases of violation of pollution laws is for purposes of
effectively regulating and monitoring activities within mining operations and installations pursuant to the
environmental protection and enhancement program undertaken by contractors and permittees in procuring
their mining permit. While the mines regional director has express administrative and regulatory powers over
mining operations and installations, it has no adjudicative powers over complaints for violation of pollution
control statutes and regulations.
True, in Laguna Lake Development Authority vs. Court of Appeals,[23] this Court held that adjudication of
pollution cases generally pertains to the Pollution Adjudication Board (PAB) except where the special law
provides for another forum. However, contrary to the ruling of the Court of Appeals, RA 7942 does not
provide for another forum inasmuch as RA 7942 does not vest quasi-judicial powers in the Mines Regional
Director. The authority is vested and remains with the PAB.
Neither was such authority conferred upon the Panel of Arbitrators and the Mines Adjudication Board
which were created by the said law. The provisions creating the Panel of Arbitrators for the settlement of
conflicts refers to disputes involving rights to mining areas, mineral agreements or permits and those
involving surface owners, occupants and claim-holders/concessionaires. [24] The scope of authority of the
Panel of Arbitrators and the Mines Adjudication Board conferred by RA 7942 clearly exclude adjudicative
responsibility over pollution cases. Nowhere is there vested any authority to adjudicate cases involving
violations of pollution laws and regulations in general.
Thus, there is no genuine conflict between RA 7942 and RA 3931 as amended by PD 984 that precludes
their co-existence. Moreover, it has to be conceded that there was no intent on the part of the legislature to
repeal the said law. There is nothing in the sponsorship speech [25] of the laws proponent, Representative
Renato Yap, and the deliberations that followed thereafter, to indicate a legislative intent to repeal the
pollution law. Instead, it appears that the legislature intended to maximize the exploration, development and
utilization of the countrys mineral resources to contribute to the achievement of national economic and social
development with due regard to the social and environmental cost implications relative thereto. The law
intends to increase the productivity of the countrys mineral resources while at the same time assuring its
sustainability through judicious use and systematic rehabilitation. Henceforth, the Department of
Environment and Natural Resources as the primary government agency responsible for the conservation,
management, development, and proper use of the States mineral resources, through its Secretary, has the
authority to enter into mineral agreements on behalf of the Government upon the recommendation of the
Director, and to promulgate such rules and regulations as may be necessary to carry out the provisions of
RA 7942.[26] The PAB and the Mines Regional Director, with their complementary functions and through their
combined efforts, serve to accomplish the mandate of RA 3931 (National Pollution Control Decree of 1976)
as amended by PD 984 and EO 192 and that of RA 7942 (Philippine Mining Act of 1995).
That matter settled, we now go to the issue of whether the appellate court erred in ruling that there is no
basis for further payments by MMC to the Ecology Trust Fund of the Calancan Bay Rehabilitation Project
considering that MMC convincingly argued and which respondent unsatisfactorily rebuked, the existing
fourteen (14) million pesos in the ETF is more than enough to complete the rehabilitation project. Indeed, the
records reveal that witness for PAB, Mr. Edel Genato, who is the Technical Resource person of the PAB for
the project admitted that the funds in the ETF amounting to about Fourteen Million Pesos are more than
sufficient to cover the costs of rehabilitation. Hereunder are excerpts from the transcript of stenographic
notes taken during the hearing held on September 15, 1997:
ATTY. HERNANDEZ:[27]
I would like your Honor, if the court will allow, our witness from the EBRB Your Honor would attest to that . . .
JUSTICE JACINTO:
Is it not being taken from the 14 million?
ATTY. HERNANDEZ:

Yes, Your Honor.

JUSTICE RASUL:
What is his role?
ATTY. HERNANDEZ:
He is our Technical Resource person Your Honor, of the project.
JUSTICE RASUL:
In other words, he has participated in the . . (inaudible)?
ATTY. HERNANDEZ:
Yes, Your Honor.
JUSTICE RASUL:
Do you agree with him?
MR. EDEL GENATO:
Yes, Your Honor, that the Calancan rehabilitation program is being funded by Marcopper through the Ecology Trust
Fund.
JUSTICE RASUL:
Will the construction be finished in two years time?
MR. EDEL GENATO:
Presently, under the Steering Committee of the Calancan Bay Rehabilitation, there is another phase that is being
proposed. Actually the two years time will definitely cover the other phase of the . . (inaudible)
JUSTICE RASUL:
Never mind that. Will the amount be sufficient to the end of the construction?
MR. EDEL GENATO:
Yes, Sir.
JUSTICE RASUL:
Enough?
MR. EDEL GENATO:
Yes, Sir.
JUSTICE RASUL:
There is no more need for collecting the 30 thousand a day? . . . Do not . . . I will hold you for contempt . . .
ATTY. HERNANDEZ:
Im sorry Your Honor.
JUSTICE RASUL:
Again.
MR. EDEL GENATO:
Well Your Honor, I cannot comment on the amount Your Honor.
JUSTICE RASUL:
You have already made your comment, but you received some signal from your lawyer.

ATTY. HERNANDEZ:
Your Honor . . .
MR. EDEL GENATO:
No, no Your Honor. . .
JUSTICE RASUL:
My question is, do you agree with him that the 14 million fund will be enough to sustain the construction up to the
end?
MR. EDEL GENATO:
Two years?
JUSTICE RASUL:
Yes.
MR. EDEL GENATO:
Your Honor. . .
JUSTICE AMIN:
Categorical answer.
JUSTICE RASUL:
You just answer, is it enough, in your own honest way, on your honor?
MR. EDEL GENATO:
I think so Your Honor.[28]

We must sustain the appellate court on this point on account of the testimony of Mr. Edel
Genato. Further, we note that the Office of the President never objected nor ruled on the manifestation dated
July 9, 1991 filed by MMC that it would stop paying since it already ceased dumping mine tailings into the
bay. Still further, the order of the OP directing MMC to rehabilitate at a cost of P30,000.00 a day during the
efficacy of the restraining order had become functus officio since MMC voluntarily stopped dumping mine
tailings into the bay.
To sum up, PAB has jurisdiction to act and rule on the letter-complaint of Mayor Wilfredo Red of
Marinduque for violation of PD 984 and its implementing rules and regulationswhich jurisdiction was not lost
upon the passage of RA 7942 (the Philippine Mining Act of 1995). Nevertheless, MMC must be declared not
to have arrears in deposits asadmittedly, the ETF already has more than sufficient funds to undertake the
rehabilitation of Calancan Bay.
WHEREFORE, the petition is hereby partially GRANTED. The assailed Decision is REVERSED insofar
as the jurisdiction of the PAB to act on the complaint is concerned; but AFFIRMED insofar as Marcopper
Mining Corporation has no arrears in deposits with the Ecology Trust Fund of the Calancan Bay
Rehabilitation Project.
SO ORDERED.

THIRD DIVISION
AIR
PHILIPPINES
CORPORATION,
Petitioner,

- versus -

G.R. No. 172835

Present:
YNARES-SANTIAGO, J.
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.
Promulgated:

PENNSWELL, INC.
Respondent.
December 13, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION

CHICO-NAZARIO, J.:

Petitioner Air Philippines Corporation seeks, via the instant Petition for Review under Rule 45 of the
Rules of Court, the nullification of the 16 February 2006 Decision [1] and the 25 May 2006
Resolution[2] of the Court of Appeals in CA-G.R. SP No. 86329, which affirmed the Order [3] dated 30
June 2004 of the Regional Trial Court (RTC), Makati City, Branch 64, in Civil Case No. 00-561.
Petitioner Air Philippines Corporation is a domestic corporation engaged in the business of air
transportation services. On the other hand, respondent Pennswell, Inc. was organized to engage in the
business of manufacturing and selling industrial chemicals, solvents, and special lubricants.
On various dates, respondent delivered and sold to petitioner sundry goods in trade, covered by Sales
Invoices No. 8846,[4] 9105,[5] 8962,[6] and 8963,[7] which correspond to Purchase Orders No. 6433,
6684, 6634 and 6633, respectively. Under the contracts, petitioners total outstanding obligation
amounted to P449,864.98 with interest at 14% per annum until the amount would be fully paid. For
failure of the petitioner to comply with its obligation under said contracts, respondent filed a
Complaint[8] for a Sum of Money on 28 April 2000 with the RTC.

In its Answer,[9] petitioner contended that its refusal to pay was not without valid and justifiable
reasons. In particular, petitioner alleged that it was defrauded in the amount of P592,000.00 by
respondent for its previous sale of four items, covered by Purchase Order No. 6626. Said items were
misrepresented by respondent as belonging to a new line, but were in truth and in fact, identical with
products petitioner had previously purchased from respondent. Petitioner asserted that it was deceived
by respondent which merely altered the names and labels of such goods. Petitioner specifically
identified the items in question, as follows:

Label/Description
1. a. Anti-Friction Fluid

Item No.

MPL-800
b. Excellent Rust Corrosion MPL-008
(fake)

Amount

P.O.

Date

153,941.40
155,496.00

5714
5888

05/20/99
06/20/99

2. a. Contact Grease
b. Connector Grease (fake)

COG #2
CG

115,236.00
230,519.52

5540
6327

04/26/99
08/05/99

3. a. Trixohtropic Grease
b. Di-Electric
Strength Protective Coating
(fake)

EPC
EPC#2

81,876.96
81,876.96

4582
5446

01/29/99
04/21/99

4. a. Dry Lubricant
b. Anti-Seize Compound (fake)

ASC-EP
ASC-EP
2000

87,346.52
124,108.10

5712
4763 &
5890

05/20/99
02/16/99 &06/24/99

According to petitioner, respondents products, namely Excellent Rust Corrosion, Connector Grease,
Electric Strength Protective Coating, and Anti-Seize Compound, are identical with its Anti-Friction
Fluid, Contact Grease, Thixohtropic Grease, and Dry Lubricant, respectively. Petitioner asseverated
that had respondent been forthright about the identical character of the products, it would not have
purchased the items complained of. Moreover, petitioner alleged that when the purported fraud was
discovered, a conference was held between petitioner and respondent on 13 January 2000, whereby
the parties agreed that respondent would return to petitioner the amount it previously paid. However,
petitioner was surprised when it received a letter from the respondent, demanding payment of the
amount of P449,864.94, which later became the subject of respondents Complaint for Collection of a
Sum of Money against petitioner.
During the pendency of the trial, petitioner filed a Motion to Compel [10] respondent to give a detailed
list of the ingredients and chemical components of the following products, to wit: (a) Contact Grease
and Connector Grease; (b) Thixohtropic Grease and Di-Electric Strength Protective Coating; and (c)
Dry Lubricant and Anti-Seize Compound.[11] It appears that petitioner had earlier requested the
Philippine Institute of Pure and Applied Chemistry (PIPAC) for the latter to conduct a comparison of
respondents goods.
On 15 March 2004, the RTC rendered an Order granting the petitioners motion. It disposed, thus:
The Court directs [herein respondent] Pennswell, Inc. to give [herein petitioner] Air
Philippines Corporation[,] a detailed list of the ingredients or chemical components of the
following chemical products:
a.
b.

Contact Grease to be compared with Connector Grease;

Thixohtropic Grease to be compared with Di-Electric Strength Protective
Coating; and

c.

Dry Lubricant to be compared with Anti-Seize Compound[.]

[Respondent] Pennswell, Inc. is given fifteen (15) days from receipt of this Order to
submit to [petitioner] Air Philippines Corporation the chemical components of all the abovementioned products for chemical comparison/analysis. [12]

Respondent sought reconsideration of the foregoing Order, contending that it cannot be compelled to
disclose the chemical components sought because the matter is confidential. It argued that what
petitioner endeavored to inquire upon constituted a trade secret which respondent cannot be forced to
divulge. Respondent maintained that its products are specialized lubricants, and if their components
were revealed, its business competitors may easily imitate and market the same types of products, in
violation of its proprietary rights and to its serious damage and prejudice.
The RTC gave credence to respondents reasoning, and reversed itself. It issued an Order dated 30 June
2004, finding that the chemical components are respondents trade secrets and are privileged in
character. A priori, it rationalized:
The Supreme Court held in the case of Chavez vs. Presidential Commission on Good
Government, 299 SCRA 744, p. 764, that the drafters of the Constitution also unequivocally
affirmed that aside from national security matters and intelligence information, trade or
industrial secrets (pursuant to the Intellectual Property Code and other related laws) as well
as banking transactions (pursuant to the Secrecy of Bank Deposit Act) are also exempted
from compulsory disclosure.
Trade secrets may not be the subject of compulsory disclosure. By reason of [their]
confidential and privileged character, ingredients or chemical components of the products
ordered by this Court to be disclosed constitute trade secrets lest [herein respondent] would
eventually be exposed to unwarranted business competition with others who may imitate and
market the same kinds of products in violation of [respondents] proprietary rights. Being
privileged, the detailed list of ingredients or chemical components may not be the subject of
mode of discovery under Rule 27, Section 1 of the Rules of Court, which expressly makes
privileged information an exception from its coverage. [13]

Alleging grave abuse of discretion on the part of the RTC, petitioner filed a Petition
for Certiorari under Rule 65 of the Rules of Court with the Court of Appeals, which denied the
Petition and affirmed the Order dated 30 June 2004 of the RTC.
The Court of Appeals ruled that to compel respondent to reveal in detail the list of ingredients
of its lubricants is to disregard respondents rights over its trade secrets. It was categorical in declaring
that the chemical formulation of respondents products and their ingredients are embraced within the
meaning of trade secrets. In disallowing the disclosure, the Court of Appeals expounded, thus:
The Supreme Court in Garcia v. Board of Investments (177 SCRA 374 [1989]) held
that trade secrets and confidential, commercial and financial information are exempt from
public scrutiny. This is reiterated in Chavez v. Presidential Commission on Good
Government (299 SCRA 744 [1998]) where the Supreme Court enumerated the kinds of
information and transactions that are recognized as restrictions on or privileges against
compulsory disclosure. There, the Supreme Court explicitly stated that:
The drafters of the Constitution also unequivocally affirmed that, aside from national
security matters and intelligence information, trade or industrial secrets (pursuant to the
Intellectual Property Code and other related laws) as well as banking transactions (pursuant
to the Secrecy of Bank Deposits Act) re also exempt from compulsory disclosure.

It is thus clear from the foregoing that a party cannot be compelled to produce, release
or disclose documents, papers, or any object which are considered trade secrets.
In the instant case, petitioner [Air Philippines Corporation] would have [respondent]
Pennswell produce a detailed list of ingredients or composition of the latters lubricant
products so that a chemical comparison and analysis thereof can be obtained. On this note,
We believe and so hold that the ingredients or composition of [respondent] Pennswells
lubricants are trade secrets which it cannot be compelled to disclose.
[Respondent] Pennswell has a proprietary or economic right over the ingredients or
components of its lubricant products. The formulation thereof is not known to the general
public and is peculiar only to [respondent] Pennswell. The legitimate and economic interests
of business enterprises in protecting their manufacturing and business secrets are wellrecognized in our system.
[Respondent] Pennswell has a right to guard its trade secrets, manufacturing formulas,
marketing strategies and other confidential programs and information against the
public. Otherwise, such information can be illegally and unfairly utilized by business
competitors who, through their access to [respondent] Pennswells business secrets, may use
the same for their own private gain and to the irreparable prejudice of the latter.
xxxx
In the case before Us, the alleged trade secrets have a factual basis, i.e., it comprises
of the ingredients and formulation of [respondent] Pennswells lubricant products which are
unknown to the public and peculiar only to Pennswell.
All told, We find no grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of public respondent Judge in finding that the detailed list of
ingredients or composition of the subject lubricant products which petitioner [Air Philippines
Corporation] seeks to be disclosed are trade secrets of [respondent] Pennswell; hence,
privileged against compulsory disclosure.[14]

Petitioners Motion for Reconsideration was denied.

Unyielding, petitioner brought the instant Petition before us, on the sole issue of:
WHETHER THE COURT OF APPEALS RULED IN ACCORDANCE WITH
PREVAILING LAWS AND JURISPRUDENCE WHEN IT UPHELD THE RULING OF
THE TRIAL COURT THAT THE CHEMICAL COMPONENTS OR INGREDIENTS OF
RESPONDENTS PRODUCTS ARE TRADE SECRETS OR INDUSTRIAL SECRETS
THAT ARE NOT SUBJECT TO COMPULSORY DISCLOSURE.[15]

Petitioner seeks to convince this Court that it has a right to obtain the chemical composition and
ingredients of respondents products to conduct a comparative analysis of its products. Petitioner
assails the conclusion reached by the Court of Appeals that the matters are trade secrets which are
protected by law and beyond public scrutiny.Relying on Section 1, Rule 27 of the Rules of Court,
petitioner argues that the use of modes of discovery operates with desirable flexibility under the
discretionary control of the trial court. Furthermore, petitioner posits that its request is not done in bad
faith or in any manner as to annoy, embarrass, or oppress respondent.
A trade secret is defined as a plan or process, tool, mechanism or compound known only to its owner
and those of his employees to whom it is necessary to confide it. [16] The definition also extends to a
secret formula or process not patented, but known only to certain individuals using it in compounding
some article of trade having a commercial value.[17] A trade secret may consist of any formula, pattern,
device, or compilation of information that: (1) is used in one's business; and (2) gives the employer an

opportunity to obtain an advantage over competitors who do not possess the information. [18] Generally,
a trade secret is a process or device intended for continuous use in the operation of the business, for
example, a machine or formula, but can be a price list or catalogue or specialized customer list. [19] It is
indubitable that trade secrets constitute proprietary rights. The inventor, discoverer, or possessor of a
trade secret or similar innovation has rights therein which may be treated as property, and ordinarily
an injunction will be granted to prevent the disclosure of the trade secret by one who obtained the
information "in confidence" or through a "confidential relationship." [20] American jurisprudence has
utilized the following factors[21] to determine if an information is a trade secret, to wit:
(1)
the extent to which the information is known outside of the employer's business;
(2)

the extent to which the information is known by employees and others involved in
the business;

(3)

the extent of measures taken by the employer to guard the secrecy of the information;

(4)

the value of the information to the employer and to competitors;

(5)

the amount of effort or money expended by the company in

developing the information; and

(6) the extent to which the information could be easily or readily obtained through an
independent source.[22]

In Cocoland Development Corporation v. National Labor Relations Commission, [23] the issue
was the legality of an employees termination on the ground of unauthorized disclosure of trade
secrets. The Court laid down the rule that any determination by management as to the confidential
nature of technologies, processes, formulae or other so-called trade secrets must have a substantial
factual basis which can pass judicial scrutiny. The Court rejected the employers naked contention that
its own determination as to what constitutes a trade secret should be binding and conclusive upon the
NLRC. As a caveat, the Court said that to rule otherwise would be to permit an employer to label
almost anything a trade secret, and thereby create a weapon with which he/it may arbitrarily dismiss
an employee on the pretext that the latter somehow disclosed a trade secret, even if in fact there be
none at all to speak of.[24] Hence, in Cocoland, the parameters in the determination of trade secrets
were set to be such substantial factual basis that can withstand judicial scrutiny.
The chemical composition, formulation, and ingredients of respondents special lubricants are
trade secrets within the contemplation of the law. Respondent was established to engage in the
business of general manufacturing and selling of, and to deal in, distribute, sell or otherwise dispose of
goods, wares, merchandise, products, including but not limited to industrial chemicals, solvents,
lubricants, acids, alkalies, salts, paints, oils, varnishes, colors, pigments and similar preparations,
among others. It is unmistakable to our minds that the manufacture and production of respondents
products proceed from a formulation of a secret list of ingredients. In the creation of its lubricants,
respondent expended efforts, skills, research, and resources. What it had achieved by virtue of its
investments may not be wrested from respondent on the mere pretext that it is necessary for
petitioners defense against a collection for a sum of money. By and large, the value of the information
to respondent is crystal clear. The ingredients constitute the very fabric of respondents production and
business. No doubt, the information is also valuable to respondents competitors. To compel its
disclosure is to cripple respondents business, and to place it at an undue disadvantage. If the chemical
composition of respondents lubricants are opened to public scrutiny, it will stand to lose the backbone
on which its business is founded. This would result in nothing less than the probable demise of
respondents business. Respondents proprietary interest over the ingredients which it had developed
and expended money and effort on is incontrovertible. Our conclusion is that the detailed ingredients
sought to be revealed have a commercial value to respondent. Not only do we acknowledge the fact

that the information grants it a competitive advantage; we also find that there is clearly a glaring intent
on the part of respondent to keep the information confidential and not available to the prying public.
We now take a look at Section 1, Rule 27 of the Rules of Court, which permits parties to inspect
documents or things upon a showing of good cause before the court in which an action is pending. Its
entire provision reads:
SECTION 1. Motion for production or inspection order. Upon motion of any party showing good cause
therefore, the court in which an action is pending may (a) order any party to produce and permit the
inspection and copying or photographing, by or on behalf of the moving party, of any designated
documents, papers, books, accounts, letters, photographs, objects or tangible things, not privileged,
which constitute or contain evidence material to any matter involved in the action and which are in his
possession, custody or control; or (b) order any party to permit entry upon designated land or other
property in his possession or control for the purpose of inspecting, measuring, surveying, or
photographing the property or any designated relevant object or operation thereon. The order shall
specify the time, place and manner of making the inspection and taking copies and photographs, and
may prescribe such terms and conditions as are just.

A more than cursory glance at the above text would show that the production or inspection of
documents or things as a mode of discovery sanctioned by the Rules of Court may be availed of by
any party upon a showing of good cause therefor before the court in which an action is pending. The
court may order any party: a) to produce and permit the inspection and copying or photographing of
any designated documents, papers, books, accounts, letters, photographs, objects or tangible things,
which are not privileged;[25] which constitute or contain evidence material to any matter involved in
the action; and which are in his possession, custody or control; or b) to permit entry upon designated
land or other property in his possession or control for the purpose of inspecting, measuring, surveying,
or photographing the property or any designated relevant object or operation thereon.
Rule 27 sets an unequivocal proviso that the documents, papers, books, accounts, letters,
photographs, objects or tangible things that may be produced and inspected should not be privileged.
[26]
The documents must not be privileged against disclosure. [27] On the ground of public policy, the
rules providing for production and inspection of books and papers do not authorize the production or
inspection of privileged matter; that is, books and papers which, because of their confidential and
privileged character, could not be received in evidence. [28] Such a condition is in addition to the
requisite that the items be specifically described, and must constitute or contain evidence material to
any matter involved in the action and which are in the partys possession, custody or control.
Section 24[29] of Rule 130 draws the types of disqualification by reason of privileged
communication, to wit: (a) communication between husband and wife; (b) communication between
attorney and client; (c) communication between physician and patient; (d) communication between
priest and penitent; and (e) public officers and public interest. There are, however, other privileged
matters that are not mentioned by Rule 130. Among them are the following: (a) editors may not be
compelled to disclose the source of published news; (b) voters may not be compelled to disclose for
whom they voted; (c) trade secrets; (d) information contained in tax census returns; and (d) bank
deposits. [30]
We, thus, rule against the petitioner. We affirm the ruling of the Court of Appeals which upheld
the finding of the RTC that there is substantial basis for respondent to seek protection of the law for its
proprietary rights over the detailed chemical composition of its products.
That trade secrets are of a privileged nature is beyond quibble. The protection that this
jurisdiction affords to trade secrets is evident in our laws. The Interim Rules of Procedure on
Government Rehabilitation, effective 15 December 2000, which applies to: (1) petitions for
rehabilitation filed by corporations, partnerships, and associations pursuant to Presidential Decree No.

902-A,[31] as amended; and (2) cases for rehabilitation transferred from the Securities and Exchange
Commission to the RTCs pursuant to Republic Act No. 8799, otherwise known as The Securities
Regulation Code, expressly provides that the court may issue an order to protect trade secrets or
other confidential research, development, or commercial information belonging to the debtor.
[32]
Moreover, the Securities Regulation Code is explicit that the Securities and Exchange Commission
is not required or authorized to require the revelation of trade secrets or processes in
any application, report or document filed with the Commission. [33] This confidentiality is made
paramount as a limitation to the right of any member of the general public, upon request, to have
access to all information filed with the Commission.[34]
Furthermore, the Revised Penal Code endows a cloak of protection to trade secrets under the
following articles:
Art. 291. Revealing secrets with abuse of office. The penalty of arresto mayor and a fine not
exceeding 500 pesos shall be imposed upon any manager, employee or servant who, in such
capacity, shall learn the secrets of his principal or master and shall reveal such secrets.
Art. 292. Revelation of industrial secrets. The penalty of prision correccional in its
minimum and medium periods and a fine not exceeding 500 pesos shall be imposed upon the
person in charge, employee or workman of any manufacturing or industrial establishment
who, to the prejudice of the owner thereof, shall reveal the secrets of the industry of
the latter.

Similarly, Republic Act No. 8424, otherwise known as the National Internal Revenue Code of
1997, has a restrictive provision on trade secrets, penalizing the revelation thereof by internal revenue
officers or employees, to wit:
SECTION 278. Procuring Unlawful Divulgence of Trade Secrets. - Any person who causes
or procures an officer or employee of the Bureau of Internal Revenue to divulge any
confidential information regarding the business, income or inheritance of any taxpayer,
knowledge of which was acquired by him in the discharge of his official duties, and which it
is unlawful for him to reveal, and any person who publishes or prints in any manner
whatever, not provided by law, any income, profit, loss or expenditure appearing in any
income tax return, shall be punished by a fine of not more than two thousand pesos (P2,000),
or suffer imprisonment of not less than six (6) months nor more than five (5) years, or both.

Republic Act No. 6969, or the Toxic Substances and Hazardous and Nuclear Wastes Control Act
of 1990, enacted to implement the policy of the state to regulate, restrict or prohibit the importation,
manufacture, processing, sale, distribution, use and disposal of chemical substances and mixtures that
present unreasonable risk and/or injury to health or the environment, also contains a provision that
limits the right of the public to have access to records, reports or information concerning
chemical substances and mixtures including safety data submitted and data on emission or
discharge into the environment, if the matter is confidential such that it would divulge trade
secrets, production or sales figures; or methods, production or processes unique to such
manufacturer, processor or distributor; or would otherwise tend to affect adversely the
competitive position of such manufacturer, processor or distributor.[35]
Clearly, in accordance with our statutory laws, this Court has declared that intellectual and
industrial property rights cases are not simple property cases. [36]Without limiting such industrial
property rights to trademarks and trade names, this Court has ruled that all agreements concerning
intellectual property are intimately connected with economic development. [37] The protection of
industrial property encourages investments in new ideas and inventions and stimulates creative efforts
for the satisfaction of human needs. It speeds up transfer of technology and industrialization, and

thereby bring about social and economic progress. [38] Verily, the protection of industrial secrets is
inextricably linked to the advancement of our economy and fosters healthy competition in trade.
Jurisprudence has consistently acknowledged the private character of trade secrets. There is a
privilege not to disclose ones trade secrets.[39] Foremost, this Court has declared that trade secrets and
banking transactions are among the recognized restrictions to the right of the people to information as
embodied in the Constitution.[40]We said that the drafters of the Constitution also unequivocally
affirmed that, aside from national security matters and intelligence information, trade or industrial
secrets (pursuant to the Intellectual Property Code and other related laws) as well as banking
transactions (pursuant to the Secrecy of Bank Deposits Act), are also exempted from compulsory
disclosure.[41]
Significantly, our cases on labor are replete with examples of a protectionist stance towards the
trade secrets of employers. For instance, this Court upheld the validity of the policy of a
pharmaceutical company prohibiting its employees from marrying employees of any competitor
company, on the rationalization that the company has a right to guard its trade secrets, manufacturing
formulas, marketing strategies and other confidential programs and information from competitors.
[42]
Notably, it was in a labor-related case that this Court made a stark ruling on the proper
determination of trade secrets.
In the case at bar, petitioner cannot rely on Section 77[43] of Republic Act 7394, or the Consumer
Act of the Philippines, in order to compel respondent to reveal the chemical components of its
products. While it is true that all consumer products domestically sold, whether manufactured locally
or imported, shall indicate their general make or active ingredients in their respective labels of
packaging, the law does not apply to respondent. Respondents specialized lubricants -- namely,
Contact Grease, Connector Grease, Thixohtropic Grease, Di-Electric Strength Protective Coating, Dry
Lubricant and Anti-Seize Compound -- are not consumer products.Consumer products, as it is defined
in Article 4(q),[44] refers to goods, services and credits, debts or obligations which are primarily for
personal, family, household or agricultural purposes, which shall include, but not be limited to, food,
drugs, cosmetics, and devices. This is not the nature of respondents products. Its products are not
intended for personal, family, household or agricultural purposes. Rather, they are for industrial use,
specifically for the use of aircraft propellers and engines.
Petitioners argument that Republic Act No. 8203, or the Special Law on Counterfeit Drugs,
requires the disclosure of the active ingredients of a drug is also on faulty ground. [45] Respondents
products are outside the scope of the cited law. They do not come within the purview of a
drug[46] which, as defined therein, refers to any chemical compound or biological substance, other than
food, that is intended for use in the treatment, prevention or diagnosis of disease in man or animals.
Again, such are not the characteristics of respondents products.
What is clear from the factual findings of the RTC and the Court of Appeals is that the chemical
formulation of respondents products is not known to the general public and is unique only to it. Both
courts uniformly ruled that these ingredients are not within the knowledge of the public. Since such
factual findings are generally not reviewable by this Court, it is not duty-bound to analyze and weigh
all over again the evidence already considered in the proceedings below.[47] We need not delve into the
factual bases of such findings as questions of fact are beyond the pale of Rule 45 of the Rules of
Court. Factual findings of the trial court when affirmed by the Court of Appeals, are binding and
conclusive on the Supreme Court.[48]
We do not find merit or applicability in petitioners invocation of Section 12 [49] of the Toxic
Substances and Hazardous and Nuclear Wastes Control Act of 1990, which grants the public access to
records, reports or information concerning chemical substances and mixtures, including safety data

submitted, and data on emission or discharge into the environment. To reiterate, Section 12[50] of said
Act deems as confidential matters, which may not be made public, those that would divulge
trade secrets, including production or sales figures or methods; production or processes unique
to such manufacturer, processor or distributor, or would otherwise tend to affect adversely the
competitive position of such manufacturer, processor or distributor. It is true that under the same
Act, the Department of Environment and Natural Resources may release information; however, the
clear import of the law is that said authority is limited by the right to confidentiality of the
manufacturer, processor or distributor, which information may be released only to a medical research
or scientific institution where the information is needed for the purpose of medical diagnosis or
treatment of a person exposed to the chemical substance or mixture. The right to confidentiality is
recognized by said Act as primordial.Petitioner has not made the slightest attempt to show that these
circumstances are availing in the case at bar.
Indeed, the privilege is not absolute; the trial court may compel disclosure where it is
indispensable for doing justice.[51] We do not, however, find reason to except respondents trade secrets
from the application of the rule on privilege. The revelation of respondents trade secrets serves no
better purpose to the disposition of the main case pending with the RTC, which is on the collection of
a sum of money. As can be gleaned from the facts, petitioner received respondents goods in trade in
the normal course of business. To be sure, there are defenses under the laws of contracts and sales
available to petitioner. On the other hand, the greater interest of justice ought to favor respondent as
the holder of trade secrets. If we were to weigh the conflicting interests between the parties, we rule in
favor of the greater interest of respondent. Trade secrets should receive greater protection from
discovery, because they derive economic value from being generally unknown and not readily
ascertainable by the public.[52] To the mind of this Court, petitioner was not able to show a
compelling reason for us to lift the veil of confidentiality which shields respondents trade secrets.
WHEREFORE, the Petition is DENIED. The Decision dated 16 February 2006, and the
Resolution dated 25 May 2006, of the Court of Appeals in CA-G.R. SP No. 86329
are AFFIRMED. No costs.
SO ORDERED.

SECOND DIVISION
[G.R. No. 156117. May 26, 2005]
REPUBLIC OF THE PHILIPPINES, petitioner, vs. JEREMIAS AND DAVID
HERBIETO, respondents.
DECISION
CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari, under Rule 45 of the 1997 Rules of
Civil Procedure, seeking the reversal of the Decision of the Court of Appeals in CA-G.R. CV No.
67625, dated 22 November 2002, which affirmed the Judgment of the Municipal Trial Court
(MTC) of Consolacion, Cebu, dated 21 December 1999, granting the application for land
registration of the respondents.
[1]

[2]

Respondents in the present Petition are the Herbieto brothers, Jeremias and David, who
filed with the MTC, on 23 September 1998, a single application for registration of two parcels of
land, Lots No. 8422 and 8423, located in Cabangahan, Consolacion, Cebu (Subject Lots). They
claimed to be owners in fee simple of the Subject Lots, which they purchased from their parents,
spouses Gregorio Herbieto and Isabel Owatan, on 25 June 1976. Together with their
application for registration, respondents submitted the following set of documents:
[3]

(a)AdvanceSurveyPlanofLotNo.8422,inthenameofrespondentJeremias;andAdvance
SurveyPlanofLotNo.8423,inthenameofrespondentDavid;
[4]

(b)ThetechnicaldescriptionsoftheSubjectLots;

[5]

(c)CertificationsbytheDepartmentofEnvironmentandNaturalResources(DENR)dispensing
withtheneedforSurveyorsCertificatesfortheSubjectLots;
[6]

(d)CertificationsbytheRegisterofDeedsofCebuCityontheabsenceofcertificatesoftitle
coveringtheSubjectLots;
[7]

(e)CertificationsbytheCommunityEnvironmentandNaturalResourcesOffice(CENRO)ofthe
DENRonitsfindingthattheSubjectLotsarealienableanddisposable,byvirtueofForestry
AdministrativeOrderNo.41063,dated25June1963;
[8]

(f)CertifiedTrueCopiesofAssessmentofRealProperty(ARP)No.941800301831,inthename
ofJeremias,coveringLotNo.8422,issuedin1994;andARPNo.941800301833,inthe
nameofDavid,coveringLotNo.8423,alsoissuedin1994; and
[9]

(g)DeedofDefiniteSaleexecutedon25June1976byspousesGregorioHerbietoandIsabel
OwatansellingtheSubjectLotsandtheimprovementsthereontotheirsonsandrespondents
herein,JeremiasandDavid,forP1,000.LotNo.8422wassoldtoJeremias,whileLotNo.
8423wassoldtoDavid.
[10]

On 11 December 1998, the petitioner Republic of the Philippines (Republic) filed an

Opposition to the respondents application for registration of the Subject Lots arguing that: (1)
Respondents failed to comply with the period of adverse possession of the Subject Lots required
by law; (2) Respondents muniments of title were not genuine and did not constitute competent
and sufficient evidence of bona fide acquisition of the Subject Lots; and (3) The Subject Lots
were part of the public domain belonging to the Republic and were not subject to private
appropriation.
[11]

The MTC set the initial hearing on 03 September 1999 at 8:30 a.m. All owners of the land
adjoining the Subject Lots were sent copies of the Notice of Initial Hearing. A copy of the Notice
[12]

[13]

was also posted on 27 July 1999 in a conspicuous place on the Subject Lots, as well as on the
bulletin board of the municipal building of Consolacion, Cebu, where the Subject Lots were
located. Finally, the Notice was also published in the Official Gazette on 02 August
1999 and The Freeman Banat News on 19 December 1999.
[14]

[15]

[16]

During the initial hearing on 03 September 1999, the MTC issued an Order of Special
Default, with only petitioner Republic opposing the application for registration of the Subject
Lots. The respondents, through their counsel, proceeded to offer and mark documentary
evidence to prove jurisdictional facts. The MTC commissioned the Clerk of Court to receive
further evidence from the respondents and to submit a Report to the MTC after 30 days.
[17]

On 21 December 1999, the MTC promulgated its Judgment ordering the registration and
confirmation of the title of respondent Jeremias over Lot No. 8422 and of respondent David over
Lot No. 8423. It subsequently issued an Order on 02 February 2000 declaring its Judgment,
dated 21 December 1999, final and executory, and directing the Administrator of the Land
Registration Authority (LRA) to issue a decree of registration for the Subject Lots.
[18]

Petitioner Republic appealed the MTC Judgment, dated 21 December 1999, to the Court of
Appeals. The Court of Appeals, in its Decision, dated 22 November 2002, affirmed the
appealed MTC Judgment reasoning thus:
[19]

Inthecaseatbar,therecanbenoquestionthatthelandsoughttoberegisteredhasbeenclassifiedas
withinthealienableanddisposablezonesinceJune25,1963.Article1113inrelationtoArticle1137of
theCivilCode,respectivelyprovidesthatAllthingswhicharewithinthecommerceofmenare
susceptibleofprescription,unlessotherwiseprovided.PropertyoftheStateoranyofitssubdivisionsof
patrimonialcharactershallnotbetheobjectofprescriptionandthatOwnershipandotherrealrightsover
immovablesalsoprescribethroughuninterruptedadversepossessionthereofforthirtyyears,withoutneed
oftitleorofgoodfaith.
Astestifiedtobytheappelleesinthecaseatbench,theirparentsalreadyacquiredthesubjectparcelsof
lands,subjectmatterofthisapplication,since1950andthattheycultivatedthesameandplanteditwith
jackfruits,bamboos,coconuts,andothertrees(JudgmentdatedDecember21,1999,p.6).Inshort,itis
undisputedthathereinappelleesortheirpredecessorsininteresthadoccupiedandpossessedthesubject
landopenly,continuously,exclusively,andadverselysince1950.Consequently,evenassumingarguendo
thatappelleespossessioncanbereckonedonlyfromJune25,1963orfromthetimethesubjectlotshad
beenclassifiedaswithinthealienableanddisposablezone,stilltheargumentoftheappellantdoesnot
holdwater.
Asearlierstressed,thesubjectproperty,beingalienablesince1963asshownbyCENROReportdated
June23,1963,maynowbetheobjectofprescription,thussusceptibleofprivateownership.Byexpress
provisionofArticle1137,appelleesare,withmuchgreaterright,entitledtoapplyforitsregistration,as
providedbySection14(4)ofP.D.1529whichallowsindividualstoownlandinanymannerprovidedby
law.Again,evenconsideringthatpossessionofappellessshouldonlybereckonedfrom1963,theyear
whenCENROdeclaredthesubjectlandsalienable,hereinappelleeshavebeenpossessingthesubject
parcelsoflandinopen,continuous,andintheconceptofanowner,for35yearsalreadywhentheyfiled
theinstantapplicationforregistrationoftitletothelandin1998.Assuch,thiscourtfindsnoreasonto
disturbthefindingofthecourtaquo.
[20]

The Republic filed the present Petition for the review and reversal of the Decision of the
Court of Appeals, dated 22 November 2002, on the basis of the following arguments:
First, respondents failed to establish that they and their predecessors-in-interest had been in
open, continuous, and adverse possession of the Subject Lots in the concept of owners since 12
June 1945 or earlier. According to the petitioner Republic, possession of the Subject Lots prior to
25 June 1963 cannot be considered in determining compliance with the periods of possession
required by law. The Subject Lots were classified as alienable and disposable only on 25 June
1963, per CENROs certification. It also alleges that the Court of Appeals, in applying the 30-year
acquisitive prescription period, had overlooked the ruling in Republic v. Doldol, where this
Court declared that Commonwealth Act No. 141, otherwise known as the Public Land Act, as
amended and as it is presently phrased, requires that possession of land of the public domain
must be from 12 June 1945 or earlier, for the same to be acquired through judicial confirmation
of imperfect title.
[21]

Second, the application for registration suffers from fatal infirmity as the subject of the
application consisted of two parcels of land individually and separately owned by two applicants.
Petitioner Republic contends that it is implicit in the provisions of Presidential Decree No. 1529,
otherwise known as the Property Registration Decree, as amended, that the application for
registration of title to land shall be filed by a single applicant; multiple applicants may file a single
application only in case they are co-owners. While an application may cover two parcels of land,
it is allowed only when the subject parcels of land belong to the same applicant or applicants (in
case the subject parcels of land are co-owned) and are situated within the same province.
Where the authority of the courts to proceed is conferred by a statute and when the manner of
obtaining jurisdiction is mandatory, it must be strictly complied with or the proceedings will be
utterly void. Since the respondents failed to comply with the procedure for land registration
under the Property Registration Decree, the proceedings held before the MTC is void, as the
latter did not acquire jurisdiction over it.
I

Jurisdiction
Addressing first the issue of jurisdiction, this Court finds that the MTC had no jurisdiction to
proceed with and hear the application for registration filed by the respondents but for reasons
different from those presented by petitioner Republic.
A. The misjoinder of causes of action and parties does not affect the jurisdiction of the MTC to
hear and proceed with respondents application for registration.
Respondents filed a single application for registration of the Subject Lots even though they
were not co-owners. Respondents Jeremias and David were actually seeking the individual and
separate registration of Lots No. 8422 and 8423, respectively.
Petitioner Republic believes that the procedural irregularity committed by the respondents
was fatal to their case, depriving the MTC of jurisdiction to proceed with and hear their
application for registration of the Subject Lots, based on this Courts pronouncement in Director
of Lands v. Court of Appeals, to wit:
[22]

...Inviewofthesemultipleomissionswhichconstitutenoncompliancewiththeabovecitedsectionsof
theAct,WerulethatsaiddefectshavenotinvestedtheCourtwiththeauthorityorjurisdictiontoproceed
withthecasebecausethemannerormodeofobtainingjurisdictionasprescribedbythestatutewhichis
mandatoryhasnotbeenstrictlyfollowed,therebyrenderingallproceedingsutterlynullandvoid.
This Court, however, disagrees with petitioner Republic in this regard. This procedural lapse
committed by the respondents should not affect the jurisdiction of the MTC to proceed with and
hear their application for registration of the Subject Lots.
The Property Registration Decree recognizes and expressly allows the following situations:
(1) the filing of a single application by several applicants for as long as they are co-owners of the
parcel of land sought to be registered; and (2) the filing of a single application for registration of
several parcels of land provided that the same are located within the same province. The
Property Registration Decree is silent, however, as to the present situation wherein two
applicants filed a single application for two parcels of land, but are seeking the separate and
individual registration of the parcels of land in their respective names.
[23]

[24]

[25]

Since the Property Registration Decree failed to provide for such a situation, then this Court
refers to the Rules of Court to determine the proper course of action. Section 34 of the Property
Registration Decree itself provides that, [t]he Rules of Court shall, insofar as not inconsistent
with the provisions of this Decree, be applicable to land registration and cadastral cases by
analogy or in a suppletory character and whenever practicable and convenient.
Considering every application for land registration filed in strict accordance with the Property
Registration Decree as a single cause of action, then the defect in the joint application for
registration filed by the respondents with the MTC constitutes a misjoinder of causes of action
and parties. Instead of a single or joint application for registration, respondents Jeremias and
David, more appropriately, should have filed separate applications for registration of Lots No.
8422 and 8423, respectively.

Misjoinder of causes of action and parties do not involve a question of jurisdiction of the
court to hear and proceed with the case. They are not even accepted grounds for dismissal
thereof. Instead, under the Rules of Court, the misjoinder of causes of action and parties
involve an implied admission of the courts jurisdiction. It acknowledges the power of the court,
acting upon the motion of a party to the case or on its own initiative, to order the severance of
the misjoined cause of action, to be proceeded with separately (in case of misjoinder of causes
of action); and/or the dropping of a party and the severance of any claim against said misjoined
party, also to be proceeded with separately (in case of misjoinder of parties).
[26]

[27]

The misjoinder of causes of action and parties in the present Petition may have been
corrected by the MTC motu propio or on motion of the petitioner Republic. It is regrettable,
however, that the MTC failed to detect the misjoinder when the application for registration was
still pending before it; and more regrettable that the petitioner Republic did not call the attention
of the MTC to the fact by filing a motion for severance of the causes of action and parties,
raising the issue of misjoinder only before this Court.
B. Respondents, however, failed to comply with the publication requirements mandated by the
Property Registration Decree, thus, the MTC was not invested with jurisdiction as a land
registration court.
Although the misjoinder of causes of action and parties in the present Petition did not affect
the jurisdiction of the MTC over the land registration proceeding, this Court, nonetheless, has
discovered a defect in the publication of the Notice of Initial Hearing, which bars the MTC from
assuming jurisdiction to hear and proceed with respondents application for registration.
A land registration case is a proceeding in rem, and jurisdiction in rem cannot be acquired
unless there be constructive seizure of the land through publication and service of notice.
[28]

[29]

Section 23 of the Property Registration Decree requires that the public be given Notice of the
Initial Hearing of the application for land registration by means of (1) publication; (2) mailing; and
(3) posting. Publication of the Notice of Initial Hearing shall be made in the following manner:
1.Bypublication.
Uponreceiptoftheorderofthecourtsettingthetimeforinitialhearing,theCommissionerofLand
RegistrationshallcauseanoticeofinitialhearingtobepublishedonceintheOfficialGazetteandoncein
anewspaperofgeneralcirculationinthePhilippines:Provided,however,thatthepublicationinthe
OfficialGazetteshallbesufficienttoconferjurisdictionuponthecourt.Saidnoticeshallbeaddressedto
allpersonsappearingtohaveaninterestinthelandinvolvedincludingtheadjoiningownerssofaras
known,andtoallwhomitmayconcern.Saidnoticeshallalsorequireallpersonsconcernedtoappearin
courtatacertaindateandtimetoshowcausewhytheprayerofsaidapplicationshallnotbegranted.
Even as this Court concedes that the aforequoted Section 23(1) of the Property Registration
Decree expressly provides that publication in the Official Gazette shall be sufficient to confer
jurisdiction upon the land registration court, it still affirms its declaration in Director of Lands v.
Court of Appeals that publication in a newspaper of general circulation is mandatory for the
land registration court to validly confirm and register the title of the applicant or applicants. That
Section 23 of the Property Registration Decree enumerated and described in detail the
requirements of publication, mailing, and posting of the Notice of Initial Hearing, then all such
requirements, including publication of the Notice in a newspaper of general circulation, is
essential and imperative, and must be strictly complied with. In the same case, this Court
expounded on the reason behind the compulsory publication of the Notice of Initial Hearing in a
newspaper of general circulation, thus
[30]

Itmaybeaskedwhypublicationinanewspaperofgeneralcirculationshouldbedeemedmandatorywhen
thelawalreadyrequiresnoticebypublicationintheOfficialGazetteaswellasbymailingandposting,all
ofwhichhavealreadybeencompliedwithinthecaseathand.Thereasonisdueprocessandthereality
thattheOfficialGazetteisnotaswidelyreadandcirculatedasnewspaperandisoftentimesdelayedinits
circulation,suchthatthenoticespublishedthereinmaynotreachtheinterestedpartiesontime,ifatall.
Additionally,suchpartiesmaynotbeownersofneighboringproperties,andmayinfactnotownany
otherrealestate.Insum,theallencompassinginremnatureoflandregistrationcases,theconsequences
ofdefaultordersissuedagainstthewholeworldandtheobjectiveofdisseminatingthenoticeinaswidea

manneraspossibledemandamandatoryconstructionoftherequirementsforpublication,mailingand
posting.
[31]

In the instant Petition, the initial hearing was set by the MTC, and was in fact held, on 03
September 1999 at 8:30 a.m. While the Notice thereof was printed in the issue of the Official
Gazette, dated 02 August 1999, and officially released on 10 August 1999, it was published
in The Freeman Banat News, a daily newspaper printed in Cebu City and circulated in the
province and cities of Cebu and in the rest of Visayas and Mindanao, only on 19 December
1999, more than three months after the initial hearing.
Indubitably, such publication of the Notice, way after the date of the initial hearing, would
already be worthless and ineffective. Whoever read the Notice as it was published inThe
Freeman Banat News and had a claim to the Subject Lots was deprived of due process for it
was already too late for him to appear before the MTC on the day of the initial hearing to oppose
respondents application for registration, and to present his claim and evidence in support of
such claim. Worse, as the Notice itself states, should the claimant-oppositor fail to appear before
the MTC on the date of initial hearing, he would be in default and would forever be barred from
contesting respondents application for registration and even the registration decree that may be
issued pursuant thereto. In fact, the MTC did issue an Order of Special Default on 03 September
1999.
The late publication of the Notice of Initial Hearing in the newspaper of general circulation is
tantamount to no publication at all, having the same ultimate result. Owing to such defect in the
publication of the Notice, the MTC failed to constructively seize the Subject Lots and to acquire
jurisdiction over respondents application for registration thereof. Therefore, the MTC Judgment,
dated 21 December 1999, ordering the registration and confirmation of the title of respondents
Jeremias and David over Lots No. 8422 and 8423, respectively; as well as the MTC Order,
dated 02 February 2000, declaring its Judgment of 21 December 1999 final and executory, and
directing the LRA Administrator to issue a decree of registration for the Subject Lots, are both
null and void for having been issued by the MTC without jurisdiction.
II

Period of Possession
Respondents failed to comply with the required period of possession of the Subject Lots for the
judicial confirmation or legalization of imperfect or incomplete title.
While this Court has already found that the MTC did not have jurisdiction to hear and
proceed with respondents application for registration, this Court nevertheless deems it
necessary to resolve the legal issue on the required period of possession for acquiring title to
public land.
Respondents application filed with the MTC did not state the statutory basis for their title to
the Subject Lots. They only alleged therein that they obtained title to the Subject Lots by
purchase from their parents, spouses Gregorio Herbieto and Isabel Owatan, on 25 June 1976.
Respondent Jeremias, in his testimony, claimed that his parents had been in possession of the
Subject Lots in the concept of an owner since 1950.
[32]

Yet, according to the DENR-CENRO Certification, submitted by respondents themselves, the

Subject Lots are within Alienable and Disposable, Block I, Project No. 28 per LC Map No. 2545
of Consolacion, Cebu certified under Forestry Administrative Order No. 4-1063, dated June 25,
1963. Likewise, it is outside Kotkot-Lusaran Mananga Watershed Forest Reservation per
Presidential Proclamation No. 932 dated June 29, 1992. The Subject Lots are thus clearly part
of the public domain, classified as alienable and disposable as of 25 June 1963.
[33]

As already well-settled in jurisprudence, no public land can be acquired by private persons

without any grant, express or implied, from the government; and it is indispensable that the
person claiming title to public land should show that his title was acquired from the State or any
other mode of acquisition recognized by law.
[34]

[35]

The Public Land Act, as amended, governs lands of the public domain, except timber and
mineral lands, friar lands, and privately-owned lands which reverted to the State. It explicitly
enumerates the means by which public lands may be disposed, as follows:
[36]

(1)Forhomesteadsettlement;
(2)Bysale;
(3)Bylease;
(4)Byconfirmationofimperfectorincompletetitles;
(a)Byjudiciallegalization;or
(b)Byadministrativelegalization(freepatent).

[37]

Each mode of disposition is appropriately covered by separate chapters of the Public Land Act
because there are specific requirements and application procedure for every mode. Since
respondents herein filed their application before the MTC, then it can be reasonably inferred
that they are seeking the judicial confirmation or legalization of their imperfect or incomplete title
over the Subject Lots.
[38]

[39]

Judicial confirmation or legalization of imperfect or incomplete title to land, not exceeding

144 hectares, may be availed of by persons identified under Section 48 of the Public Land Act,
as amended by Presidential Decree No. 1073, which reads
[40]

Section48.ThefollowingdescribedcitizensofthePhilippines,occupyinglandsofthepublicdomainor
claimingtoownanysuchlandsoraninteresttherein,butwhosetitleshavenotbeenperfectedor
completed,mayapplytotheCourtofFirstInstanceoftheprovincewherethelandislocatedfor
confirmationoftheirclaimsandtheissuanceofacertificateoftitlethereafter,undertheLand
RegistrationAct,towit:
(a)[RepealedbyPresidentialDecreeNo.1073].
(b)Thosewhobythemselvesorthroughtheirpredecessorsininteresthavebeeninopen,
continuous,exclusive,andnotoriouspossessionandoccupationofagriculturallandsofthe
publicdomain,underabonafideclaimofacquisitionofownership,sinceJune12,1945,or
earlier,immediatelyprecedingthefilingoftheapplicationsforconfirmationoftitle,except
whenpreventedbywarorforcemajeure.Theseshallbeconclusivelypresumedtohave
performedalltheconditionsessentialtoaGovernmentgrantandshallbeentitledtoa
certificateoftitleundertheprovisionsofthischapter.
(c)Membersofthenationalculturalminoritieswhobythemselvesorthroughtheirpredecessors
ininteresthavebeeninopen,continuous,exclusiveandnotoriouspossessionandoccupation
oflandsofthepublicdomainsuitabletoagriculturewhetherdisposableornot,underabona
fideclaimofownershipsinceJune12,1945shallbeentitledtotherightsgrantedinsubsection
(b)hereof.
Not being members of any national cultural minorities, respondents may only be entitled to
judicial confirmation or legalization of their imperfect or incomplete title under Section 48(b) of
the Public Land Act, as amended. Section 48(b), as amended, now requires adverse possession
of the land since 12 June 1945 or earlier. In the present Petition, the Subject Lots became
alienable and disposable only on 25 June 1963. Any period of possession prior to the date when
the Subject Lots were classified as alienable and disposable is inconsequential and should be
excluded from the computation of the period of possession; such possession can never ripen
into ownership and unless the land had been classified as alienable and disposable, the rules on
confirmation of imperfect title shall not apply thereto. It is very apparent then that respondents
could not have complied with the period of possession required by Section 48(b) of the Public
Land Act, as amended, to acquire imperfect or incomplete title to the Subject Lots that may be
judicially confirmed or legalized.
[41]

The confirmation of respondents title by the Court of Appeals was based on the erroneous
supposition that respondents were claiming title to the Subject Lots under the Property
Registration Decree. According to the Decision of the Court of Appeals, dated 22 November
2002, Section 14(4) of the Property Registration Decree allows individuals to own land in any
other manner provided by law. It then ruled that the respondents, having possessed the Subject
Lots, by themselves and through their predecessors-in-interest, since 25 June 1963 to 23
September 1998, when they filed their application, have acquired title to the Subject Lots by
extraordinary prescription under Article 1113, in relation to Article 1137, both of the Civil Code.
[42]

The Court of Appeals overlooked the difference between the Property Registration Decree
and the Public Land Act. Under the Property Registration Decree, there already exists a title
which is confirmed by the court; while under the Public Land Act, the presumption always is that
the land applied for pertains to the State, and that the occupants and possessors only claim an
interest in the same by virtue of their imperfect title or continuous, open, and notorious
possession. As established by this Court in the preceding paragraphs, the Subject Lots
respondents wish to register are undoubtedly alienable and disposable lands of the public
domain and respondents may have acquired title thereto only under the provisions of the Public
Land Act.
[43]

However, it must be clarified herein that even though respondents may acquire imperfect or
incomplete title to the Subject Lots under the Public Land Act, their application for judicial
confirmation or legalization thereof must be in accordance with the Property Registration
Decree, for Section 50 of the Public Land Act reads
SEC.50.Anypersonorpersons,ortheirlegalrepresentativesorsuccessorsinright,claiminganylandsor
interestinlandsundertheprovisionsofthischapter,mustineverycasepresentanapplicationtothe
properCourtofFirstInstance,prayingthatthevalidityoftheallegedtitleorclaimbeinquiredintoand
thatacertificateoftitlebeissuedtothemundertheprovisionsoftheLandRegistrationAct.
[44]

Hence, respondents application for registration of the Subject Lots must have complied with
the substantial requirements under Section 48(b) of the Public Land Act and the procedural
requirements under the Property Registration Decree.
Moreover, provisions of the Civil Code on prescription of ownership and other real rights
apply in general to all types of land, while the Public Land Act specifically governs lands of the
public domain. Relative to one another, the Public Land Act may be considered a special
law that must take precedence over the Civil Code, a general law. It is an established rule of
statutory construction that between a general law and a special law, the special law
prevails Generalia specialibus non derogant.
[45]

[46]

WHEREFORE, based on the foregoing, the instant Petition is GRANTED. The Decision of
the Court of Appeals in CA-G.R. CV No. 67625, dated 22 November 2002, is REVERSED. The
Judgment of the MTC of Consolacion, Cebu in LRC Case No. N-75, dated 21 December 1999,
and its Order, dated 02 February 2000 are declared NULL AND VOID. Respondents application
for registration is DISMISSED.
SO ORDERED.

G.R. No. 81564

April 26, 1990

ACTING REGISTRARS OF LAND TITLES AND DEEDS OF PASAY CITY, PASIG AND MAKATI, METRO MANILA vs.
THE REGIONAL TRIAL COURT, BRANCH 57, IN MAKATI, METRO MANILA PRESIDED OVER BY THE HONORABLE
JUDGE FRANCISCO X. VELEZ
G.R. No. 90176

April 26, 1990

THE INTESTATE ESTATE OF THE LATE DELFIN CASAL vs. HONORABLE CONRADO VASQUEZ, JR., Presiding
Judge, BRANCH 118, RTC, RICARDO P. SANTIAGO
SARMIENTO, J.:
The petitioners charge His Honor, Judge Francisco Velez, of the Regional Trial Court, Branch 57, Makati, Metro Manila,
with grave abuse of discretion in issuing an order authorizing the private respondent, through Domingo Palomares, to
perform acts of ownership over a 2,574-hectare parcel of land known as Hacienda de Maricabanspread out in various parts
of Makati, Pasig, Taguig, Pasay City, and Paraaque. There is no controversy as to the facts.
**

On November 5, 1985, the private respondent, Domingo Palomares, as administrator of the heirs of Delfin Casal,
commenced suit with the Regional Trial Court, Branch 132, Makati, Metro Manila for declaratory relief, quieting of title,
cancellation of Transfer Certificate of Title No. 192, and cancellation of entries upon Original Certificate of Title No. 291.
Palomares had earlier come to this Court (February 27, 1985) on a similar petition, and in addition, to direct the Register of
Deeds to issue a duplicate owner's copy of Original Certificate of Title No. 291, embracing allegedly Hacienda de
Maricaban, in lieu of the (alleged) lost one. On September 9, 1985, the Court denied the petition for lack of merit. (G.R. No.
69834).
On December 19, 1985, the petitioners filed their answer.
On June 2, 1986, the private respondent filed a motion to admit amended complaint impleading the Republic of the
Philippines and the Registers of Deeds of Pasig, Makati, and Pasay City as parties-respondents, and alleging, among other
things, that: (1) on October 1, 1906, the Court of Land Registration (James Ostrand, Presiding Judge) confirmed the title of
Dolores Pascual Casal y Ochoa, a native of Madrid, Spain, over the 2,574-hectare parcel above-mentioned; (2) on October
17, 1906, the Register of Deeds of Rizal issued OCT No. 291 in her name; (3) upon her death, and successive deaths of
her heirs, the property devolved on Gerardo, Reynaldo, Lolita, and Erlinda, all surnamed Casal, great grandchildren of
Dolores; (4) no conveyances or dispositions of any kind have been allegedly made upon the parcel; (5) TCT No. 192, which
covers the same landholding, is allegedly spurious and inexistent; (6) the State itself, by placing 27,213,255 square meters
thereof under a military reservation (Fort McKinley now Fort Bonifacio), by Proclamation No. 423, and fifty hectares thereof
pursuant to Proclamation No. 192, had been guilty of landgrabbing; (7) any and all holders of any and all TCTs emanating
therefrom or from TCT No. 192, are null, void, and of no force and effect; and (8) as a consequence thereof, the heirs of
Dolores Casal suffered various damages and attorney's fees.
On June 26, 1986, the petitioners filed an answer, stating, among other things, that: (1) the estate of Dolores Casal (or
Delfin Casal, her grandchild) is not a juridical person authorized by law to bring suit; (2) the Registers of Deeds of Makati,
Pasig, and Pasay City are not the real parties in interest, but rather, the registered owners over which the court had not
acquired jurisdiction; (3) the non-joinder of the real parties in interest is fatal; (4) OCT No. 291 has long been cancelled; (5)
Judge Gregorio Pineda of the then Court of First Instance of Rizal, Branch XXI, Pasig, had earlier denied prayers for the
issuance of duplicate owner's copy of OCT No. 291 because the land embraced therein had been validly delivered to the
Government; (6) the Supreme Court itself had denied the Casals' appeal; (7) as a consequence, res judicata is a bar; (8)
prescription has also set in; and (9) the Casal's claims can not validly override the titles of innocent purchasers for value.
***

On August 29, 1986, the respondent judge issued a temporary restraining order, directing the petitioners to cease and
desist from performing the acts complained of.
In a subsequent memorandum, the petitioners alleged that Dolores Casal had conveyed the property to the Government of
the United States in 1906 and the Manila Railroad Company on which Judge Ostrand, the Presiding Judge of the Court of
Land Registration, later Justice of this Court, had stamped his imprimatur.
On October 12, 1987, the respondent court issued an order in the tenor, as follows:

No other opposition having been registered, this Court hereby resolves to grant the plaintiffs' prayer in the
OMNIBUS MOTION in order to safeguard the integrity of the land embraced in OCT 291, hereby authorizing for this
purpose the plaintiff Domingo C. Palomares:
1. To order such subdivision and/or individual survey or surveys within Parcel II, Parcel III and Parcel IV
under Survey Plan Psu-2031 by a licensed geodetic engineer or engineers at plaintiffs' expense in order to
facilitate and simplify the efficient administration of the property described in OCT 291; and
2. To sell, exchange, lease or otherwise dispose (of) any area or areas or portion or portions thereof, subject
to the approval of the Intestate Estate Court, to cover expenses for the payment of taxes to which the
property is subject, as well as expenses of administration and for the protection of the integrity of the said
lands.
SO ORDERED.

Eleven days later, or on October 23, 1987 to be precise, it issued another order, as follows:
Acting on the plaintiffs MOTION dated October 15, 1987 praying for the issuance of a Writ of Execution
implementing the Order of this Court dated October 12, 1987 before the expiration of the time to appeal, and after
inquiring from the plaintiff's counsel for their reason in seeking the same, the Court hereby issues this clarificatory
order affirming the power of the plaintiff Domingo C. Palomares to execute and perform the acts authorized in the
said Order of October 12, 1987 without the need of a Writ of Execution, where no relief has been sought therefrom
by any party, said Order being implementable at the instance of the said plaintiff Domingo C. Palomares, anytime
when the said Order becomes final 15 days after the said plaintiff received copy of the same (see Section 39,
Chapter IV, B.P. Blg. 129). Plaintiff Domingo C. Palomares may therefore take whatever steps he considers
appropriate for the implementation of the said Order without need of further Orders or additional authority from this
Court.
SO ORDERED.

The petitioners filed a notice of appeal; the respondent court, however, denied it" "it being directed against . . . an
interlocutory order. . .
3

Hence, this recourse.

The petitioners interpose the following questions:
A. Whether or not respondent Court can validly decide before trial in favor of private respondent the ownership and
possession of the 25,743,514 square meters (of) land known as "Hacienda de Maricaban", which is the main issue
in this case;
B. Whether or not respondent Court can validly allow private respondent to exercise and perform all acts of
ownership and possession over the said land before trial
C. Whether or not respondent Court has acquired jurisdiction to hear and decide this action;
D. Whether of not respondent Court committed grave abuse of discretion amounting to lack of jurisdiction in not
dismissing this action or allowing petitioners to appeal from the orders in question.
5

In their comment, the private respondent averred, among other things, that: (1) the respondent court, contrary to the
petitioners' claim, did not decide the case "before trial"; (2) OCT No. 291 had not been validly cancelled and that the rubber
stamp impression thereon, "CANCELLED" is a forgery; (3) the act of Judge Pineda, in denying issuance of OCT No. 291,
duplicate owner's copy, can not be considered res judicata because that case involved purportedly a mere petition for
issuance of duplicate owner's copy; (4) non-joinder of proper parties is not a jurisdictional defect; (5) the TCTs issued
thereafter are a nullity because OCT No. 291 had not been shown to have been duly cancelled; (6) OCT No. 291 has
become imprescriptible; and (7) the private respondent has a valid right of dominion over the property.
In the meantime, the private respondent came to this Court on certiorari (G.R. No. 90176) alleging that on December 15,
1987, in connection with Sp. Proc. No. P-2993 of the Regional Trial Court, Branch 118, Pasay City, entitled "In the matter of
the Intestate Estate of the Late Fortunato Santiago and Mariano Pantanilla Crisanta P. Santiago, et al., Petitioners," Judge
Conrado Vasquez, Jr. issued an order disposing of certain parcels which the private respondent claims as forming part and
parcel of Hacienda de Maricaban.
On June 20, 1988, the respondent judge in G.R. No. 81564 filed his own comment, asserting, among other things, that: (1)
what he had sought to bar, by virtue of injunction, was incursions and forcible entries of trespassers and squatters; (2) the
petitioners can not rightly claim that he had prematurely adjudicated the case, because there was allegedly no decision to
begin with; (3) that he issued the writ of preliminary injunction in order only to maintain thestatus quo ante bellum that is, to
re-place the private respondent, which had been allegedly in prior possession, in possession; (4) he did not allegedly
authorize unbridled "acts of ownership" to be exercised on the property; (5) all rights of dominion given thereon were subject
to the approval of the intestate estate court; (6) he denied the notice of appeal because the order dated October 12, 1987,
was interlocutory in nature from which no appeal lies; (7) as to jurisdiction, the various motions filed by petitioners, allegedly
accepting the court's jurisdiction, have clothed the court with jurisdiction, and that besides, the jurisdictional question was
never raised except now.
On July 7, 1988, the petitioners filed a reply traversing the respondent judge's allegations.

On August 26, 1988, the respondent judge filed a supplemental comment. He reiterated that the writ of injunction was
directed only on such spaces not occupied by the Government (Fort Bonifacio, Libingan ng mga Bayani, Ninoy Aquino
International Airport, Nayong Pilipino, Population Commission, National Science and Development Board, and National
Housing Authority).
Meanwhile, Atty. Antonio J. Dalangpan for and on behalf purportedly of the "Heirs of Delfin Casal" and the private
respondent, Domingo Palomares, file a Comment/Opposition in Intervention", dated December 23, 1988 asking for the
outright dismissal of the petition.
On December 14, 1989, the private respondent filed a manifestation, stating, among other things, that assuming OCT No.
291 had been cancelled, there was still basis for the respondent judge to prevent landgrabbers from entering into vacant
portions of the state embraced thereby.
The Court finds the issues, quintessentially, to be:
(1) Is OCT No. 291 still valid and subsisting?
(2) Did the respondent judge, in issuing the orders, dated October 12 and October 23, 1987, commit a grave abuse
of discretion equivalent to lack or excess of jurisdiction?
I.
Is OCT No. 291 still valid and subsisting?
The Court takes judicial notice of the fact that the hectarage embraced by TCT No. 192 (OCT No. 291) consists of
Government property. Three things persuade the Court: (1) the decrees of Proclamations Nos. 192 and 435; (2) the
incontrovertible fact that OCT No. 291 has been duly cancelled; and (3) the division of the Court of Appeals in ACG.R. CV No. 00293, affirming the decision of Hon. Gregorio Pineda, Judge of the then Court of First Instance of
Rizal, Branch XXI, in LRC (GLRO) Rec. No. 2484, Case No. R-1467 thereof, entitled "In Re: Issuance of Owner's
Duplicate of Certificate of Title No. 291," as well as our own Resolution, in G.R. No. 69834, entitled "Domingo
Palomares, et al., v. Intermediate Appellate Court".
(a)
Proclamation No. 192 ("RESERVING FOR THE VETERANS CENTER SITE PURPOSES CERTAIN PARCEL OF
LAND OF THE PUBLIC DOMAIN SITUATED IN THE PROVINCE OF RIZAL, ISLAND OF LUZON") and
Proclamation No. 423 ("RESERVING FOR MILITARY PURPOSES CERTAIN PARCELS OF THE PUBLIC DOMAIN
SITUATED IN THE MUNICIPALITY OF PASIG, TAGUIG, AND PARAAQUE PROVINCE OF RIZAL, AND PASAY
CITY") have the character of official assertions of ownership, and the presumption is that they have been issued by
right of sovereignty and in the exercise of the State's dominical authority. We take not only judicial notice
thereof but accept the same as a valid asseveration of regalian light over property.
6

With respect to the premises occupied by the Libingan ng mga Bayani, Ninoy Aquino International Airport, Nayong
Pilipino, the Population Commission, National Science and Development Board, and the National Housing Authority,
we do not have the slightest doubt that they stand on Government property by sheer presumption that, unless
otherwise shown, what the Government occupies is what the Government owns.
While there is no presumption that property is Government property until otherwise shown, because the law
recognizes private ownership, thus:
Art. 425. Property of private ownership, besides the patrimonial property of the State, provinces, cities, and
municipalities, consists of all property belonging to private persons, either individually or collectively.
7

we find hard evidence on record that: (1) the property covered by OCT No. 291 had been conveyed to the United
States of America; (2) it had been later ceded to the Republic of the Philippines, and (3) as a consequence, OCT
No. 291 was cancelled upon final order of Judge Ostrand.
Be that as it may, the private respondent in G.R. No. 81564 is pressed hard to establish the fact that portions of the
property, especially the open spaces referred to in the lower court's writ of injunction and the private respondent's
manifestation of December 14, 1989, and which open spaces it claims to be outside Maricaban, are indeed
outsideMaricaban (or OCT 291). With respect, however, to parts thereof on which Fort Bonifacio, Libingan ng mga Bayani,
Ninoy Aquino International Airport, Nayong Pilipino, Population Commission National Science and Development Board, and
National Housing Authority sit, the hands of the private respondent are tied.
Claims that Judge Ostrand's decree was a counterfeit is not only self-serving, it finds no support from the records. The
presumptions is "that official duty has been regularly performed," and the burden is on the private respondent to prove
irregular performance. The barren insistence that Judge Ostrands order was a forgery is not sufficient to overthrow the
presumption. To begin with, the act of forgery has been seasonably disputed by the petitioners. Secondly, the Acting
Registrar of Deeds of Pasig, who supposedly certified to the fake character of Judge Ostrand's order, has himself joined the
other petitioners in opposing the reconveyance sought.
8

(b)
The decision in AC-G.R. No. 00293, dismissing the private respondent's petition for the issuance of a new owner's copy of
OCT No. 291, a dismissal affirmed by this Court in G.R. No. 69834, also militates against the return of the property to the

heirs of Delfin Casal. The Appellate Court's judgment, a judgment sustained by this Court, operates as, at the very least, the
law of the case between the parties, that OCT No. 291 has been cancelled and the land covered has been conveyed and
ceded to the National Government. The fact that AC-G.R. CV No. 00293 dealt with a petition for issuance of lost owner's
duplicate copy is no argument because be that as it may, the private respondent can not rightfully say that the heirs of Delfin
Casal still have title to the land. If it can not secure a new owner's copy, it can mean that they have lost title thereto.
(c)
The principle of res judicata is also a bar to the instant proceedings. It should be noted that in G.R. No. 69834, Mr. Domingo
Palomares prayed:
WHEREFORE, premises considered it is most respectfully prayed to the most Honorable Supreme Court, that in the
name of law, justice and fair play, to prevent and frustrate "land-grabbing" by the government, decision be rendered:
FIRST, That a thorough review of the aforementioned resolution of the Intermediate Appellate Court be
made;
SECOND, That after due consideration, the resolution subject of review be set aside based on the
aforestated assignment of error;
THIRD, That the Order of the Lower Court dated Jan. 19, 1977 be affirmed as the lawful and valid order;
FOURTH, To erase all doubts by declaring OCT No. 291 as continuously and existing validly against the
whole world;
FIFTH, Clearing OCT No. 291 of all adverse claims, since the herein petitioners are the true and legally
declared heirs; and
SIXTH, Ordering the Register of Deeds of Pasig, Rizal to issue the Owner's Duplicate Copy of OCT No. 291.
Petitioner-Appellant further prays for other just and equitable reliefs.

****

When we therefore denied that petition, we, in effect, held that reconstitution (of lost duplicate owner's copy) was not
possible because the mother title (OCT No. 291) had been duly cancelled. And when we therefore declared OCT No. 291 to
have been cancelled, we perished all doubts as to the invalidity of Mr. Palomares' pretenses of title toMaricaban. Our
judgment was conclusive not only as to Mr. Palomares, but also as to the existing status of the property. As we have held:
The lower Court correctly ruled that the present action is barred by the final judgment rendered in the previous case
of Tuason & Co. vs. Aguila, Civil Case No. Q-4275, of the Court of First Instance of Rizal. The reason is plain: if the
herein appellants really had a preferential right to a conveyance of the land from J.M. Tuason & Co., or if the
certificate of (Torrens) title held by Tuason & Co. were truly void and ineffective, then these facts should have been
pleaded by these appellants in the previous case (Q-4275), since such facts, if true, constituted a defense to the
claim of Tuason & Co. for recovery of possession. If appellants failed to plead such defenses in that previous case,
they are barred from litigating the same in any subsequent proceeding, for it is a well established rule that as
between the same parties and on the same subject and cause of action, a final judgment is conclusive not only on
matters directly adjudicated, but also as to any other matter that could have been raised in relation thereto.
9

II
Did the respondent judge, in issuing the order, dated October 12, 1987, commit a grave abuse of discretion equivalent to
lack of excess of jurisdiction?
(a)
The Court has no doubt that Judge Velez is here guilty of grave abuse of discretion tantamount to lack or excess of
jurisdiction to warrant certiorari. As above-stated, what he gave away, by virtue of reconveyance, was property that
inalienably belongs to the Government or its successors. Worse, he gave away property without notice to the actual
possessors, that is, the present registered owner. It is beyond debate, as we have indicated, that the land had been, since
the cancellation of OCT No. 291, parcelled out to a succession of buyers and owners. In the absence of notice, it acquired
no jurisdiction to decree redelivery or reconveyance. It is well-established that owners of property over which reconveyance
is asserted are indispensable parties, without whom no relief is available and without whom the court can render no valid
judgment.
10

Furthermore, the present holders of the land in question are innocent purchasers for value, or presumed to be so in the
absence of contrary evidence, against whom reconveyance does not lie.
11

(b)
The respondent judge can not conceal his faults behind arguments that he did not intend to convey the premises, but rather,
to secure, allegedly, vacant portions thereof from interlopers. First, this is not stated in his order. Second, that order is clear
and unequivocal that Domingo Palomares has the right "[t]o sell, exchange, lease or otherwise dispose of any area or areas
or portion or portions thereof . . . " Third and last, the security of the property is the lookout of the claimants, and not the
court's. In case the premises the respondent judge's injunctive writ have been directed belong to others, let them air their
plaints.
12

(c)
The Court is also agreed that the challenged order was issued with no benefit of trial or hearing. The private respondent can
not validly rely on AC-G.R. No. 00293 as the "trial or hearing" to justify the issuance of its said order, in the first place,
because it is a different proceeding. But above all, the private respondent itself says that AC-G.R. CV No. 00293 can not be
made a basis for denying reconveyance because "the . . . petition was merely for the issuance of a new owner's duplicate
copy . . . Accordingly, it can not invoke that case and yet, repudiate its effects. It is the height of contradiction.
13

(d)
It was also grave error for the lower court to deny the Solicitor General's notice of appeal. The Government had all the right
to appeal because: (1) the order of October 12, 1987 was in the nature of a final judgment, as "final judgment" is known in
law (however it is captioned), that is to say, one that "finally disposes of the pending action so that nothing more can be
done with it in the trial court; (2) it did not merely maintain the status quo, but allowed Mr. Domingo Palomares to transact
on the property by near right of dominion over it.
14

Judge Velez had therefore no reason, indeed, excuse, to deny the Government's notice of appeal. What is plain is the fact
that Judge Velez was hell-bent, so to speak, in blocking the Government's efforts to defend what rightfully belongs to it.
What has obviously been lost on the parties, Judge Velez in particular, is the established principle that injunction does not
lie "to take property out of the possession or control of one party and place it into that of another." In this wise it has also
been held:
15

xxx

xxx

xxx

It is a well established doctrine in this jurisdiction that an injunction is not the proper remedy for the recovery of
possession of real estate and the improvements thereon, as well as for the ejectments therefrom of the actual
occupants who claim to have title to or material interest therein. The use of said remedy in such cases has invariably
been considered unjustified, in open violation of the legal presumption that the bona fidepossessor of a certain piece
of land and improvements thereon, holds the same under claim of ownership and with a just title, and as an
advanced concession of the remedy to which the claimant might be entitled. (Citations omitted)
16

xxx

xxx

xxx

Injunction, moreover, is an extraordinary remedy. It lies only in certain cases, to wit:

Sec. 3. Grounds for issuance of preliminary injunction. - A preliminary injunction may be granted at any time after the
commencement of the action and before judgment when it is established:
(a) That the plaintiff is entitled to the relief demanded, and the whole or part of such relief consists in restraining the
commission or continuance of the acts complained of, or in the performance of an act or acts, either for a limited
period or perpetually;
(b) That the commission or continuance of some act complained of during the litigation or the non-performance
thereof would probably work injustice to the plaintiff; or
(c) That the defendant is doing, threatens, or is about to do, or is procuring or suffering to be done, some act
probably in violation of the plaintiffs rights respecting the subject of the action, and tending to render the judgment
ineffectual.
17

xxx

xxx

xxx

The conspicuous and unusual zeal with which Judge Francisco Velez now defends his acts has not escaped us. His
Honor should have borne in mind that in proceedings under Rule 65 of the Rules, such as the present cases, the judge is
included only as a nominal party. Unless otherwise ordained by this Court, he is not called upon to answer or comment on
the petition, but rather, the private respondent. It is indeed distressing to note that it is the very judge who has taken the
cudgels for the latter, in defending its interests, when he, the judge, should have remained a neutral magistrate. Res ipsa
loquitor. He must get his just deserts.
18

19

III
The Court thus closes the long-drawn tale of Hacienda de Maricaban. In this connection, let trial judges be cautioned on the
indiscriminate disposition of our dwindling natural resources to private persons. Accordingly, we grant G.R. No. 81564 and
dismiss G.R. No. 90176, and so also, end what has come down as nearly a century of uncertainty, doubt, and conflict
Maricaban has left in its trail. The Court has finally spoken. Let the matter rest.
WHEREFORE:
1. The petition in G.R. No. 81564 is GRANTED:
(a) The Writ of Preliminary Injunction issued by our Resolution, dated April 13, 1988, enjoining the respondent judge
from enforcing his: (i) order of October 12, 1987 and (ii) the follow-up order of October 23, 1987, is made permanent
and
(b) Original Certificate of Title No. 291 is declared duly CANCELLED;

2. The petition in G.R. No. 90176 is DISMISSED; and

3. Judge Francisco Velez is ordered to SHOW CAUSE why he should not be administratively dealt with for giving
away, by virtue of reconveyance, property that inalienably belongs to the Government, without notice to the
registered owner, and without benefit of trial or hearing; for blocking Government efforts to defend what rightfully
belongs to it; and for filing his comment of June 17, 1988 and supplemental comment of August 26, 1988 without
express leave of court.
Costs against the private respondent.
SO ORDERED.
G.R. No. L-3714

January 26, 1909

ISABELO MONTANO Y MARCIAL, petitioner-appellee,

vs.
THE INSULAR GOVERNMENT, ET AL., respondents.
THE INSULAR GOVERNMENT, appellant.
Attorney-General Araneta, for appellant.
F. Buencamino, for appellee.
TRACEY, J.:
Isabelo Montano presents a petition to the Court of Land Registration for the inscription of a piece of land in the barrio of
Libis, municipality of Caloocan, used as a fishery having a superficial area of 10,805 square meters, and bounded as set out
in the petition; its value according to the last assessment being $505.05, United States currency.
This petition was opposed by the Solicitor-General in behalf of the Director of Lands, and by the entity known asObras Pias
de la Sagrada Mitra, the former on the ground that the land in question belonged to the Government of the United States,
and the latter, that it was the absolute owner of all the dry land along the eastern boundary of the said fishery.
The Court of Land Registration in its decision of December 1, 1906, dismissed the said oppositions without costs and
decreed, after a general entry by default, the adjudication and registration of the property described in the petition, in favor
of Isabelo Montano y Marcial.
From this decision only counsel for the Director of Public Lands appealed to this court. It is a kindred case to Cirilo Mapa vs.
The Insular Government, decided by this court on February 19, 1908, reported in 10 Phil. Rep., 175.
As some discussion has arisen as to the scope of that decision, it appears opportune to reaffirm the principle there laid
down. The issue was, whether the lands used as a fishery , for the growth of nipa, and as salt deposits, inland some
distance from the sea, and asserted, though not clearly proved to be overflowed at high tide could be registered as private
property on the strength of ten years' occupation, under paragraph 6 of section 54 of Act No. 926 of the Phil. Commission.
The point decided was that such land within the meaning of the Act of Congress of July 1, 1902, was agricultural, the
reasoning leading up to the conclusion being that congress having divided all the public lands of the Islands into three
classes it must be included in one of the three, and being clearly neither forest nor mineral, it must of necessity fall into two
division of agricultural land. In the concurring opinion, in order to avoid misapprehension on the part of those not familiar
with United States land legislation and a misunderstanding of the reach of the doctrine, it was pointed out that under the
decision of the Supreme Court of the United States the phrase "public lands" is held to be equivalent to "public domain," and
dos not by any means include all lands of Government ownership, but only so much of said lands as are thrown open to
private appropriation and settlement by homestead and other like general laws. Accordingly, "government land" and "public
domain" are not synonymous items; the first includes not only the second, but also other lands of the Government already
reserved or devoted to public use or subject to private right. In other words, the Government owns real estate which is part
of the "public lands" and other real estate which is not part thereof.
This meaning attached to the phrase "public lands" by Congress in its land legislation is settled by usage and adjudication
beyond a doubt, and without variation. It is therefore doing the utmost violence to all rules of construction to contend that in
this law, dealing with the same subject-matter in connection with these Islands, a different meaning had, without indication
or motive, been imported into the words. They cannot have one meaning in any other statute and a different and conflicting
meaning in this statute. Where property in general is referred to therein, other and apt phrases are used in order to include
it; for instance, section 12 provides "that all the property and rights which have been acquired in the Phil. Islands by the
United States ... are hereby placed under the control of the Government of the said Islands." Therefore, there is much real
property belonging to the Government which is not affected by statutes for the settlement, prescription or sale of public
lands. Examples in point are properties occupied by public buildings or devoted to municipal or other governmental uses.
Among the authorities cited in the Mapa case are two, Shively vs. Bowlby (152 U.S., 1), and Mann vs. Tacoma Land Co.
(153 U.S., 273), in which it was held that general public land laws did not apply to land over which the tide ebbs and flows.
Mr. Justice Gray, in Shively vs. Bowlby, which is in itself an epitome of the American Law of Waters, speaking of the tide
lands, said:
But Congress has never undertaken by general laws to dispose of such lands. . . .
The Congress of the United States, in disposing of the public lands, has constantly acted upon the theory that those
lands, whether in the interior, or on the coast, above high- water mark, may be taken up by actual occupants, in
order to encourage the settlement of the country, but that the navigable water and the soils under them. whether

within the above the ebb and flow of the tide, shall be and remain public highways; and being chiefly valuable for the
public purposes of commerce, navigation, and fishery, and for the improvement necessary to secure and promote
those purposes, shall not be granted away during the period of territorial government. (Pp. 48 and 49.)
The conclusions of the court are in part stated as follows:
Lands under tide waters are incapable of cultivation or improvement in the manner of lands above high-water mark.
They are of great value to the public for the purposes of commerce, navigation, and fishery. Their improvement by
individuals, when permitted, is incidental or subordinate to the public use and right. Therefore the title and the
control of them are vested in the sovereign for the benefit of the whole people . . . .
Upon the acquisition of a territory by the United States, whether by cession from one of the States, or by treaty with
a foreign country, or by discovery and settlement, the same title and dominion passed to the United States, for the
benefit of whole people, and in trust for the several States to be ultimately created out of the territory . . . .
The United States, while hold the country as a territory, having all the powers both of national and municipal
government, may grant, for appropriate purposes, titles or rights in the soil below high-water mark of tide waters. But
that have never done so in general laws. (Pp. 57 and 58.)
In Mann vs. Tacoma Land Co., it was said by Mr. Justice Brewer (p. 284);
It is settled that the general legislation of Congress in respect to public lands does not extend to tide lands .... It
provided that the scrip might be located on the unoccupied and unappropriated public lands. As said in
Newhall vs. Sanger (92 U.S., 761, 763.) "The words "public lands" are habitually used in our legislation to described
such as are subject to sale or other disposal under general laws."
In Illinois Central R.R. Company vs. Illinois (146 U.S., 387) Mr. Justice Field, delivering the opinion of the court, said:
That the State holds the title tot he lands under the navigable waters of lake Michigan within its limits, in the same
manner that the State hold title to soils under tide water, by the common law, we have already shown, and that title
necessarily carries with it control over the waters above them whenever the lands are subjected to use. But it is a
title different in character from that which the States holds in lands intended for sale. It is different from the title
which the United States hold in the public lands which are open to preemption and sale. It is a title held in trust for
the people of the States that they may enjoy the navigation of the waters, carry on commerce over them, and have
liberty of fishing therein freed from the obstruction or interference of private parties. The interest of the people in the
navigation of the waters and in commerce over them may be improved in many instances by the erection of
wharves, docks, and piers therein, for which purpose the State may grant parcels of the submerged lands; and so
long as their disposition is made for such purposes, no valid objections can be made to the grants .... The control of
the State for the purposes of the trust can never be lost, except as to such parcels as are used in promoting the
interests of the public therein, or can be disposed of without any substantial impairment of the public interest in the
lands and waters remaining .... The State can no more abdicate its trust over property in which the whole people are
interested, like navigable waters and soils under them, so as to leave them entirely under the use and control of
private parties, except in the instance of parcels mentioned for the improvement of the navigation and use of the
waters, or when parcels can be disposed of without impairment of the public interest in what remains, that can
abdicate its police powers in the administration of government and the preservation of the peace .... So with trusts
connected with public property, or property of a special character, like lands under navigable waters, they can not be
placed entirely beyond the direction and control of the State.
The ownership of the navigable waters of the harbor and the lands under them is a subject of public concern to the
whole people of the State. The trust with which they are held, therefore, is governmental and can not be alienated,
except in those instances mentioned of parcels used in the improvement of the interest thus held, or when parcels
can be disposed of without detriment to the public interest in the lands and waters remaining. . . . . (Pp. 452-455.)
Mr. Justice Fields quotes from an opinion by Mr. Justice Bradley, delivered in a case in the Circuit Court, speaking of lands
under water, as follows (p. 457):
Being subject to this trust, they were publici juris; in other words, they were held for the use of the people at large. It
is true that to utilize the fisheries, especially those of shellfish, it was necessary to parcel them out to particular
operators, and employ the rent or consideration for the benefit of the whole people; but this did not alter the
character of the title. The land remained subject to all other public uses as before, especially to those of navigation
and commerce, which are always paramount to those of public fisheries. It is also true that portions of the
submerged shoals and flats, which really interfered with navigation, and could better subserve the purposes of
commerce by being filled up and reclaimed, were disposed of to individuals for that purpose. But neither did these
dispositions of useless parts affect the character of the title to the remainder.
These citations are thus given at length in order to make clear, first, the lands under the ebb and flow of the tide of
navigable waters are not in America understood to be included in the phrase "public lands" in Acts of Congress of United
States; nor, perforce, can they best understood in laws of the Philippine Commission drawn immediately under the sanction
of those Acts; and second, that such lands are under existing Congressional legislation the subject of private ownership,
any occupation therefore be subordinate to the public purpose of navigation and fishery. While as well in the original thirteen
States in which there was never a national public domain to which the land laws of Congress could apply as in States more
recently created out of that domain and which upon their formation became masters of their own land policy the local laws
govern riparian and littoral rights, subject only to Congressional control in matters of foreign and interstate commerce
( U.S. vs. Mission Rock Co., 189 U. S., 391), yet, as to the unappropriated public lands constituting the public domain the
sole power of legislation is vested in Congress, which are uniformly and consistently declined to assume the function of
authorizing or regulating private appropriation of such rights. Therefore, in the absence of specific Congressional legislation,

it is impossible for individuals to acquire title under the ten years provision of Act No. 926 or even through a definite grants
from the local legislature of lands beneath navigable waters in which the tide ebbs and flows, except for wharf-age or other
purposes auxiliary to navigation or other public uses, unless in conformity with the preexisting local law of the Archipelago.
The matter is dwelt is upon for the reason that the late Attorney-General in his very able brief calls attention to the effect
apprehended from the extension of the words "agricultural lands" as used in Act No. 926 to include all public lands not forest
or mineral in character, specifying two acts of the Philippine Commission, the validity of which he fears might thereby be
called into question. The first of these, Act No. 1039, dedicates to use of the Navy Department of the United States
Government certain ground and buildings in Cavite, while the other, Act No. 1654, is a fore-shore law regulating the control
and disposal of filled Government lands. If the term "agricultural lands" be held to include all government property not forest
or mineral in character, he suggests that these Acts, not being in conformity with the procedure of Act No. 926, as approved
by Congress, would be invalid, and moreover, that the Philippine Government would be seriously tied up in the
management and disposition of other lands owned by it.
Without finally passing on this question in relation to lands the owners of which are not before us parties to this action, it is
appropriate, in answering the argument of the law officer of the State, to point out that this consequence appears to be
avoided by the restricted sense given to the words "public lands" or "public domain" in the Act of Congress and in Act No.
926, as hereinbefore noted. Neither the property affected by Act No. 1039, already in use by the Navy Department of the
United States, nor the foreshore land mentioned in Act No. 1654, which is under the ebb and flow of the tide, was, in so far
as appears in the Acts before us, part of the public domain to be disposed of under sections 13, 14, 15, and 16 of the Act of
congress of July 1, 1902, and for that reason it is not included in any of the three subdivisions of "public lands" as
agricultural or otherwise, although it was part of the property acquired in the Philippine Islands by the United States by the
treaty of peace with Spain, which by section 12 of that Act was "placed under the control of the Government of said Islands,
to be administered for the benefit of the inhabitants thereof." It would seem that the validity of the Cavite Act can not be
successfully assailed on this ground, while it may well be that The Fore-shore Act on examination will be found to fall, as to
its general purpose, within the authorization of section 11 of the Act of Congress, whereby the duty is imposed upon the
Island government of improving the harbors and navigable waters in the interest of commerce.
As a consequence, it follows that The Public Land Act did not apply to the fisheries in the Mapa case, if they are to be
regarded as constituting, in a general sense, land under tidal waters. It becomes necessary, therefore, to refer to the
character of the lands.
Although argued at different times, five of these cases have been presented substantially together, all being covered by one
brief of the late Attorney-General in behalf of the Government in which, with many interesting historical and graphic citations
he describes that part of the marginal seashore of the Philippine Islands known as manglares, with their characteristic
vegetation. In brief, it may be said that they are mud flats, alternately washed and exposed by the tide, in which grow
various kindred plants which will not live except when watered by the sea, extending their roots deep into the mud and
casting their seeds, which also germinate there. These constitute the mangrove flats of the tropics, which exist naturally, but
which are also, to some extent, cultivated by man for the sake of the combustible wood of the mangrove and like trees as
well as for the useful nipa palm propagated thereon. Although these flats are literally tidal lands, yet we are of the opinion
that they can not be so regarded in the sense in which that term is used in the cases cited or in general American
Jurisprudence. The waters flowing over them are not available for purpose of navigation, and they "may be disposed of
without impairment of the public interest in what remains." Mr. Justice Bradley, in the passage quoted by Mr. Justice Field,
makes an exception of submerged shoals and flats. In Railroad Company vs. Schurmeir (74 U.S., 272) , a Government
patent of public land bordering upon a river was held to include a parcel submerge at very high water and separated from
the mainland by a slough in which the water ran when ordinarily high. In Mobile vs. Hallett (41 U.S., 260), at page 266. Mr.
Justice Catron remarked in his dissenting opinion:
. . . and that a mud flat, flowed by tide water, is the subject of grant by the Government to an individual, I think can
not well be doubted by anyone acquainted with the southern country; when such valuable portions of it are mud
flats, in the constant course of reclamation.
In several of the older States along the Atlantic coast such flats, either by force of ordinance, custom, judicial construction,
or local laws are held to pass under private grants as appurtenant to the uplands. (Winslow vs. Patten, 34 Maine, 25;
Litchfield vs. Scituate, 135 Mass., 39; People vs. New York and Staten Island Ferry Co., 68 N.Y., 71; Stevens vs. P.& N.
Railroad, 5 Vroom, 34 N.J. Law, 532.) There is even stronger reason for excepting mud flats from the rule of tide lands in
these Islands, owing to the peculiarities of their configuration and to the nature of the tropical growth thereon, and whatever
may be action of the tide, we do not think that in the Philippines such of the shoals covered by this vegetation, whether
spontaneously or by cultivation, as are not available for free navigation, or required for any other purpose of general benefit,
can be considered tidal land reserved for public use alone, under the governmental trust for commerce and public fishery,
but on the contrary, we regard them as public property, susceptible of a sort of cultivation and of improvement, and as such,
subject to occupation under paragraph 6 of section 54 of the Land Law. Instances may hereafter arise of fisheries unduly
established in what are clearly navigable waters which would constitute a nuisance, and not be the subject of prescription or
of grant. A brief reference to the five cases under consideration in this court, however, will serve to show that they all fairly
fall within the benefits of the law. In the Mapa case1 the property was far from the the sea, partly occupied as fish pond, as
nipa land, and as a salt pit. It does not appear whether it was connected with the sea by nature or by art, or whether the tide
ebbed or flowed upon it, or whether the salt was sufficient to impart to any portion of it a mineral character. In the Santiago
case2 there was a fishery about two thousand yards from the sea, with which it communicated by a river, and a portion of
the inclosure was dedicated to growing the aquatic tree called bacawan. The fishery had been constructed by man, upon
land heretofore sown with this tree. In the Gutierrez case 3 it was shown that the land was partly highland, growing fruit trees,
and partly lowland , converted by the occupant of the upland into a fishery by this labor. In the Baello case, 4 the river running
to the sea was a hundred meters away, the salt water therefrom reaching the lowland by means of an artificial canal cut by
the owner of the land when he gave up cultivatingbacawan thereon, an made it into a fishery. In the Montano case, although
there was a considerable depth of water over the soil, yet before the fishery was made, some thirty years before the
trial, bacawan had been sown and propagated in the mud by the owner who finally sold the entire cut when he built the
dikes.

All these lots, in their original state, whether near the sea or at a distance from it inland, and whether bare or washed by the
tides, were not covered by waters practically navigable and were filled, whether naturally or artificially, with vegetation
sometimes cultivated and in common use for fuel and for building purposes, and they were all adapted to fisheries or fish
hatcheries by the labor of man introducing or regulating the access of salt water thereto. It is obvious that that all five cases
are of the same general nature and that one rule must be applied to them all.
In this discussion of the meaning which the Congress of the United States attached to the phrase "public lands" in the
Philippine Bill, we have assumed that it was used in the same sense as in other laws enacted by that body. If, however, it
can be considered as employed with reference to the peculiar conditions of the territory to which it was to be applied and to
the local law or usage prevailing therein, the result would not be different. In many of its general features the Spanish law of
public lands in the Philippines resembled the American. Government property was of two kinds first, that of public use or
service, said to be of public ownership, and second, that of having a private character or use. (Civil Code, arts. 339 and
340.) Lands of the first class, while they retain their public character are inalienable; those of the second are not.
By the royal decree of February 13, 1894, it was enacted that all "the land, soil, ground not under cultivation, and forests in
the Philippine Islands should be considered saleable crown lands," which are not included in the four exceptions stated,
among which were "those which belonged to the forest zones which the State desires to hold for the Commonwealth." This
corresponds in the main to the American classification into Government property, public lands, and forest reserve. Mineral
lands are elsewhere defined. It is to be noted, however, that in the two languages terms ordinarily equivalent are not in this
relation employed in the same sense and that lands de dominio publicosignify quite a different thing from the arbitrary
English Phrases "public lands" or "public domain."
The Law of Waters of 1866, which was the latest Spanish Law of Waters extended to these Islands, provides that private
property can not be acquired in lands preserving the character of public ownership (title 1, art. 1, par. 29), and among the
lands declared of public ownership and use by article 1 of chapter 1 of title 5 of the same law are:
The seashore. By shore is understood the land alternately covered and uncovered by the sea in its tidal
movement. Its interior, or land limit, is the point reached by the highest and equinoctial tides. At those places not
affected by tides, the land limit is the highest point reached by sea water in ordinary storms or hurricanes. (Par. 3.)
So that under this legislation the same question also presented itself as to what constituted seashore, which was of public
use and trust and therefore not alienable. This question can not be said to have been settled by official ruling at the time of
the American occupation. From the official records it appears that there were then pending for registration a great number of
possessory expedientes, twenty-two of which, made before April 17, 1895, were from the Province of Pampanga alone, in
which the land was described as manglares. Under the royal decree of 1894 such manglares appear at the outset to have
been registered and considered alienable and numbers of them were conceded by adjustment, including considerable tracts
in the town of Sexmoan and Lubao in Pampanga. Claims having been made that on account of the trees growing thereon
they formed part of the forest reserve and also because, being covered and uncovered by the tide, they were part of the
shore, and in either case were inalienable, the engineer in chief of the forestry district of the center of Luzon addressed, on
January 7, 1893, a communication to the inspector general de montes ( Forestry Department) in which he expressed an
opinion that as part of the shore they were not subject to private ownership and asked for an early decision of the question.
On November 26, 1893, the acting inspector-general notified the chief of the district of the Visayas in Mindanao that his
excellency, the governor-general, had that they ordered all action suspended on expedientes of manglar and nipa lands and
salt marshes until the questions involved in regard thereto should be determined. In this condition the matter remained until
the expiration of the Spanish sovereignty.
By article 14 of the Law of Waters the right of shore fishery was declared public, but by article 23 authority might be granted
individuals to establish shore hatcheries for fish and shellfish, and by article 15 salt-water ponds on private ground not
communicating with the sea by water navigable by boats were recognized as private property, while chapter 10 permitted
and regulated the draining of swamps and marshes, both of private and of public ownership.
Under this uncertain and somewhat unsatisfactory condition of the law the custom had grown up of
convertingmanglares and nipa lands into fisheries which became common feature of settlements along the coast and at the
time of the change of sovereignty constituted one of the most productive industries of the Islands, the abrogation of which
would destroy vested interests and prove a public disaster. In our opinion it was the object of Congress not to work such a
result but, on the contrary, in furtherance of the purposes of the treaty of Paris, to recognize and safeguard such property.
Therefore, the judgment of the Court of Land Registration is affirmed, without costs.

G.R. No. L-26374

December 31, 1926

NICANOR JACINTO, Petitioner, vs. THE DIRECTOR OF LANDS, Respondent.

Araneta & Zaragoza for petitioner.
Attorney-General Jaranilla for respondent.
OSTRAND, J.:
This is a petition for a writ of mandamus to compel the Director of Lands to execute
a deed of conveyance in favor of the petitioner for lots Nos. 670, 690, 691, 695,
696, 697 698, 699, 700, 701, 950, 951, 952, 953, 954, 955, 956, 957, and 1050 of
the Tala Friar Lans Estate, located at the barrio of Novaliches, municipality of
Caloocan, Province of Rizal.
chanroblesvirtualawlibrary

chanrobles virtual law library

It appears from the record that, during the period from 1911 to 1913, sales
certificates were issued by the Bureau of Lands to Frank W. Carpenter for more than
100 lots of the Tala and Piedad Friar Lands Estates including the lots enumerated
above, the total area of the land covered by the sales certificates being over 1,490
hectares and the purchase price amounting to about P56,600. of which amount
Carpenter up to the year 1923, had paid in installments the sum of P16,272.
chanroble svirtualawlibrary

chanroble s virtual law library

Under a judgment rendered against Carpenter in civil No. 24607 of the Court of
First Instance of Manila, execution was levied upon all of his right, title and interest
in the lots purchase together with the improvements thereon, and on November 16,
1923, the sheriff of Rizal sold the property to the petitioner herein, Nicanor Jacinto.
The sheriff's sale was registered in the Bureau of Lands, assignments of the Bureau
of Lands' sales certificates were duly recorded, and certificates of assignment were
issued and delivered to Nicanor Jacinto in September, 1924.
chanroblesvirtualawlibrary

chanrobles virtual law library

On March 31, 1925, the Metropolitan Water District instituted proceedings in the
Court of First Instance of Rizal for the condemnation of certain parcels of land
situated in the municipality of Caloocan for the construction of an earth am and a
first-class highway three kilometers long, in connection with the so-called Angat
Water Works Project, and on the same date the Court of First Instance of Rizal
issued an order authorizing the Metropolitan Water District to take possession of
said parcels of land upon deposit with the provincial treasurer of the sum of P3,000
as the provisional value, fixed by the court, of the parcels so to be condemned. By
virtue of this order, the Metropolitan Water District entered into occupation of the
land and began the construction of permanent improvements thereon. Copies of the
complaint as well as of the order of March 31, 1925, were filed with the register of
deeds of the Province of Rizal on February 11, 1926, to be recorded as notices of lis
pendens.
chanroble svirtualawlibrary

chanroble s virtual law library

The lots hereinbefore enumerated in the first paragraph of this decision were
included in the land sought to be expropriated and the herein petitioner, Nicanor
Jacinto, was made a party defendant in the proceedings. He admitted the existence
of the right of condemnation and the necessity for the expropriation, but demanded
the sum of P64,839.33 as indemnity for the expropriation. As the actual purchase
price to be paid by the purchaser from the Government only amounts P13,725,

including interest, the Metropolitan Water District considered the petitioner's

demand excessive and declined to pay the claim.
chanroble svirtualawlibrary

chanroble s virtual law library

In the month of July, 1926, the applicant tendered payment to the Director of Lands
of the sum of P4,650 to cover the remaining balance of the sales price of the lots in
question and demanded a corresponding deed of conveyance for said lots. The
Director of Lands, upon the advice of the Attorney-General, rejected the tender and
refused to execute and deliver the instrument of conveyance demanded from
him.
chanroble svirtualawlibrary

chanroble s virtual law library

The present action was thereupon brought, the petitioner insisting that, under Act
No. 1120 as amended, he is entitled to a conveyance of the land upon payment of
the purchase price to the Government, and that, upon such payment, the execution
of the document of conveyance becomes a ministerial act which the Director of
Lands is bound to perform, and, in regard to which, he has no discretion. The
respondent's contention seems to be that before the petitioner's tender of final
payment was made, the land in question had already to all intents and purposes
been expropriated and the Metropolitan Water District, the plaintiff in expropriation
proceedings, placed in possession; that the petitioner had admitted the necessity
and the right of the plaintiff to expropriate the lands and that the only thing lacking
to complete the condemnation was the appraisal of the value of the petitioner's
interest in the land and the payment to him of the amount of such value, and that,
therefore, the execution of a deed of conveyance for the land to the petitioner is not
only useless, but also improper.
chanroble svirtualawlibrary

chanroble s virtual law library

We find but little merit in this contention; the proprietary rights, except the right of
occupation, are not affected by the condemnation proceedings until the title has
passed to the plaintiff and that does not occur until the award of compensation or
damages has been satisfied. But there are other reason why the petition for a writ
of mandamus to compel a conveyance must be denied. In the first place,
mandamus is not the proper remedy to enforce purely contract rights such as that
here sought to be enforced. (18 R. C. L., 121; Quiogue vs. Romualdez, 46 Phil.,
337.)
chanrobles virtual law library

In the second place, the writ cannot issue in this case unless it appears that the
respondent "unlawfully neglects the performance of an act which the law specially
enjoins as a duty resulting from an office, trust, or station." (Section 222, Code of
Civil Procedure.) The land in question is private or patrimonial property of the
Philippine Government and we can find no law specially enjoining upon the Director
of Lands the duty to execute deeds of conveyance to purchasers of such lands; on
the contrary, that duty, under section 567 of the Administrative Code, appears to
devolve upon the Governor-General.
chanroblesvirtualawlibrary

chanrobles virtual law library

By section 14 of Act No. 1120 the Director of Lands is, however, charged with the
duty of receiving the purchase money payable under that Act and may therefore be
compelled by mandamus to receive, as a purely ministerial act, such purchase
money when tendered.
chanroblesvirtualawlibrarychanroble s virtual law library

The respondent is, therefore, hereby ordered to receive the balance of the purchase
money for any or all of the by the petitioner. The petition is denied as to the
execution of deeds of conveyance. Without costs. So ordered.
chanroble svirtualawlibrary

SECOND DIVISION
[G.R. No. 95608. January 21, 1997]
SPOUSES IGNACIO PALOMO and TRINIDAD PASCUAL, and CARMEN
PALOMO VDA. DE BUENAVENTURA, petitioners, vs. THE HONORABLE
COURT OF APPEALS, THE REPUBLIC OF THE PHILIPPINES, FAUSTINO J.
PERFECTO, RAFFY SANTILLAN, BOY ARIADO, LORENZO BROCALES,
SALVADOR DOE, and other DOES, respondents.
DECISION
ROMERO, J.:

The issue in the case at bar pertains to ownership of 15 parcels of land in Tiwi, Albay which
form part of the "Tiwi Hot Spring National Park." The facts of the case are as follows.
On June 13, 1913, then Governor General of the Philippine Islands, William Cameron
Forbes issued Executive Order No. 40 which reserved for provincial park purposes some
440,530 square meters of land situated in Barrio Naga, Municipality of Tiwi, Province of Albay
pursuant to the provisions of Act 648 of the Philippine Commission.
[1]

Subsequently, the then Court of First Instance of Albay, 15th Judicial District, United States
of America, ordered the registration of 15 parcels of land covered by Executive Order No. 40 in
the name of Diego Palomo on December 9, 1916; December 28, 1916; and January 17, 1917.
Diego Palomo donated these parcels of land consisting of 74,872 square meters which were
allegedly covered by Original Certificates of Title Nos. 513, 169, 176 and 173 to his heirs,
herein petitioners, Ignacio and Carmen Palomo two months before his death in April 1937.
[2]

[3]

[4]

[5]

[6]

Claiming that the aforesaid original certificates of title were lost during the Japanese
occupation, Ignacio Palomo filed a petition for reconstitution with the Court of First Instance of
Albay on May 30, 1950. The Register of Deeds of Albay issued Transfer Certificates of Title
Nos. 3911, 3912, 3913 and 3914 sometime in October 1953.
[7]

[8]

On July 10, 1954 President Ramon Magsaysay issued Proclamation No. 47 converting the
area embraced by Executive Order No. 40 into the "Tiwi Hot Spring National Park," under the
control, management, protection and administration of the defunct Commission of Parks and
Wildlife, now a division of the Bureau of Forest Development. The area was never released as
alienable and disposable portion of the public domain and, therefore, is neither susceptible to
disposition under the provisions of the Public Land Law (CA 141) nor registrable under the Land
Registration Act (Act No. 496).
The Palomos, however, continued in possession of the property, paid real estate taxes
thereon and introduced improvements by planting rice, bananas, pandan and coconuts. On
April 8, 1971, petitioner Carmen vda. de Buenaventura and spouses Ignacio Palomo and
Trinidad Pascual mortgaged the parcels of land covered by TCT 3911, 3912, 3913 and 3914 to
guarantee a loan of P200,000 from the Bank of the Philippine Islands.
[9]

In May 7, 1974 petitioner Carmen vda. de Buenaventura and spouses Ignacio Palomo and
Trinidad Pascual filed Civil Case No. T-143 before the then Court of First Instance of Albay for
Injunction with damages against private respondents Faustino J. Perfecto, Raffy Santillan, Boy
Ariado, Lorenzo Brocales, Salvador Doe and other Does who are all employees of the Bureau of
Forest Development who entered the land covered by TCT No. 3913 and/or TCT 3914 and cut
down bamboos thereat, totally leveling no less than 4 groves worth not less than P2,000.00.

On October 11, 1974, the Republic of the Philippines filed Civil Case No. T-176 for
annulment and cancellation of Certificates of Title involving the 15 parcels of land registered in
the name of the petitioners and subject of Civil Case T-143. Impleaded with the petitioners as
defendants were the Bank of the Philippine Islands, Legazpi Branch and the Register of Deeds
of Albay.
The case against the Bank of Philippine Islands was dismissed because the loan
of P200,000 with the Bank was already paid and the mortgage in its favor cancelled.
A joint trial of Civil Case T-143 and T-176 was conducted upon agreement of the parties and
on July 31, 1986, the trial court rendered the following decision:
"WHEREFORE,premisesconsidered,judgmentisherebyrendered:
INCIVILCASENo.T143,infavorofthedefendantsandagainsttheplaintiffs,dismissingthecomplaint
forinjunctionanddamages,asitisherebyDISMISSED.
Costsagainsttheplaintiffs.
InCIVILCASENo.T176,infavoroftheplaintiffsandagainstthedefendants:
(1)DeclaringnullandvoidandnoforceandeffecttheOrderdatedSeptember14,1953,aswellasthe
OriginalCertificateofTitlesNos.153, 169,173and176andTransferCertificatesofTitlesNos.3911,
T3912,T3913,andT3914,alloftheRegisterofDeedsofAlbayandalltransactionsbasedonsaid
titles.
[10]

(2)ForfeitinginfavoroftheplaintiffGovernmentanyandallimprovementsonthelandsinquestionthat
arefoundthereinandintroducedbythedefendants;
(3)DeclaringLotNos.1,2,3,4,5,6,7,8,9,10,11and12,PlanII9299andLots1,21, 3and4ofPlan
II9205aspartoftheTiwiHotSpringNationalPark;
[11]

(4)andFinally,theRegisterofDeedsofAlbayisherebyorderedtocanceltheallegedOriginal
CertificatesofTitlesNos.513,169,173and176,TransferCertificatesofTitleNos.T3911,T3912,T
3913andT3914.
Costsagainstthedefendants.
SoOrdered."

[12]

The court a quo in ruling for the Republic found no sufficient proof that the Palomos have
established property rights over the parcels of land in question before the Treaty of Paris which
ended the Spanish-American War at the end of the century. The court further stated that
assuming that the decrees of the Court of First Instance of Albay were really issued, the
Palomos obtained no right at all over the Properties because these were issued only when
Executive Order No. 40 was already in force. At this point, we take note that although the
Geodetic Engineer of the Bureau of Lands appointed as one of the Commissioners in the
relocation survey of the properties stated in his reamended report that of the 3,384 square
meters covered by Lot 2, Plan II-9205, only 1,976 square meters fall within the reservation area,
the RTC ordered TCT 3913 covering the entire Lot 21 (sic) Plan II-9205 cancelled.
[13]

The petitioners appealed to the Court of Appeals which affirmed in toto the findings of the
lower Court; hence this petition raising the following issues:
1.TherespondentCourtofAppealscommittedgraveabuseofdiscretioninaffirmingintotothedecision
ofthelowercourt.
2.Thedeclarationofnullityoftheoriginalcertificatesoftitleandsubsequenttransfercertificatesoftitles
ofthepetitionersoverthepropertiesinquestioniscontrarytolawandjurisprudenceonthematter.

3.Theforfeitureofallimprovementsintroducedbythepetitionersinthepremisesinfavorofthe
governmentisagainstourexistinglawandjurisprudence.
The issues raised essentially boil down to whether or not the alleged original certificate of
titles issued pursuant to the order of the Court of First Instance in 1916-1917 and the
subsequent TCTs issued in 1953 pursuant to the petition for reconstitution are valid.
Petitioners contend that the Treaty of Paris which ended the Spanish-American War at the
end of the 19th century recognized the property rights of Spanish and Filipino citizens and the
American government had no inherent power to confiscate properties of private citizens and
declare them part of any kind of government reservation. They allege that their predecessors in
interest have been in open, adverse and continuous possession of the subject lands for 20-50
years prior to their registration in 1916-1917. Hence, the reservation of the lands for provincial
purposes in 1913 by then Governor-general Forbes was tantamount to deprivation of private
property without due process of law.
In support of their claim, the petitioners presented copies of a number of decisions of the
Court of First Instance of Albay, 15th Judicial District of the United States of America which state
that the predecessors in interest of the petitioners' father Diego Palomo, were in continuous,
open and adverse possession of the lands from 20 to 50 years at the time of their registration in
1916.
We are not convinced.
The Philippines passed to the Spanish Crown by discovery and conquest in the 16th century.
Before the Treaty of Paris in April 11, 1899, our lands, whether agricultural, mineral or forest
were under the exclusive patrimony and dominion of the Spanish Crown. Hence, private
ownership of land could only be acquired through royal concessions which were documented in
various forms, such as (1) Titulo Real or Royal Grant," (2) Concession Especial or Special
Grant, (3) Titulo de Compra or Title by Purchase and (4)Informacion Posesoria or Possessory
Information title obtained under the Spanish Mortgage Law or under the Royal Decree of
January 26, 1889.
Unfortunately, no proof was presented that the petitioners' predecessors in interest derived
title from an old Spanish grant. Petitioners placed much reliance upon the declarations in
Expediente No. 5, G.L.R.O. Record Decision No. 9820, dated January 17, 1917; Expediente No.
6, G.L.R.O. Record No. 9821, dated December 28, 1916; Expediente No. 7, G.L.R.O. Record
No. 9822, dated December 9, 1916; Expediente No. 8, G.L.R.O. Record No. 9823, dated
December 28, 1916 and Expediente No. 10, G.L.R.O. Record No. 9868, dated December 9,
1916 of the Court of First Instance of Albay, 15th Judicial District of the United States of America
presided by Judge Isidro Paredes that their predecessors in interest were in open, adverse and
continuous possession of the subject lands for 20-50 years. The aforesaid "decisions" of the
Court of First Instance, however, were not signed by the judge but were merely certified copies
of notification to Diego Palomo bearing the signature of the clerk of court.
[14]

Moreover, despite claims by the petitioners that their predecessors in interest were in open ,
adverse and continuous possession of the lands for 20 to 50 years prior to their registration in
1916-1917, the lands were surveyed only in December 1913, the very same year they were
acquired by Diego Palomo. Curiously, in February 1913 or 10 months before the lands were
surveyed for Diego Palomo, the government had already surveyed the area in preparation for its
reservation for provincial park purposes. If the petitioners' predecessors in interest were indeed
in possession of the lands for a number of years prior to their registration in 1916-1917, they
would have undoubtedly known about the inclusion of these properties in the reservation in
1913. It certainly is a trifle late at this point to argue that the government had no right to include
these properties in the reservation when the question should have been raised 83 years ago.
As regards the petitioners' contention that inasmuch as they obtained the titles without
government opposition, the government is now estopped from questioning the validity of the
certificates of title which were granted. As correctly pointed out by the respondent Court of
Appeals, the principle of estoppel does not operate against the Government for the act of its
agents.
[15]

Assuming that the decrees of the Court of First Instance were really issued, the lands are
still not capable of appropriation. The adverse possession which may be the basis of a grant of
title in confirmation of imperfect title cases applies only to alienable lands of the public domain.
There is no question that the lands in the case at bar were not alienable lands of the public
domain. As testified by the District Forester, records in the Bureau of Forestry show that the
subject lands were never declared as alienable and disposable and subject to private alienation
prior to 1913 up to the present. Moreover, as part of the reservation for provincial park
purposes, they form part of the forest zone.
[16]

It is elementary in the law governing natural resources that forest land cannot be owned by
private persons. It is not registrable and possession thereof, no matter how lengthy, cannot
convert it into private property, unless such lands are reclassified and considered disposable
and alienable.
[17]

Neither do the tax receipts which were presented in evidence prove ownership of the parcels
of land inasmuch as the weight of authority is that tax declarations are not conclusive proof of
ownership in land registration cases.
[18]

Having disposed of the issue of ownership, we now come to the matter regarding the
forfeiture of improvements introduced on the subject lands. It bears emphasis that Executive
Order No. 40 was already in force at the time the lands in question were surveyed for Diego
Palomo. Petitioners also apparently knew that the subject lands were covered under the
reservation when they filed a petition for reconstitution of the lost original certificates of title
inasmuch as the blueprint of Survey Work Order Number 21781 of Plan II-9299 approved by the
Chief of the Land Registration Office Enrique Altavas in 1953 as a true and correct copy of the
Original Plan No. II-9299 filed in the Bureau of Lands dated September 11, 1948 contains the
following note, "in conflict with provincial reservation." In any case, petitioners are presumed to
know the law and the failure of the government to oppose the registration of the lands in
question is no justification for the petitioners to plead good faith in introducing improvements on
the lots.
[19]

[20]

Finally, since 1,976 square meters of the 3,384 square meters covered by TCT 3913 fall
within the reservation, TCT 3913 should be annulled only with respect to the aforesaid area.
Inasmuch as the bamboo groves leveled in TCT 3913 and subject of Civil Case T-143, were
within the perimeter of the national park, no pronouncement as to damages is in order.
[21]

[22]

WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED with the
modification that TCT 3913 be annulled with respect to the 1,976 square meter area falling
within the reservation zone.
SO ORDERED.

G.R. No. L-19615

December 24, 1964
IN THE MATTER OF THE APPLICATION FOR REGISTRATION OF LAND. LEONOR DE LOS ANGELES
vs.
ISIDORO O. SANTOS, ET AL.
BENGZON, JP, J.:
Squarely before this Court in this appeal is the important and fundamental question of whether a land registration court
which has validly acquired jurisdiction over a parcel of land for registration of title thereto could be divested of said
jurisdiction by a subsequent administrative act consisting in the issuance by the Director of Lands of a homestead patent
covering the same parcel of land.
The court a quo held in effect that it could be, as it dismissed the application to register title to the land in its order brought
here on appeal.
On November 21, 1959 an application for registration of title to 12 parcels of land in Ampid San Mateo Rizal was filed in the
Court of First Instance of Rizal by Leonor de los Angeles and seven co-applicants. Among other things it alleged that
"applicants are owners pro-indiviso and in fee simple of the aforesaid land."
The required notices were given in which May 27, 1960 was set for the initial hearing. On March 3, 1960 the Director of
Lands filed an opposition stating that the land "is a portion of the public domain". The Province of Rizal also interposed an
opposition on May 24, 1960, asserting "the required 3.00 meters strips of public easement" on lots along Ampid River and a
creek.
At the initial hearing on May 27, 1960 an order of general default was issued except as against the Director of Lands, the
Province of Rizal and eleven private oppositors who appeared therein. On July 10, 1960 the aforesaid private oppositors,
Julio Hidalgo among them, filed their written opposition claiming they "are the lawful owners of the parcels of land in
question for having acquired homestead patents over said lots".
On July 25, 1961 a "Report" was filed in court by the Land Registration Commissioner, stating:
1. That the parcel of land described as Lot 11 of plan Psu-158857, applied for in the above-entitled land registration
case, is a portion of that described on plan Psu-148997, previously patented on June 12, 1961 under Patent No.
95856 in the name of Julio Hidalgo; and
2. That Case No. N-2671, LRC Record No. N-18332, was set for hearing on May 27, 1960 but no decision has as
yet been received by this Commissioner.
WHEREFORE, it is respectfully recommended to this Honorable Court that Case No. N-2671, LRC Record No. N18332, be dismissed with respect to Lot 11 of plan Psu-158857 only, giving due course, however, to the other lots in
the application.
Acting thereon, the court required applicants in its order of July 29, 1961, to show cause why their application should not be
dismissed as to Lot 11 (10.6609 hectares). On August 15, 1961 applicants filed an "opposition to motion to dismiss". But on
September 18, 1961 the court issued an order dismissing the application with respect to Lot 11 "without prejudice on the
part of applicants to pursue the corresponding remedy in any ordinary action". After a motion for reconsideration was filed
and denied, applicants appealed to this Court.
As lone assignment of error it is alleged that "the lower, court grievously erred in dismissing the application for
registration as regards Lot No. 11, over which a homestead patent was issued by the Director of Lands during the
pendency of the registration proceeding". (Emphasis supplied.)

To start with, it is well settled that the Director of Lands' jurisdiction, administrative supervision and executive control extend
only over lands of the public domain and not to lands already of private ownership. (Susi vs. Razon, 48 Phil. 424; Vital vs.
Anore 53 O.G. 3739; Republic vs. Heirs of Carle L-12485, July 31, 1959; Director of Lands vs. De Luna, L-1441, Nov. 23,
1960.) Accordingly, a homestead patent issued by him over land not of the public domain is a nullity, devoid of force and
effect against the owner (Zarate vs. Director of Lands, 34 Phil. 416; Vital vs. Anoresupra).
Now, in the land registration proceedings applicants contended that as of November 21, 1959 the date they applied for
registration they were already "owners pro-indiviso and in fee simple of the aforesaid land". As a result, if applicants were
to successfully prove this averment, and thereby show their alleged registrable title to the land, it could only result in the
finding that when Julio Hidalgo's homestead patent was issued over Lot 11 on June 12, 1961 said lot was no longer public.
The land registration court, in that event, would have to order a decree of title issued in applicants' favor and declare the
aforesaid homestead patent a nullity which vested no title in the patentee as against the real owners (Rodriguez vs. Director
of Lands, 31 Phil. 273; Zarate vs. Director of Lands, supra; Lacaste vs. Director of Lands, 63 Phil. 654).
Since the existence or non-existence of applicants' registrable title to Lot 11 is decisive of the validity or nullity of the
homestead patent issued as aforestated on said lot the court a quo's jurisdiction in the land registration proceedings could
not have been divested by the homestead patent's issuance.
Proceedings for land registration are in rem whereas proceedings for acquisition of homestead patent are not (De los Reyes
vs. Razon, 38 Phil. 480; Philippine National Bank vs. Ortiz Luis, 53 Phil. 649). A homestead patent, therefore, does not
finally dispose of the public or private character of the land as far as courts upon proceedings in rem are concerned (De los
Reyes vs. Razon, supra). Applicants should thus be given opportunity to prove registrable title to Lot 11.

WHEREFORE, we hereby set aside the orders appealed from and remand the case to the
court a quo for further proceedings, without costs. So ordered.

FIRST DIVISION
[G. R. No. 107764. October 4, 2002]
EDNA COLLADO vs. COURT OF APPEALS
DECISION
CARPIO, J.:

The Case
This Petition seeks to set aside the Decision of the Court of Appeals, dated June 22, 1992,
in CA-G.R. SP No. 25597, which declared null and void the Decision dated January 30, 1991 of
the Regional Trial Court of Antipolo, Rizal, Branch 71, in LRC No. 269-A, LRC Rec. No. N59179, confirming the imperfect title of petitioners over a parcel of land.
[1]

[2]

[3]

The Facts
On April 25, 1985, petitioner Edna T. Collado filed with the land registration court an
application for registration of a parcel of land with an approximate area of 1,200,766 square
meters or 120.0766 hectares (Lot for brevity). The Lot is situated in Barangay San Isidro
(formerly known as Boso-boso), Antipolo, Rizal, and covered by Survey Plan Psu162620. Attached to the application was the technical description of the Lot as Lot Psu-162620
signed by Robert C. Pangyarihan, Officer-in-Charge of the Survey Division, Bureau of Lands,
which stated, [t]his survey is inside IN-12 Mariquina Watershed. On March 24, 1986,
petitioner Edna T. Collado filed an Amended Application to include additional co-applicants.
Subsequently, more applicants joined (collectively referred to as petitioners for brevity).
[4]

[5]

The Republic of the Philippines, through the Solicitor General, and the Municipality of
Antipolo, through its Municipal Attorney and the Provincial Fiscal of Rizal, filed oppositions to
petitioners application. In due course, the land registration court issued an order of general
default against the whole world with the exception of the oppositors.
Petitioners alleged that they have occupied the Lot since time immemorial. Their possession
has been open, public, notorious and in the concept of owners. The Lot was surveyed in the
name of Sesinando Leyva, one of their predecessors-in-interest, as early as March 22,
1902. Petitioners declared the Lot for taxation purposes and paid all the corresponding real
estate taxes. According to them, there are now twenty-five co-owners in pro-indiviso shares of
five hectares each. During the hearings, petitioners submitted evidence to prove that there have
been nine transfers of rights among them and their predecessors-in-interest, as follows:
1. SESINANDO LEYVA was the earliest known predecessor-in-interest of the Applicants who was in actual,
open, notorious and continuous possession of the property in the concept of owner. He had the property

surveyed in his name on 22 March 1902 (Exhibit W and W-1 testimonies of J. Torres on 16 December
1987 and Mariano Leyva on 29 December 1987).
2. DIOSDADO LEYVA, is the son of Sesinando Leyva, who inherited the property. He had the property
resurveyed in his name on May 21-28, 1928 (Exhibit X and X-1; testimony of Mariano Leyva, a son of
Diosdado Leyva).
3. GREGORIO CAMANTIQUE bought the property from Diosdado Leyva before the Japanese Occupation of
the Philippines during World War II. He owned and possessed the propertyuntil 1958. He declared the
property for tax purposes, the latest of which was under Tax Declaration No. 7182 issued on 3 February
1957 (Exhibit I and testimony of Mariano Leyva, supra).
4. ANGELINA REYNOSO, bought the property from Gregorio Camantique by virtue of a Deed of Sale on 3
February 1958 (Exhibit H). During the ownership of the property by Angelina Reynoso, Mariano
Leyva the grandson of Sesinando Leyva, the previous owner, attended to the farm. (Testimony of Mariano
Leyva, supra). Angelina Reynoso declared the property in her name under Tax Declaration No. 7189 in 4
February 1958, under Tax Declaration No. 8775 on 3 August 1965, under Tax Declaration No.
16945 on 15 December 1975, and under Tax Declaration No. 03-06145 on 25 June 1978.
5. MYRNA TORRES bought the property from Angelina Reynoso on 16 October 1982 through a Deed of
Sale (Exhibit G).
6. EDNA COLLADO bought the property from Myrna Torres in a Deed of Sale dated 28 April 1984 (Exhibit
P-1 to P-3).
7. Additional
owners BERNARDINA
TAWAS,
JORETO
TORRES,
JOSE
AMO,
VICENTE
TORRES and SERGIO MONTEALEGRE who bought portions of the property from Edna Collado
through a Deed of Sale on 6 November 1985 (Exhibit Q to Q-3).
8. And more additional Owners JOSEPH NUNEZ, DIOSDADO ARENOS, DANILO FABREGAS,
FERNANDO TORRES, LUZ TUBUNGBANUA, CARIDAD TUTANA, JOSE TORRES JR., RODRIGO
TUTANA, ROSALIE TUTANA, NORMA ASTORIAS, MYRNA LANCION, CHONA MARCIANO, CECILIA
MACARANAS, PEDRO BRIONES, REMEDIOS BANTIQUE, DANTE MONTEALEGRE, ARMANDO
TORRES, AIDA GADON and AMELIA M. MALAPAD bought portions of the property in a Deed of
Sale on 12 May 1986 (Exhibit S to S-3).
9. Co-owners DIOSDADO ARENOS, RODRIGO TUTANA, CHONA MARCIANO and AMELIA MALAPAD
jointly sold their shares to new OWNERS GLORIA R. SERRANO, IMELDA CAYLALUAD, NORBERTO
CAMILOTE and FIDELITO ECO through a Deed of Sale dated 18 January 1987 (Exhibit T to T-9).[6]

During the hearing on January 9, 1991, only the assistant provincial prosecutor appeared
without the Solicitor General. For failure of the oppositors to present their evidence, the land
registration court issued an order considering the case submitted for decision based on the
evidence of the petitioners. The court later set aside the order and reset the hearing to January
14, 1991 for the presentation of the evidence of the oppositors. On this date, counsel for
oppositors failed to appear again despite due notice. Hence, the court again issued an order
submitting the case for decision based on the evidence of the petitioners.
The Trial Courts Ruling
After appraisal of the evidence submitted by petitioners, the land registration court held that
petitioners had adduced sufficient evidence to establish their registrable rights over the
Lot. Accordingly, the court rendered a decision confirming the imperfect title of petitioners. We
quote the pertinent portions of the courts decision, as follows:
Fromtheevidencepresented,theCourtfindsthatfromthetestimonyofthewitnessespresentedbythe
Applicants,thepropertyappliedforisinactual,open,publicandnotoriouspossessionbytheapplicants
andtheirpredecessorininterestsincetimeimmemorialandsaidpossessionhadbeentestifiedtoby
witnessesJimmyTorres,MarianoLeyva,SergioMontealegre,JoseAmoandoneChonawhowereall
crossexaminedbyCounselforOppositorRepublicofthePhilippines.
Evidencewaslikewisepresentedthatsaidpropertywasdeclaredfortaxationpurposesinthenamesofthe
previousownersandthecorrespondingtaxeswerepaidbytheApplicantsandthepreviousownersand
saidpropertywasplantedtofruitbearingtrees;portionstopalayandportionsusedforgrazingpurposes.
TothemindoftheCourt,Applicantshavepresentedsufficientevidencetoestablishregistrabletitleover
saidpropertyappliedforbythem.

OntheclaimthatthepropertyappliedforiswithintheMarikinaWatershed,theCourtcanonlyaddthat
allPresidentialProclamationsliketheProclamationsettingasidetheMarikinaWatershedaresubjectto
privaterights.
InthecaseofMunicipalityofSantiagovs.CourtofAppeals,120SCRA734,1983privaterightsisproof
ofacquisitionthrough(sic)amongmeansofacquisitionofpubliclands.
InthecaseofDirectorofLandsvs.Reyes,68SCRA193195,byprivaterightsmeansthatapplicant
shouldshowclearandconvincingevidencethatthepropertyinquestionwasacquiredbyapplicantsor
theirancestorseitherbycompositiontitlefromtheSpanishgovernmentorbyPossessoryInformation
title,oranyothermeansfortheacquisitionofpubliclandsxxx(underscoringsupplied).
TheCourtbelievesthatfromtheevidencepresentedasabovestated,Applicantshaveacquiredprivate
rightstowhichthePresidentialProclamationsettingasidetheMarikinaWatershedshouldbesubjectto
suchprivaterights.
Atanyrate,theCourtnotesthatevidencewaspresentedbytheapplicantsthatasperCertificationissued
bytheBureauofForestDevelopmentdatedMarch18,1980,theareaappliedforwasverifiedtobewithin
theareaexcludedfromtheoperationoftheMarikinaWatershedLandsExecutiveOrderNo.33datedJuly
26,1904perProclamationNo.1283promulgatedonJune21,1974whichestablishedtheBosoboso
TownSiteReservation,amendedbyProclamationNo.1637datedApril18,1977knownastheLungsod
SilanganTownsiteReservation.(ExhibitK).
[7]

In a motion dated April 5, 1991, received by the Solicitor General on April 6, 1991, petitioners
alleged that the decision dated January 30, 1991 confirming their title had become final after the
Solicitor General received a copy of the decision on February 18, 1991. Petitioners prayed that
the land registration court order the Land Registration Authority to issue the necessary decree in
their favor over the Lot.
On April 11, 1991, the Solicitor General inquired from the Provincial Prosecutor of Rizal
whether the land registration court had already rendered a decision and if so, whether the
Provincial Prosecutor would recommend an appeal. However, the Provincial Prosecutor failed to
answer the query.
According to the Solicitor General, he received on April 23, 1991 a copy of the land
registration courts decision dated January 30, 1991, and not on February 18, 1991 as alleged by
petitioners in their motion.
In the meantime, on May 7, 1991, the land registration court issued an order directing the
Land Regulation Authority to issue the corresponding decree of registration in favor of the
petitioners.
On August 6, 1991, the Solicitor General filed with the Court of Appeals a Petition for
Annulment of Judgment pursuant to Section 9(2) of BP Blg. 129 on the ground that there had
been no clear showing that the Lot had been previously classified as alienable and disposable
making it subject to private appropriation.
On November 29, 1991, Bockasanjo ISF Awardees Association, Inc., an association of
holders of certificates of stewardship issued by the Department of Environment and Natural
Resources (DENR for brevity) under its Integrated Social Forestry Program (ISF for brevity),
filed with the Court of Appeals a Motion for Leave to Intervene and to Admit Petition-InIntervention. They likewise opposed the registration and asserted that the Lot, which is situated
inside the Marikina Watershed Reservation, is inalienable. They claimed that they are the actual
occupants of the Lot pursuant to the certificates of stewardship issued by the DENR under the
ISF for tree planting purposes.
The Court of Appeals granted the motion to intervene verbally during the preliminary
conference held on April 6, 1992. During the preliminary conference, all the parties as
represented by their respective counsels agreed that the only issue for resolution was whether
the Lot in question is part of the public domain.
[8]

The Court of Appeals Ruling

In a decision dated June 22, 1992, the Court of Appeals granted the petition and declared
null and void the decision dated January 30, 1991 of the land registration court. The Court of
Appeals explained thus:
UndertheRegalianDoctrine,whichisenshrinedinthe1935(Art.XIII,Sec.1),1973(Art.XIV,Sec.8),
and1987Constitution(Art.XII,Sec.2),alllandsofthepublicdomainbelongtotheState.Anapplicant,
liketheprivaterespondentsherein,forregistrationofaparceloflandbearstheburdenofovercomingthe
presumptionthatthelandsoughttoberegisteredformspartofthepublicdomain(DirectorofLandsvs.
Aquino,192SCRA296).
ApositiveActofgovernmentisneededtodeclassifyapubliclandandtoconvertitintoalienableor
disposablelandforagriculturalorotherpurposes(Republicvs.Bacas,176SCRA376).
Inthecaseatbar,theprivaterespondentsfailedtopresentanyevidencewhatsoeverthatthelandapplied
forasdescribedinPsu162620hasbeensegregatedfromthebulkofthepublicdomainanddeclaredby
competentauthoritytobealienableanddisposable.Worse,thetechnicaldescriptionofPsu162620signed
byRobertC.Pangyarihan,OfficerinCharge,SurveyDivision,BureauofLands,whichwasattachedto
theapplicationofprivaterespondents,categoricallystatedthat"ThissurveyisinsideIN12Mariquina
Watershed."
ThatthelandinquestioniswithintheMarikinaWatershedReservationisconfirmedbytheAdministrator
oftheNationalLandTitlesandDeedsinaReport,datedMarch2,1988,submittedtotherespondent
CourtinLRCaseNo.269A.Thesedocumentsreadilyandeffectivelynegatetheallegationin
privaterespondentColladosapplicationthatsaidparceloflandknownasPsu162620isnotcoveredby
anyformoftitle,noranypubliclandapplicationandarenotwithinanygovernmentreservation(Par.8,
Application;Emphasissupplied).Therespondentcourtcouldnothavemissedtheimportofthesevital
documentswhicharebindinguponthecourtsinasmuchasitistheexclusiveprerogativeoftheExecutive
Departmenttoclassifypubliclands.Theyshouldhaveforewarnedtherespondentjudgefromassuming
jurisdictionoverthecase.
xxxinasmuchasthesaidpropertiesappliedforbypetitionersarepartofthepublicdomain,itisthe
DirectorofLandswhohasjurisdictioninthedispositionofthesame(subjecttotheapprovalofthe
SecretaryofNaturalResourcesandEnvironment),andnotthecourts.xxxEvenassumingthatpetitioners
didhavethesaidpropertiessurveyedevenbeforethesamewasdeclaredtobepartoftheBusolForest
Reservation,thefactremainsthatitwassoconvertedintoaforestreservation,thusitiswithmorereason
thatthisactionmustfail.Forestlandsareinalienableandpossessionthereof,nomatterhowlong,cannot
convertthesameintoprivateproperty.Andcourtsarewithoutjurisdictiontoadjudicatelandswithinthe
forestzone.(HeirsofGumanganvs.CourtofAppeals.172SCRA563;Emphasissupplied).
Needlesstosay,afinaljudgmentmaybeannulledonthegroundoflackofjurisdiction,fraudorthatitis
contrarytolaw(Panliliovs.Garcia,119SCRA387,391)andadecisionrenderedwithoutjurisdictionisa
totalnullityandmaybestruckdownatanytime(Suarezvs.CourtofAppeals,186SCRA339).
[9]

Hence,theinstantpetition.
The Issues
The issues raised by petitioners are restated as follows:
I

WHETHERTHECOURTOFAPPEALSERREDORGRAVELYABUSEDITSDISCRETIONIN
REVERSINGTHEDECISIONOFTHETRIALCOURTGRANTINGTHEAPPLICATIONOFTHE
PETITIONERSFORCONFIRMATIONOFTITLE;
II

WHETHERTHECOURTOFAPPEALSERREDORGRAVELYABUSEDITSDISCRETIONIN
GIVINGDUECOURSETOTHEPETITIONFORANNULMENTOFJUDGMENTFILEDBYTHE
REPUBLICLONGAFTERTHEDECISIONOFTHETRIALCOURTHADBECOMEFINAL;
III

WHETHERTHECOURTOFAPPEALSERREDORGRAVELYABUSEDITSDISCRETIONIN
GIVINGDUECOURSETOTHEINTERVENORSPETITIONFORINTERVENTIONWHICHWAS
FILEDOUTOFTIMEORLONGAFTERTHEDECISIONOFTHETRIALCOURTHADBECOME
FINAL.
The Courts Ruling
The petition is bereft of merit.
First Issue: whether petitioners have registrable title over the Lot.
There is no dispute that Executive Order No. 33 (EO 33 for brevity) dated July 26,
1904 established the Marikina Watershed Reservation (MWR for brevity) situated in the
Municipality of Antipolo, Rizal. Petitioners even concede that the Lot, described as Lot Psu162620, is inside the technical, literal description of the MWR. However, the main thrust of
petitioners claim over the Lot is that all Presidential proclamations like the proclamation setting
aside the Marikina Watershed Reservation are subject to private rights. They point out that EO
33 contains a saving clause that the reservations are subject to existing private rights, if any
there be. Petitioners contend that their claim of ownership goes all the way back to 1902, when
their known predecessor-in-interest, Sesinando Leyva, laid claim and ownership over the Lot.
They claim that the presumption of law then prevailing under the Philippine Bill of 1902
and Public Land Act No. 926 was that the land possessed and claimed by individuals as their
own are agricultural lands and therefore alienable and disposable. They conclude that private
rights were vested on Sesinando Leyva before the issuance of EO 33, thus excluding the Lot
from the Marikina Watershed Reservation.
[10]

Petitioners arguments find no basis in law.

The Regalian Doctrine: An Overview
Under the Regalian Doctrine, all lands not otherwise appearing to be clearly within private
ownership are presumed to belong to the State. The Spaniards first introduced the doctrine to
the Philippines through the Laws of the Indies and the Royal Cedulas, specifically, Law 14, Title
12, Book 4 of the Novisima Recopilacion de Leyes de las Indias which laid the foundation that
all lands that were not acquired from the Government, either by purchase or by grant, belong to
the public domain. Upon the Spanish conquest of the Philippines, ownership of all lands,
territories and possessions in the Philippines passed to the Spanish Crown.
[11]

[12]

[13]

[14]

The Laws of the Indies were followed by the Ley Hipotecaria or the Mortgage Law
of 1893. The Spanish Mortgage Law provided for the systematic registration of titles and deeds
as well as possessory claims. The Royal Decree of 1894 or the Maura Law partly amended the
Mortgage Law as well as the Law of the Indies. The Maura Law was the last Spanish land law
promulgated in the Philippines. It required the adjustment or registration of all agricultural lands,
otherwise the lands would revert to the state.
[15]

Four years later, Spain ceded to the government of the United States all rights, interests and
claims over the national territory of the Philippine Islands through the Treaty of Paris of
December 10, 1898. In 1903, the United States colonial government, through the Philippine
Commission, passed Act No. 926, the first Public Land Act, which was described as follows:
ActNo.926,thefirstPublicLandAct,waspassedinpursuanceoftheprovisionsofthePhilippineBillof
1902.Thelawgovernedthedispositionoflandsofthepublicdomain.Itprescribedrulesandregulations
forthehomesteading,sellingandleasingofportionsofthepublicdomainofthePhilippineIslands,and
prescribedthetermsandconditionstoenablepersonstoperfecttheirtitlestopubliclandsintheIslands.It
alsoprovidedfortheissuanceofpatentstocertainnativesettlersuponpubliclands,fortheestablishment
oftownsitesandsaleoflotstherein,forthecompletionofimperfecttitles,andforthecancellationor
confirmationofSpanishconcessionsandgrantsintheIslands.Inshort,thePublicLandActoperated

ontheassumptionthattitletopubliclandsinthePhilippineIslandsremainedinthegovernment;
andthatthegovernmentstitletopubliclandsprungfromtheTreatyofParisandothersubsequent
treatiesbetweenSpainandtheUnitedStates.Thetermpubliclandreferredtoalllandsofthepublic
domainwhosetitlestillremainedinthegovernmentandarethrownopentoprivateappropriationand
settlement,andexcludedthepatrimonialpropertyofthegovernmentandthefriarlands.
[16]

Thus, it is plain error for petitioners to argue that under the Philippine Bill of 1902 and Public
Land Act No. 926, mere possession by private individuals of lands creates the legal presumption
that the lands are alienable and disposable.
Act 2874, the second Public Land Act, superseded Act No. 926 in 1919. After the passage of
the 1935 Constitution, Commonwealth Act No. 141 (CA 141 for brevity) amended Act 2874 in
1936. CA 141, as amended, remains to this day as the existing general law governing the
classification and disposition of lands of the public domain other than timber and mineral lands.
[17]

In the meantime, in order to establish a system of registration by which recorded title

becomes absolute, indefeasible and imprescriptible, the legislature passed Act 496, otherwise
known as the Land Registration Act, which took effect on February 1, 1903. Act 496 placed all
registered lands in the Philippines under the Torrens system. The Torrens system requires the
government to issue a certificate of title stating that the person named in the title is the owner of
the property described therein, subject to liens and encumbrances annotated on the title or
reserved by law. The certificate of title is indefeasible and imprescriptible and all claims to the
parcel of land are quieted upon issuance of the certificate. PD 1529, known as the Property
Registration Decree enacted on June 11, 1978, amended and updated Act 496.
[18]

[19]

[20]

The 1935, 1973, 1987 Philippine Constitutions

The 1935, 1973 and 1987 Constitutions adopted the Regalian doctrine substituting, however,
the state, in lieu of the King, as the owner of all lands and waters of the public domain. Justice
Reynato S. Puno, in his separate opinion in Cruz vs. Secretary of Environment and Natural
Resources, explained thus:
[21]

[22]

Oneofthefixedanddominatingobjectivesofthe1935ConstitutionalConventionwasthenationalization
andconservationofthenaturalresourcesofthecountry.Therewasanoverwhelmingsentimentinthe
Conventioninfavoroftheprincipleofstateownershipofnaturalresourcesandtheadoptionofthe
Regaliandoctrine.Stateownershipofnaturalresourceswasseenasanecessarystartingpointtosecure
recognitionofthestatespowertocontroltheirdisposition,exploitation,development,orutilization.The
delegatestotheConstitutionalConventionverywellknewthattheconceptofStateownershipoflandand
naturalresourceswasintroducedbytheSpaniards,however,theywerenotcertainwhetheritwas
continuedandappliedbytheAmericans.Toremovealldoubts,theConventionapprovedtheprovisionin
theConstitutionaffirmingtheRegaliandoctrine.
Thus, Section 1, Article XIII of the 1935 Constitution, on Conservation and Utilization of
Natural Resources barred the alienation of all natural resources except public agricultural lands,
which were the only natural resources the State could alienate. The 1973 Constitution reiterated
the Regalian doctrine in Section 8, Article XIV on the National Economy and the Patrimony of
the Nation. The 1987 Constitution reaffirmed the Regalian doctrine in Section 2 of Article XII on
National Economy and Patrimony.
[23]

[24]

[25]

Both the 1935 and 1973 Constitutions prohibited the alienation of all natural resources
except agricultural lands of the public domain. The 1987 Constitution readopted this
policy. Indeed, all lands of the public domain as well as all natural resources enumerated in the
Philippine Constitution belong to the State.
Watershed Reservation is a Natural Resource
The term natural resource includes not only timber, gas, oil coal, minerals, lakes, and
submerged lands, but also, features which supply a human need and contribute to the health,
welfare, and benefit of a community, and are essential to the well-being thereof and proper
enjoyment of property devoted to park and recreational purposes.
[26]

In Sta. Rosa Realty Development Corp. vs. Court of Appeals, et al ., the Court had
occasion to discourse on watershed areas. The Court resolved the issue of whether the parcel
of land which the Department of Environment and Natural Resources had assessed to be a
[27]

watershed area is exempt from the coverage of RA No. 6657 or the Comprehensive Agrarian
Reform Law (CARL for brevity). The Court defined watershed as an area drained by a river and
its tributaries and enclosed by a boundary or divide which separates it from adjacent
watersheds. However, the Court also recognized that:
[28]

Thedefinitiondoesnotexactlydepictthecomplexitiesofawatershed.Themostimportantproductofa
watershediswaterwhichisoneofthemostimportanthumannecessit(ies).Theprotectionofwatershed
ensuresanadequatesupplyofwaterforfuturegenerationsandthecontrolofflashfloodsthatnotonly
damagepropertybutalsocauselossoflives.Protectionofwatershedsisanintergenerational
responsibilitythatneedstobeanswerednow.
Article 67 of the Water Code of the Philippines (PD 1067) provides:
Art.67.Anywatershedoranyareaoflandadjacenttoanysurfacewateroroverlyinganygroundwater
maybedeclaredbytheDepartmentofNaturalResourcesasaprotectedarea.RulesandRegulationsmay
bepromulgatedbysuchDepartmenttoprohibitorcontrolsuchactivitiesbytheownersoroccupants
thereofwithintheprotectedareawhichmaydamageorcausethedeteriorationofthesurfacewateror
groundwaterorinterferewiththeinvestigation,use,control,protection,managementoradministrationof
suchwaters.
The Court in Sta. Rosa Realty also recognized the need to protect watershed areas and
took note of the report of the Ecosystems Research and Development Bureau (ERDB), a
research arm of the DENR, regarding the environmental assessment of the Casile and
Kabanga-an river watersheds involved in that case. That report concluded as follows:
TheCasilebarangaycoveredbyCLOAinquestionissituatedintheheartlandofboth
watersheds.ConsideringthebarangaysproximitytotheMatangtubigwaterworks,theactivitiesofthe
farmerswhichareinconflictwithpropersoilandwaterconservationpracticesjeopardizeandendanger
thevitalwaterworks.Degradationofthelandwouldhavedoubleedgedetrimentaleffects.OntheCasile
sidethiswouldmeandirectsiltationoftheMangumitriverwhichdrainstothewaterimpounding
reservoirbelow.OntheKabangaanside,thiswouldmeandestructionofforestcoverswhichactsas
rechargedareasoftheMatangtubigsprings.Consideringthatthepeoplehavelittleifnodirectinterestin
theprotectionoftheMatangtubigstructurestheycouldntcarelessevenifitwouldbedestroyed.
TheCasileandKabangaanwatershedscanbeconsideredamostvitallifesupportsystemtothousandsof
inhabitantsdirectlyandindirectlyaffectedbyit.FromthesewatershedscomethenaturalGodgiven
preciousresourcewater.xxx
Clearingandtillingofthelandsaretotallyinconsistentwithsoundwatershedmanagement.Moreso,the
introductionofearthdisturbingactivitieslikeroadbuildinganderectionofpermanent
infrastructures.UnlesstheperniciousagriculturalactivitiesoftheCasilefarmersareimmediatelystopped,
itwouldnotbelongbeforethesewatershedswouldceasetobeofvalue.Theimpactofwatershed
degradationthreatensthelivelihoodofthousandsofpeopledependentuponit.Towardthis,wehopethat
anacceptablecomprehensivewatersheddevelopmentpolicyandprogrambeimmediatelyformulatedand
implementedbeforetheirreversibledamagefinallyhappens.
The Court remanded the case to the Department of Agriculture and Adjudication Board or
DARAB to re-evaluate and determine the nature of the parcels of land involved in order to
resolve the issue of its coverage by the CARL.
Sta. Rosa Realty gives us a glimpse of the dangers posed by the misuse of natural
resources such as watershed reservations which are akin to forest zones. Population growth
and industrialization have taken a heavy toll on the environment. Environmental degradation
from unchecked human activities could wreak havoc on the lives of present and future
generations. Hence, by constitutional fiat, natural resources remain to this day inalienable
properties of the State.
Viewed under this legal and factual backdrop, did petitioners acquire, as they vigorously
argue, private rights over the parcel of land prior to the issuance of EO 33 segregating the same
as a watershed reservation?
The answer is in the negative.

First. An applicant for confirmation of imperfect title bears the burden of proving that he
meets the requirements of Section 48 of CA 141, as amended. He must overcome the
presumption that the land he is applying for is part of the public domain and that he has an
interest therein sufficient to warrant registration in his name arising from an imperfect title. An
imperfect title may have been derived from old Spanish grants such as a titulo real or royal
grant, a concession especial or special grant, a composicion con el estado or adjustment title, or
a titulo de compra or title through purchase. Or, that he has had continuous, open and
notorious possession and occupation of agricultural lands of the public domain under a bona
fide claim of ownership for at least thirty years preceding the filing of his application as provided
by Section 48 (b) CA 141.
[29]

Originally, Section 48(b) of CA 141 provided for possession and occupation of lands of the
public domain since July 26, 1894. This was superseded by RA 1942 which provided for a
simple thirty-year prescriptive period of occupation by an applicant for judicial confirmation of an
imperfect title. The same, however, has already been amended by Presidential Decree No.
1073, approved on January 25, 1977, the law prevailing at the time petitioners application for
registration was filed on April 25, 1985. As amended, Section 48 (b) now reads:
[30]

(b)Thosewhobythemselvesorthroughtheirpredecessorsininteresthavebeeninopen,continuous,
exclusiveandnotoriouspossessionandoccupationofagriculturallandsofthepublicdomain,undera
bonafideclaimofacquisitionorownership,foratleastthirtyyearsimmediatelyprecedingthefilingof
theapplicationforconfirmationoftitle,exceptwhenpreventedbywarsorforcemajeure.Thoseshallbe
conclusivelypresumedtohaveperformedalltheconditionsessentialtoaGovernmentgrantandshallbe
entitledtoacertificateoftitleundertheprovisionsofthischapter.
Interpreting Section 48 (b) of CA 141, the Court stated that the Public Land Act requires that
the applicant must prove the following:
(a)thatthelandisalienablepubliclandand(b)thathisopen,continuous,exclusiveandnotorious
possessionandoccupationofthesamemusteitherbesincetimeimmemorialorfortheperiodprescribed
inthePublicLandAct.Whentheconditionssetbylawarecompliedwith,thepossessoroftheland,by
operationoflaw,acquiresarighttoagrant,agovernmentgrant,withoutthenecessityofacertificateof
titlebeingissued.
[31]

Petitioners do not claim to have documentary title over the Lot. Their right to register the Lot is
predicated mainly upon continuous possession since 1902.
Clearly, petitioners were unable to acquire a valid and enforceable right or title because of
the failure to complete the required period of possession, whether under the original Section 48
(b) of CA 141 prior to the issuance of EO 33, or under the amendment by RA 1942 and PD
1073.
There is no proof that prior to the issuance of EO 33 in 1904, petitioners had acquired
ownership or title to the Lot either by deed or by any other mode of acquisition from the State, as
for instance by acquisitive prescription. As of 1904, Sesinando Leyva had only been in
possession for two years. Verily, petitioners have not possessed the parcel of land in the manner
and for the number of years required by law for the confirmation of imperfect title.
Second, assuming that the Lot was alienable and disposable land prior to the issuance of
EO 33 in 1904, EO 33 reserved the Lot as a watershed. Since then, the Lot became nondisposable and inalienable public land. At the time petitioners filed their application on April 25,
1985, the Lot has been reserved as a watershed under EO 33 for 81 years prior to the filing of
petitioners application.
The period of occupancy after the issuance of EO 33 in 1904 could no longer be counted
because as a watershed reservation, the Lot was no longer susceptible of occupancy,
disposition, conveyance or alienation. Section 48 (b) of CA 141, as amended, applies
exclusively to alienable and disposable public agricultural land. Forest lands, including
watershed reservations, are excluded. It is axiomatic that the possession of forest lands or other
inalienable public lands cannot ripen into private ownership. InMunicipality of Santiago,
Isabela vs. Court of Appeals, the Court declared that inalienable public lands [32]

xxxcannotbeacquiredbyacquisitiveprescription.Prescription,bothacquisitiveandextinctive,doesnot
runagainsttheState.
Thepossessionofpublicland,howeverlongtheperiodmayhaveextended,neverconferstitlethereto
uponthepossessorbecausethestatuteoflimitationswithregardtopubliclanddoesnotoperateagainst
theState,unlesstheoccupantcanprovepossessionandoccupationofthesameunderclaimofownership
fortherequirednumberofyearstoconstituteagrantfromtheState.
Third, Gordula vs. Court of Appeals is in point. In Gordula, petitioners did not contest the
nature of the land. They admitted that the land lies in the heart of the Caliraya-Lumot River
Forest Reserve, which Proclamation No. 573 classified as inalienable. The petitioners
in Gordula contended, however, that Proclamation No. 573 itself recognizes private rights of
landowners prior to the reservation. They claim to have established their private rights to the
subject land. The Court ruled:
[33]

Wedonotagree.Nopubliclandcanbeacquiredbyprivatepersonswithoutanygrant,expressorimplied
fromthegovernment;itisindispensablethattherebeashowingofatitlefromthestate.Thefactsshow
thatpetitionerGorduladidnotacquiretitletothesubjectlandpriortoitsreservationunderProclamation
No.573.HefiledhisapplicationforfreepatentonlyinJanuary,1973,morethanthree(3)yearsafterthe
issuanceofProclamationNo.573inJune,1969.Atthattime,theland,aspartoftheCalirayaLumot
RiverForestReserve,wasnolongeropentoprivateownershipasithasbeenclassifiedaspublicforest
reserveforthepublicgood.
Nonetheless,petitionersinsistthattheterm,privaterights,inProclamationNo.573,shouldnotbe
interpretedasrequiringatitle.Theyopinethatitsufficesiftheclaimanthadoccupiedandcultivatedthe
propertyforsomanynumberofyears,declaredthelandfortaxationpurposes,[paid]thecorresponding
realestatetaxes[whichare]acceptedbythegovernment,and[his]occupancyandpossession[is]
continuous,openandunmolestedandrecognizedbythegovernment.Prescindingfromthispremise,
petitionersurgethatthe25yearpossessionbypetitionerGordulafrom1944to1969,albeitfive(5)years
shortofthe30yearpossessionrequiredunderCommonwealthAct(C.A.)No.141,asamended,isenough
tovestuponpetitionerGordulatheprivaterightsrecognizedandrespectedinProclamationNo.573.
Thecaselawdoesnotsupportthissubmission.InDirectorofLandsvs.Reyes,weheldthatasettler
claimingtheprotectionofprivaterightstoexcludehislandfromamilitaryorforestreservationmust
showxxxbyclearandconvincingevidencethatthepropertyinquestionwasacquiredby[any]xxx
meansfortheacquisitionofpubliclands.
Infine,oneclaimingprivaterightsmustprovethathehascompliedwithC.A.No.141,asamended,
otherwiseknownasthePublicLandAct,whichprescribesthesubstantiveaswellastheprocedural
requirementsforacquisitionofpubliclands.Thislawrequiresatleastthirty(30)yearsofopen,
continuous,exclusiveandnotoriouspossessionandpossessionofagriculturallandsofthepublicdomain,
underabonafideclaimofacquisition,immediatelyprecedingthefilingoftheapplicationforfree
patent.Therationaleforthe30yearperiodliesinthepresumptionthatthelandappliedforpertainstothe
State,andthattheoccupantsand/orpossessorsclaimaninterestthereinonlybyvirtueoftheirimperfect
titleorcontinuous,openandnotoriouspossession.
Next, petitioners argue that assuming no private rights had attached to the Lot prior to EO 33
in 1904, the President of the Philippines had subsequently segregated the Lot from the public
domain and made the Lot alienable and disposable when he issued Proclamation No. 1283 on
June 21, 1974. Petitioners contend that Proclamation No. 1283 expressly excluded an area of
3,780 hectares from the MWR and made the area part of the Boso-boso Townsite
Reservation. Petitioners assert that Lot Psu-162620 is a small part of this excluded town site
area. Petitioners further contend that town sites are considered alienable and disposable under
CA 141.
Proclamation No. 1283 reads thus:
PROCLAMATIONNO.1283

EXCLUDINGFROMTHEOPERATIONEXECUTIVEORDERNO.33,DATEDJULY26,1904,AS
AMENDEDBYEXECUTIVEORDERSNOS.14AND16,BOTHSERIESOF1915,WHICH
ESTABLISHEDTHEWATERSHEDRESERVATIONSITUATEDINTHEMUNICIPALITYOF
ANTIPOLO,PROVINCEOFRIZAL,ISLANDOFLUZON,ACERTAINPORTIONOFTHELAND
EMBRACEDTHEREINANDRESERVINGTHESAME,TOGETHERWITHTHEADJACENT
PARCELOFLANDOFTHEPUBLICDOMAIN,FORTOWNSITEPURPOSESUNDERTHE
PROVISIONSOFCHAPTERXIOFTHEPUBLICLANDACT.
UponrecommendationoftheSecretaryofAgricultureandNaturalResourcesandpursuanttothe
authorityvestedinmebylaw,I,FERDINANDE.MARCOS,PresidentofthePhilippines,dohereby,
excludefromtheoperationofExecutiveOrderNo.33datedJuly26,1904,asamendedbyExecutive
OrdersNos.14and16,bothseriesof1915,whichestablishedtheWatershedReservationsituatedinthe
MunicipalityofAntipolo,ProvinceofRizal,IslandofLuzon,certainportionsoflandembracedtherein
andreservethesame,togetherwiththeadjacentparceloflandofthepublicdomain,fortownsitepurposes
undertheprovisionsofChapterXIofthePublicLandAct,subjecttoprivaterights,ifanytherebe,andto
futuresubdivisionsurveyinaccordancewiththedevelopmentplantobepreparedandapprovedbythe
DepartmentofLocalGovernmentandCommunityDevelopment,whichparcelsaremoreparticularly
describedasfollows:
LotA(PartofWatershedReservation)
Aparcelofland(LotAofProposedPoorMansBaguio,beingaportionoftheMarikinaWatershed,IN
2),situatedinthemunicipalityofAntipolo,ProvinceofRizal,IslandofLuzon,beginningatapoint
marked1onsketchplan,beingN7430E,8480.00metersmoreorless,fromBLLM1,Antipolo,Rizal;
thenceN3328W1575.00m.topoint2;thenceN4026W1538.50m.topoint3;thenceN3050W
503.17m.topoint4;thenceN7502W704.33m.topoint5;thenceN1418W1399.39m.topoint6;
thenceN4325W477.04m.topoint7;thenceN7138W458.36m.topoint8;thenceN3105W
1025.00m.topoint9;thenceDueNorth490.38m.topoint10;thenceDueNorth1075.00m.topoint11;
thenceDueEast1000.00m.topoint12;thenceDueEast1000.00m.topoint13;thenceDueEast
1000.00m.topoint14;thenceDueEast1000.00m.topoint15;thenceDueEast1000.00m.topoint16;
thenceDueEast1000.00m.topoint17;thenceDueEast1075.00m.topoint18;thenceDueSouth
1000.00m.topoint19;thenceDueSouth1000.00m.topoint20;thenceDueSouth1000.00m.topoint
21;thenceDueSouth1000.00m.topoint22;thenceDueSouth1000.00m.topoint23;thenceDueSouth
1000.00m.topoint24;thenceDueSouth1075.00m.topoint25;thenceDueWest1000.00m.topoint
26;thenceDueWest1000.00m.topoint27;thenceDueWest636.56m.topointof
beginning.Containinganareaofthreethousandsevenhundredeighty(3,780)Hectares,moreor
less.
LotB(AlienableandDisposableLand)
Aparcelofland(LotBofProposedPoorMansBaguio,beingaportionofalienableanddisposable
portionofpublicdomain)situatedinthemunicipalityofAntipolo,ProvinceofRizal,Islandof
Luzon.Beginningatapointmarked1onsketchplanbeingN7430E.,8430.00m.,moreorless,from
BLLM1.Antipolo,Rizal;thenceDueWest363.44m.topoint2;thenceDueWest1000.00m.topoint3;
thenceDueWest100.00m.topoint4;thenceDueWest1000.00m.topoint5;thenceDueWest1075.00
m.topoint6;thenceDueNorth1000.00m.topoint7;thenceDueNorth1000.00m.topoint8;thence
DueNorth1000.00m.topoint9;thenceDueNorth1000.00m.topoint10;thenceDueNorth1000.00m.
topoint11;thenceDueNorth509.62m.topoint12;thenceS.3105E1025.00m.topoint13;thenceS
7138E458.36m.topoint14;thenceS4325E477.04m.topoint15;thenceS1418E1399.39m.to
point16;thenceS7502E704.33m.topoint17;thenceS.3050E503.17m.topoint18;thenceS4026
E1538.50m.topoint19;thences3323e1575.00mtopointofbeginning.Containinganareaof
onethousandtwohundredtwentyfive(1,225)Hectares,moreorless.
Note:Alldataareapproximateandsubjecttochangebasedonfuturesurvey.
INWITNESSWHEREOF,IHavehereuntosetmyhandandcausedthesealoftheRepublicofthe
Philippinestobeaffixed.

DoneintheCityofManila,this21 dayofJune,intheyearofOurLord,nineteenhundredandseventy
four.
st

(Sgd.)FERDINANDE.MARCOS
President
RepublicofthePhilippines
Proclamation No. 1283 has since been amended by Proclamation No. 1637 issued on April
18, 1977. Proclamation No. 1637 revised the area and location of the proposed
townsite. According to then DENR Secretary Victor O. Ramos, Proclamation No. 1637 excluded
Lot A (of which the Lot claimed by petitioners is part) for townsite purposes and reverted it to
MWR coverage. Proclamation No. 1637 reads:
[34]

PROCLAMATIONNO.1637
AMENDINGPROCLAMATIONNO.1283,DATEDJUNE21,1974,WHICHESTABLISHEDTHE
TOWNSITERESERVATIONINTHEMUNICIPALITIESOFANTIPOLOANDSANMATEO,
PROVINCEOFRIZAL,ISLANDOFLUZONBYINCREASINGTHEAREAANDREVISINGTHE
TECHNICALDESCRIPTIONOFTHELANDEMBRACEDTHEREIN,ANDREVOKING
PROCLAMATIONNO.765DATEDOCTOBER26,1970THATRESERVEDPORTIONSOFTHE
AREAASRESETTLEMENTSITE.
UponrecommendationoftheSecretaryofNaturalResourcesandpursuanttotheauthorityvestedinme
bylaw,I,FERDINANDE.MARCOS,PresidentofthePhilippines,doherebyamendProclamationNo.
1283,datedJune21,1974whichestablishedthetownsitereservationinthemunicipalitiesofAntipolo
andSanMateo,ProvinceofRizal,IslandofLuzon,byincreasingtheareaandrevisingthetechnical
descriptionsofthelandembracedtherein,subjecttoprivaterights,ifanytherebe,whichparceloflandis
moreparticularlydescribedasfollows:
(ProposedLungsodSilanganTownsite)
APARCELOFLAND(ProposedLungsodSilanganTownsiteReservationamendingtheareaunder
SWO41762establishingtheBagongSilanganTownsiteReservation)situatedintheMunicipalitiesof
Antipolo,SanMateo,andMontalban,ProvinceofRizal,IslandofLuzon.BoundedontheE.,alonglines
1234567891011121314151617181920212223bytheMarikinaWatershedReservation
(IN12);ontheS.,alonglines232425bytheportionofAntipolo;ontheW.,alonglines25262728
2930bytheMunicipalitiesofMontalban,SanMateo;andontheN.,alonglines30313233343536
3738394041424344bytheAngatWatershedReservation.Beginningatapointmarked1on
theTopographicMapswiththeScaleof1:50,000whichistheidenticalcorner38IN12,Marikina
WatershedReservation.
xxxxxxxxx
NOTE:Alldataareapproximateandsubjecttochangebasedonfuturesurvey.
ProclamationNo.765datedOctober26,1970,whichcoveredareasentirelywithinthehereinLungsod
SilanganTownsite,isherebyrevokedaccordingly.
INWITNESSWHEREOF,IhavehereuntosetmyhandandcausedthesealoftheRepublicofthe
Philippinestobeaffixed.
DoneintheCityofManila,this18thdayofApril,intheyearofOurLord,nineteenhundredandseventy
seven.
(Sgd.)FERDINANDE.MARCOS
PresidentofthePhilippines
A positive act (e.g., an official proclamation) of the Executive Department is needed to
declassify land which had been earlier classified as a watershed reservation and to convert it
into alienable or disposable land for agricultural or other purposes. Unless and until the land
classified as such is released in an official proclamation so that it may form part of the
[35]

disposable agricultural lands of the public domain, the rules on confirmation of imperfect title do
not apply.
[36]

The principal document presented by petitioners to prove the private character of the Lot is
the Certification of the Bureau of Forest Development dated March 18, 1986 that the Lot is
excluded from the Marikina Watershed (Exh. R). The Certification reads:
RepublicofthePhilippines
MinistryofNaturalResources
BUREAUOFFORESTDEVELOPMENT
REGIONIV
ELALBuilding
100QuezonAvenue,QuezonCity
MAR181986
VERIFICATIONONTHESTATUSOFLAND:
TOWHOMITMAYCONCERN:
ThisistocertifythatthetractoflandsituatedinBarangaySanIsidro,Antipolo,Rizal,containinganarea
of1,269,766squaremeters,asshownanddescribedonthereversesidehereof,surveyedbyGeodetic
EngineerTelesforoCabadingforAngelinaC.Reynoso,isverifiedtobewithintheareaexcludedfromthe
operationofMarikinaWatershedReservationestablishedunderExecutiveOrderNo.33datedJuly26,
1904perProclamationNo.1283,promulgatedonJune21,1974,whichestablishedtheBosoBoso
TownsiteReservation,amendedbyproclamationNo.1637datedApril18,1977knownasLungsod
SilanganTownsiteReservation.
SubjectareaalsofallswithintheboundsofBagongLipunanSiteunderP.D.1396datedJune2,1978
underthesolejurisdictionoftheMinistryofHumanSettlements,totheexclusionofanyother
governmentagencies.
ThisverificationismadeupontherequestoftheChief,LegalStaff,R4ascontainedinhisinternal
memorandumdatedMarch18,1986.
Verifiedby:
(Sgd)ROMEOC.PASCUBILLO
CartographerII
Checkedby:
(Sgd)ARMENDOR.CRUZ
SupervisingCartographer
ATTESTED:
(Sgd)LUISG.DACANAY
Chief,ForestEngineering&
InfrastructureSection
The above certification on which petitioners rely that a reclassification had occurred, and that
the Lot is covered by the reclassification, is contradicted by several documents submitted by the
Solicitor General before the land registration court.
The Solicitor General submitted to the land registration court a Report dated March 2,
1988, signed by Administrator Teodoro G. Bonifacio of the then National Land Titles and Deeds
Registration Administration, confirming that the Lot described in Psu-162620 forms part of the
MWR. He thus recommended the dismissal of the application for registration. The Report states:
[37]

COMESNOWtheAdministratoroftheNationalLandTitlesandDeedsRegistrationCommissionandto
thisHonorableCourtrespectfullyreportsthat:

1. A parcel of land described in plan Psu-162620 situated in the Barrio of San Isidro, Municipality of Antipolo,
Province of Rizal, is applied for registration of title in the case at bar.
2. After plotting plan Psu-162620 in our Municipal Index Map it was found that a portion of the SW, described
as Lot 3 in plan Psu-173790 was previously the subject of registration in Land Reg. Case No. N-9578,
LRC Record No. N-55948 and was issued Decree No. N-191242 on April 4, 1986 in the name of Apolonia
Garcia, et al., pursuant to the Decision and Order for Issuance of the Decree dated February 8, 1984 and
March 6, 1984, respectively, and the remaining portion of plan Psu-162620 is inside IN-12, Marikina
Watershed. x x x
WHEREFORE, this matter is respectfully submitted to the Honorable Court for its information and
guidance with the recommendation that the application in the instant proceedings be dismissed, after due
hearing (Underlining supplied).

Likewise, in a letter dated November 11, 1991, the Deputy Land Inspector, DENR, Region
IV, Community Environment and Natural Resources Office, Antipolo, Rizal,similarly confirmed
that the Lot is within the MWR. The letter states:
[38]

ThatthelandsoughttoberegisteredissituatedatSanIsidro(Bosoboso),Antipolo,Rizal,withanareaof
ONEHUNDREDTWENTYSIXPOINTZEROSEVENSIXTYSIX(126.0766)hectares,more
particularlydescribedinPsu162620,whichiswithintheMarikinaWatershedReservationunder
ExecutiveOrderNo.33datedJuly2,1904whichestablishedtheMarikinaWatershedReservation(IN
12)xxx.
xxx
ThatthelandsoughttoberegisteredisnotaprivatepropertyoftheRegistrationApplicantbutpartofthe
publicdomain,notsubjectedtodispositionandiscoveredbyProclamationNo.585forIntegratedSocial
ForestryProgramhence,L.R.C.No.269Aisrecommendedforrejection(Underliningsupplied).Copyof
theletterisattachedherewithasAnnex3andmadeanintegralparthereof.
Lastly, the Solicitor General pointed out that attached to petitioner Edna T. Collados [as
original applicant] application is the technical description of the Lot signed by Robert C.
Pangyarihan, Officer-in-Charge of the Survey Division of the Bureau of Lands. This technical
description categorically stated that the Lot is inside IN-12 Mariquina Watershed.
[39]

The evidence of record thus appears unsatisfactory and insufficient to show clearly and
positively that the Lot had been officially released from the Marikina Watershed Reservation to
form part of the alienable and disposable lands of the public domain. We hold that once a parcel
of land is included within a watershed reservation duly established by Executive Proclamation,
as in the instant case, a presumption arises that the land continues to be part of such
Reservation until clear and convincing evidence of subsequent declassification is shown.
It is obvious, based on the facts on record that neither petitioners nor their predecessors-ininterest have been in open, continuous, exclusive and notorious possession and occupation of
the Lot for at least thirty years immediately preceding the filing of the application for confirmation
of title. Even if they submitted sufficient proof that the Lot had been excluded from the MWR
upon the issuance of Proclamation No. 1283 on June 21, 1974, petitioners possession as of the
filing of their application on April 25, 1985 would have been only eleven years counted from the
issuance of the proclamation in 1974. The result will not change even if we tack in the two years
Sesinando Leyva allegedly possessed the Lot from 1902 until the issuance of EO 33 in
1904. Petitioners case falters even more because of the issuance of Proclamation No. 1637 on
April 18, 1977. According to then DENR Secretary Victor Ramos, Proclamation No. 1637
reverted Lot A or the townsite reservation, where petitioners' Lot is supposedly situated, back to
the MWR.
Finally, it is of no moment if the areas of the MWR are now fairly populated and vibrant
communities as claimed by petitioners. The following ruling may be applied to this case by
analogy:
Aforestedareaclassifiedasforestlandofthepublicdomaindoesnotlosesuchclassificationsimply
becauseloggersorsettlersmayhavestrippeditofitsforestcover.Parcelsoflandclassifiedasforestland
mayactuallybecoveredwithgrassorplantedtocropsbykaingincultivatorsorotherfarmers.Forest
landsdonothavetobeonmountainsorinoutofthewayplaces.Swampyareascoveredbymangrove
trees,nipapalmsandothertreesgrowinginbrackishorseawatermayalsobeclassifiedasforest
land.Theclassificationisdescriptiveofitslegalnatureorstatusanddoesnothavetobedescriptiveof

whatthelandactuallylookslike.Unlessanduntilthelandclassifiedasforestisreleasedinanofficial
proclamationtothateffectsothatitmayformpartofthedisposableagriculturallandsofthepublic
domain,therulesonconfirmationofimperfecttitledonotapply.
[40]

Second Issue: Whether the petition for annulment of judgment

should have been given due course.
Petitioners fault the Court of Appeals for giving due course to the Republics petition for
annulment of judgment which was filed long after the decision of the land registration court had
allegedly become final and executory. The land registration court rendered its decision on
January 30, 1991 and the Solicitor General received a copy of the decision on April 23, 1991.
Petitioners point out that the Solicitor General filed with the Court of Appeals the petition for
annulment of judgment invoking Section 9(2) of BP Blg. 129 only on August 6, 1991, after the
decision had supposedly become final and executory. Moreover, petitioners further point out that
the Solicitor General filed the petition for annulment after the land registration court issued its
order of May 6, 1991 directing the Land Registration Authority to issue the corresponding decree
of registration.
[41]

[42]

The Solicitor General sought the annulment of the decision on the ground that the land
registration court had no jurisdiction over the case, specifically, over the Lot which was not
alienable and disposable. The Solicitor General maintained that the decision was null and void.
Petitioners argue that the remedy of annulment of judgment is no longer available because it
is barred by the principle of res judicata. They insist that the land registration court had
jurisdiction over the case which involves private land. They also argue that the Republic is
estopped from questioning the land registration courts jurisdiction considering that the Republic
participated in the proceedings before the court.
It is now established that the Lot, being a watershed reservation, is not alienable and
disposable public land. The evidence of the petitioners do not clearly and convincingly show that
the Lot, described as Lot Psu-162620, ceased to be a portion of the area classified as a
watershed reservation of the public domain. Any title to the Lot is void ab initio.In view of this,
the alleged procedural infirmities attending the filing of the petition for annulment of judgment
are immaterial since the land registration court never acquired jurisdiction over the Lot. All
proceedings of the land registration court involving the Lot are therefore null and void.
We apply our ruling in Martinez vs. Court of Appeals, as follows:
[43]

TheLandRegistrationCourthasnojurisdictionovernonregistrableproperties,suchaspublicnavigable
riverswhicharepartsofthepublicdomain,andcannotvalidlyadjudgetheregistrationoftitleinfavorof
privateapplicant.Hence,thejudgmentoftheCourtofFirstInstanceofPampangaasregardstheLotNo.
2ofcertificateofTitleNo.15856inthenameofpetitionersmaybeattackedatanytime,eitherdirectlyor
collaterally,bytheStatewhichisnotboundbyanyprescriptiveperiodprovidedforbytheStatuteof
Limitations.
We also hold that environmental consequences in this case override concerns over
technicalities and rules of procedure.
In Republic vs. De los Angeles, which involved the registration of public lands, specifically
parts of the sea, the Court rejected the principle of res judicata and estoppel to silence the
Republics claim over public lands. The Court said:
[44]

ItshouldbenotedfurtherthatthedoctrineofestoppelorlachesdoesnotapplywhentheGovernment
suesasasovereignorassertsgovernmentalrights,nordoesestoppelorlachesvalidateanactthat
contraveneslaworpublicpolicy,andthatresjudicataistobedisregardedifitsapplicationwouldinvolve
thesacrificeofjusticetotechnicality.
The Court further held that the right of reversion or reconveyance to the State of the public
properties registered and which are not capable of private appropriation or private acquisition
does not prescribe.
Third issue: Whether the petition-in-intervention is proper.

The Bockasanjo ISF Awardees Association, Inc., an association of holders of certificates of

stewardship issued by the DENR under its Integrated Social Forestry Program, filed with the
Court of Appeals on November 29, 1991 a Motion for Leave to Intervene and to Admit PetitionIn-Intervention.
According to intervenors, they are the actual occupants of the Lot which petitioners sought to
register. Aware that the parcels of land which their forefathers had occupied, developed
and tilled belong to the Government, they filed a petition with then President Corazon C. Aquino
and then DENR Secretary Fulgencio S. Factoran, to award the parcels of land to them.
Secretary Factoran directed the Director of Forest Management Bureau to take steps for the
segregation of the aforementioned area from the MWR for development under the DENRs ISF
Programs. Subsequently, then President Aquino issued Proclamation No. 585 dated June 5,
1990 excluding 1,430 hectares from the operation of EO 33 and placed the same under the
DENRs Integrated Social Forestry Program. Proclamation No. 585 reads:
PROCLAMATIONNO.585
AMENDINGFURTHEREXECUTIVEORDERNO.33,DATEDJULY26,1904WHICH
ESTABLISHEDTHEMARIKINAWATERSHEDRESERVATION(IN12)ASAMENDED,BY
EXCLUDINGCERTAINPORTIONSOFLANDSEMBRACEDTHEREINSITUATEDATSITIOS
BOSOBOSO,KILINGAN,VETERANS,BARANGAYSSANJOSEPHANDPAENAAN,
MUNICIPALITYOFANTIPOLO,PROVINCEOFRIZAL,ISLANDOFLUZON.
UponrecommendationoftheSecretaryofEnvironmentandNaturalResourcesandpursuanttothe
authorityvestedinmebylaw,I,CORAZONC.AQUINO,PresidentofthePhilippines,dohereby
excludefromtheoperationofExecutiveOrderNo.33,whichestablishedtheMarikinaWatershed
Reservation,certainparceloflandofthepublicdomainembracedthereinsituatedinSitiosBosoboso,
Veterans,KilinganandBarangaySanJosephandPaenaan,MunicipalityofAntipolo,ProvinceofRizal
andplacethesameundertheIntegratedSocialForestryProgramoftheDepartmentofEnvironmentand
NaturalResourcesinaccordancewithexistinglaws,rulesandregulations,whichparceloflandismore
particularlydescribedasfollows:
APARCELOFLAND,withintheMarikinaWatershedReservationsituatedintheMunicipalityof
Antipolo,ProvinceofRizal,beginningatpoint1onplan,beingidenticaltocorner1ofMarikina
WatershedReservation;thence
xxxxxxxxx
ContaininganareaofOneThousandFourHundredThirty(1,430)Hectares.
AllotherlandscoveredandembracedunderExecutiveOrderNo.33asamended,nototherwiseaffected
bythisProclamation,shallremaininforceandeffect.
INWITNESSWHEREOF,IhavehereuntosetmyhandandcausedthesealoftheRepublicofthe
Philippinestobeaffixed.
DoneintheCityofManila,this5 dayofJune,intheyearofOurLord,nineteenhundredandninety.
th

(Sgd.)CORAZONC.AQUINO
PresidentofthePhilippines
Pursuant to Proclamation No. 585, the chief of the ISF Unit, acting through the Regional
Executive Director of the DENR (Region IV), issued sometime between the years 1989 to 1991
certificates of stewardship contracts to bona fide residents of the barangays mentioned in the
proclamation as qualified recipients of the ISF programs. Among those awarded were
intervenors. The certificates of stewardship are actually contracts of lease granted by the DENR
to actual occupants of parcels of land under its ISF programs for a period of twenty-five (25)
years, renewable for another twenty-five (25) years. The DENR awarded contracts of
stewardship to ISF participants in Barangay San Isidro (or Boso-boso) and the other barangays
based on the Inventory of Forest Occupants the DENR had conducted.
[45]

[46]

According to intervenors, they learned only on July 31, 1991 about the pendency of LRC
Case No. 269-A before the Regional Trial Court of Antipolo, Rizal. On August 8, 1991, they filed
a Motion for Leave to Intervene and to Admit Opposition in Intervention before the land
registration court to assert their rights and to protect their interests.
However, shortly after the filing of their opposition, intervenors learned that the land
registration court had already rendered a decision on January 30, 1991 confirming petitioners
imperfect title. Intervenors counsel received a copy of the decision on August 9, 1991.
On August 14, 1991, intervenors filed a motion to vacate judgment and for new trial before
the land registration court. According to intervenors, the land registration court could not act on
its motions due to the restraining order issued by the Court of Appeals on August 8, 1991,
enjoining the land registration court from executing its decision, as prayed for by the Solicitor
General in its petition for annulment of judgment. The intervenors were thus constrained to file a
petition for intervention before the Court of Appeals which allowed the same.
Rule 19 of the 1997 Rules of Civil Procedure provides in pertinent parts:
[47]

Section1.Whomayintervene.Apersonwhohasalegalinterestinthematterinlitigation,orinthe
successofeitheroftheparties,oraninterestagainstboth,orissosituatedastobeadverselyaffectedbya
distributionorotherdispositionofpropertyinthecustodyofthecourt,oranofficerthereofmay,with
leaveofcourt,beallowedtointerveneintheaction.TheCourtshallconsiderwhetherornotthe
interventionwillundulydelayorprejudicetheadjudicationoftherightsoftheoriginalparties,and
whetherornottheinertvenorsrightsmaybefullyprotectedinaseparateproceeding.
Sec.2.Timetointervene.Themotiontointervenemaybefiledatanytimebeforerenditionofjudgment
bythetrialcourt.Acopyofthepleadingininterventionshallbeattachedtothemotionandservedonthe
originalparties.
As a rule, intervention is allowed before rendition of judgment by the trial court, as Section 2,
Rule 19 expressly provides. However, the Court has recognized exceptions to this rule in the
interest of substantial justice. Mago vs. Court of Appeals reiterated the ruling in Director of
Lands vs. Court of Appeals, where the Court allowed the motions for intervention even when
the case had already reached this Court. Thus, in Mago the Court held that:
[48]

Itisquiteclearandpatentthatthemotionsforinterventionfiledbythemovantsatthisstageofthe
proceedingswheretrialhadalreadybeenconcludedxxxandonappealxxxthesameaffirmedbythe
CourtofAppealsandtheinstantpetitionforcertioraritoreviewsaidjudgmentisalreadysubmittedfor
decisionbytheSupremeCourt,areobviouslyand,manifestlylate,beyondtheperiodprescribedunderxx
xSection2,Rule12oftherulesofCourt.
ButRule12oftheRulesofCourt,likeallotherRulesthereinpromulgated,issimplyaruleofprocedure,
thewholepurposeandobjectofwhichistomakethepowersoftheCourtfullyandcompletelyavailable
forjustice.Thepurposeofprocedureisnottothwartjustice.Itsproperaimistofacilitatetheapplication
ofjusticetotherivalclaimsofcontendingparties.Itwascreatednottohinderanddelaybuttofacilitate
andpromotetheadministrationofjustice.Itdoesnotconstitutethethingitselfwhichcourtsarealways
strivingtosecuretolitigants.Itisdesignedasthemeansbestadoptedtoobtainthatthing.Inotherwords,
itisameanstoanend.
To be sure, the Court of Appeals did not pass upon the actual status of intervenors in relation
to the Lot as this was not in issue. Neither was the validity of the certificates of stewardship
contracts which intervenors allegedly possessed inquired into considering this too was not in
issue. In fact, intervenors did not specifically seek any relief apart from a declaration that the Lot
in question remains inalienable land of the public domain. We cannot fault the Court of Appeals
for allowing the intervention, if only to provide the rival groups a peaceful venue for ventilating
their sides. This case has already claimed at least five lives due to the raging dispute between
the rival camps of the petitioners on one side and those of the DENR awardees on the other. It
also spawned a number of criminal cases between the two rival groups including malicious
mischief, robbery and arson. A strict application of the rules would blur this bigger, far more
important picture.

WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals dated June 22,
1992 declaring null and void the Decision dated January 30, 1991 of Branch 71, Regional Trial
Court of Antipolo, Rizal, in LRC No. 269-A, LRC Rec. No. N-59179 is AFFIRMED.
SO ORDERED.

SECOND DIVISION

[G.R. No. 98045. June 26, 1996]

DESAMPARADO VDA. DE NAZARENO vs. THE COURT OF APPEALS

SYLLABUS
1. CIVIL LAW; OWNERSHIP; RIGHTS OF ACCESSION WITH RESPECT TO IMMOVABLE
PROPERTY; ARTICLE 457; REQUISITES.- In the case of Meneses vs. CA, this Court held
that accretion, as a mode of acquiring property under Art. 457 of the Civil Code, requires the
concurrence of these requisites: (1) that the deposition of soil or sediment be gradual and
imperceptible; (2) that it be the result of the action of the waters of the river (or sea); and (3)
that the land where accretion takes place is adjacent to the banks of rivers (or the sea
coast). These are called the rules on alluvion which if present in a case, give to the owners
of lands adjoining the banks of rivers or streams any accretion gradually received from the
effects of the current of waters.
2. ID.; ID.; ID.; ID.; ID.; NOT PRESENT IN CASE AT BAR.- Where the accretion was formed by
the dumping of boulders, soil and other filling materials on portions of the Balacanas Creek
and the Cagayan River bounding petitioner's land, it cannot be claimed that the
accumulation was gradual and imperceptible, resulting from the action of the waters or the
current of the creek and the river. In Hilario vs. City of Manila, this Court held that the word
current indicates the participation of the body of water in the ebb and flow of waters due to
high and low tide. Not having met the first and second requirements of the rules of alluvion,
petitioners cannot claim the rights of a riparian owner.
3. ID.; ID.; ID.; ID.; ID.; THAT DEPOSIT IS DUE TO THE CURRENT OF THE RIVER,
MANDATORY.- In Republic vs. CA, this Court ruled that the requirement that the deposit
should be due to the effect of the current of the river is indispensable. This excludes

from Art. 457 of the Civil Code all deposits caused by human intervention. Putting it
differently, alluvion must be the exclusive work of nature. Thus, in Tiongco vs. Director of
Lands, et al., where the land was not formed solely by the natural effect of the water current
of the river bordering said land but is also the consequence of the direct and deliberate
intervention of man, it was deemed a man-made accretion and, as such, part of the public
domain. In the case at bar, the subject land was the direct result of the dumping of sawdust
by the Sun Valley Lumber Co. consequent to its sawmill operations.
4.

ID.; PUBLIC LANDS; FINDINGS AS SUCH BY THE BUREAU OF LANDS,

RESPECTED.- The mere filing of the Miscellaneous Sales Application constituted an
admission that the land being applied for was public land, having been the subject of a
Survey Plan wherein said land was described as an orchard. Furthermore, the Bureau of
Lands classified the subject land as an accretion area which was formed by deposits of
sawdust in the Balacanas Creek and the Cagayan river, in accordance with the ocular
inspection conducted by the Bureau of Lands. This Court has often enough held that findings
of administrative agencies which have acquired expertise because their jurisdiction is
confined to specific matters are generally accorded not only respect but even finality. Again,
when said factual findings are affirmed by the Court of Appeals, the same are conclusive on
the parties and not reviewable by this Court.

5. ID.; PUBLIC LAND LAW; JURISDICTION OVER PUBLIC LANDS.- Having determined that
the subject land is public land, a fortiori, the Bureau of Lands, as well as the Office of the
Secretary of Agriculture and Natural Resources have jurisdiction over the same in
accordance with the Public Land Law. Under Sections 3 and 4 thereof, the Director of Lands
has jurisdiction, authority and control over public lands. Here respondent Palad as Director
of Lands, is authorized to exercise executive control over any form of concession, disposition
and management of the lands of the public domain. He may issue decisions and orders as
he may see fit under the circumstances as long as they are based on the findings of fact. In
the case of Calibo vs. Ballesteros, this Court held that where, in the disposition of public
lands, the Director of Lands bases his decision on the evidence thus presented, he clearly
acts within his jurisdiction, and if he errs in appraising the evidence, the error is one of
judgment, but not an act of grave abuse of discretion annullable by certiorari.
6. ADMINISTRATIVE LAW; ADMINISTRATIVE REMEDIES; EXHAUSTED IN CASE AT
BAR.- The administrative remedies have been exhausted. Petitioners could not have
intended to appeal to respondent Ignacio as an Officer-In-Charge of the Bureau of
Lands. The decision being appealed from was the decision of respondent Hilario who was
the Regional Director of the Bureau of Lands. Said decision was made "for and by authority
of the Director of Lands." It would be incongruous to appeal the decision of the Regional
Director of the Bureau of Lands acting for the Director of the Bureau of Lands to an OfficerIn-Charge of the Bureau of Lands. In any case, respondent Ignacio's official designation was
"Undersecretary of the Department of Agriculture and Natural Resources." He was only an
"Officer-In-Charge" of the Bureau of Lands. When he acted on the late Antonio Nazareno's
motion for reconsideration by affirming or adopting respondent Hilario's decision, he was
acting on said motion as an Undersecretary on behalf of the Secretary of the Department. In
the case of Hamoy vs. Secretary of Agriculture and Natural Resources, this Court held that
the Undersecretary of Agriculture and Natural Resources may modify, adopt, or set aside the
orders or decisions of the Director of Lands with respect to questions involving public lands
under the administration and control of the Bureau of Lands and the Department of
Agriculture and Natural Resources. He cannot, therefore, be said to have acted beyond the
bounds of his jurisdiction under Sections 3, 4 and 5 of Commonwealth Act No. 141.
APPEARANCES OF COUNSEL
Manolo L. Tagarda, Sr. for petitioners.
Arturo R. Legaspi for private respondents.
DECISION
ROMERO, J.:

Petitioners Desamparado Vda. de Nazareno and Leticia Nazareno Tapia challenge the
decision of the Court of Appeals which affirmed the dismissal of petitioners' complaint by the
Regional Trial Court of Misamis Oriental, Branch 22. The complaint was for annulment of the

verification, report and recommendation, decision and order of the Bureau of Lands regarding a
parcel of public land.
The only issue involved in this petition is whether or not petitioners exhausted administrative
remedies before having recourse to the courts.
The subject of this controversy is a parcel of land situated in Telegrapo, Puntod, Cagayan de
Oro City. Said land was formed as a result of sawdust dumped into the dried-up Balacanas
Creek and along the banks of the Cagayan river.
Sometime in 1979, private respondents Jose Salasalan and Leo Rabaya leased the subject
lots on which their houses stood from one Antonio Nazareno, petitioners' predecessor-ininterest. In the latter part of 1982, private respondents allegedly stopped paying rentals. As a
result, Antonio Nazareno and petitioners filed a case for ejectment with the Municipal Trial Court
of Cagayan de Oro City, Branch 4. A decision was rendered against private respondents, which
decision was affirmed by the Regional Trial Court of Misamis Oriental, Branch 20.
The case was remanded to the municipal trial court for execution of judgment after the same
became final and executory. Private respondents filed a case for annulment of judgment before
the Regional Trial Court of Misamis Oriental, Branch 24 which dismissed the same. Antonio
Nazareno and petitioners again moved for execution of judgment but private respondents filed
another case for certiorari with prayer for restraining order and/or writ of preliminary injunction
with the Regional Trial Court of Misamis Oriental, Branch 25 which was likewise dismissed. The
decision of the lower court was finally enforced with the private respondents being ejected from
portions of the subject lots they occupied.
Before he died, Antonio Nazareno caused the approval by the Bureau of Lands of the survey
plan designated as Plan Csd-106-00571 with a view to perfecting his title over the accretion
area being claimed by him. Before the approved survey plan could be released to the applicant,
however, it was protested by private respondents before the Bureau of Lands.
In compliance with the order of respondent District Land Officer Alberto M. Gillera,
respondent Land Investigator Avelino G. Labis conducted an investigation and rendered a report
to the Regional Director recommending that Survey Plan No. MSI-10-06-000571-D (equivalent
to Lot No. 36302, Cad. 237) in the name of Antonio Nazareno, be cancelled and that private
respondents be directed to file appropriate public land applications.
Based on said report, respondent Regional Director of the Bureau of Lands Roberto Hilario
rendered a decision ordering the amendment of the survey plan in the name of Antonio
Nazareno by segregating therefrom the areas occupied by the private respondents who, if
qualified, may file public land applications covering their respective portions.
Antonio Nazareno filed a motion for reconsideration with respondent Rolleo Ignacio,
Undersecretary of the Department of Natural Resources and Officer-in-Charge of the Bureau of
Lands who denied the motion. Respondent Director of Lands Abelardo Palad then ordered him
to vacate the portions adjudicated to private respondents and remove whatever improvements
they have introduced thereon. He also ordered that private respondents be placed in possession
thereof.
Upon the denial of the late Antonio Nazareno's motion for reconsideration, petitioners
Desamparado Vda. de Nazareno and Leticia Tapia Nazareno, filed a case before the RTC,
Branch 22 for annulment of the following: order of investigation by respondent Gillera, report and
recommendation by respondent Labis, decision by respondent Hilario, order by respondent
Ignacio affirming the decision of respondent Hilario and order of execution by respondent
Palad. The RTC dismissed the complaint for failure to exhaust administrative remedies which
resulted in the finality of the administrative decision of the Bureau of Lands.
On appeal, the Court of Appeals affirmed the decision of the RTC dismissing the
complaint. Applying Section 4 of C.A. No. 141, as amended, it contended that the approval of
the survey plan belongs exclusively to the Director of Lands. Hence, factual findings made by
the Metropolitan Trial Court respecting the subject land cannot be held to be controlling as the
preparation and approval of said survey plans belong to the Director of Lands and the same
shall be conclusive when approved by the Secretary of Agriculture and Natural Resources.[1]
Furthermore, the appellate court contended that the motion for reconsideration filed by
Antonio Nazareno cannot be considered as an appeal to the Office of the Secretary of

Agriculture and Natural Resources, as mandated by C.A. No. 141 inasmuch as the same had
been acted upon by respondent Undersecretary Ignacio in his capacity as Officer-in-Charge of
the Bureau of Lands and not as Undersecretary acting for the Secretary of Agriculture and
Natural Resources. For the failure of Antonio Nazareno to appeal to the Secretary of Agriculture
and Natural Resources, the present case does not fall within the exception to the doctrine of
exhaustion of administrative remedies. It also held that there was no showing of oppressiveness
in the manner in which the orders were issued and executed.
Hence, this petition.
Petitioners assign the following errors:
I. PUBLIC RESPONDENT COURT OF APPEALS IN A WHIMSICAL, ARBITRARY AND CAPRICIOUS
MANNER AFFIRMED THE DECISION OF THE LOWER COURT WHICH IS CONTRARY TO THE
PREVAILING FACTS AND THE LAW ON THE MATTER;
II. PUBLIC RESPONDENT COURT OF APPEALS IN A WHIMSICAL, ARBITRARY AND CAPRICIOUS
MANNER AFFIRMED THE DECISION OF THE LOWER COURT DISMISSING THE ORIGINAL CASE
WHICH FAILED TO CONSIDER THAT THE EXECUTION ORDER OF PUBLIC RESPONDENT
ABELARDO G. PALAD, JR., DIRECTOR OF LANDS, MANILA, PRACTICALLY CHANGED THE
DECISION OF PUBLIC RESPONDENT ROBERTO HILARIO, REGIONAL DIRECTOR, BUREAU OF
LANDS, REGION 10, THUS MAKING THE CASE PROPER SUBJECT FOR ANNULMENT WELL WITHIN
THE JURISDICTION OF THE LOWER COURT.

The resolution of the above issues, however, hinges on the question of whether or not the
subject land is public land. Petitioners claim that the subject land is private land being an
accretion to his titled property, applying Article 457 of the Civil Code which provides:
"Totheownersoflandsadjoiningthebanksofriversbelongtheaccretionwhichtheygraduallyreceive
fromtheeffectsofthecurrentofthewaters."
In the case of Meneses v. CA,[2] this Court held that accretion, as a mode of acquiring
property under Art. 457 of the Civil Code, requires the concurrence of these requisites:(1) that
the deposition of soil or sediment be gradual and imperceptible; (2) that it be the result of the
action of the waters of the river (or sea); and (3) that the land where accretion takes place is
adjacent to the banks or rivers (or the sea coast). These are called the rules on alluvion which if
present in a case, give to the owners of lands adjoining the banks of rivers or streams any
accretion gradually received from the effects of the current of waters.
For petitioners to insist on the application of these rules on alluvion to their case, the abovementioned requisites must be present. However, they admit that the accretion was formed by
the dumping of boulders, soil and other filling materials on portions of the Balacanas Creek and
the Cagayan River bounding their land.[3] It cannot be claimed, therefore, that the accumulation
of such boulders, soil and other filling materials was gradual and imperceptible, resulting from
the action of the waters or the current of the Balacanas Creek and the Cagayan River. In Hilario
v. City of Manila,[4] this Court held that the word "current" indicates the participation of the body
of water in the ebb and flow of waters due to high and low tide. Petitioners' submission not
having met the first and second requirements of the rules on alluvion, they cannot claim the
rights of a riparian owner.
In any case, this court agrees with private respondents that petitioners are estopped from
denying the public character of the subject land, as well as the jurisdiction of the Bureau of
Lands when the late Antonio Nazareno filed his Miscellaneous Sales Application MSA (G-6) 571.
[5]
The mere filing of said Application constituted an admission that the land being applied for
was public land, having been the subject of Survey Plan No. MSI-10-06-000571-D (Equivalent to
Lot No. 36302, Cad-237) which was conducted as a consequence of Antonio Nazareno's
Miscellaneous Sales Application wherein said land was described as an orchard. Said
description by Antonio Nazareno was, however, controverted by respondent Labis in his
investigation report to respondent Hilario based on the findings of his ocular inspection that said
land actually covers a dry portion of Balacanas Creek and a swampy portion of Cagayan
River. The investigation report also states that except for the swampy portion which is fully
planted to nipa palms, the whole area is fully occupied by a part of a big concrete bodega of
petitioners and several residential houses made of light materials, including those of private
respondents which were erected by themselves sometime in the early part of 1978.[6]
Furthermore, the Bureau of Lands classified the subject land as an accretion area which was
formed by deposits of sawdust in the Balacanas Creek and the Cagayan river, in accordance

with the ocular inspection conducted by the Bureau of Lands. [7] This Court has often enough
held that findings of administrative agencies which have acquired expertise because their
jurisdiction is confined to specific matters are generally accorded not only respect but even
finality.[8] Again, when said factual findings are affirmed by the Court of Appeals, the same are
conclusive on the parties and not reviewable by this Court.[9]
It is this Court's irresistible conclusion, therefore, that the accretion was man-made or
artificial. In Republic v. CA,[10] this Court ruled that the requirement that the deposit should be
due to the effect of the current of the river is indispensable. This excludes from Art. 457 of the
Civil Code all deposits caused by human intervention. Putting it differently, alluvion must be the
exclusive work of nature. Thus, in Tiongco v. Director of Lands, et al.,[11] where the land was not
formed solely by the natural effect of the water current of the river bordering said land but is also
the consequence of the direct and deliberate intervention of man, it was deemed a man-made
accretion and, as such, part of the public domain.
In the case at bar, the subject land was the direct result of the dumping of sawdust by the
Sun Valley Lumber Co. consequent to its sawmill operations. [12] Even if this Court were to take
into consideration petitioners' submission that the accretion site was the result of the late
Antonio Nazareno's labor consisting in the dumping of boulders, soil and other filling materials
into the Balacanas Creek and Cagayan River bounding his land, [13] the same would still be part
of the public domain.
Having determined that the subject land is public land, a fortiori, the Bureau of Lands, as well
as the Office of the Secretary of Agriculture and Natural Resources have Jurisdiction over the
same in accordance with the Public Land Law. Accordingly, the court a quo dismissed
petitioners' complaint for non-exhaustion of administrative remedies which ruling the Court of
Appeals affirmed.
However, this Court agrees with petitioners that administrative remedies have been
exhausted. Petitioners could not have intended to appeal to respondent Ignacio as an Officer-inCharge of the Bureau of Lands. The decision being appealed from was the decision of
respondent Hilario who was the Regional Director of The Bureau of Lands. Said decision was
made "for and by authority of the Director of Lands." [14] It would be incongruous to appeal the
decision of the Regional Director of the Bureau of Lands acting for the Director of the Bureau of
Lands to an Officer-In-Charge of the Bureau of Lands.
In any case, respondent Rolleo Ignacio's official designation was "Undersecretary of the
Department of Agriculture and Natural Resources." He was only an "Officer-In-Charge" of the
Bureau of Lands. When he acted on the late Antonio Nazareno's motion for reconsideration by
affirming or adopting respondent's Hilario's decision, he was acting on said motion as an
Undersecretary on behalf of the Secretary of the Department. In the case of Hamoy v. Secretary
of Agriculture and Natural Resources,[15] This Court held that the Undersecretary of Agriculture
and Natural Resources may modify, adopt, or set aside the orders or decisions of the Director of
Lands with respect to questions involving public lands under the administration and control of
the Bureau of Lands and the Department of Agriculture and Natural Resources. He cannot
therefore, be said to have acted beyond the bounds of his jurisdiction under Sections 3, 4 and 5
of Commonwealth Act No. 141.[16]
As borne out by the administrative findings, the controverted land is public land, being an
artificial accretion of sawdust. As such, the Director of Lands has jurisdiction, authority and
control over the same, as mandated under Sections 3 and 4 of the Public Land Law (C.A. No.
141) which states, thus:
"Sec.3.TheSecretaryofAgricultureandNaturalResourcesshallbetheexclusiveofficerchargedwith
carryingouttheprovisionsofthisActthroughtheDirectorofLandswhoshallactunderhisimmediate
control.
Sec.4.Subjecttosaidcontrol,theDirectorofLandsshallhavedirectexecutivecontrolofthesurvey,
classification,lease,saleoranyotherformofconcessionordispositionandmanagementofthelandsof
thepublicdomain,andhisdecisionsastoquestionsoffactshallbeconclusivewhenapprovedbythe
SecretaryofAgricultureandNaturalResources."
In connection with the second issue, petitioners ascribe whim, arbitrariness or
capriciousness in the execution order of public respondent Abelardo G. Palad, the Director of

Lands. This Court finds otherwise since said decision was based on the conclusive finding that
the subject land was public land. Thus, this Court agrees with the Court of Appeals that the
Director of Lands acted within his rights when he issued the assailed execution order, as
mandated by the aforecited provisions.
Petitioners' allegation that respondent Palad's execution order directing them to vacate the
subject land practically changed respondent Hilario's decision is baseless. It is incorrect for
petitioners to assume that respondent Palad awarded portions of the subject land to private
respondents Salasalans and Rayabas as they had not yet been issued patents or titles over the
subject land. The execution order merely directed the segregation of petitioners' titled lot from
the subject land which was actually being occupied by private respondents before they were
ejected from it. Based on the finding that private respondents were actually in possession or
were actually occupying the subject land instead of petitioners, respondent Palad, being the
Director of Lands and in the exercise of this administrative discretion, directed petitioners to
vacate the subject land on the ground that private respondents have a preferential right, being
the occupants thereof.
While private respondents may not have filed their application over the land occupied by
them, they nevertheless filed their protest or opposition to petitioners' Miscellaneous Sales
Application, the same being preparatory to the filing of an application as they were in fact
directed to do so. In any case, respondent Palad's execution order merely implements
respondent Hilario's order. It should be noted that petitioners' own application still has to be
given due course.[17]
As Director of lands, respondent Palad is authorized to exercise executive control over any
form of concession, disposition and management of the lands of the public domain. [18] He may
issue decisions and orders as he may see fit under the circumstances as long as they are based
on the findings of fact.
In the case of Calibo v. Ballesteros,[19] this Court held that where, in the disposition of public
lands, the Director of Lands bases his decision on the evidence thus presented, he clearly acts
within his jurisdiction, and if he errs in appraising the evidence, the error is one of judgment, but
not an act or grave abuse of discretion annullable by certiorari.Thus, except for the issue of nonexhaustion of administrative remedies, this Court finds no reversible error nor grave abuse of
discretion in the decision of the Court of Appeals.
WHEREFORE, the petition is DISMISSED for lack of merit.
SO ORDERED.
THIRD DIVISION

[G.R. No. 95694. October 9, 1997]

VICENTE VILLLAFLOR, substituted by his heirs, petitioner, vs. COURT OF APPEALS

and NASIPIT LUMBER CO., INC., respondents.

DECISION
PANGANIBAN ,J.:

In this rather factually complicated case, the Court reiterates the binding force and effect of
findings of specialized administrative agencies as well as those of trial courts when affirmed by
the Court of Appeals; rejects petitioners theory of simulation of contracts; and passes upon the
qualifications of private respondent corporation to acquire disposable public agricultural lands
prior to the effectivity of the 1973 Constitution.
The Case
Before us is a petition for review on certiorari seeking the reversal of the Decision of the
Court of Appeals, dated September 27, 1990, in C.A. G.R. CV No. 09062, affirming the
dismissal by the trial court of Petitioner Vicente Villaflors complaint against Private Respondent
Nasipit Lumber Co., Inc. The disposition of both the trial and the appellate courts are quoted in
the statement of facts below.
[1]

The Facts
The facts of this case, as narrated in detail by Respondent Court of Appeals, are as follows:

[2]

Theevidence,testimonialanddocumentary,presentedduringthetrialshowthatonJanuary16,1940,Cirilo
Piencenaves,inaDeedofAbsoluteSale(exh.A),soldto[petitioner],aparcelofagriculturallandcontaininganareaof
50hectares, moreorless,andparticularlydescribedandboundedasfollows:
[3]

Acertainparcelofagriculturallandplantedtoabacawithvisibleconcretemonumentsmarkingthe
boundariesandboundedontheNORTHbyPublicLandnowPrivateDeedsontheEastbySerafin
Villaflor,ontheSOUTHbyPublicLand;andontheWestbylandclaimedbyH.Patete,containingan
areaof60hectaresmoreorless,nowunderTaxDec.29451inthe(sic)ofsaidVicenteVillaflor,the
wholeparcelofwhichthisparticularparcelisonlyapart,isassessedatP22,550.00undertheabovesaid
TaxDec.Number.
Thisdeedstates:
ThattheabovedescribedlandwassoldtothesaidVICENTEVILLAFLOR,xxxonJune22,1937,butno
formaldocumentwasthenexecuted,andsincethenuntilthepresenttime,thesaidVicenteVillaflorhas
beeninpossessionandoccupationof(thesame);(and)
Thattheabovedescribedpropertywasbeforethesale,ofmyexclusivepropertyhavinginheritedfrommy
longdeadparentsandmyownershiptoitandthatofmy[sic]lastedformorethanfifty(50)years,
possessingandoccupyingsamepeacefully,publiclyandcontinuouslywithoutinterruptionforthatlength
oftime.
AlsoonJanuary16,1940,ClaudioOtero,inaDeedofAbsoluteSale(exh.C)soldtoVillafloraparcelof
agriculturalland,containinganareaof24hectares,moreorless,andparticularlydescribedandbounded
asfollows:
Acertainlandplantedtocornwithvisibleconcretemeasurementsmarkingtheboundariesandbounded
ontheNorthbyPublicLandandTungaoCreek;ontheEastbyAgusanRiver;ontheSouthbySerafin
VillaflorandCiriloPiencenaves;andontheWestbylandofFerminBacobocontaininganareaof24
hectaresmoreorless,underTaxDeclarationNo.29451inthenamealreadyofVicenteVillaflor,the
wholeparcelofwhichthisparticularlandisonlyapart,isassessedatP22,550.00undertheabovesaid
TaxDeclarationNo.29451.
Thisdeedstates:
ThattheabovedescribedlandwassoldtothesaidVICENTEVILLAFLOR,xxxonJune22,1937,butno
sounddocumentwasthenexecuted,howeversincethenanduntilthepresenttime,thesaidVicente
Villaflorhasbeeninopenandcontinuouspossessionandoccupationofsaidland;(and)
Thattheabovedescribedlandwasbeforethesale,myownexclusiveproperty,beinginheritedfrommy
deceasedparents,andmyownershiptoitandthatofmypredecessorslastedmorethanfifty(50)years,
possessingandoccupyingthesame,peacefully,openlyandcontinuouslywithoutinterruptionforthat
lengthoftime.
LikewiseonJanuary16,1940,HermogenesPatete,inaDeedofAbsoluteSale(exh.D),soldtoVillaflor,
aparcelofagriculturalland,containinganareaof20hectares,moreorless,andparticularlydescribed
andboundedasfollows:
Acertainparcelofagriculturallandplantedtoabacaandcornwithvisibleconcretemonumentsmarking
theboundariesandboundedontheNorthbyPublicLandareaprivateRoad;ontheEastbylandclaimed
byCiriloPiencenaves;ontheSouthbyPublicLandcontaininganareaof20hectaresmoreorless,now
underTaxDeclarationNo.29451inthenameofVicenteVillaflorthewholeparcelofwhichthis
particularparcel,isassessedatP22,550.00forpurposesoftaxationundertheabovesaidTaxDeclaration
No.29451.
Thisdeedstates:

xxx(O)nJune22,1937buttheformaldocumentwasthenexecuted,andsincethenuntilthepresenttime,
thesaidVICENTEVILLAFLORhasbeenincontinuousandopenpossessionandoccupationofthe
same;(and)
Thattheabovedescribedpropertywasbeforethesale,myownandexclusiveproperty,beinginherited
frommydeceasedparentsandmyownershiptoitandthatofmypredecessorslastedmorethanfifty(50)
years,possessingandoccupyingsame,peacefully,openlyandcontinuouslywithoutinterruptionforthat
lengthoftime.
OnFebruary15,1940,FerminBocobo,inaDeedofAbsoluteSale(exh.B),soldtoVillaflor,aparcelof
agriculturalland,containinganareaof18hectares,moreorless,andparticularlydescribedandbounded
asfollows:
Acertainparcelofagriculturallandplantedwithabacawithvisiblepartmarkingthecornersandbounded
ontheNorthbythecornersandboundedontheNorthbyPublicLand;ontheEastbyCiriloPiencenaves;
ontheSouthbyHermogenesPateteandWestbyPublicLand,containinganareaof18hectaresmoreor
lessnowunderTaxDeclarationNo.29451inthenameofVicenteVillaflor.Thewholeparcelofwhich
thisparticularparcelisonlyapartisassessedasP22,550.00forpurposesoftaxationundertheabovesaid
TaxDeclarationNumber(DeedofAbsoluteSaleexecutedbyFerminBocobodateFeb.15,1940).This
documentwasannotatedinRegistryofDeedsonFebruary16,1940).
Thisdeedstates:
Thattheabovedescribedpropertywasbeforethesaleofmyownexclusiveproperty,beinginheritedfrom
mydeceasedparents,andmyownershiptoitandthatofmypredecessorslastedmorethanfifty(50)
years,possessingandoccupyingthesamepeacefully,openlyandcontinuouslywithoutinterruptionfor
thatlengthoftime.
OnNovember8,1946,Villaflor,inaLeaseAgreement(exh.Q), leasedtoNasipitLumberCo.,Inc.a
parcelofland,containinganareaoftwo(2)hectares,togetherwithalltheimprovementsexistingthereon,
foraperiodoffive(5)yearsfromJune1,1946atarentalofP200.00perannumtocovertheannualrental
ofhouseandbuildingsitesforthirtythree(33)housesorbuildings.Thisagreementalsoprovides:
[4]

[5]

3.Duringthetermofthislease,theLesseeisauthorizedandempoweredtobuildandconstructadditional
housesinadditiontothe33housesorbuildingsmentionedinthenextprecedingparagraph,provided
however,thatforeveryadditionalhouseorbuildingconstructedtheLesseeshallpayuntotheLessoran
amountoffiftycentavos(50)permonthforeveryhouseorbuilding.TheLesseeisempoweredand
authorizedbytheLessortosublot(sic)thepremisesherebyleasedorassignthesameoranyportionof
thelandherebyleasedtoanyperson,firmandcorporation;(and)
4.TheLesseeisherebyauthorizedtomakeanyconstructionand/orimprovementonthepremiseshereby
leasedashemaydeemnecessaryandproperthereon,providedhowever,thatanyandallsuch
improvementsshallbecomethepropertyoftheLessorupontheterminationofthisleasewithout
obligationonthepartofthelattertoreimbursetheLesseeforexpensesincurredintheconstructionofthe
same.
Villaflorclaimedhavingdiscoveredthataftertheexecutionoftheleaseagreement,thatNasipitLumberin
badfaithxxxsurreptitiouslygrabbedandoccupiedabigportionofplaintiffspropertyxxx;thataftera
confrontationwiththecorporates(sic)fieldmanager,thelatter,inaletterdatedDecember3,1973(exh.
R), statedrecallinghavingmadesomesortofagreementfortheoccupancy(ofthepropertyatAcacia,
SanMateo),butInolongerrecallthedetailsandIhadforgottenwhetherornotwedidoccupyyour
land.Butif,asyousay,wedidoccupyit,then(heis)surethatthecompanyisobligatedtopaytherental.
[6]

OnJuly7,1948,inanAgreementtoSell(exh.2),VillaflorconveyedtoNasipitLumber,two(2)parcels
oflandxxxdescribedasfollows:
[7]

PARCELONE

BoundedontheNorthbyPublicLandandTungaoCreek;ontheEastbyAgusanRiverandSerafin
Villaflor;ontheSouthbyPublicLand,ontheWestbyPublicLand.Improvementsthereonconsistof
abaca,fruittrees,coconutsandthirtyhousesofmixedmaterialsbelongingtotheNasipitLumber
Company.DividedintoLotNos.5412,5413,5488,5490,5491,5492,5850,5849,5860,5855,5851,
5854,5855,5859,5858,5857,5853,and5852.Boundariesofthisparceloflandaremarkedbyconcrete
monumentsoftheBureauofLands.Containinganareaof112,000hectares.AssessedatP17,160.00
accordingtoTaxDeclarationNo.V315datedApril14,1946.
PARCELTWO
BoundedontheNorthbyPagudasanCreek;ontheEastbyAgusanRiver;ontheSouthbyTungaoCreek;
ontheWestbyPublicLand.Containinganareaof48,000hectaresmoreorless.DividedintoLotNos.
5411,5410,5409,and5399.Improvements100coconuttrees,productive,and300cacao
trees.BoundariesofsaidlandaremarkedbyconcretemonumentsoftheBureaupf(sic)Lands.Assessed
valueP6,290.00accordingtoTaxNo.317,April14,1946.
ThisAgreementtoSellprovides:
3.Thatbeginningtoday,thePartyoftheSecondPartshallcontinuetooccupythepropertynotanymorein
conceptoflesseebutasprospectiveowners,itbeingthesenseofthepartiesheretothatthePartyofthe
SecondPartshallnotinanymannerbeunderanyobligationtomakeanycompensationtothePartyofthe
FirstPart,fortheuse,andoccupationofthepropertyhereinbeforedescribedinsuchconceptof
prospectiveowner,anditlikewisebeingthesenseofthepartiesheretototerminateastheydohereby
terminate,effectiveonthedateofthispresentinstrument,theContractofLease,otherwiseknownasDoc.
No.420,PageNo.36,BookNo.II,Seriesof1946ofNotaryPublicGabrielR.Banaag,oftheProvinceof
Agusan.
4.ThatthePartyoftheSecondParthasboundasitdoesherebybinditself,itsexecutorsand
administrators,topayuntothepartyoftheFirstPartthesumofFiveThousandPesos(P5,000.00),
PhilippineCurrency,uponpresentationbythelattertotheformerofsatisfactoryevidencethat:
(a)TheBureauofLandswillnothaveanyobjectiontotheobtainmentbythePartyoftheFirstPartofa
CertificateofTorrensTitleinhisfavor,eitherthruordinarylandregistrationproceedingsorthru
administrativemeansprocedure.
(b)Thatthereisnootherprivateclaimanttothepropertieshereinbeforedescribed.
5.ThatthePartyoftheFirstParthasboundashedoesherebybindtoundertakeimmediatelyafterthe
executionofthesepresentstosecureandobtain,orcausetobesecuredandobtained,aCertificateof
TorrensTitleinhisfavoroverthepropertiesdescribedonPage(One)hereof,andafterobtainmentofsuch
CertificateofTorrensTitle,thesaidPartyoftheFirstPartshallexecutea(D)eedofAbsoluteSaleunto
andinfavorofthePartyoftheSecondPart,itsexecutors,administratorsandassigns,itbeingthesenseof
thepartiesthatthePartyoftheSecondPartupondeliverytoitofsuchdeedofabsolutesale,shallpay
untothePartyoftheFirstPartincash,thesumofTwelveThousand(P12,000.00)PesosinPhilippine
Currency,provided,however,thatthePartyoftheFirstPart,shallbereimbursedbythePartyofthe
SecondPartwithonehalfoftheexpensesincurredbythePartyoftheFirstPartforsurveyandattorneys
fees;andotherincidentalexpensesnotexceedingP300.00.
OnDecember2,1948,VillaflorfiledSalesApplicationNo.V807 (exh.1)withtheBureauofLands,
Manila,topurchaseundertheprovisionsofChapterV,XIorIXofCommonwealthAct.No.141(The
PublicLandsAct),asamended,thetractofpubliclandsxxxanddescribedasfollows:NorthbyPublic
Land;EastbyAgusanRiverandSerafinVillaflor;SouthbyPublicLandandWestbypublicland(Lot
Nos.5379,5489,5412,5490,5491,5492,5849,5850,5851,5413,5488,5489,5852,5853,5854,5855,
5856,5857,5858,5859and5860xxxcontaininganareaof140hectaresxxx.Paragraph6ofthe
Application,states:Iunderstandthatthisapplicationconveysnorighttooccupythelandpriortoits
approval,andIrecognized(sic)thatthelandcoveredbythesameisofpublicdomainandanyandall
rightsImayhavewithrespecttheretobyvirtueofcontinuousoccupationandcultivationarehereby
relinquishedtotheGovernment. (exh.1D)
[8]

[9]

OnDecember7,1948,VillaflorandNasipitLumberexecutedanAgreement(exh3). Thiscontract
provides:
[10]

1.ThattheFirstPartyisthepossessorsince1930oftwo(2)parcelsoflandsituatedinsitioTungao,
BarrioofSanMateo,MunicipalityofButuan,ProvinceofAgusan;
2.ThatthefirstparceloflandabovementionedanddescribedinPlanPLS97filedintheofficeofthe
BureauofLandsismadeupofLotsNos.5412,5413,5488,5490,5491,5492,5849,5850,5851,5852,
5853,5854,5855,5856,5857,5858,5859and5860andthesecondparceloflandismadeofLotsNos.
5399,5409,5410and5411;
3.ThatonJuly7,1948,acontractofAgreementtoSellwasexecutedbetweenthecontractingparties
herein,coveringthesaidtwoparcelsofland,copyofsaidAgreementtoSellisheretoattachedmarkedas
AnnexAandmadeanintegralpartofthisdocument.ThepartiesheretoagreethatthesaidAgreementto
Sellbemaintainedinfullforceandeffectwithallitstermsandconditionsofthispresentagreementand
innowaybeconsideredasmodified.
4.Thatparagraph4oftheContractofAgreementtoSell,markedasannex,Astipulatesasfollows:
Par.4.ThatthePartyoftheSecondParthasboundasitdoesherebybinditself,itsexecutorsand
administrators,topayuntothePartyoftheFirstPartofthesumofFIVETHOUSANDPESOS
(P5,000.00)PhilippineCurrency,uponpresentationbythelattertotheformerofsatisfactoryevidence
that:
a)TheBureauofLandswillhaveanyobjectiontotheobtainmentbyPartyoftheFirstPartofafavor,
eitherthruordinarylandregistrationproceedingsorthruadministrativemeansandprocedure.
b)Thatthereisnootherprivateclaimanttothepropertieshereinabovedescribed.
ThattheFirstPartyhasonDecember2,1948,submittedtotheBureauofLands,aSalesApplicationfor
thetwentytwo(22)lotscomprisingthetwoabovementionedparcelsofland,thesaidSalesApplication
wasregisteredinthesaidBureauunderNo.V807;
6.ThatinreplytotherequestmadebytheFirstPartytotheBureauofLands,inconnectionwiththeSales
ApplicationNo.V807,thelatterinformedtheformerthatactiononhisrequestwillbeexpedited,asper
letteroftheChief,PublicLandDivision,datedDecember2,1948,copyofwhichisheretoattached
markedasannexBandmadeanintegralpartofthisagreement:
7.ThatforandinconsiderationofthepremisesabovestatedandtheamountofTWENTYFOUR
THOUSAND(P24,000.00)PESOSthattheSecondPartyshallpaytotheFirstParty,bythesepresents,
theFirstPartyherebysells,transfersandconveysuntotheSecondParty,itssuccessorsandassigns,his
right,interestandparticipationunderan(d)byvirtueoftheSalesApplicationNo.V807,whichhehasor
mayhaveinthelotsmentionedinsaidSalesApplicationNo.V807;
8.ThattheamountofTWENTYFOURTHOUSAND(P24,000.00)PESOS,shallbepaidbytheSecond
PartytotheFirstParty,asfollows:
a)TheamountofSEVENTHOUSAND(P7,000.00)PESOS,hasalreadybeenpaidbytheSecondParty
totheFirstPartyupontheexecutionoftheAgreementtoSell,onJuly7,1948;
b)TheamountofFIVETHOUSAND(P5,000.00)PESOSshallbepaiduponthesigningofthispresent
agreement;and
c)ThebalanceofTWELVETHOUSAND(P12,000.00)PESOS,shallbepaidupontheexecutionbythe
FirstPartyoftheAbsoluteDeedofSaleofthetwoparcelsoflandinquestioninfavoroftheSecond
Party,andupondeliverytotheSecondPartyoftheCertificateofOwnershipofthesaidtwoparcelsof
land.
9.ItisspeciallyunderstoodthatthemortgageconstitutedbytheFirstPartyinfavoroftheSecondParty,
asstatedinthesaidcontractofAgreementtoSelldatedJuly7,1948,shallcovernotonlytheamountof

SEVENTHOUSAND(P7,000.00)PESOSasspecifiedinsaiddocument,butshallalsocovertheamount
ofFIVETHOUSAND(P5,000.00)PESOStobepaidasstipulatedinparagraph8,subparagraph(b)of
thispresentagreement,iftheFirstPartyshouldfailtocomplywiththeobligationsasprovidedforin
paragraphs2,4,and5oftheAgreementtoSell;
10.ItisfurtheragreedthattheFirstPartyobligateshimselftosign,executeanddelivertoandinfavorof
theSecondParty,itssuccessorsandassigns,atanytimeupondemandbytheSecondPartysuchother
instrumentsasmaybenecessaryinordertogivefulleffecttothispresentagreement;
IntheReportdatedDecember31,1949bythepubliclandinspector,DistrictLandOffice,Bureauof
Lands,inButuan,thereportcontainsanIndorsementoftheaforesaidDistrictLandOfficerrecommending
rejectionoftheSalesApplicationofVillaflorforhavingleasedthepropertytoanotherevenbeforehehad
acquiredtransmissiblerightsthereto.
InaletterofVillaflordatedJanuary23,1950,addressedtotheBureauofLands,heinformedtheBureau
DirectorthathewasalreadyoccupyingthepropertywhentheBureausAgusanRiverValleySubdivision
Projectwasinaugurated,thatthepropertywasformerlyclaimedasprivateproperties(sic),andthat
therefore,thepropertywassegregatedorexcludedfromdispositionbecauseoftheclaimofprivate
ownership.InaletterofNasipitLumberdatedFebruary22,1950(exh.X) addressedtotheDirectorof
Lands,thecorporationinformedtheBureauthatitrecognizedVillaflorastherealowner,claimantand
occupantoftheland;thatsinceJune1946,Villaflorleasedtwo(2)hectaresinsidethelandtothe
company;thatithasnootherinterestontheland;andthattheSalesApplicationofVillaflorshouldbe
givenfavorableconsideration.
[11]

xxx xxx xxx

OnJuly24,1950,thescheduleddateofauctionofthepropertycoveredbytheSalesApplication,Nasipit
LumberofferedthehighestbidofP41.00perhectare,butsinceanapplicantunderCA141,isallowedto
equalthebidofthehighestbidder,Villaflortenderedanequalbid,depositedtheequivalentof10%ofthe
bidpriceandthenpaidtheassessmentinfull.
xxx xxx xxx
OnAugust16,1950,Villaflorexecutedadocument,denominatedasaDeedofRelinquishmentofRights
(exh.N), pertinentportionofwhichreads:
[12]

5.ThatinviewofmypresentbusinessinManila,andmychangeinresidencefromButuan,Agusantothe
CityofManila,Icannot,therefore,develope(sic)orcultivatethelandappliedforasprojectedbefore;
6.ThattheNasipitLumberCompany,Inc.,acorporationdulyorganizedxxxisverymuchinterestedin
acquiringthelandcoveredbytheaforecitedapplicationxxx;
7.ThatIbelievethesaidcompanyisqualifiedtoacquirepublicland,andhasthemeanstodevelop(sic)
theabovementionedland;
xxx xxx xxx
WHEREFORE,andinconsiderationoftheamountofFIVETHOUSANDPESOS(P5,000.00)tobe
reimbursedtomebytheaforementionedNasipitLumberCompany,Inc.,afteritsreceiptoftheorderof
award,thesaidamountrepresentingpartofthepurchasepriceofthelandaforesaid,thevalueofthe
improvementsIintroducedthereon,andtheexpensesincurredinthepublicationoftheNoticeofSale,I,
theapplicant,VicenteJ.Villaflor,herebyvoluntarilyrenounceandrelinquishwhateverrightsto,and
interestsIhaveinthelandcoveredbymyabovementionedapplicationinfavoroftheNasipitLumber
Company,Inc.
AlsoonAugust16,1950,NasipitLumberfiledaSalesApplicationoverthetwo(2)parcelsofland,
coveringanareaof140hectares,moreorless.ThisapplicationwasalsonumberedV807(exh.Y).
OnAugust17,1950theDirectorofLandsissuedanOrderofAward infavorofNasipitLumber
Company,Inc.,pertinentportionofwhichreads:
[13]

4.ThatattheauctionsaleofthelandheldonJuly24,1950thehighestbidreceivedwasthatofNasipit
LumberCompany,Inc.whichofferedP41.00perhectareorP5,740.00forthewholetract,whichbidwas
equaledbyapplicantVicenteJ.Villaflor,whodepositedtheamountofP574.00underOfficialReceipt
No.B1373826datedJuly24,1950whichisequivalentto10%ofthebid.Subsequently,thesaidxxx
VillaflorpaidtheamountofP5,160.00infullpaymentofthepurchasepriceoftheabovementionedland
andforsomereasonsstatedinaninstrumentofrelinquishmentdatedAugust16,1950,he(VicenteJ.
Villaflor)relinquishedhisrightstoandinterestinthesaidlandinfavoroftheNasipitLumberCompany,
Inc.whofiledthecorrespondingapplicationtherefore.
Inviewoftheforegoing,anditappearingthattheproceedingshadxxxwereinaccordancewithlawand
in[sic]existingregulations,thelandcoveredtherebyisherebyawardedtoNasipitLumberCompany,Inc.
atP41.00perhectareorP5,740.00forthewholetract.
ThisapplicationshouldbeenteredintherecordofthisOfficeasSalesEntryNo.V407.
ItisVillaflorsclaimthatheonlylearnedoftheOrderofAwardonJanuary16,1974,orafterhisarrivalto
thePhilippines,comingfromIndonesia,wherehestayedformorethanten(10)years;thathewentto
ButuanCityinthelatterpartof1973uponthecallofhisbrotherSerafinVillaflor,whowasthensickand
learnedthatNasipitLumber(had)failedandrefusedtopaytheagreedrentals,althoughhisbrotherwas
abletocollectduringtheearlyyears;andthatSerafindiedthreedaysafterhis(Vicentes)arrival,andso
noaccountingoftherentalscouldbemade;thatonNovember27,1973,VillaflorwrotealettertoMr.
G.E.C.MearsofNasipitLumber,remindinghimoftheirverbalagreementin1955xxxthatMr.Mearsin
aReplydatedDecember3,1973,appearstohavereferredthemattertoMr.Noriega,thecorporate
generalmanager,butthenewsetofcorporateofficersrefusedtorecognize(Villaflors)claim,forMr.
FlorencioTamesis,thegeneralmanagerofNasipitLumber,inaletterdatedFebruary19,1974,denied
VillaflorsitemizedclaimdatedJanuary5,1974(exh.V)tobewithoutvalidandlegalbasis.Inthat
5thJanuary,1974letter,VillaflorclaimedthetotalamountofP427,000.00xxx.
InaformalprotestdatedJanuary31,1974 whichVillaflorfiledwiththeBureauofLands,heprotested
theSalesApplicationofNasipitLumber,claimingthatthecompanyhasnotpaidhimP5,000.00as
providedintheDeedofRelinquishmentofRightsdatedAugust16,1950.
[14]

xxx xxx xxx

xxx(T)hatinaDecisiondatedAugust8,1977(exh.8),theDirectorofLandsfoundthatthepaymentof
theamountofP5,000.00intheDeedxxxandtheconsiderationintheAgreementtoSellwereduly
proven,andorderedthedismissalofVillaflorsprotestandgaveduecoursetotheSalesApplicationof
NasipitLumber.PertinentportionoftheDecisionpennedbyDirectorofLands,RamonCasanova,inthe
MatterofSPNo.V807(CV407)xxxreads:
xxx xxx xxx
Duringtheproceedings,Villaflorpresentedanotherclaimentirelydifferentfromhispreviousclaimthis
time,forrecoveryofrentalsinarrearsarisingfromasupposedcontractofleasebyVillafloraslessorin
favorofNasipitaslessee,andindemnityfordamagessupposedlycausedimprovementsonhisother
propertyxxxinthestaggeringamountofSeventeenMillion(P17,000,000.00)Pesos.Earlier,hehadalso
demandedfromNASIPITxxx(P427,000.00)xxxalsoasindemnityfordamagestoimprovements
supposedlycausedbyNASIPITonhisotherrealpropertyaswellasforreimbursementofrealtytaxes
allegedlypaidbyhimthereon.
xxx xxx xxx
ItwouldseemthatxxxVillaflorhassoughttoinjectsomanycollaterals,ifnotextraneousclaims,intothis
case.ItistheconsideredopinionofthisOfficethatanyclaimnotwithinthesphereorscopeofits
adjudicatoryauthorityasanadministrativeaswellasquasijudicialbodyoranyissuewhichseeksto
delveintothemeritsofincidentsclearlyoutsideoftheadministrativecompetenceofthisOfficetodecide
maynotbeentertained.

ThereisnomeritinthecontentionofVillaflorthatowingtoNasipitsfailuretopaytheamountofxxx
(P5,000.00)xxx(assumingthatNasipithadfailed)thedeedofrelinquishmentbecamenullandvoidfor
lackofconsideration.xxxx.
xxx xxx xxx
xxxTherecordsclearlyshow,however,thatsincetheexecutionofthedeedofrelinquishmentxxx
VillaflorhasalwaysconsideredandrecognizedNASIPITashavingthejuridicalpersonalitytoacquire
publiclandsforagriculturalpurposes.xxxx.
xxx xxx xxx
EventhisOfficehadnotfailedtorecognizethejuridicalpersonalityofNASIPITtoapplyforthepurchase
ofpubliclandsxxxwhenitawardedtoitthelandsorelinquishedbyVillaflor(OrderofAwarddated
August17,1950)andaccepteditsapplicationtherefor.Atanyrate,thequestionwhetheranapplicantis
qualifiedtoapplyfortheacquisitionofpubliclandsisamatterbetweentheapplicantandthisOfficeto
decideandwhichathirdpartylikeVillaflorhasnopersonalitytoquestionbeyondmerelycallingthe
attentionofthisOfficethereto.
xxx xxx xxx
Villaflorofferednoevidencetosupporthisclaimofnonpaymentbeyondhisownselfservingassertions
andexpressionsthathehadnotbeenpaidsaidamount.Asprotestantinthiscase,hehastheaffirmativeof
theissue.Heisobligedtoprovehisallegations,otherwisehisactionwillfail.For,itisawellsettled
principle()thatifplaintiffuponwhomreststheburdenofprovinghiscauseofactionfailstoshowina
satisfactorymannerthefactsuponwhichhebaseshisclaim,thedefendantisundernoobligationtoprove
hisexceptionsorspecialdefenses(Belenvs.Belen,13Phil.202;Mendozavs.Fulgencio,8Phil.243).
xxx xxx xxx
Consequently,Villaflorsclaimthathehadnotbeenpaidmustperforcefail.
Ontheotherhand,therearestrongandcompellingreasonstopresumethatVillaflorhadalreadybeen
paidtheamountofFiveThousand(P5,000.00)Pesos.
First,xxxWhatissurprising,however,isnotsomuchhisclaimsconsistingofgiganticamountsashis
havingforgottentoadduceevidencetoprovehisclaimofnonpaymentoftheFiveThousand(P5,000.00)
Pesosduringtheinvestigationproceedingswhenhehadallthetimeandopportunitytodoso.xxxThe
factthathedidnotadduceorevenattempttoadduceevidenceinsupportthereofshowseitherthathehad
noevidencetoofferxxxthatNASIPIThadalreadypaidhiminfact.WhatisworseisthatVillaflordid
notevenbothertocommandpayment,orallyorinwriting,oftheFiveThousand(P5,000.00)Pesoswhich
wassupposedtobeduehimsinceAugust17,1950,thedatewhentheorderofawardwasissuedto
Nasipit,andwhenhiscauseofactiontorecoverpaymenthadaccrued.Thefactthatheonlymadea
command(sic)forpaymentonJanuary31,1974,whenhefiledhisprotestortwentyfour(24)yearslater
isimmediatelynugatoryofhisclaimfornonpayment.
ButVillaflormaintainsthathehadnoknowledgeornoticethattheorderofawardhadalreadybeen
issuedtoNASIPITashehadgonetoIndonesiaandhehadbeenabsentfromthePhilippinesduringall
thosetwentyfour(24)years.Thisofcoursetaxescredulity.xxx.
Second,itshouldbeunderstoodthattheconditionthatNASIPITshouldreimburseVillaflortheamountof
FiveThousand(P5,000.00)Pesosuponitsreceiptoftheorderofawardwasfulfilledassaidawardwas
issuedtoNASIPITonAugust17,1950.Thesaiddeedofrelinquishmentwaspreparedandnotarizedin
ManilawithVillaflorandNASIPITsigningtheinstrumentalsoinManilaonAugust16,1950(p.77,
(sic)).Thefollowingdayorbarelyadayafterthat,oronAugust17,1950,theorderofawardwasissued
bythisOfficetoNASIPITalsoinManila.Now,consideringthatVillaflorispresumedtobemore
assiduousinfollowingupwiththeBureauofLandstheexpeditiousissuanceoftheorderofawardasthe
paymentoftheFiveThousand(P5,000.00)Pesos(consideration)woulddependontheissuanceofsaid
ordertoawardNASIPIT,woulditnotbereasonabletobelievethatVillaflorwasathandwhentheaward

wasissuedtoNASIPITonAugust17,1950,orbarelyadaywhich(sic)heexecutedthedeedof
relinquishmentonAugust16,1950,inManila?xxx.
Third,ontheotherhand,NASIPIThasinhispossessionasortoforderuponitself(thedeedof
relinquishmentwhereinhe(sic)obligateditselftoreimburseorpayVillaflorthexxxconsiderationofthe
relinquishmentuponitsreceiptoftheorderofaward)forthepaymentoftheaforesaidamountthe
momenttheorderofawardisissuedtoit.ItisreasonabletopresumethatNASIPIThaspaidtheFive
Thousand(P5,000.00)PesostoVillaflor.
Apersoninpossessionofanorderonhimselfforthepaymentofmoney,orthedeliveryofanything,has
paidthemoneyordeliveredthethingaccordingly.(Section5(k)B131RevisedRulesofCourt.
ItshouldbenotedthatNASIPITdidnotproducedirectevidenceasproofofitspaymentoftheFive
Thousand(P5,000.00)PesostoVillaflor.Nasipitsexplanationonthispointisfoundsatisfactory.
xxx(I)twasvirtuallyimpossibleforNASIPIT,afterthelapseoftheintervening24years,tobeableto
copeupwithalltherecordsnecessarytoshowthattheconsiderationforthedeedofrelinquishmenthad
beenfullypaid.ToexpectNASIPITtokeepintactallrecordspertinenttothetransactionforthewhole
quarterofacenturywouldbetorequirewhateventhelawdoesnot.Indeed,eventheapplicablelawitself
(Sec.337,NationalInternalRevenueCode)requiresthatallrecordsofcorporationsbepreservedforonly
amaximumoffiveyears.
NASIPITmaywellhaveaddedthatatanyratewhiletherearetransactionswheretheproperevidenceis
impossibleorextremelydifficulttoproduceafterthelapseoftimexxxthelawcreatespresumptionsof
regularityinfavorofsuchtransactions(20Am.Jur.232)sothatwhenthebasicfactisestablishedinan
actiontheexistenceofthepresumedfactmustbeassumedbyforceoflaw.(Rule13,UniformRulesof
Evidence;9Wigmore,Sec.2491).
AnentVillaflorsclaimthatthe140hectarelandrelinquishedandawardedtoNASIPITishisprivate
property,little(need)besaid.xxxxThetracksoflandreferredtothereinarenotidenticaltothelands
awardedtoNASIPIT.Evenintheassumptionthatthelandsmentionedinthedeedsoftransferarethe
sameasthe140hectareareaawardedtoNASIPIT,theirpurchasebyVillaflor(or)thelattersoccupation
ofthesamedidnotchangethecharacterofthelandfromthatofpubliclandtoaprivateproperty.The
provisionofthelawisspecificthatpubliclandscanonlybeacquiredinthemannerprovidedfortherein
andnototherwise(Sec.11,C.A.No.141,asamended).TherecordsshowthatVillaflorhadappliedfor
thepurchaseofthelandsinquestionwiththisOffice(SalesApplicationNo.V807)onDecember2,
1948.xxxxThereisaconditioninthesalesapplicationsignedbyVillaflortotheeffectthatherecognizes
thatthelandcoveredbythesameisofpublicdomainandanyandallrightshemayhavewithrespect
theretobyvirtueofcontinuousoccupationandcultivationarerelinquishedtotheGovernment(paragraph
6,SalesApplicationNo.V807xxx)ofwhichVillaflorisverymuchaware.ItalsoappearsthatVillaflor
hadpaidforthepublicationfeesappurtenanttothesaleoftheland.Heparticipatedinthepublicauction
wherehewasdeclaredthesuccessfulbidder.Hehadfullypaidthepurchaseprive(sic)thereof(sic).It
wouldbea(sic)heightofabsurdityforVillaflortobebuyingthatwhichisownedbyhimifhisclaimof
privateownershipthereofistobebelieved.Themostthatcanbesaidisthathispossessionwasmerely
thatofasalesapplicanttowhenithadnotbeenawardedbecauseherelinquishedhisinterestthereinin
favorofNASIPITwho(sic)filedasalesapplicationtherefor.
xxx xxx xxx
xxxDuringtheinvestigationproceedings,VillaflorpresentedashisExhibit(sic)(whichNASIPIT
adoptedasitsownexhibitandhaditmarkedinevidenceasExhibit1)adulynotarizedagreementtoSell
datedJuly7,1948,byvirtueofwhichVillaflorundertooktoselltoNasipitthetractsoflandmentioned
therein,foraconsiderationofTwentyFourThousand(P24,000.00)Pesos.Saidtractsoflandhavebeen
verifiedtobeidenticaltotheparcelsoflandformerlyappliedforbyVillaflorandwhichthelatterhad
relinquishedinfavorofNASIPITunderadeedofrelinquishmentexecutedbyhimonAugust16,1950.In
anotherdocumentexecutedonDecember7,1948xxxVillaflorasFIRSTPARTYandNASIPITas
SECONDPARTYconfirmedtheAgreementtoSellofJuly7,1948,whichwasmaintainedinfullforce
andeffectwithallitstermsandconditionsxxx(Exh.38A);andthatforandinconsiderationofxxx
TWENTYFOURTHOUSAND(P24,000.00)PESOSthattheSecondPartyshallpaytotheFirstParty

xxxtheFirstPartyherebysells,transfersandconveysuntotheSecondPartyxxxhisrightinterestand
participationunderandbyvirtueoftheSalesApplicationNo.V807and,initsparagraph8,itmade
stipulationsastowhenpartofthesaidconsiderationxxxwaspaidandwhenthebalancewastobepaid,
towit:
a)theamountofSEVENTHOUSANDxxxPESOShasalreadybeenpaidbytheSecondPartytotheFirst
PartyupontheexecutionoftheAgreementtoSell,onJuly17,1948;
b)theamountofFIVETHOUSANDxxxPESOSshallbepaiduponthesigningofthispresent
agreement;and
c)theamountofTWELVETHOUSANDxxxPESOS,shallbepaidupontheexecutionbytheFirstParty
oftheAbsoluteSaleoftheTwoparcelsoflandinquestioninfavoroftheSecondPartyoftheCertificate
ofOwnershipofthesaidtwoparcelsofland.(Exh.38B).(Emphasisours)
ItisthusclearfromthissubsequentdocumentmarkedExhibit38ANALCOthatoftheconsiderationof
theAgreementtoSelldatedJuly7,1948,involvingthe140hectarearearelinquishedbyVillaflorinfavor
ofNASIPIT,intheamountofTwentyFourThousand(P24,000.00)Pesos:
(1)theamountofSevenThousand(P7,000.00)Pesoswasalreadypaidupontheexecutionofthe
AgreementtoSellonJuly7,1948,receiptofwhichincidentallywasadmittedbyVillaflorinthe
documentofDecember7,1948;
(2)theamountofFiveThousand(P5,000.00)PesoswaspaidwhensaiddocumentwassignedbyVicente
J.VillaflorastheFirstPartyandNasipitthruitsPresident,astheSecondParty,onDecember7,1948;and
(3)thebalanceofTwelveThousand(P12,000.00)PesostobepaidupontheexecutionbytheFirstParty
oftheAbsoluteDeedofSaleofthetwoparcelsoflandinfavoroftheSecondParty,andupondeliveryto
theSecondPartyoftheCertificateofOwnershipofthesaidtwoparcelsofland.
VillaflorcontendsthatNASIPITcouldnothavepaidVillaflorthebalanceofTwelveThousand
(P12,000.00)PesosxxxconsiderationintheAgreementtoSellwillonlybepaidtoapplicantassignor
(referringtoVillaflor)uponobtainingaTorrensTitleinhisfavoroverthe140hectareoflandappliedfor
anduponexecutionbyhimofaDeedofAbsoluteSaleinfavorofNasipitLumberCompany,Inc.xx
x.InasmuchasapplicantassignorwasnotabletoobtainaTorrensTitleoverthelandinquestionhecould
notexecuteanabsoluteDeedof(sic)NasipitLumberCo.,Inc.Hence,theAgreementtoSellwasnot
carriedoutandnoTwelveThousand(P12,000.00)Pesoswasoverpaideithertotheapplicantassignor,
muchlesstoHowardJ.NellCompany.(SeeMEMORANDUMFORTHEAPPLICANTASSIGNOR,
datedJanuary5,1977).xxx.
xxxVillaflordidnotadduceevidenceinsupportofhisclaimthathehadnotbeenpaidthexxx
(P12,000.00)xxxconsiderationoftheAgreementtoSelldatedJuly7,1948(Exh.38NALCO)beyondhis
mereuncorroboratedassertions.Ontheotherhand,thereisstrongevidencetoshowthatsaidTwelve
Thousand(P12,000.00)Pesoshadbeenpaidby(privaterespondent)toEdwardJ.NellCompanybyvirtue
oftheDeedofAssignmentofCreditexecutedbyVillaflor(Exh.41NALCO)forthecreditofthelatter.
Atty.GabrielBanaag,residentcounselofNASIPITwhoisinapositiontoknowthefacts,testifiedfor
NASIPIT.HedescribedthatitwashewhonotarizedtheAgreementtoSell(Exh.F);thatheknewabout
theexecutionofthedocumentofDecember7,1948(Exh.38)confirmingthesaidAgreementtoSell
havingbeenpreviouslyconsultedthereonbyJoseFernandez,whosignedsaiddocumentonbehalfof
NASIPITxxxthatsubsequently,inJanuary1949,VillaflorexecutedaDeedofAssignmentofcreditin
favorofEdwardJ.NellCompany(Exh.41NALCO)wherebyVillaflorcededtothelatterhisreceivable
forNASIPITcorrespondingtotheremainingbalanceintheamountofTwelveThousandxxxPesosofthe
totalconsiderationxxxstipulatedinboththeAgreementtoSell(Exh.F)andthedocumentdated
December7,1948(Exh.39);xxx.Hefurthertestifiedthatthesaidassignmentofcreditwas
communicatedto(privaterespondent)undercoverletterdatedJanuary24,1949(Exh.41A)andnotlong
thereafter,byvirtueofthesaidassignmentofcredit,(privaterespondent)paidthebalanceofTwelve
ThousandxxxduetoVillaflortoEdwardJ.NellCompanyxxx.Atty.Banaagsaforesaidtestimonystand
unrebutted;hence,mustbegivenfullweightandcredit.xxxVillaflorandhiscounselwerepresentwhen

Atty.Banaagsforegoingtestimonywasgiven.Yet,Villaflordidnotdemur,nordidherebutthesame,
despitehavingbeenaccordedfullopportunitytodoso.
xxx xxx xxx
HavingfoundthatboththeFiveThousandxxxconsiderationofthedeedofRelinquishmentxxxandthat
theremainingbalanceofxxx(P12,000.00)tocompletetheTwentyFourThousand(P24,000.00)Pesos
considerationofboththeAgreementtoSelldatedJuly7,1948,andthedocument,datedDecember7,
1948,executedbytheformerinfavorofthelatter,havebeenpaidVillaflortheissueonprescriptionand
lachesbecomesacademicandneedsnofurtherdiscussion.
Butmorethanallthequestionsthusfarraisedandresolvedisthequestionwhetherasalespatentcanbe
issuedtoNASIPITforthe140hectareareaawardedtoitinthelightofSection11,ArticleXIVofthe
newConstitutionwhichprovidesinitspertinentportiontowit:
xxxNoprivatecorporationorassociationmayholdalienablelandofthepublicdomainexceptbylease
nottoexceedonethousandhectaresinareaxxx.
TheSecretaryofJusticehadpreviousoccasiontoruleonthispointinhisopinionNo.140,s.1974.Said
theHonorableJusticeSecretary:
Onthesecondquestion,(referringtothequestionswhenmayapubliclandbeconsideredtohavebeen
acquiredbypurchasebeforetheeffectivityofthenewConstitutionposedbytheDirectorofLandsinhis
queryontheeffectonpendingapplicationsfortheissuanceofsalespatentinthelightofSection11,Art.
XIVoftheNewConstitutionaforecited),yourefertothisOfficesOpinionNo.64seriesof1973inwhich
Istated:
Ontheotherhand,withrespecttosalesapplicationsreadyforissuanceofsalespatent,itismyopinion
thatwheretheapplicanthad,beforetheConstitutiontookeffect,fullycompliedwithallthisobligations
underthePublicLandActinordertoentitlehimtoaSalespatent,therewouldbenolegalorequitable
justificationforrefusingtoissueorreleasethesalespatent.
WithrespecttothepointastowhentheSalesapplicanthascompliedwithallthetermsandconditions
whichwouldentitlehimtoasalespatent,thehereinaboveSecretaryofJusticewenton:
Thatastowhentheapplicanthascompliedwithallthetermsandconditionswhichwouldentitlehimtoa
patentisaquestioned(sic)factwhichyourofficewouldbeinthebestpositiontodetermine.However,
relatingthistotheprocedurefortheprocessingofapplicationsmentionedabove,Ithinkthatas
theapplicanthasfulfilledtheconstruction/cultivationrequirementsandhasfullypaidthepurchaseprice,
heshouldbedeemedtohaveacquiredbypurchasetheparticulartractoflandand(sic)thearea(sic)inthe
provisioninquestionofthenewconstitutionwouldnotapply.
FromthedecisionoftheDirectorofLands,VillaflorfiledaMotionforReconsiderationwhichwas
consideredasanAppealM.N.R.Case4341,totheMinistryofNaturalResources.
OnJune6,1979,theMinisterofNaturalResourcesrenderedaDecision(exh.9), dismissingtheappeal
andaffirmingthedecisionoftheDirectorofLands,pertinentportionsofwhichreads:
[15]

Afteracarefulstudyoftherecordsandtheargumentsoftheparties,webelievethattheappealisnotwell
taken.
Firstly,theareaindisputeisnottheprivatepropertyofappellant.
Theevidenceadducedbyappellanttoestablishhisclaimofownershipoverthesubjectareaconsistsof
deedsofabsolutesaleexecutedinhisfavoronJanuary16,andFebruary15,1940,byfour(4)different
persons,namely,CiriloPiencenaves,FerminBalobo,ClaudioOteroandHermogenesPatete.
However,anexaminationofthetechnicaldescriptionsofthetractsoflandsubjectofthedeedsofsale
willdisclosethatsaidparcelsarenotidenticalto,anddonottallywith,theareaincontroversy.

Itisabasicassumptionofourpolicythatlandsofwhateverclassificationbelongtothestate.Unless
alienatedinaccordancewithlaw,itretainsitsrightsoverthesameasdominus,(Santiagovs.delos
Santos,L20241,November22,1974,61SCRA152).
For,itiswellsettledthatnopubliclandcanbeacquiredbyprivatepersonswithoutanygrant,expressor
impliedfromthegovernment.Itisindispensablethenthattherebeshowingoftitlefromthestateorany
othermodeofacquisitionrecognizedbylaw.(LeeHongHok,etal.vs.David,etal.,L30389,December
27,1972,48SCRA379.)
Itiswellsettledthatalllandsremainpartofthepublicdomainunlessseveredtherefrombystategrantor
unlessalienatedinaccordancewithlaw.
We,therefore,believethattheaforesaiddeedsofsaledonotconstituteclearandconvincingevidenceto
establishthatthecontestedareaisofprivateownership.Hence,thepropertymustbeheldtobepublic
domain.
Therebeingnoevidencewhateverthatthepropertyinquestionwaseveracquiredbytheapplicantsor
theirancestorseitherbycompositiontitlefromtheSpanishGovernmentorbypossessoryinformationtitle
orbyanyothermeansfortheacquisitionofpubliclands,thepropertymustbeheldtobepublic
domain.(LeeHongHok,etal.,vs.David,etal.,L30389December27,1972,48SCRA378379citing
HeirsofDatuPendatunvs.DirectorofLands;seealsoDirectorofLandsvs.Reyes,L27594,November
28,1975,68SCRA177).
Bethatasitmay,appellant,byfilingasalesapplicationoverthecontrovertedland,acknowledged
unequivocably[sic]thatthesameisnothisprivateproperty.
Assuchsalesapplicant,appellantmanifestlyacknowledgedthathedoesnotownthelandandthatthe
sameisapubliclandundertheadministrationoftheBureauofLands,towhichtheapplicationwas
submitted,xxxAllofitsactspriorthereof,includingitsrealestatetaxdeclarations,characterizedits
possessionsofthelandasthatofasalesapplicantandconsequently,asonewhoexpectstobuyit,buthas
notasyetdoneso,andisnot,therefore,itsowner.(PalawanAgriculturalandIndustrialCo.,Inc.vs.
DirectorofLands,L25914,March21,1972,44SCRA20,21).
Secondly,appellantsallegedfailuretopaytheconsiderationstipulatedinthedeedofrelinquishment
neitherconvertssaiddeedintoonewithoutacauseorconsiderationnoripsofactorescindsthe
same.Appellant,though,hastherighttodemandpaymentwithlegalinterestforthedelayortodemand
rescission.
xxx xxx xxx
However,appellantscauseofaction,eitherforspecificperformanceorrescissionofcontract,with
damages,lieswithinthejurisdictionofcivilcourts,notwithadministrativebodies.
xxx xxx xxx
Lastly,appelleehasacquiredavestedrighttothesubjectareaand,therefore,isdeemednotaffectedby
thenewconstitutionalprovisionthatnoprivatecorporationmayholdalienablelandofthepublicdomain
exceptbylease.
xxx xxx xxx
ImplementingtheaforesaidOpinionNo.64oftheSecretaryofJustice,thethenSecretaryofAgriculture
andNaturalResourcesissuedamemorandum,datedFebruary18,1974,whichpertinentlyreadsas
follows:
Intheimplementationoftheforegoingopinion,salesapplicationofprivateindividualscoveringareasin
excessof24hectaresandthoseofcorporations,associations,orpartnershipwhichfallunderanyofthe
followingcategoriesshallbegivenduecourseandissuedpatents,towit:

1.Salesapplicationforfishpondsandforagriculturalpurposes(SFA,SAandIGPSA)whereinpriorto
January17,1973;
a.thelandcoveredtherebywasawarded;
b.cultivationrequirementsoflawwerecompliedwithasshownbyinvestigationreportssubmittedprior
toJanuary17,1973;
c.landwassurveyedandsurveyreturnsalreadysubmittedtotheDirectorofLandsforverificationand
approval;and
d.purchasepricewasfullypaid.
Fromtherecords,itisevidentthattheaforestatedrequisiteshavebeencompliedwithbyappelleelong
beforeJanuary17,1973,theeffectivityoftheNewConstitution.Torestate,thedisputedareawas
awardedtoappelleeonAugust17,1950,thepurchasepricewasfullypaidonJuly26,1951,the
cultivationrequirementswerecompliedwithasperinvestigationreportdatedDecember31,1949,andthe
landwassurveyedunderPls97.
On July 6, 1978, petitioner filed a complaint in the trial court for Declaration of Nullity of
Contract (Deed of Relinquishment of Rights), Recovery of Possession (of two parcels of land
subject of the contract), and Damages at about the same time that he appealed the decision of
the Minister of Natural Resources to the Office of the President.
[16]

On January 28, 1983, petitioner died. The trial court ordered his widow, Lourdes D. Villaflor,
to be substituted as petitioner. After trial in due course, the then Court of First Instance of
Agusan del Norte and Butuan City, Branch III, dismissed the complaint on the grounds that: (1)
petitioner admitted the due execution and genuineness of the contract and was estopped from
proving its nullity, (2) the verbal lease agreements were unenforceable under Article 1403 (2)(e)
of the Civil Code, and (3) his causes of action were barred by extinctive prescription and/or
laches. It ruled that there was prescription and/or laches because the alleged verbal lease
ended in 1966, but the action was filed only on January 6, 1978. The six-year period within
which to file an action on an oral contract per Article 1145 (1) of the Civil Code expired in
1972. The decretal portion of the trial courts decision reads:
[17]

[18]

WHEREFORE,theforegoingpremisesdulyconsidered,judgmentisherebyrenderedinfavorofthe
defendantandagainsttheplaintiff.Consequently,thiscaseisherebyorderedDISMISSED.Thedefendant
isherebydeclaredthelawfulactualphysicalpossessoroccupantandhavingabetterrightofpossession
overthetwo(2)parcelsoflandinlitigationdescribedinpar.1.2ofthecomplaintasParcelIandParcelII,
containingatotalareaofOneHundredSixty(160)hectares,andwasthenthesubjectoftheSales
ApplicationNo.V807oftheplaintiff(Exhibits1,1A,1B,pp.421to421A,Record),andnowofthe
SalesApplicationNo.807,EntryNo.V407ofthedefendantNasipitLumberCompany(ExhibitY,pp.
357358,Record).TheAgreementstoSellRealRights,Exhibits2to2C,3to3B,andtheDeedof
RelinquishmentofRights,ExhibitsNtoN1,overthetwoparcelsoflandinlitigationareherebydeclared
bindingbetweentheplaintiffandthedefendant,theirsuccessorsandassigns.
Doublethecostsagainsttheplaintiff.
The heirs of petitioner appealed to Respondent Court of Appeals which, however, rendered
judgment against petitioner via the assailed Decision dated September 27, 1990 finding
petitioners prayers -- (1) for the declaration of nullity of the deed of relinquishment, (2) for the
eviction of private respondent from the property and (3) for the declaration ofpetitioners heirs as
owners to be without basis. The decretal portion of the assailed 49-page, single-spaced
Decision curtly reads:
[19]

[20]

WHEREFORE,theDecisionappealedfrom,isherebyAFFIRMED,withcostsagainstplaintiff
appellants.
Not satisfied, petitioners heirs filed the instant 57-page petition for review dated December 7,
1990. In a Resolution dated June 23, 1991, the Court denied this petition for being late. On
reconsideration -- upon plea of counsel that petitioners were poor and that a full decision on the

merits should be rendered -- the Court reinstated the petition and required comment from private
respondent. Eventually, the petition was granted due course and the parties thus filed their
respective memoranda.
The Issues
Petitioner, through his heirs, attributes the following errors to the Court of Appeals:
I.ArethefindingsoftheCourtofAppealsconclusiveandbindingupontheSupremeCourt?
II.ArethefindingsoftheCourtofAppealsfortifiedbythesimilarfindingsmadebytheDirectorofLands
andtheMinisterofNaturalResources(aswellasbytheOfficeofthePresident)?
III.Wasthereforumshopping?
IV.ArethefindingsoffactsoftheCourtofAppealsandthetrialcourtsupportedbytheevidenceandthe
law?
V.ArethefindingsoftheCourtofAppealssupportedbytheverytermsofthecontractswhichwereunder
considerationbythesaidcourt?
VI.DidtheCourtofAppeals,inconstruingthesubjectcontracts,considerthecontemporaneousand
subsequentactofthepartiespursuanttoarticle1371oftheCivilCode?
VII.DidtheCourtofAppealsconsiderthefactandtheunrefutedclaimofVillaflorthatheneverknewof
theawardinfavorofNasipit?
VIII.DidtheCourtofAppealscorrectlyapplytherulesonevidenceinitsfindingsthatVillaflorwaspaid
theP5,000.00considerationbecauseVillaflordidnotadduceanyproofthathewasnotpaid?
IX.IstheCourtofAppealsconclusionthatthecontractisnotsimulatedorfictitioussimplybecauseitis
genuineanddulyexecutedbytheparties,supportedbylogicorthelaw?
X.Maytheprestationsinacontractagreeingtotransfercertainrightsconstituteestoppelwhenthisvery
contractisthesubjectofanactionforannulmentonthegroundthatitisfictitious?
XI.IstheCourtofAppealsconclusionthattheleaseagreementbetweenVillaflorisverbalandtherefore,
unenforceablesupportedbytheevidenceandthelaw?
After a review of the various submissions of the parties, particularly those of petitioner, this
Court believes and holds that the issues can be condensed into three as follows:
(1)DidtheCourtofAppealserrinadoptingorrelyingonthefactualfindingsoftheBureauofLands,
especiallythoseaffirmedbytheMinister(nowSecretary)ofNaturalResourcesandthetrialcourt?
(2)DidtheCourtofAppealserrinupholdingthevalidityofthecontractstosellandthedeedof
relinquishment?Otherwisestated,didtheCourtofAppealserrinfindingthedeedofrelinquishmentof
rightsandthecontractstosellvalid,andnotsimulatedorfictitious?
(3)Istheprivaterespondentqualifiedtoacquiretitleoverthedisputedproperty?
The Courts Ruling
The petition is bereft of merit. It basically questions the sufficiency of the evidence relied
upon by the Court of Appeals, alleging that public respondents factual findings were based on
speculations, surmises and conjectures. Petitioner insists that a review of those findings is in
order because they were allegedly (1) rooted, not on specific evidence, but on conclusions and
inferences of the Director of Lands which were, in turn, based on misapprehension of the

applicable law on simulated contracts; (2) arrived at whimsically -- totally ignoring the substantial
and admitted fact that petitioner was not notified of the award in favor of private respondent; and
(3) grounded on errors and misapprehensions, particularly those relating to the identity of the
disputed area.
First Issue: Primary Jurisdiction of the Director of Lands and Finality of Factual Findings
of the Court of Appeals
Underlying the rulings of the trial and appellate courts is the doctrine of primary
jurisdiction; i.e., courts cannot and will not resolve a controversy involving a question which is
within the jurisdiction of an administrative tribunal, especially where the question demands the
exercise of sound administrative discretion requiring the special knowledge, experience and
services of the administrative tribunal to determine technical and intricate matters of fact.
[21]

In recent years, it has been the jurisprudential trend to apply this doctrine to cases involving
matters that demand the special competence of administrative agencies even if the question
involved is also judicial in character. It applies where a claim is originally cognizable in the
courts, and comes into play whenever enforcement of the claim requires the resolution of issues
which, under a regulatory scheme, have been placed within the special competence of an
administrative body; in such case, the judicial process is suspended pending referral of such
issues to the administrative body for its view.
[22]

In cases where the doctrine of primary jurisdiction is clearly applicable, the court cannot
arrogate unto itself the authority to resolve a controversy, the jurisdiction over which is initially
lodged with an administrative body of special competence. In Machete vs. Court of Appeals,
the Court upheld the primary jurisdiction of the Department of Agrarian Reform Adjudicatory
Board (DARAB) in an agrarian dispute over the payment of back rentals under a leasehold
contract. In Concerned Officials of the Metropolitan Waterworks and Sewerage System vs.
Vasquez, the Court recognized that the MWSS was in the best position to evaluate and to
decide which bid for a waterworks project was compatible with its development plan.
[23]

[24]

[25]

The rationale underlying the doctrine of primary jurisdiction finds application in this case,
since the questions on the identity of the land in dispute and the factual qualification of private
respondent as an awardee of a sales application require a technical determination by the
Bureau of Lands as the administrative agency with the expertise to determine such
matters. Because these issues preclude prior judicial determination, it behooves the courts to
stand aside even when they apparently have statutory power to proceed, in recognition of the
primary jurisdiction of the administrative agency.
[26]

Onethrustofthemultiplicationofadministrativeagenciesisthattheinterpretationofcontractsandthe
determinationofprivaterightsthereunderisnolongerauniquelyjudicialfunction,exercisableonlyby
ourregularcourts
[27]

Petitioner initiated his action with a protest before the Bureau of Lands and followed it
through in the Ministry of Natural Resources and thereafter in the Office of the
President.Consistent with the doctrine of primary jurisdiction, the trial and the appellate courts
had reason to rely on the findings of these specialized administrative bodies.
The primary jurisdiction of the director of lands and the minister of natural resources over the
issues regarding the identity of the disputed land and the qualification of an awardee of a sales
patent is established by Sections 3 and 4 of Commonwealth Act No. 141, also known as the
Public Land Act:
Section3.TheSecretaryofAgricultureandCommerce(nowSecretaryofNaturalResources)shallbethe
executiveofficerchargedwithcarryingouttheprovisionsofthisActthroughtheDirectorofLands,who
shallactunderhisimmediatecontrol.
Section4.Subjecttosaidcontrol,theDirectorofLandsshallhavedirectexecutivecontrolofthesurvey,
classification,lease,saleoranyotherformofconcessionordispositionandmanagementofthelandsof
thepublicdomain,andhisdecisionastoquestionsoffactshallbeconclusivewhenapprovedbythe
SecretaryofAgricultureandCommerce.

Thus, the Director of Lands, in his decision, said:

[28]

xxxItismerelywhetherornotVillaflorhasbeenpaidtheFiveThousand(P5,000.00)Pesosstipulated
considerationofthedeedofrelinquishmentmadebyhimwithouttouchingonthenatureofthedeedof
relinquishment.TheadministrationanddispositionofpubliclandsisprimarilyvestedintheDirectorof
LandsandultimatelywiththeSecretaryofAgricultureandNaturalResources(nowSecretaryofNatural
Resources),andtothisend
OurSupremeCourthasrecognizedthattheDirectorofLandsisaquasijudicialofficerwhopasseson
issuesofmixedfactsandlaw(Ortuavs.BingsonEncarnacion,59Phil440).Sections3and4ofthe
PublicLandLawthusmeanthattheSecretaryofAgricultureandNaturalResourcesshallbethefinal
arbiteronquestionsoffactinpubliclandconflicts(HeirsofVarelavs.Aquino,71Phil69;Julianvs.
Apostol,52Phil442).
TherulingofthisOfficeinitsorderdatedSeptember10,1975,isworthreiterating,thus:
xxxitisouropinionthatintheexerciseofhispowerofexecutivecontrol,administrativedispositionand
allegationofpublicland,theDirectorofLandsshouldentertaintheprotestofVillaflorandconduct
formalinvestigationxxxtodeterminethefollowingpoints:(a)whetherornottheNasipitLumber
Company,Inc.paidorreimbursedtoVillaflortheconsiderationoftherightsintheamountofP5,000.00
andwhatevidencethecompanyhastoprovepayment,therelinquishmentofrightsbeingpartofthe
administrativeprocessinthedispositionofthelandinquestionxxx.
xxxxBesides,theauthorityoftheDirectorofLandstopassuponanddeterminequestionsconsidered
inherentinoressentialtotheefficientexerciseofhispowersliketheincidentatissue,i.e.,whether
Villaflorhadbeenpaidornot,isconcededbylaw.
Reliance by the trial and the appellate courts on the factual findings of the Director of Lands
and the Minister of Natural Resources is not misplaced. By reason of the special knowledge and
expertise of said administrative agencies over matters falling under their jurisdiction, they are in
a better position to pass judgment thereon; thus, their findings of fact in that regard are generally
accorded great respect, if not finality, by the courts. The findings of fact of an administrative
agency must be respected as long as they are supported by substantial evidence, even if such
evidence might not be overwhelming or even preponderant. It is not the task of an appellate
court to weigh once more the evidence submitted before the administrative body and to
substitute its own judgment for that of the administrative agency in respect of sufficiency of
evidence.
[29]

[30]

[31]

However, the rule that factual findings of an administrative agency are accorded respect and
even finality by courts admits of exceptions. This is true also in assessing factual findings of
lower courts. It is incumbent on the petitioner to show that the resolution of the factual issues
by the administrative agency and/or by the trial court falls under any of the
exceptions. Otherwise, this Court will not disturb such findings.
[32]

[33]

We mention and quote extensively from the rulings of the Bureau of Lands and the Minister
of Natural Resources because the points, questions and issues raised by petitioner before the
trial court, the appellate court and now before this Court are basically the same as those brought
up before the aforesaid specialized administrative agencies. As held by the Court of Appeals:
[34]

Wefindthatthecontentiouspointsraisedbyappellantinthisaction,aresubstantiallythesamemattershe
raisedinBLClaimNo.873(N).Inbothactions,heclaimedprivateownershipoverthelandinquestion,
assailedthevalidityandeffectivenessoftheDeedofRelinquishmentofRightsheexecutedinAugust16,
1950,thathehadnotbeenpaidtheP5,000.00consideration,thevalueoftheimprovementsheintroduced
onthelandandotherexpensesincurredbyhim.
In this instance, both the principle of primary jurisdiction of administrative agencies and the
doctrine of finality of factual findings of the trial courts, particularly when affirmed by the Court of
Appeals as in this case, militate against petitioners cause. Indeed, petitioner has not given us
sufficient reason to deviate from them.

Land in Dispute Is Public Land

Petitioner argues that even if the technical description in the deeds of sale and those in the
sales application were not identical, the area in dispute remains his private property. He alleges
that the deeds did not contain any technical description, as they were executed prior to the
survey conducted by the Bureau of Lands; thus, the properties sold were merely described by
reference to natural boundaries. His private ownership thereof was also allegedly attested to by
private respondents former field manager in the latters February 22, 1950 letter, which contained
an admission that the land leased by private respondent was covered by the sales application.
This contention is specious. The lack of technical description did not prove that the finding of
the Director of Lands lacked substantial evidence. Here, the issue is not so much whether the
subject land is identical with the property purchased by petitioner. The issue, rather, is whether
the land covered by the sales application is private or public land. In his sales application,
petitioner expressly admitted that said property was public land. This is formidable evidence as it
amounts to an admission against interest.
In the exercise of his primary jurisdiction over the issue, Director of Lands Casanova ruled
that the land was public:
[35]

xxxEven(o)ntheassumptionthatthelandsmentionedinthedeedsoftransferarethesameasthe140
hectareareaawardedtoNasipit,theirpurchasebyVillaflor(or)thelattersoccupationofthesamedidnot
changethecharacterofthelandfromthatofpubliclandtoaprivateproperty.Theprovisionofthelawis
specificthatpubliclandscanonlybeacquiredinthemannerprovidedforthereinandnototherwise(Sec.
11,C.A.No.141,asamended).TherecordsshowthatVillaflorhadappliedforthepurchaseoflandsin
questionwiththisOffice(SalesApplicationNo.V807)onDecember2,1948.xxxThereisaconditionin
thesalesapplicationxxxtotheeffectthatherecognizesthatthelandcoveredbythesameisofpublic
domainandanyandallrightshemayhavewithrespecttheretobyvirtueofcontinuousoccupationand
cultivationarerelinquishedtotheGovernment(paragraph6,SalesApplicationNo.V807ofVicenteJ.
Villaflor,p.21,carpeta)ofwhichVillaflorisverymuchaware.ItalsoappearsthatVillaflorhadpaidfor
thepublicationfeesappurtenanttothesaleoftheland.Heparticipatedinthepublicauctionwherehewas
declaredthesuccessfulbidder.Hehadfullypaidthepurchaseprive(sic)thereor(sic).Itwouldbea(sic)
heightofabsurdityforVillaflortobebuyingthatwhichisownedbyhimifhisclaimofprivateownership
thereofistobebelieved.xxx.
This finding was affirmed by the Minister of Natural Resources:

[36]

Firstly,theareaindisputeisnottheprivatepropertyofappellant(hereinpetitioner).
Theevidenceadducedby(petitioner)toestablishhisclaimofownershipoverthesubjectareaconsistsof
deedsofabsolutesaleexecutedinhisfavorxxx.
However,anexaminationofthetechnicaldescriptionsofthetractsoflandsubjectofthedeedsofsale
willdisclosethatsaidparcelsarenotidenticalto,anddonottallywith,theareaincontroversy.
Itisabasicassumptionofourpolicythatlandsofwhateverclassificationbelongtothestate.Unless
alienatedinaccordancewithlaw,itretainsitsrightsoverthesameasdominus.(Santiagovs.delos
Santos,L20241,November22,1974,61SCRA152).
Foritiswellsettledthatnopubliclandcanbeacquiredbyprivatepersonswithoutanygrant,expressor
impliedfromthegovernment.Itisindispensablethenthattherebeshowingoftitlefromthestateorany
othermodeofacquisitionrecognizedbylaw.(LeeHongHok,etal.vs.David,etal.,L30389,December
27,1972,48SCRA379).
xxx xxx xxx xxx

We,therefore,believethattheaforesaiddeedsofsaledonotconstituteclearandconvincingevidenceto
establishthatthecontestedareaisofprivateownership.Hence,thepropertymustbeheldtobepublic
domain.
Therebeingnoevidencewhateverthatthepropertyinquestionwaseveracquiredbytheapplicantsor
theirancestorseitherbycompositiontitlefromtheSpanishGovernmentorbypossessoryinformationtitle
orbyanyothermeansfortheacquisitionofpubliclands,thepropertymustbeheldtobepublicdomain.
Bethatasitmay,[petitioner],byfilingasalesapplicationoverthecontrovertedland,acknowledged
unequivocably[sic]thatthesameisnothisprivateproperty.
Assuchsalesapplicantmanifestlyacknowledgedthathedoesnotownthelandandthatthesameisa
publiclandundertheadministrationoftheBureauofLands,towhichtheapplicationwassubmitted,xxx
Allofitsactspriorthereof,includingitsrealestatetaxdeclarations,characterizeditspossessionsofthe
landasthatofasalesapplicant.Andconsequently,asonewhoexpectstobuyit,buthasnotasyetdone
so,andisnot,therefore,itsowner.(PalawanAgriculturalandIndustrialCo.,Inc.vs.DirectorofLands,L
25914,March21,1972,44SCRA15).
Clearly, this issue falls under the primary jurisdiction of the Director of Lands because its
resolution requires survey, classification, xxx disposition and management of the lands of the
public domain. It follows that his rulings deserve great respect. As petitioner failed to show that
this factual finding of the Director of Lands was unsupported by substantial evidence, it assumes
finality. Thus, both the trial and the appellate courts correctly relied on such finding. We can do
no less.
[37]

Second Issue: No Simulation of Contracts Proven

Petitioner insists that contrary to Article 1371 of the Civil Code, Respondent Court
erroneously ignored the contemporaneous and subsequent acts of the parties; hence, it failed
to ascertain their true intentions. However, the rule on the interpretation of contracts that was
alluded to by petitioner is used in affirming, not negating, their validity. Thus, Article 1373,
which is a conjunct of Article 1371, provides that, if the instrument is susceptible of two or
more interpretations, the interpretation which will make it valid and effectual should be
adopted. In this light, it is not difficult to understand that the legal basis urged by petitioner does
not support his allegation that the contracts to sell and the deed of relinquishment are simulated
and fictitious. Properly understood, such rules on interpretation even negate petitioners thesis.
[38]

[39]

But let us indulge the petitioner awhile and determine whether the cited
contemporaneous and subsequent acts
of the parties
support
his
allegation
of
simulation. Petitioner asserts that the relinquishment of rights and the agreements to sell were
simulated because, first, the language and terms of said contracts negated private
respondentsacquisition of ownership of the land in issue; and second, contemporaneous and
subsequent communications between him and private respondent allegedly showed that the
latter admitted that petitioner owned and occupied the two parcels; i.e., that private respondent
was not applying for said parcels but was interested only in the two hectares it had leased, and
that private respondent supported petitioners application for a patent.
Petitioner explains that the Agreement to Sell dated December 7, 1948 did not and could not
transfer ownership because paragraph 8 (c) thereof stipulates that the balance of twelve
thousand pesos (P12,000.00) shall be paid upon the execution by the First Party [petitioner] of
the Absolute Deed of Sale of the two parcels of land in question in favor of the Second Party,
and upon delivery to the Second Party [private respondent] of the Certificate of Ownership of the
said two parcels of land. The mortgage provisions in paragraphs 6 and 7 of the agreement state
that the P7,000.00 and P5,000.00 were earnest money or a loan with antichresis by the free
occupancy and use given to Nasipit of the 140 hectares of land not anymore as a lessee. If the
agreement to sell transferred ownership to Nasipit, then why was it necessary to require
petitioner, in a second agreement, to mortgage his property in the event of nonfulfillment of the
prestations in the first agreement?
True, the agreement to sell did not absolutely transfer ownership of the land to private
respondent. This fact, however, does not show that the agreement was simulated.Petitioners

delivery of the Certificate of Ownership and execution of the deed of absolute sale were
suspensive conditions, which gave rise to a corresponding obligation on the part of the private
respondent, i.e., the payment of the last installment of the consideration mentioned in the
December 7, 1948 Agreement. Such conditions did not affect the perfection of the contract or
prove simulation. Neither did the mortgage.
Simulation occurs when an apparent contract is a declaration of a fictitious will, deliberately
made by agreement of the parties, in order to produce, for the purpose of deception, the
appearance of a juridical act which does not exist or is different from that which was really
executed. Such an intention is not apparent in the agreements. The intent to sell, on the other
hand, is as clear as daylight.
[40]

Petitioner alleges further that the deed of relinquishment of right did not give full effect to the
two agreements to sell, because the preliminary clauses of the deed allegedly served only to
give private respondent an interest in the property as a future owner thereof and to enable
respondent to follow up petitioners sales application.
We disagree. Such an intention is not indicated in the deed. On the contrary, a real and
factual sale is evident in paragraph 6 thereof, which states: That the Nasipit Lumber Co., Inc.,
xxx is very much interested in acquiring the land covered by the aforecited application to be
used for purposes of mechanized farming and the penultimate paragraph stating: xxx VICENTE
J. VILLAFLOR, hereby voluntarily renounce and relinquish whatever rights to, and interests I
have in the land covered by my above-mentioned application in favor of the Nasipit Lumber Co.,
Inc.
We also hold that no simulation is shown either in the letter, dated December 3, 1973, of the
former field manager of private respondent, George Mear. A pertinent portion of the letter reads:
(a)sregardsyourpropertyatAcacia,SanMateo,Irecallthatwemadesomesortofagreementforthe
occupancy,butInolongerrecallthedetailsandIhadforgottenwhetherornotweactuallydidoccupy
yourland.Butif,asyousay,wedidoccupyit,thenIamsurethattheCompanyisobligatedtopaya
rental.
The letter did not contain any express admission that private respondent was still leasing the
land from petitioner as of that date. According to Mear, he could no longer recall the details of
his agreement with petitioner. This cannot be read as evidence of the simulation of either the
deed of relinquishment or the agreements to sell. It is evidence merely of an honest lack of
recollection.
Petitioner also alleges that he continued to pay realty taxes on the land even after the
execution of said contracts. This is immaterial because payment of realty taxes does not
necessarily prove ownership, much less simulation of said contracts.
[41]

Nonpayment of the Consideration

Did Not Prove Simulation
Petitioner insists that nonpayment of the consideration in the contracts proves their
simulation. We disagree. Nonpayment, at most, gives him only the right to sue for
collection. Generally, in a contract of sale, payment of the price is a resolutory condition and the
remedy of the seller is to exact fulfillment or, in case of a substantial breach, to rescind the
contract under Article 1191 of the Civil Code. However, failure to pay is not even a breach, but
merely an event which prevents the vendors obligation to convey title from acquiring binding
force.
[42]

[43]

Petitioner also argues that Respondent Court violated evidentiary rules in upholding the
ruling of the Director of Lands that petitioner did not present evidence to show private
respondents failure to pay him. We disagree. Prior to the amendment of the rules on evidence
on March 14, 1989, Section 1, Rule 131, states that each party must prove his or her own
affirmative allegations. Thus, the burden of proof in any cause rested upon the party who, as
determined by the pleadings or the nature of the case, asserts the affirmative of an issue and
remains there until the termination of the action. Although nonpayment is a negative fact which
need not be proved, the party seeking payment is still required to prove the existence of the debt
and the fact that it is already due.
[44]

[45]

[46]

Petitioner showed the existence of the obligation with the presentation of the contracts, but
did not present any evidence that he demanded payment from private respondent.The demand
letters dated January 2 and 5, 1974 (Exhs. J and U), adduced in evidence by petitioner, were for
the payment of back rentals, damages to improvements and reimbursement of acquisition costs
and realty taxes, not payment arising from the contract to sell.
Thus, we cannot fault Respondent Court for adopting the finding of the Director of Lands that
petitioner offered no evidence to support his claim of nonpayment beyond his own self-serving
assertions, as he did not even demand payment, orally or in writing, of the five thousand
(P5,000.00) pesos which was supposed to be due him since August 17, 1950, the date when the
order of award was issued to Nasipit, and when his cause of action to recover payment had
accrued. Nonpayment of the consideration in the contracts to sell or the deed of relinquishment
was raised for the first time in the protest filed with the Bureau of Lands on January 31,
1974. But this protest letter was not the demand letter required by law.
Petitioner alleges that the assignment of credit and the letter of the former field manager of
private respondent are contemporaneous and subsequent acts revealing the nonpayment of the
consideration. He maintains that the P12,000.00 credit assigned pertains to the P5,000.00
and P7,000.00 initial payments in the December 7, 1948 Agreement, because the balance
of P12,000.00 was not yet due and accruing. This is consistent, he argues, with the
representation that private respondent was not interested in filing a sales application over the
land in issue and that Nasipit was instead supporting petitioners application thereto in Mears
letter to the Director of Lands dated February 22, 1950 (Exh. X).
[47]

This argument is too strained to be acceptable. The assignment of credit did not establish
the nondelivery of these initial payments of the total consideration. First, the assignment of credit
happened on January 19, 1949, or a month after the signing of the December 7, 1948
Agreement and almost six months after the July 7, 1948 Agreement to Sell. Second, it does not
overcome the recitation in the Agreement of December 7, 1948: xxx a) The amount of SEVEN
THOUSAND (P7,000.00) PESOS has already been paid by the Second Party to the First Party
upon the execution of the Agreement to Sell, on July 7, 1948; b) The amount of FIVE
THOUSAND (P5,000.00) PESOS shall be paid upon the signing of this present agreement; xxx.
Aside from these facts, the Director of Lands found evidence of greater weight showing that
payment was actually made:
[48]

xxx(T)hereisstrongevidencetoshowthatsaidxxx(P12,000.00)hadbeenpaidbyNASIPITtoEdward
J.NellCompanybyvirtueoftheDeedofAssignmentofCreditexecutedbyVillaflor(Exh.41NALCO)
forthecreditofthelatter.
Atty.GabrielBanaag,residentcounselofNASIPITxxxdeclaredthatitwashewhonotarizedthe
AgreementtoSell(Exh.F);xxxxthatsubsequently,inJanuary1949,VillaflorexecutedaDeedof
AssignmentofcreditinfavorofEdwardJ.NellCompany(Exh.41NALCO)wherebyVillaflorcededto
thelatterhisreceivableforNASIPITcorrespondingtotheremainingbalanceintheamountofxxx
(P12,000.00)xxxofthetotalconsiderationxxxx;Hefurthertestifiedthatthesaidassignmentxxxwas
communicatedtoNASIPITundercoverletterdatedJanuary24,1949(Exh.41A)andnotlongthereafter,
byvirtueofthesaidassignmentofcredit,NASIPITpaidthebalancexxxtoEdwardJ.NellCompany(p.
58,bid).Atty.Banaagsaforesaidtestimonystandunrebutted;hence,mustbegivenfullweightandcredit.
xxx xxx xxx.
The Director of Lands also found that there had been payment of the consideration in the
relinquishment of rights:
[49]

Ontheotherhand,therearestrongandcompellingreasonstopresumethatVillaflorhadalreadybeen
paidtheamountofFiveThousand(P5,000.00)Pesos.
First,xxxWhatissurprising,however,isnotsomuchhisclaimsconsistingofgiganticamountsashis
havingforgottentoadduceevidencetoprovehisclaimofnonpaymentoftheFiveThousand(P5,000.00)
Pesosduringtheinvestigationproceedingswhenhehadallthetimeandopportunitytodoso.xxxxThe
factthathedidnotadduceorevenattempttoadduceevidenceinsupportthereofshowseitherthathehad
noevidencetoofferofthatNASIPIThadalreadypaidhiminfact.WhatisworseisthatVillaflordidnot
evenbothertocommandpayment,orallyorinwriting,oftheFiveThousand(P5,000.00)Pesoswhich

wassupposedtobeduehimsinceAugust17,1950,thedatewhentheorderofawardwasissuedto
Nasipit,andwhenhiscauseofactiontorecoverpaymenthadaccrued.Thefactthatheonlymadea
commandforpaymentonJanuary31,1974,whenhefiledhisprotestortwentyfour(24)yearslateris
immediatelynugatoryofhisclaimfornonpayment.
ButVillaflormaintainsthathehadnoknowledgeornoticethattheorderofawardhadalreadybeen
issuedtoNASIPITashehadgonetoIndonesiaandhehadbeenabsentfromthePhilippinesduringall
thosetwentyfour(24)years.Thisofcoursetaxescredulity.xxxx
xxxItismoreinkeepingwiththeordinarycourseofthingsthatheshouldhaveacquiredinformationas
towhatwastranspiringinhisaffairsinManilaxxx.
Second,itshouldbeunderstoodthattheconditionthatNASIPITshouldreimburseVillaflortheamountof
FiveThousand(P5,000.00)Pesosuponitsreceiptoftheorderofawardwasfulfilledassaidawardwas
issuedtoNASIPITonAugust17,1950.Thesaiddeedofrelinquishmentwaspreparedandnotarizedin
ManilawithVillaflorandNASIPITsigningtheinstrumentalsoinManila.Now,consideringthatVillaflor
ispresumedtobemoreassiduousinfollowingupwiththeBureauofLandstheexpeditiousissuanceof
theorderofawardasthe(consideration)woulddependontheissuanceofsaidordertoawardNASIPIT,
woulditnotbereasonabletobelievethatVillaflorwasathandwhentheawardwasissuedtoNASIPITon
August17,1950,orbarelyadaywhichheexecutedthedeedofrelinquishmentonAugust16,1950,in
Manila?xxxx.
Third,ontheotherhand,NASIPIThasinhispossessionasortoforderuponitself(thedeedof
relinquishmentwhereinhe(sic)obligateditselftoreimburseorpayVillaflorthexxxconsiderationofthe
relinquishmentuponitsreceiptoftheorderofaward)forthepaymentoftheaforesaidamountthe
momenttheorderofawardisissuedtoit.ItisreasonabletopresumethatNASIPIThaspaidthe
(consideration)toVillaflor.
xxx xxx xxx
xxx(I)twasvirtuallyimpossibleforNASIPIT,afterthelapseoftheintervening24years,tobeableto
copeupwithalltherecordsnecessarytoshowthattheconsiderationforthedeedofrelinquishmenthad
beenfullypaid.ToexpectNASIPITtokeepintactallrecordspertinenttothetransactionforthewhole
quarterofacenturywouldbetorequirewhateventhelawdoesnot.Indeed,eventheapplicablelawitself
(Sec.337,NationalInternalRevenueCode)requiresthatallrecordsofcorporationsbepreservedforonly
amaximumoffiveyears.
NASIPITmaywellhaveaddedthatatanyratewhiletherearetransactionswheretheproperevidenceis
impossibleorextremelydifficulttoproduceafterthelapseoftimexxxthelawcreatespresumptionsof
regularityinfavorofsuchtransactions(20Am.Jur.232)sothatwhenthebasicfactisestablishedinan
actiontheexistenceofthepresumedfactmustbeassumedbyforceoflaw.(Rule13,UniformRulesof
Evidence;9Wigmore,Sec.2491).
The Court also notes that Mears letter of February 22, 1950 was sent six months prior to the
execution of the deed of relinquishment of right. At the time of its writing, private respondent had
not perfected its ownership of the land to be able to qualify as a sales applicant. Besides,
although he was a party to the July 7, 1948 Agreement to Sell, Mear was not a signatory to the
Deed of Relinquishment or to the December 7, 1948 Agreement to Sell. Thus, he cannot be
expected to know the existence of and the amendments to the later contracts. These
circumstances explain the mistaken representations, not misrepresentations, in said letter.
Lack of Notice of the Award
Petitioner insists that private respondent suppressed evidence, pointing to his not having
been notified of the Order of Award dated August 17, 1950. At the bottom of page 2 of the
order, petitioner was not listed as one of the parties who were to be furnished a copy by Director
of Lands Jose P. Dans. Petitioner also posits that Public Land Inspector Sulpicio A. Taeza
irregularly received the copies for both private respondent and the city treasurer of Butuan
[50]

City. The lack of notice for petitioner can be easily explained. Plainly,petitioner was not entitled
to said notice of award from the Director of Lands, because by then, he had already relinquished
his rights to the disputed land in favor of private respondent. In the heading of the order, he was
referred to as sales applicant-assignor. In paragraph number 4, the order stated that, on August
16, 1950, he relinquished his rights to the land subject of the award to private respondent. From
such date, the sales application was considered to be a matter between the Bureau of Lands
and private respondent only. Considering these facts, the failure to give petitioner a copy of the
notice of the award cannot be considered as suppression of evidence. Furthermore, this order
was in fact available to petitioner and had been referred to by him since January 31, 1974 when
he filed his protest with the Bureau of Lands.
[51]

[52]

Third Issue: Private Respondent Qualified

for an Award of Public Land
Petitioner asserts that private respondent was legally disqualified from acquiring the parcels
of land in question because it was not authorized by its charter to acquire disposable public
agricultural lands under Sections 121, 122 and 123 of the Public Land Act, prior to its
amendment by P.D. No. 763. We disagree. The requirements for a sales application under the
Public Land Act are: (1) the possession of the qualifications required by said Act (under Section
29) and (2) the lack of the disqualifications mentioned therein (under Sections 121, 122, and
123). However, the transfer of ownership via the two agreements dated July 7 and December 7,
1948 and the relinquishment of rights, being private contracts, were binding only between
petitioner and private respondent. The Public Land Act finds no relevance because the disputed
land was covered by said Act only after the issuance of the order of award in favor of private
respondent. Thus, the possession of any disqualification by private respondent under said Act is
immaterial to the private contracts between the parties thereto. (We are not, however,
suggesting a departure from the rule that laws are deemed written in contracts.) Consideration
of said provisions of the Act will further show their inapplicability to these contracts. Section 121
of the Act pertains to acquisitions of public land by a corporation from a grantee, but petitioner
never became a grantee of the disputed land. On the other hand, private respondent itself was
the direct grantee. Sections 122 and 123 disqualify corporations, which are not authorized by
their charter, from acquiring public land; the records do not show that private respondent was
not so authorized under its charter.
Also, the determination by the Director of Lands and the Minister of Natural Resources of the
qualification of private respondent to become an awardee or grantee under the Act is persuasive
on Respondent Court. In Espinosa vs. Makalintal, the Court ruled that, by law, the powers of
the Secretary of Agriculture and Natural Resources regarding the disposition of public lands -including the approval, rejection, and reinstatement of applications are of executive and
administrative nature. (Such powers, however, do not include the judicial power to decide
controversies arising from disagreements in civil or contractual relations between the
litigants.) Consequently, the determination of whether private respondent is qualified to become
an awardee of public land under C.A. 141 by sales application is included therein.
[53]

All told, the only disqualification that can be imputed to private respondent is the prohibition
in the 1973 Constitution against the holding of alienable lands of the public domain by
corporations. However, this Court earlier settled the matter, ruling that said constitutional
prohibition had no retroactive effect and could not prevail over a vested right to the land. In Ayog
vs. Cusi, Jr., this Court declared:
[54]

[55]

Weholdthatthesaidconstitutionalprohibitionhasnoretroactiveapplicationtothesalesapplicationof
BianDevelopmentCo.,Inc.becauseithadalreadyacquiredavestedrighttothelandappliedforatthe
timethe1973Constitutiontookeffect.
Thatvestedrighthastoberespected.ItcouldnotbeabrogatedbythenewConstitution.Section2,Article
XIIIofthe1935Constitutionallowsprivatecorporationstopurchasepublicagriculturallandsnot
exceedingonethousandandtwentyfourhectares.Petitionersprohibitionactionisbarredbythedoctrine
ofvestedrightsinconstitutionallaw.

Arightisvestedwhentherighttoenjoymenthasbecomethepropertyofsomeparticularpersonor
personsasapresentinterest.(16C.J.S.1173).Itistheprivilegetoenjoypropertylegallyvested,to
enforcecontracts,andenjoytherightsofpropertyconferredbyexistinglaw(12C.J.955,Note46,No.6)
orsomerightorinterestinpropertywhichhasbecomefixedandestablishedandisnolongeropento
doubtorcontroversy(Downsvs.Blount,170Fed.15,20,citedinBalboavs.Farrales,51Phil.498,502).
Thedueprocessclauseprohibitstheannihilationofvestedrights.Astatemaynotimpairvestedrightsby
legislativeenactment,bytheenactmentorbythesubsequentrepealofamunicipalordinance,orbya
changeintheconstitutionoftheState,exceptinalegitimateexerciseofthepolicepower(16C.J.S.1177
78).
Ithasbeenobservedthat,generally,thetermvestedrightexpressestheconceptofpresentfixedinterest,
whichinrightreasonandnaturaljusticeshouldbeprotectedagainstarbitraryStateaction,oraninnately
justanimperativerightwhichanenlightenedfreesociety,sensitivetoinherentandirrefragableindividual
rights,cannotdeny(16C.J.S.1174,Note71,No.5,citingPennsylvaniaGreyhoundLines,Inc.vs.
Rosenthal,192Atl.2 587).
nd

SecretaryofJusticeAbadSantosinhis1973opinionruledthatwheretheapplicant,beforethe
Constitutiontookeffect,hadfullycompliedwithallhisobligationsunderthePublicLandActinorderto
entitlehimtoasalespatent,therewouldseemtobenolegalorequitablejustificationforrefusingtoissue
orreleasethesalespatent(p.254,Rollo).
InOpinionNo.140,seriesof1974,heheldthatassoonastheapplicanthadfulfilledtheconstructionor
cultivationrequirementsandhasfullypaidthepurchaseprice,heshouldbedeemedtohaveacquiredby
purchasetheparticulartractoflandandtohimthearealimitationinthenewConstitutionwouldnot
apply.
InOpinionNo.185,seriesof1976,SecretaryAbadSantosheldthatwherethecultivationrequirements
werefulfilledbeforethenewConstitutiontookeffectbutthefullpaymentofthepricewascompleted
afterJanuary17,1973,theapplicantwas,nevertheless,entitledtoasalespatent(p.256,Rollo).
Suchacontemporaneousconstructionoftheconstitutionalprohibitionbyahighexecutiveofficialcarries
greatweightandshouldbeaccordedmuchrespect.Itisacorrectinterpretationofsection11ofArticle
XIV.
Intheinstantcase,itisincontestablethatpriortotheeffectivityofthe1973Constitutiontherightofthe
corporationtopurchasethelandinquestionhadbecomefixedandestablishedandwasnolongeropento
doubtorcontroversy.
ItscompliancewiththerequirementsofthePublicLandLawfortheissuanceofapatenthadtheeffectof
segregatingthesaidlandfromthepublicdomain.Thecorporationsrighttoobtainapatentforthatlandis
protectedbylaw.Itcannotbedeprivedofthatrightwithoutdueprocess(DirectorofLandsvs.CA,123
Phil.919).
The Minister of Natural Resources ruled, and we agree, that private respondent was similarly
qualified to become an awardee of the disputed land because its rights to it vested prior to the
effectivity of the 1973 Constitution:
[56]

Lastly,appelleehasacquiredavestedrighttothesubjectareaand,therefore,isdeemednotaffectedby
thenewconstitutionalprovisionthatnoprivatecorporationmayholdalienablelandofthepublicdomain
exceptbylease.
ItmayberecalledthattheSecretaryofJusticeinhisOpinionNo.64,seriesof1973,haddeclared,towit:
Ontheotherhand,withrespecttosalesapplicationreadyforissuanceofsalespatent,itismyopinionthat
wheretheapplicanthad,before,theconstitutiontookeffect,fullycompliedwithallhisobligationsunder
thePublicLandactinordertoentitlehimtosalespatent,therewouldseemtobenotlegalorequitable
justificationforrefusingtoissueorreleasethesalespatent.

ImplementingtheaforesaidOpinionNo.64xxx,thethenSecretaryofAgricultureandNaturalResources
issuedamemorandum,datedFebruary18,1974,whichpertinentlyreadsasfollows:
Intheimplementationoftheforegoingopinion,salesapplicationofprivateindividualscoveringareasin
excessof24hectaresandthoseofcorporations,associations,orpartnershipwhichfallunderanyofthe
followingcategoriesshallbegivenduecourseandissuedpatents,towit:
Salesapplicationforfishpondsandforagriculturalpurposes(SFA,SAandIGPSA)whereinpriorto
January17,1973,
a.thelandcoveredtherebywasawarded;
b.cultivationrequirementsoflawwerecompliedwithasshownbyinvestigationreportssubmittedprior
toJanuary17,1973;
c.landwassurveyedandsurveyreturnsalreadysubmittedtotheDirectorofLandsforverificationand
approval;and
d.purchasepricewasfullypaid.
Fromtherecords,itisevidentthattheaforestatedrequisiteshavebeencompliedwithbyappelleelong
beforeJanuary17,1973,theeffectivityoftheNewConstitution.Torestate,thedisputedareawas
awardedtoappelleeonAugust17,1950,thepurchasepricewasfullypaidonJuly26,1951,the
cultivationrequirementswerecompliedwithasperinvestigationreportdatedDecember31,1949,andthe
landwassurveyedunderPls97.
The same finding was earlier made by the Director of Lands:

[57]

ItisfurthercontendedbyVillaflorthatNasipithasnojuridicalpersonalitytoapplyforthepurchaseof
publiclandsforagriculturalpurposes.Therecordsclearlyshow,however,thatsincetheexecutionofthe
deedofrelinquishmentofAugust16,1950,infavorofNasipit,Villaflorhasalwaysconsideredand
recognizedNasipitashavingthejuridicalpersonalitytoacquirepubliclandsforagriculturalpurposes.In
thedeedofrelinquishmentxxx,itisstated:
6.ThattheNasipitLumberCo.,Inc.,acorporationdulyorganizedinaccordancewiththelawsofthe
Philippines,xxx.
EventhisOfficehadnotfailedtorecognizethejuridicalpersonalityofNasipittoapplyforthepurchase
ofpubliclandsxxxwhenitawardedtoitthelandsorelinquishedbyVillaflor(OrderofAwarddated
August17,1950)andaccepteditsapplicationtherefor.Atanyrate,thequestionwhetheranapplicantis
qualifiedtoapplyfortheacquisitionofpubliclandsisamatterbetweentheapplicantandthisOfficeto
decideandwhichathirdpartylikeVillaflorhasnopersonalitytoquestionbeyondmerelycallingthe
attentionofthisOfficethereto.
Needless to say, we also agree that the November 8, 1946 Lease Agreement between
petitioner and private respondent had been terminated by the agreements to sell and the
relinquishment of rights. By the time the verbal leases were allegedly made in 1951 and 1955,
the disputed land had already been acquired and awarded to private respondent. In any event,
petitioners cause of action on these alleged lease agreements prescribed long before he filed
Civil Case No. 2072-III, as correctly found by the trial and appellate courts. Thus, it is no longer
important, in this case, to pass upon the issue of whether or not amendments to a lease contract
can be proven by parol evidence. The same holds true as regards the issue of forum-shopping.
[58]

[59]

All in all, petitioner has not provided us sufficient reason to disturb the cogent findings of the
Director of Lands, the Minister of Natural Resources, the trial court and the Court of Appeals.
WHEREFORE, the petition is hereby DISMISSED.
SO ORDERED.

G.R. No. L-35408 October 27, 1973

MANUEL FIRMALO vs. HON. EDUARDO C. TUTAAN
CASTRO, J.:
The petitioners Manuel Firmalo, Rosita Firmalo Fradejas, Emilia Firmalo Lanzona, Nenita Firmalo Mortel, Thelma Firmalo,
Guia Firmalo and Emilio Firmalo (hereinafter simply referred to as the Firmalos) were grantees of a free patent title covering
more than 13 hectares of land situated in Barrio Demologan, Municipality of Bacolod, Province of Lanao del Norte. On
November 5, 1969, the said petitioners brought an action in the Court of First Instance of Lanao del Norte (Branch II)
docketed as Civil Case 1528, against the respondents Wenceslao Taruc, Faustino Taruc, Aniceta Taruc Malolot, Artemio
Taruc, Rodolfo Taruc and Epifania Paculba Vda. de Taruc (hereinafter simply referred to as the Tarucs) for "ownership,
possession and damages with preliminary mandatory injunction," affecting about 9 hectares of the aforementioned property.
A writ of preliminary mandatory injunction was issued by the trial court on November 24, 1969, upon a bond of P20,000, and
the possession of the property was effectively transferred to the Firmalos. Relying, however, on a final judgment in their
favor in Civil Case 1218 of the same court adjudging them as the "equitable owners" of the said property, the Tarucs
succeeded in securing a writ of execution and placing themselves in possession once more of the disputed land.
The Firmalos immediately sought the intervention of this Court in L-32651-52. On August 31, 1971 we rendered a decision
the dispositive portion of which recites as follows:
ACCORDINGLY, the decision of the court a quo in civil case 1218 dated October 28, 1968 is hereby set
aside as being null and void, together with the writ of execution and the order of September 12, 1970
deriving therefrom. The same court is hereby ordered to reinstate the writ of preliminary mandatory
injunction dated December 16, 1969 issued in civil case 1528 and, thereafter, proceed with the hearing and
determination of the latter case. Costs against the private respondents.
On October 15, 1971, this Court's judgment having become final, the trial court issued an order rescinding its writ of
execution in Civil Case 1218 and reinstating, in Civil Case 1528, the writ of preliminary mandatory injunction of December
16, 1969, thus placing the Firmalos in possession of the property in question pending decision on the merits.
On February 22, 1972 the Firmalos' bondsman, the Workmen's Insurance Co., Inc., filed, with the conformity of the counsel
for the Tarucs, an urgent motion to withdraw and have its bond cancelled on the ground of the non-payment of the
premiums due on the said bond. On February 24, 1972 the trial court issued an order requiring the Firmalos to pay the
overdue amortizations within 15 days of their receipt of the order at the pain of having the bond cancelled.
At this juncture, Civil Case 1528 was, for some reason not stated in the record, transferred from the sala of the respondent
Judge Teodulo Tandayag (Branch II) to the sala of the respondent Judge Eduardo C. Tutaan and there given a new docket
number: Civil Case IV-146. The Firmalos moved, to no avail, for the return of the said case to the sala of Judge Tandayag.
On July 11, 1972 the Tarucs filed an unverified urgent motion to lift and/or to reconsider the preliminary mandatory injunction
then in force or to place the property in dispute under receivership pending adjudication on the merits of now Civil Case IV146 (formerly Civil Case 1528 of Branch II), upon the ground that the said preliminary mandatory injunction "was
improvidently issued and not only contravenes justice and equity but, more specifically, contravenes the law and
jurisprudence on the matter ..." The Firmalos opposed this motion and submitted a lengthy memorandum to bolster their
position.
In a reasoned order of August 1, 1972, the trial court, presided by the respondent Judge Tutaan, placed the property in
dispute under receivership (appointing the respondent deputy sheriff Elias Anacleto as receiver) and, in effect, removed the
possession thereof from the Firmalos.
The Firmalos immediately filed the present petition. On August 31, 1972 we granted the petitioners' prayer for a temporary
restraining order, and enjoined the respondents from enforcing the questioned order of August 1, 1972 and "from gathering
the coconuts on the land subject of the litigation and from selling the already produced copras in favor of any person or
persons."
The central issue posed for resolution by the present petition is whether the respondent Judge Tutaan may alter the
mandate of this Court in L-32651-52 directing the reinstatement of the writ of preliminary mandatory injunction dated
December 16, 1969 issued in Civil Case 1528 and, in its place, institute the provisional remedy of receivership over the
property disputed by the parties.
In the case of Ysasi vs. Fernandez, 1 we held that the preliminary mandatory injunction issued by the trial court, upon a mandate
of this Court, cannot be dissolved on a mere counterbond so long as the facts upon which we had acted still prevail. Applying the

same principle to the case at bar, we find that neither the Tarucs' motion to lift and/or reconsider the preliminary mandatory
injunction nor the disputed order of August 1, 1972 placing the property in the possession and administration of a receiver, attests
to any new fact overtaking the case after the same was remanded by this Court for trial on the merits.

Indeed, the disputed order itself admits that the court a quo was ruling upon the following issues: "First, whether or not the
writ (of preliminary mandatory injunction) was improvidently issued and contravenes justice and equity ... Second, whether
or not the lifting or reconsideration of the order for the allowance of the writ will result in irreparable injury," all of which we
have disposed of, by clear and unmistakable implication, in the earlier case (L-32651-52). In that case, the decision and
various orders of the trial court which we annulled tended to override the writ of preliminary mandatory injunction which we
upheld and ordered reinstated.
It will be recalled that the same preliminary mandatory injunction which was issued by the trial court was later ordered
reinstated by us after it had been quashed, for the principal reason that whereas the Firmalos have in their favor a decree of
registration issued by the Director of Lands covering the property in dispute, the Tarucs do not have even a semblance of
title in their name, the judgment in Civil Case 1218 upon which they desperately relied having been annulled by this Court.
This brings us to the erroneous notion entertained by the court a quo, presided by the respondent Judge Tutaan, that the
remand of the case for trial on the merits warrants an inquiry into the validity of the decree of registration issued by the
Director of Lands over the property in dispute. The decision of the Director of Lands may be annulled or reviewed only in a
direct proceeding and not collaterally as the respondent judge would have it in the case at bar.2 Moreover, the patent title
issued in favor of the Firmalos by the Director of Lands is by now already indefeasible due to the lapse of one year following the
entry of the decree of registration (March 28, 1969 at the latest when the title to the property was issued) in the records of the
register of deeds. 3
A reading of the complaint and the answer filed in Civil Case IV-146 (formerly Civil Case 1528 of Branch II) shows that only
two basic issues stand out between the litigants. One is with respect to the title of ownership over the property; this was
resolved by his Court in L-32651-52 when we annulled the judgment in Civil Case 1218 relied upon by the Tarucs and
recognized the decision of the Director of Lands in favor of the Firmalos. Importantly, the Firmalos' title is to be respected,
given effect, and accorded due recognition unless and until a superior title, if any there be, overtakes the same. 4 The other
remaining issue relates to the right of possession, i.e., whether, notwithstanding the title of the Firmalos, the Tarucs have any right
of possession over the property, and, if they have none, what liability, if any, they have for holding the property illegally. This latter,
to our minds, is the only and remaining basic issue that could properly be heard when we remanded the original case for trial on
the merits.
As for the failure of the Firmalos to pay the premiums due to their bondsman, the record shows that on March 7, 1972,
within the time then prescribed by the respondent Judge Tandayag, the Firmalos duly renewed the surety bond of P20,000
in their favor and paid the corresponding premiums.
Subsequent to the submission of the present case for decision, that is, on September 5, 1973, the Firmalos, thru counsel,
manifested that before our restraining order of August 31, 1972 was actually served upon the parties, the respondent
Anacleto, acting as receiver for the court, had caused coconuts to be gathered from the disputed property and converted
into copra which was sold for P1,184.27. With the result arrived at by us in this decision, it behooves the trial court to hold a
hearing with respect to the proceeds of the sale and adjudge disposition thereof in a manner consistent with our
pronouncements herein.
In sum, the trial court has no power to alter the effect of our final decision in
L-32651-52 by lifting the writ of preliminary mandatory injunction ordered reinstated by us and substituting in its place a
receivership which would take away the possession of the property in dispute from the Firmalos, pending the trial on the
merits in Civil Case IV-146.
ACCORDINGLY, the order of the trial court dated August 1, 1972 is hereby annulled and set aside, and Civil Case IV-146
(formerly Civil Case 1528 of Branch II) is hereby again remanded to the court a quo for further hearing and determination,
consistent with the views herein expressed. Costs against the respondents Wenceslao Taruc, Faustino Taruc, Aniceta Taruc
Malolot, Artemio Taruc, Rodolfo Taruc and Epifania Paculba Vda. de Taruc.

EN BANC
G.R. No. L-29040

December 14, 1928

BONIFACIO JULIAN, Plaintiff-Appellant, vs. SILVERIO APOSTOL, Secretary of

Agriculture and Natural Resouces, ET AL., Defendants-Appellees.
Alejo Mabanag for appellant.
Attorney-General Jaranilla for appellees.
JOHNSON, J.:
This action was commenced on May 19, 1926 in the Court of First Instance of Nueva
Ecija, for the purpose of recovering possession of two parcels of land situated in the
municipality of Munoz of said province, known in the record as lots 1576 and 1577,
together with damages in the sum of P10,000. The plaintiff alleged that he was a
homesteader of said lots, with preferential right to the possession of the same. The
defendant Remigia Juan was excluded from the complaint, by stipulation of the
parties, it having been found that she had no interest in any of said lots. The
defendants Silverio Apostol, as Secretary of Agriculture and Natural Resources;
Jorge Vargas, as Director of Lands; Angel P. Miguel, Cesar Bengson and Frank E.
Yost, as members of the Board of Investigation and Survey, - were included, on the
ground that said defendants had unlawfully and without authority cancelled the
homestead application of the plaintiff for lots 1576 and 1577, and had unlawfully
declared forfeit his right as a homesteader.
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All of the defendants answered by a general and special defense. The defendants
Filemon Saturno and Tomasa Tomas filed a counterclaim for the sum of P15,000.

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Upon the issue raised by the pleadings, the cause was brought on for trial. After
hearing the evidence adduced during the trial of the cause, the Honorable Eduardo
Gutierrez David, judge, in a carefully prepared opinion, reached the conclusion that
the plaintiff, as homesteader of lots 1576 and 1577, had not complied with the
requirements of the homestead law and had forfeited his right to said lots, and
rendered a judgment, absolving the defendants from all liability under the
complaint, with pronouncement as to costs. The dispositive part of the judgment
reads as follows:
En virtud de estas consideraciones, el Juzgado es de opinion que debe fallar este
asunto, en cuanto a la demanda, absolviendo de ella a los demandados en todas y
cada una de sus peticiones, incluyendo la de la demanda enmendada. En cuanto a
la reconvencion de los demandados Filemon Saturno y Tomasa Tomas, se absuelve
de ella al demandante por improcedente. Sin pronunciamiento en cuanto a las
costas.
From that judgment the plaintiff appealed.

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The appellant now contends that the lower court committed eight errors, relating to
question of both fact and law. His principal contentions are:
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(1) That the lower court erred in finding that the plaintiff had abandoned his
possession of the land (lots 1576 and 1577), and had not complied with the
requirements of the law;
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(2) That the lower court erred in not declaring that the Director of Lands had no
authority to create the Board of Investigation and Survey, and that the decision of
said board is null and void; and
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(3) That the lower court erred in not declaring that the homestead applications of
Filemon Saturno and Raymundo Saturno were null and void ab initio.
ANTECEDENT FACTS

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(1) On January 27, 1914, the plaintiff filed a homestead application for the lots in
question, Nos. 1576 and 1577, which was appoved by the Director of Lands on
September 14, 1914 (Exhibits A and A-1).
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(2) On February 27, 1914, the defendant Filemon Saturno filed a homestead
application, which was approved by the Director of Lands on December 1, 1914, for
a parcel of land which was later found to include the northern portion of the parcel
covered by the application of the plaintiff (Exhibit 6 and 7). This portion is now
known as lot 1577.
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(3) On February 23, 1914, one Macario Santero filed a homestead application,
which was approved by the Director of Lands on December 10, 1914, for a parcel of
land, which was later found to be the southern portion of the land covered by the
application of the plaintiff. This portion is now known as lot 1576. Macario Santero
is the predessor of the defendant Tomasa Tomas (Exhibits 8 and 9).
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(4) On November 13, 1918, by reason of complaints filed with the Bureau of Lands
by the plaintiff, the Director of Lands addressed letters to the defendants
homesteaders, advising them not to interfere with the possession and cultivation by
the plaintiff of the land covered by his homestead application (Exhibits B and C).
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(5) On November 24, 1919, in reply to a letter of the plaintiff, the Director of Lands
advised him to file an action against the defendants homesteaders in the court of
the justice of the peace of the municipality of Munoz, for their interference with his
possession and cultivation of said lots 1576 and 1577 (Exhibits E-2 and E-3).
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(6) On October 25, 1921, the Secretary of Agriculture and Natural Resources
directed the Director of Lands of establish a branch office of the Bureau of Lands in
the Province of Nueva Ecija, in order to expedite the disposition and settlement of
conflicting claims to public lands in each municipality of said province. Accordingly,
a board composed of three members (the defendants Angel P. Miguel, Cesar
Bengson and Frank D. Yost) was created. Said board was known as "Investigation
and Survey Board" (Exhibits 1 and 12).
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(7) On January 23, 1922, said board heard the claims of the plaintiff and the
defendants Saturno and Tomasa Tomas. Both sides presented witnesses, and were
given a full and impartial hearing (Exhibit 11).
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(8) On March 10, 1922, said Board of Investigation and Survey rendered its
decision, based on the facts disclosed at the hearing, and held that the plaintiff
Bonifacio Julian had forfeited his right as homesteader of lots 1576 and 1577, on
the ground of abandonment. The pertinent part of said decision reads as follows:
It thus appears that Bonifacio Julian may rightfully claim priority in the filing of the
application. However, it seems clear that whatever rights he has acquired by such
priority, were lost because he has neglected the cultivation of his homestead as is

shown by his own testimony to the effect that he worked in his homestead only in
1915 and in 1921. He himself testified that during the intervening period he worked
for other people to earn a living. He, however, asserts that he did not cultivate his
land because he was afraid of the other claimants, namely Saturno and Santero, but
this excuse cannot avail him because he himself admitted that during that time he
could clear the land, and if he could clear it there is no reason why he could not
have cultivated the same.
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In view of the foregoing, this Board finds that Bonifacio Julian has forfeited his
rights to lots 1576 and 1577 which are hereby adjudicated in favor to the heirs of
Raymundo Saturno and in favor of Filemon Saturno, respectively.
(9) On April 4, 1922, the Director of Lands approved said decision, from which the
plaintiff appealed to the Secretary of Agriculture and Natural Resources (Exhibits G2 to G-5).
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(10) On August 7, 1923, the Secretary of Agriculture and Natural Resources

affirmed the decision of the Board, as approved by the Director of Lands (Exhibit
13).
TRIAL OF THE CAUSE - FACTS

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The trial of the cause in the lower court was substantially a repetition of the hearing
made by the Survey and Investigation Board in 1922. The same witnesses testified
for the plaintiff (plaintiff himself and Jose Cabanatan). The witnesses for both partes
testified to the same facts covered by the testimony of the witnesses at the hearing
before the Survey and Investigation Board.
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A great preponderance of the evidence adduced by both parties shows that the
plaintiff has not cultivated lots 1576 and 1577 except in 1915 and 1921. The
conclusion of the lower court, that the plaintiff had abandoned the land and that he
had not complied with the requisites of the homestead law, is in conformity with the
facts proved during the trial.
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Section 5 of Act No. 926, which corresponds to section 16 of Act No. 2874,
authorizes the Director of Lands to cancel any homestead entry, upon satisfatory
proof that the homesteader has voluntarily abandoned the land for more than six
months at any one time, or has otherwise failed to comply with the requirements of
the homestead law.
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Section 70 of Act No. 926, which corresponds to section 4 of Act No. 2874, provides
that the decisions of the Director of Lands upon questions of fact relating to the
survey, classification, lease, sale or any other form of concession or disposition and
management of the lands of the public domain, shall be conclusive when appoved
by the Secretary of Agriculture and Natural Resources.
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From the provisions of said section 5 of Act No. 926 and section 16 of Act No. 2874,
it appears that the Director of Lands was justified in declaring forfeited the right of
plaintiff as homesteader of lots 1576 and 1577, and in cancelling his homestead
entry, because of his failure to cultivate said lots from 1916 to 1920. The Survey
and Investigation Board, created by order of the Secretary of Agriculture and
Natural Resources was a lawfully organized body - a branch office of the Bureau of
Lands, established in Nueva Ecija for the purpose of expediting the disposition and
settlement of conflicting claims so public lands in said province. At least there is
nothing in the law to show that said board was not lawfully organized. Its report on
the investigation of plaintiff's homestead, was approved by the Director of Lands

and became his decision. Upon appeal to the Secretary of Agriculture and Natural
Resources, it was affirmed, and the fact therein decided - plaintiff's failure to
cultivate the land and his abandonment of the same - became final and conclusive,
under the provisions of said section 70 of Act No. 926, which corresponds to section
4 of Act No. 2874.
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The decision of the Supreme Court of the United States have consitently followed
the general rule, that when the officers of the land department decide controverted
questions of fact, which fall within the sope of their authority, their decision on
those question is final, except as they may be reversed on appeal in that
department. (Cyc. of the U. S. Supreme Court Reports, vol. 10, p. 245.)
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In the case of Vance vs. Burbank (101 U. S., 519), the Supreme Court of the United
States, speaking through Mr. Chief Justice Waite, said:
So far as this suit depends on the original title of Lemuel Scott, it is clear, under the
well-settled rules of decision in this court, that there can be no recovery. The
question in dispute is one of fact; that is to say, whether Scott, when he demanded
his patent certificate as against the other contesting claimants, had resided on and
cultivated the lands in dispute for four consecutive years, and had otherwise
conformed to the requirements of the donation act. This was to be determined by
the Land Departmnet, and as there was a contest, the contending parties were
called on in the usual way to make their proofs. They appeared, and full opportunity
was given Scott to be heard. He presented his evidence and was beaten, after
having taken the case through, by successive stages on appeal, to the Secretary of
the Interior. This, in the absence of fraud, is conclusive on all questions of fact. We
have many times so decided. (Johnson vs. Towsley, 13 Wall., 72; Warren vs. Van
Brunt, 19 Wall., 646; Shepley vs. Cowan, 91 U. S., 330; Moore vs. Robbins, 96 U. S.
530; Marquez vs. Frisbie, supra p. 800.) The appropriate officers of the Land
Department have been constituted a special tribunal to decide such questions, and
their decisions are final to the same extent that those of other judicial of quasijudicial tribunals are.
In these proceedings, however, the decision of the Director of Lands was tacitly
considered open for review by the judicial department. Another opportunity was
thus afforded the plaintiff to prove his alleged right to the possession of the lots in
question. However, the evidence adduced during the trial showed that the plaintiff
had really abandoned the land and had failed to cultivate the same from 1916 to
1920, inclusive, in violation of the requirements of the homestead law. Therefore,
the cancellation of his homestead entry by the Director of Lands and the forfeiture
of his rights as homesteader of lots 1576 and 1577 are in accordance with the law
and with the facts proved during the trial. The judgment of the lower court,
dismissing the complaint and denying plaintiff's right to the possession of said lots
is correct and should be affirmed.
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The foregoing discussion of the facts and the law thereto applicable, disposes
entirely of the first two assignments of error above noted. The other assignments of
error need not be discussed for the purpose of this decision. Whether or not the
homestead application of Filemon Saturno and Raymundo Saturno (now Tomasa
Tomas) are null and void ab initio, it is not necessary for this court to determine.
The only question for determination is whether or not plaintiff is entitled to the
possession of the lots as a homesteader, and we have decided that question in the
negative.
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Therefore, the judgment appealed from is hereby affirmed, without pronouncement

as to costs. So ordered.

SECOND DIVISION

[G.R. No. 104296. March 29, 1996]

REPUBLIC OF THE PHILIPPINES, represented by the DIRECTOR OF LANDS, petitioner,
vs. THE COURT OF APPEALS, HEIRS OF IRENE BULLUNGAN, represented by her
husband DOMINGO PAGGAO and THE REGISTER OF DEEDS OF ISABELA, respondents.

DECISION
MENDOZA, J.:

This is a petition for review of the decision of the Court of Appeals reversing the decision of
the Regional Trial Court, Branch XIX, Cauayan, Isabela declaring Free Patent No. V-79740 and
Original Certificate of Title No. P-88 17 in the name of Irene Bullungan null and void so far as the
portion of Lot No. 1, Psu- 150801 involved in this case is concerned.
[1]

[2]

The facts of this case are as follows:

On September 10, 1955, Irene Bullungan (now deceased) applied for a free patent covering
lots situated in Fugaru (now San Guillermo), Angadanan, Isabela. The lots included a portion of
Lot No. 1, Psu-150801, between Lot No. 763 and Lot No. 764, consisting of 1.04 hectares,
which Vicente Carabbacan claimed. In her application, Irene Bullungan stated that the land
applied for by her was not claimed or occupied by any other person and that it was public land
which had been continuously occupied and cultivated by her since 1925.
[3]

Upon certification of Assistant Public Land Inspector Jose M. Telmo at Ilagan, Isabela that
Irene Bullungan had been in actual, continuous, open, notorious, exclusive and adverse
possession of the land since 1925, the Director of Lands approved Bullungans application
on June 4, 1957. On December 26, 1957, Original Certificate of Title No. P-8817 was issued in
the name of Irene Bullungan.
Alleging that a portion of Lot No. 1, Psu-150801 covered by the free patent issued to Irene
Bullungan overlapped the lot between Lot No. 763 and Lot No. 764, which he was occupying,
Vicente Carrabacan filed a protest on September 7, 1961. The District Land Officer at Ilagan,
Isabela recommended the dismissal of the protest on the ground that the Bureau of Lands no
longer had jurisdiction over the matter as a result of the grant of a free patent to Irene
Bullungan. But the Director of Lands on March 23, 1982 ordered an investigation of the protest.
Vicente Carabbacan also brought an action for the reconveyance of the portion of Lot No. 1,
Psu-150801 and the cancellation of free patent against Irene Bullungan onSeptember 5, 1961,
although this was dismissed by the court without prejudice.
The heirs of Irene Bullungan in turn sought to recover possession of the land in an action
which they brought in the Court of First Instance of Isabela on April 13, 1972. The case was
docketed as Civil Case No. Br. II-1102. On the other hand, refusing to give up his claim, Vicente
Carabbacan filed a case for reconveyance on August 15, 1972, which was docketed as Civil
Case No. 1108. The cases were thereafter tried jointly.
On November 22, 1972 the court rendered a decision, dismissing the complaint of Vicente
Carabbacan and ordering him to vacate the land, even as it upheld the ownership of Irene
Bullungan. Carabbacan, who had been in possession of the land in question, was finally ousted
on December 10, 1981.

As already stated, the Director of Lands ordered on March 23, 1982 an investigation of
Carabbacans protest. The investigation was undertaken by Senior Special Investigator
Napoleon R. Dulay, who found that Vicente Carabbacan had been in actual cultivation of the
land identified as Lot No. 763, Pls-594 since 1947, having acquired the same from Tomas
Tarayao on May 4, 1947. In his report dated September 17, 1985, the land investigator stated
that due to a big flood which occurred in December 1947, the Cagayan River changed its course
by moving north-east, resulting in the emergence of a piece of land, which is the subject of this
dispute. Carrabacan took possession of the land and cultivated it. He was in the continuous,
peaceful, open and adverse occupation and cultivation of the land from December 1947 until
1981 when he was ejected by virtue of the decision in Civil Cases No. 1088 and 11102.
[4]

Based on these findings, the Chief of the Legal Division of the Bureau of Lands
recommended on March 10, 1986 that steps be taken to seek the amendment of Free Patent
No. V-79740 and Original Certificate of Title No. P-8817 of the late Irene Bullungan so as to
exclude the disputed portion and for the reversion of the same to the State.
On November 28, 1986, the Solicitor General filed in behalf of the Republic of
the Philippines a complaint for the cancellation of Free Patent No. V- 79740 and OCT No. P8817 on the ground of fraud and misrepresentation in obtaining the free patent. The case was
filed in the Regional Trial Court of Cauayan, Isabela which, on September 25, 1989, rendered a
decision declaring Free Patent No. V-79740 and OCT No. P-8817 null and void insofar as the
portion of Lot No. 1, Psu-150801 between Lot No. 763 and Lot No. 764, is concerned. The lower
court found that Irene Bullungan made misrepresentations by claiming in her application for a
free patent that she was in possession of the disputed portion of Lot No. 1, Psu-150801, when in
fact Vicente Carabbacan was occupying and cultivating the land. The court justified the
reversion of the land in question as an assertion of a governmental right.
On appeal, however, the Court of Appeals reversed the lower courts ruling on the ground
that, after the lapse of one year from the date of issuance of the patent, the State could no
longer bring an action for reversion. The appellate court held that the certificate of title issued in
the name of Irene Bullungan became incontrovertible and indefeasible upon the lapse of one
year from the issuance of the free patent.
The Republic controverts the ruling of the Court of Appeals. It contends that the doctrine of
indefeasibility of Torrens Titles does not bar the filing of an action for cancellation of title and
reversion of land even if more than one year has elapsed from the issuance of the free patent in
case of fraud in obtaining patents.
We agree with petitioner. To begin with, there is no question that Free Patent No. 79740 and
Original Certificate of Title P-8817 were obtained through fraud. The trial court found that Irene
Bullungan falsely stated in her application for a free patent that Lot No. 1, Psu-150801 was not
claimed or occupied by any other person. The trial court found that a portion of the lot in
question had been in the possession and cultivation of Vicente Carabbacan since December
1947. Indeed private respondents admit that before Irene Bullungan filed her application for a
free patent, she had filed a complaint for forcible entry against Vicente Carrabacan. The
complaint, which was filed in the Justice of the Peace Court of Angadanan, Isabela, was
dismissed precisely because the court found that Carabbacan had been in possession of the
land long before it was sold to Irene Bullungan by Leonida Tarayao.
[5]

[6]

The Court of Appeals did not disturb the trial courts finding in this case that Irene Bullungan
committed fraud and misrepresentation. Its decision rests solely on the ground that after the
lapse of one year from the date of issuance of a free patent an action for the cancellation of
patent and title on ground of fraud and misrepresentation can no longer be maintained.
We think that this is error. It is settled that once a patent is registered under Act No. 496 (now
P.D. No. 1529) and the corresponding certificate of title is issued, the land ceases to be part of
the public domain and becomes private property over which the Director of Lands will no longer
have either control or jurisdiction. The Torrens Title issued on the basis of a free patent or
homestead patent becomes as indefeasible as one which was judicially secured upon the
expiration of one year from date of issuance of patent as provided in P.D. No. 1529, 32 (formerly
Act No. 496, 38). However, as held in Director of Lands v. De Luna, even after the lapse of one
[7]

[8]

year, the State may still bring an action under 101 of the Public Land Act for the reversion to the
public domain of lands which have been fraudulently granted to private individuals. This has
been the consistent ruling of this Court.
[9]

[10]

The failure of Irene Bullungan to disclose that Vicente Carrabacan was in possession of the
portion of land in dispute constitutes fraud and misrepresentation and is a ground for annulling
her title. Thus 91 of the Public Land Act provides:
[11]

91.Thestatementsmadeintheapplicationshallbeconsideredasessentialconditionsandpartsofany
concession,title,orpermitissuedonthebasisofsuchapplication,andanyfalsestatementthereinor
omissionoffactsaltering,changing,ormodifyingtheconsiderationofthefactssetforthinsuch
statements,andanysubsequentmodification,alteration,orchangeofthematerialfactssetforthinthe
applicationshallipsofactoproducethecancellationoftheconcession,title,orpermitgranted.Itshallbe
thedutyoftheDirectorofLands,fromtimetotimeandwheneverhemaydeemitadvisable,tomakethe
necessaryinvestigationsforthepurposeofascertainingwhetherthematerialfactssetoutinthe
applicationaretrue,orwhethertheycontinuetoexistandaremaintainedandpreservedingoodfaith,and
forthepurposeofsuchinvestigation,theDirectorofLandsisherebyempoweredto
issuesubpoenasandsubpoenasducestecumand,ifnecessary,toobtaincompulsoryprocessfromthe
courts.Ineveryinvestigationmadeinaccordancewiththissection,theexistenceofbadfaith,fraud,
concealment,orfraudulentandillegalmodificationofessentialfactsshallbepresumedifthegranteeor
possessorofthelandshallrefuseorfailtoobeyasubpoenaorsubpoenaducestecumlawfullyissuedby
theDirectorofLandsorhisauthorizeddelegatesoragents,orshallrefuseorfail.togivedirectand
specificanswerstopertinentquestions,andonthebasisofsuchpresumption,anorderofcancellation
mayissueoutfurtherproceedings.
The appellate court said in its decision:
Wearenot,ofcourse,unawareofcaseswherethepatentandthecertificateoftitleissuedpursuantthereto
weredeclarednullandvoidnotwithstandingtheexpirationoftheaforementionedperiodofone(1)year
simplybecauseoffalsestatementofmaterialandessentialfactsmadeintheapplicationtherefor.Beit
noted,however,thatinthesecasesthelotspatentedorgrantedwerenolongerpartofthepublicdomain
butprivateonessegregatedfromthemassthereof.Consequently,norightwhatsoeverwasawardedin
saidcasesforitisalreadysettledthatafreepatentwhichpurportstoconveylandtowhichthe
governmentdidnothaveanytitleatthetimeofitsissuancedoesnotvestanytitleinthepatenteeas
againstthetrueowner(Suvav.Ventura,40O.G.8,4thsup.August23,1941;Vitalv.Anore,90Phil.
855;DirectorofLandsv.Abanilla,G.R.No.L26324,August31,1983).Thisdoesnotobtaininthe
presentcaseforitisbeyonddisputethatthesubjectlandwasstillapartofthepublicdomainwhenthe
samewaspatentedbytheGovernmentinfavorofappellantspredecessorininterest.Accordingly,there
wasindeedatitleawardedsuchthatwhenthesamewasbroughtunderoperationofLandRegistrationAct
in1957,itbecameincontrovertiblein1958.
[12]

This is not so. Where public land is acquired by an applicant through fraud and
misrepresentation, as in the case at bar, the State may institute reversion proceedings even
after the lapse of the one-year period.
Nor is there merit in the claim of private respondents that the action taken by the Republic in
this case is not in keeping with the policy of State to foster families as the factors of society, to
give them a sense. of protection and permanency in their homes. Public policy demands that
one who obtains title to a public land through fraud should not be allowed to benefit
therefrom. Vicente Carabbacan had been in possession of the land even. before Irene
Bullungan bought the possessory rights to the land. It was therefore a misrepresentation for her
to state in her application for a free patent that she had been in possession of the lot in question
when the fact is that Carabbacan had been there ahead of her.
[13]

WHEREFORE, the decision appealed from is REVERSED and the decision

dated September 25, 1989 of the Regional Trial Court of Cauayan, Isabela, Branch XIX is
REINSTATED.
SO ORDERED.

FIRST DIVISION
[G.R. No. 120066. September 9, 1999]
OCTABELA ALBA Vda. De RAZ, Spouses MANUEL and SUSANA BRAULIO, RODOLFO,
LOURDES and BEATRIZ all surnamed ALBA, petitioners, vs. COURT OF APPEALS and
JOSE LACHICA, respondents.

DECISION
YNARES-SANTIAGO, J.:

Before us is an appeal by certiorari from a decision rendered by the Court of Appeals dated August 18, 1992
affirming in toto the decision of the Regional Trial Court of Kalibo, Aklan, Branch I, in Land Registration Case No. K101, LRC Record No. K. 15104, the dispositive portion of which reads as follows:

WHEREFORE,judgmentisherebyrenderedasfollows:
1. The parcel of land described in Plan Psu-161277 and the improvements thereon situated in the Poblacion of the
Municipality of Banga, Province of Aklan, Philippines, with an area of 4,845 square meters is brought under the operation of
the property registration decree (PD No. 1529) and the title thereto is registered and confirmed in the name of applicant Jose
Lachica, married to Adela Raz of Kalibo, Aklan, Philippines;
2. A ten (10) meter road width along the national road mentioned in the application be segregated for future road
widening program upon payment of just compensation to be annotated at the back of the title;
3. For lack of merit, the opposition filed by the spouses Manuel and Susana Braulio, Octabela Alba Vda. De Raz,
Rodolfo Alba, Lourdes Alba and Beatriz Alba are hereby DISMISSED.

SOORDERED.[1]
The factual antecedents of the case as summed by the trial court and adopted by the Court of Appeals are as
follows:

ApplicantJoseLachicafiledthisapplicationfortitletolandonApril28,1958withtheclaimthattheland
appliedforwaspurchasedbyhimandhiswife,AdelaRazfrom,fromoneEulalioRaz.Thedocuments
attachedtotheapplicationare:technicaldescription,surveyorscertificate,certificationbythechief
deputyassessorofAklanandtheblueprintofPsu161277.
TheinitialhearingwasscheduledforOctober31,1958andthecertificateofpublicationintheOfficial
GazettewasissuedonSeptember23,1958.Thecertificationofpostingofthenoticeofinitialhearingwas
issuedonOctober13,1958.
Thelandappliedforisresidential,situatedinthePoblacionofBanga,Aklan,withanareaof4,845square
meters,boundedonthenortheastbythepropertyoftheMunicipalityofBanga(Sketch,Exh.F).

TheinitialhearingwasheldonOctober31,1958.Anorderofgeneraldefaultwasissuedbutthosewho
presentedtheiropposition,namely,OctabelaAlbaVda.DeRaz,ManuelandSusanaBraulio,JoseRago,
representingApoloniaRebeco,theDirectorofLandsandtheMunicipalityofBangarepresentedbythe
ProvincialFiscal,weregiventhirty(30)daystofiletheirwrittenopposition.
ManuelC.BraulioandSusanaP.BrauliofiledtheiroppositiononOctober31,1958.Theyopposedthe
registrationofthesoutheasternportionofthe240squaremetersofthelandappliedforallegingthatthey
aretheownersinfeesimpleandpossessorsofsaidportionandalltheimprovementsthereonfornotless
than70yearstogetherwiththeirpredecessorininterestderivingtheirtitlebypurchasefromtheoriginal
owners.TheyprayedfortheCourttodeclarethemthetrueandabsoluteownersofthedisputedportionof
thesameintheirnames.
OnOctober31,1958,OctabelaVda.deRazfiledheropposition.
JoseRagofiledhisoppositiononNovember29,1958asthedulyconstitutedattorneyinfactofApolonia
Rebecoalthoughnospecialpowerofattorneywasattached.Heopposedtheregistrationofthe
northeasternportionofthelandappliedfor,withanareaof43.83squaremeters.Heallegedthathis
principalistheownerbyrightofsuccessionandisinthepossessionofsaidportionwithallits
improvementsformorethan80yearstogetherwithhispredecessorininterest,continuously,peacefully
andopenlyunderclaimofownership.Heprayedthathisprincipalbedeclaredthetrueandabsoluteowner
ofthedisputedportionof43.83squaremeters.
OnMarch22,1966,theCourtissuedanOrderallowingtheapplicanttohireanothersurveyortosegregate
thenoncontroversialportionofthelandappliedforandtonotifytheoppositorsandtheircounsels.
OnJanuary12,1970,amotiontolifttheorderofgeneraldefaultandtoadmittheattachedoppositionof
RodolfoAlba,LourdesAlbaandBeatrizAlba,aswellasamotiontoadmittheattachedamendedpetition
ofOctabelaVda.deRazwerefiled.TheCourtinitsorderdatedMarch21,1970admittedsaidopposition
andsetasidetheorderofdefault.
Intheiropposition,RodolfoAlba,LourdesAlba,representedbytheirattorneyinfact,OctabelaAlbaVda.
deRaz,allegedthattheyarethecoownersofaportionofthelandappliedforwithanareaof2,262
squaremetersboundedonthenorthbyJanuarioMasigon,NicolasRealtor,AgustinaRebeldiaand
ApoloniaRebeco,onthesouthbyEulalioRazandonthewestbythepublicmarketofBanga.They
claimedtohaveinheritedtheabovementionedportionfromtheirlatefather,EufrosinoM.Alba,who
purchasedthesamefromDionisiaRegadoin1918.Hence,theyhavebeeninpossessioncontinuously,
openlyandpeacefullyunderclaimofownershipoftheabovementionedportionfornotless70
years.Theyprayedthatthedisputedportionof2,262squaremetersberegisteredastheirpro
indivisoproperty.
Inheramendedopposition,OctabelaAlbaVda.deRazopposedtheregistrationofthesoutheastern
portionofthelandappliedforwithanareaof331.44squaremeters.Sheclaimedtohavebeeninpeaceful,
continuousandopenpossessiontogetherwithherdeceasedhusband,EulalioRaz,underclaimof
ownershipoftheabovementionedportionfornotlessthan70years,bypurchasefromitsowners.She
likewiseopposedtheregistrationofthewesternportionofthelandappliedfor,withanareaof676square
meters,havingpurchasedthesamefromitsoriginalownerson(sic)herpredecessorininteresthasbeen
open,peacefulandcontinuousunderclaimofownershipforaperiodofnotlessthan70years.Sheprayed
thattheportionof331.44squaremetersberegisteredinhernameandthatoftheheirsofEulalioRaz,pro
indiviso.,andtheotherportionof676squaremetersberegisteredsolelyinhername.
OnFebruary25,1970,theapplicantDr.JoseLachicafiledhisconsolidatedoppositionandreplytothe
motiontoliftorderofdefaultstatingthatthereisnoreasontodosoundertheRulesofCourt,andthatthe
oppositionofRodolfoAlba,LourdesAlbaandBeatrizAlba,aswellastheamendedoppositionof
OctabelaAlbaVda.deRazarewithoutmeritinlawandinfact.
OnMarch21,1970,themotiontolifttheorderofgeneraldefaultwasgrantedandtheoppositionof
RodolfoAlba,LourdesAlbaandBeatrizAlba,aswellastheoppositionofOctabelaAlbaVda.deRaz
werealladmitted.

InthehearingofMarch3,1972,applicantofferedforadmissionexhibitsAtoIandthetestimoniesof
PedroRuiz(April20,1971),JoseRago(Oct.23,1970)andDr.JoseLachica(July16,1971;Feb.10,
1972).TheCourtadmittedthesame.
OnMarch13,1974,theCourtissuedanorderappointingEngr.AngelesRelortoactasCommissionerand
delimittheportionsclaimedbythethreesetsofoppositorsandsubmitanamendedapprovedplantogether
withthetechnicaldescriptionforeachportion.
TheCommissionersreportandsketchwassubmittedonDecember4,1974.Theapplicantfiledhis
oppositiontotheCommissionersreportonDecember12,1974.TheCourtinitsorderofDecember13,
1974requiredtheCommissionertosubmitanamendedreportandamendedsketch.
TheCommissionerscorrectedreportandsketchwassubmittedonFebruary24,1975whichtheCourt
approvedonFebruary25,1975therebeingnoobjectionfromtheparties.
OnMarch15,1977,theCourtissuedanorderwherebythetestimonyofoppositorOctabelaAlbaVda.de
RazwasstrickenofftherecordforherfailuretoappearinthescheduledhearingonMarch15,1977.
Again,initsorderdatedMay27,1977thetestimonyofOctabelaAlbaVda.deRazwasstrickenoff
recordbecausethelatterwasbedriddenandcannotpossiblyappearforcrossexamination.
OppositorOctabelaAlbaVda.deRazsubstitutedbyherheirsfiledaformalofferofexhibitsonAugust
24,1988.ApplicantfiledhiscommentstheretoonAugust29,1988.TheCourtadmittedsaidexhibitsand
thetestimonyoftheirwitnessonMarch1,1989.
InthisapplicatonfortitletolandfiledbyapplicantJoseLachica,fouroppositionswerefiledbythe
following:
1. Jose Rago, in representation of Apolonia Rebeco;
2. Manuel C. Braulio and Susana Braulio;
3. Rodolfo, Lourdes and Beatriz, all surnamed Alba, represented by Octabela Alba Vda. de Raz; and
4. Octabela Alba Vda. de Raz.

InthehearingofOctober23,1970,counselforoppositorJoseRagomanifestedthathewouldfilea
motionforwithdrawalofoppositionandJoseRagohimselfdeclaredhisconformity(Tsn,Oct.23,1970,
p.5).Althoughnoformalmotiontowithdrawwasactuallyfiled,oppositorRagohasnotpresented
evidenceonhisbehalf;hence,hisoppositionmustbedisregarded.
AsregardsoppositorManuelC.BraulioansSusanaBraulio,adeedofsalesupposedlyexecutedby
SusanaBraulioandOctabelaAlbaVda.deRazin1956wasidentifiedbyFelimonRaz,awitnessforthe
oppositors(Tsn,Sept.29,1977,pp.3to4).However,saiddeedcannotbefoundintherecords.Evenso,
theBraulioshavenotpresentedevidencetoshowthatbythetimethisapplicationwasfiled,theyandtheir
predecessorsininteresthavebeeninactual,open,public,peacefulandcontinuouspossessionoftheland
claimed,inconceptofowner,foratleast10yearssufficienttoacquiretitlethereto(Arts.1117,1118,
1134,CivilCodeofthePhilippines).Assuch,theoppositionofManuelC.BraulioandSusanaBraulio
mustbedismissed.[2]
On the basis of the testimonial and documentary evidence presented by the applicant and the oppositor Raz, the
court a quo rendered judgment in favor of the applicant as stated at the outset. In dismissing the claim of the remaining
oppositors Rodolfo, Lourdes and Beatriz, all surnamed Alba, represented by Octabela Alba Vda. de Raz and Octabela
Alba Vda. de Raz herself, the trial court in sum noted that said oppositors have never offered any explanation as to the
non-payment of realty taxes for the disputed portions of the subject property from 1941 to 1958 while the
respondent/applicant continuously paid taxes under Tax Declaration No. 14181 covering said property from 1945-1958
when the case was filed per certification issued by the Municipal Treasurers Office of Banga. [3] In rendering judgment
in favor of respondent/applicant, the trial court stressed that while it is true that tax receipts and declarations of
ownership for tax purposes are not incontrovertible evidence of ownership, they become strong evidence of ownership
acquired by prescription when accompanied by proof of actual possession.
Dissatisfied, petitioners interposed an appeal to the Court of Appeals which affirmed the decision of the trial court.

Unfazed, petitioners now come to this Court arguing that

1. The Civil law provisions on prescription are inapplicable.
2. The applicable law is Section 48 [a] of the Public Land Law or Act 141, as amended.
3. Private respondent has not acquired ownership in fee simple, much less has he met the conditions for judicial confirmation
of imperfect title under Section 48 [a] of Act 141, as amended, except perhaps for a 620 square meter portion of the
land applied for because:
3.1. There is absolutely no proof of the alleged sales made by Raz and Alba.
3.2. There is absolutely no reliable proof of the alleged theft of the deeds of sale.
3.3. The identity of the land has not been established.
3.4. The Court of Appeals misapplied the basic rules governing the introduction of secondary evidence.
3.5. The applicant/respondents Tax Declaration No. 14181 is a doctored tax declaration.
3.6. Applicant/respondents tax declarations have no probative value.
3.7. Applicant/respondent has not satisfied the required quantum of evidence in land registration cases.
3.8. Petitioners-oppositors have proven their right over the subject property.

In rendering judgment in favor of private respondent, the Court of Appeals reasoned, inter alia, as follows:

Onthebasisofthetestimonialanddocumentaryevidencepresentedbytheapplicant,thetrialcourtdid
noterrinconfirmingthattheapplicantistheabsoluteownerinfeesimpleofthepropertysubjectofthe
applicationforregistrationentitlinghimtoregisterthesameinhisnameundertheoperationofPD1529.
Itisofnomomentthattheapplicantfailedtoproducetheoriginalsofthoseotherdeeds/documentsof
conveyances,forhewasabletopresentsufficientsubstantialsecondaryevidence,inaccordancewiththe
requirementsofSection4,Rule130oftheRevisedRulesofCourt,nowSection5,sameRuleofthe
RevisedRulesonEvidence,andthedoctrinesinpoint.
Thus,Governmentvs.Martinez,44Phil.817,explainedthatwhentheoriginalwritingisnotavailablefor
onereasonoranotherwhichisthebestorprimaryevidence,toproveitscontentsisthetestimonyofsome
onewhohasreadorknownaboutit.Republicvs.CourtofAppeals,73SCRA148,laidoutthefoundation
beforesecondaryevidenceisintroduced,thatthedueexecution,deliveryandreasonfornonproductionof
theoriginalwritingmustfirstbeproduced.RaylagovsJarabe,22SCRA1247,ruledthatitisnot
necessarytoprovethelossoftheoriginaldocumentbeyondallpossibilityofmistake.Areasonable
probabilityofitslossissufficientandthismaybeshownbyabonafide(sic)anddiligentsearch,
fruitlesslymade,foritinplaceswhereitislikelytobefound.Afterprovingthedueexecutionand
deliveryofthedocument,togetherwiththefactthatthesamehasbeenlostordestroyed,itscontentsmay
beproved,amongothers,bytherecollectionofwitnesses.AndBeallvs.Dearing,7ala.126;
andBogardasvs.TrinityChurch,4Sandf.Ch.(Nn.y.)639,areoftheviewthatthatwherethelost
documentsaremorethanthirty(30)yearsoldandwouldthusprovethemselvesifproduced,secondary
evidenceoftheircontentsisadmissiblewithoutproofoftheirexecution.
Inthecaseatbar,petitioneracquiredthepropertyin19401941.HepresentedtheDeed(Exh.G)executed
bythevendorFaustinoMartirez.Whilehefailedtopresenttheotherdeedsofsalecoveringtheother
portionsoftheproperty,hehassufficientlyestablishedthattheywerenotarizeddocumentsandwere
takenbyhismotherinlawsometimein1956.Hereportedthelosstotheauthoritiesandevenfiledacase
oftheft.Hefurtherexertedeffortsandmadeadiligentsearchofthosedocumentsfromthenotarypublic
butinvain.HepresentedtheclerkoftheMunicipalTreasurersOfficeofBanga,whotestifiedhavingseen
thosedeedsastheywerepresentedtohimbytheapplicantandwhichwereusedasbasisforthe
preparationandissuanceofTaxDeclarationNo.14181inthenameofthetaxdeclarant.TaxDeclaration
No.14181(Exh.H)waspresentedinCourt,provingthatthelandwasdeclaredfortaxpurposesinthe
nameoftheapplicantandhiswife.Theapplicanthasbeenpayingtherealtytaxcoveringtheproperty
since1945andbeyond1958,whentheapplicationforregistrationwasfiledincourt,percertificationof
theMunicipalTreasurerofBanga(Exh.1).

Inresume,WefindandsoholdasdidthetrialcourtthatDr.JoseLachicaistheaboluteownerinfee
simpleofthelanddescribedinhisapplicationforitsoriginalregistrationinhisname.Thelandcontains
anareaof4,845squaremeters,moreorless,situatedinBanga,Aklan,and
BoundedontheNE.,alongline12,bypropertyofApoloniaRimate;ontheSE.,alongline23,by
Nationalroad;ontheSW.,alongline34,bypropertyoftheMpl.GovernmentofBanga(PublicMarket);
andontheNW.,alongline41,bypropertyoftheMunicipalGovernmentofBanga(Public
Market).Beginningatapointmarked1onplan,beingN.45deg.02E.,423.38m.fromB.L.L.M.1,Mp.
ofBanga,Aklan;
thence,S.33deg.46E.,87.66m.topoint2
thence,S.56deg.42W.,63.81m.topoint3
thence,N.37deg.22W.,59.26m.topoint4
thence,N.33deg.42E.,73.08m.tothepointof
beginning,xxxAllpointsreferredtoareindicatedontheplanandaremarkedonthegroundbyP.L.S.
Cyl.Conc.Mons.Bearingstruedateofthesurvey,January25,1957,andthatoftheapproval,October3,
1957.
Theapplicanthasbeeninpublic,open,continuousandadversepossessionofthepropertysince194041
uptothepresenttotheexclusionofall,andtherebyalsoacquiredthepropertybyacquisitiveprescription,
inaccordancewithSections40and43ofAct190,otherwiseknownastheCodeofCivilProcedure,
havingbeeninactualandadversepossessionunderclaimofownershipforoverten(10)years,andthusin
whateverwayhisoccupancymighthavecommencedorcontinuedunderaclaimoftitleexclusiveofany
otherrightandadversetoallotherclaimants,resultedintheacquisitionoftitletothelandbyacquisitive
prescription(Vda.deDelimavs.Tio,32SCRA516).
Indeed,toborrowtheaptwordsoftheponenteintheDelimacase,suchproofofownershipof,andthe
adverse,continuouspossessionoftheapplicantsince1940,stronglyxxxmilitateagainstanyjudicial
cognizanceofamatterthatcouldhavebeenwithheldinitsken,hence,whateverrightoppositorsmay
havehadoverthepropertyoranyportionthereofwastherebyalsolostthroughextinctiveprescriptionin
favoroftheapplicantwhohadbeeninactual,open,adverseandcontinuouspossessionofthelandapplied
forintheconceptofownerforover10yearswhentheapplicationforregistrationwasfiledincourt. [4]
It is a fundamental and settled rule that findings of fact by the trial court and the Court of Appeals are final, binding
or conclusive on the parties and upon this Court, [5] which will not be reviewed[6] or disturbed on appeal unless these
findings are not supported by evidence[7] or unless strong and cogent reasons dictate otherwise.[8]
More explicitly, the findings of fact of the Court of Appeals, which are as a general rule deemed conclusive, may
be reviewed by this Court in the following instances:
1.] When the factual findings of the Court of Appeals and the trial court are contradictory; [9]
2.] When the conclusion is a finding grounded entirely on speculation, surmises and conjectures; [10]
3.] When the inference made by the Court of Appeals from its findings of fact is manifestly mistaken, absurd [11] or
impossible;
4.] Where there is a grave abuse of discretion in the appreciation of facts; [12]
5.] When the appellate court in making its findings went beyond the issues of the case, and such findings are contrary to
the submission of both appellant and appellee;
6.] When the judgment of the Court of Appeals is premised on a misapprehension of facts; [13]
7.] When the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties which, if properly
considered, would justify a different conclusion;[14]
8.] When the findings of fact are themselves conflicting;
9.] When the findings of fact are conclusions without citation of specific evidence on which they are based; and

10.] When the findings of fact of the Court of Appeals are premised on the absence of evidence but such findings are
contradicted by the evidence on record.[15]

The primordial issue to be resolved is whether or not the private respondent/applicant is entitled to the
confirmation of his ownership in fee simple for the 4, 845 square meter parcel of land he applied for.
In sum, both the trial court and the Court of Appeals adjudicated and confirmed private respondent/applicants title
to the land on the basis of the findings that: 1.] the private respondent/applicant purchased the land from Faustino
Martirez; 2.] the subject land is covered by Tax Declaration No. 14181; 3.] the private respondent/applicant has paid the
realty taxes on the land from 1945 up to the filing of his application in 1958; 4.] the private respondent/applicant has
been in actual, open and continuous possession of the subject land in the concept of owner since 1945, and 5.] the
private respondent/applicant has acquired the land by prescription.
As stated earlier, a review of the findings of fact of the Court of Appeals is not a function that this Court normally
undertakes[16] unless the appellate courts findings are palpably unsupported by the evidence on record or unless the
judgment itself is based on a misapprehension of facts. [17] A thorough review of the record convinces this Court that the
general rule with regard to the conclusiveness of the trial courts and appellate tribunals factual findings should not be
applied because there are material circumstances which, when properly considered, would have altered the result of the
case.
First, a circumspect scrutiny of the evidence extant on record reveals that with the exception of 620 square meters,
there has been no satisfactory showing of how private respondent/applicant acquired the remainder of the subject land.
As can be gathered from the discussion of the appellate court, as well as the arguments proffered by private
respondent, he acquired the land in question from three (3) sources, namely: a.] A Deed of Sale dated August 13, 1941
allegedly executed by Faustino Martirez covering 840 square meters; b.] 300 square meters allegedly purchased from
private respondents father-in-law Eulalio Raz, and c.] 3,725 square meters private respondent allegedly bought in 1940
from Eufrocino Alba.
The sale involving the first parcel of land covering 840 square meters, was not questioned by petitioners as its
technical description delineated in the Escritura De Venta Absoluta dated August 13, 1941,[18] to wit:

Unterrenosolarresidenciaantespalayeroregado,actuadoenelcascocentraldelmunicipiodeBanga,
Capiz.Sinningunamejora,deunaextensionsuperficialdeochocientoscuarentametroscuadrados(840
mts.cds.)6seancuarentametrosdefrenteporotrosveinteyunmetrodefondo,cuyoslinderosporel
NorteconpropiedaddeEufrosinoAlbayconEulalioRaz;porEsteconEulalioRazyconlacarretera
provincialdeKaliboaBanga;porSurconlamismacarreteraprovincialyconterrenodelmunicipiopara
mercado;yporalOesteconalterrenodelmercadomunicipaldeBangayconpropiedaddeEufrosino
Albayalterrenotienessusmojonesdecementoentodossuscuatrocantosdelinderiaysinotrolimite
visibledelinderiamasquedichosmojonesyestaamillaradoaminombreenunasolahojadeclaratoriade
propiedadTaxNo.12374enlaOficinadelTasadorProvincialdeCapiz,cuyovaloramilaradoactuales
veintepesos(P20.00)xxx
leaves no room for doubt as to its identity, total area of 840 square meters as well as its dimensions of 40 meters in
front and 21 meters at the base. How this parcel was further reduced to 620 square meters is explained by the fact that
the Municipal Government of Banga appropriated 220 square meters thereof for the Banga Public Market Road.
What, however, is seriously contested are the alleged purchases of the other two parcels from Eulalio Raz
measuring 300 square meters and from Eufrocino Alba measuring 3,725 square meters owing to the questionable
circumstances surrounding their acquisition.
The records disclose that the subject land was originally owned by Dionisia Regado under Tax Declaration No.
802.[19] The records further reveal that Dionisia Regado sold: [1.] 1,850 square meters of the land to the Municipality of
Banga evidenced by a Spanish document denominated as a deed of sale dated April 29, 1914; [20] [2.] 1,320 square
meters to Eulalio Raz evidenced by a document entitled Escritura de Venta Absoluta dated September 6, 1918,[21] and
[3.] 2,938 square meters to Eufrocino Alba evidenced by a deed of conveyance dated September 6, 1918 written in
Spanish.[22]
Faustino Martirez acquired a portion of 840 square meters from Eulalio Raz on January 15, 1933. [23] Raz retained
480 square meters, however, he and his wife Octabela Alba conveyed a 240 square meter portion thereof to Susana
Braulio on November 5, 1956.[24] Subsequently on May 29, 1969, the heirs of Eufrocino Alba sold a 676 square meter
portion of the parcel purchased by Eufrocino to Octabela Alba Vda. de Raz. [25] The deed of conveyance was duly
registered with the Registry of Deeds of Aklan pursuant to Act No. 334 on June 17, 1969 [26] and is covered by Tax
Declaration No. 332 in the name of Eulalio Raz, her husband.[27]

Other than the foregoing transactions involving the subject land which are borne out by the documentary evidence
on record, private respondent/applicant did not produce the alleged deeds of conveyances evidencing the purported
transfers made by Eulalio Raz and Eufrocino Alba in his favor. Instead he relied chiefly on secondary evidence to prove
the existence thereof which was sustained by both the trial and the appellate courts. Such reliance on secondary
evidence vis--vis the peculiar facts prevailing in this case rests on infirm legal bases much more so in the face of the
overwhelming documentary evidence of petitioners arrayed against it because

...[a]contractofsaleofrealtycannotbeprovenbymeansofwitnesses,butmustnecessarilybe
evidencedbyawritteninstrument,dulysubscribedbythepartycharged,orbyhisagent,orbysecondary
evidenceoftheircontents.Nootherevidence,therefore,canbereceivedexceptthedocumentaryevidence
referredto,insofarasregardssuchcontracts,andthesearevaluelessasevidenceunlesstheyaredrawn
upinwritinginthemanneraforesaid.[28]
Anapplicantforregistrationofland,ifhereliesonadocumentevidencinghistitlethereto,mustprove
notonlythegenuinenessofhistitlebuttheidentityofthelandthereinreferredto.Thedocumentinsucha
caseiseitherabasisofhisclaimforregistrationornotatall.If,asinthiscase,heonlyclaimsaportion
ofwhatisincludedinhistitle,hemustclearlyprovethatthepropertysoughttoberegisteredisincluded
inthattitle.[29]
Second, there are glaring variances in the identities and technical descriptions of the land applied for by private
respondent/applicant and the land he purportedly purchased from Eufrocino Alba.
Private respondent/applicant alleged that he purchased the remainder of the subject land measuring 3,725 square
meters from Eufrocino Alba sometime in 1940 averring that this parcel is listed as Item No. 5 of his Exhibit I which is
denominated as an Inventory And Appraisal Of The Properties Of The Spouses Adela Raz De Lachica (Deceased) and
Dr. Jose Lachica. Item No. 5[30] of the said inventory described the parcel of land mentioned therein as follows:

5.Unaparceladeterrenococalsecano,amillaradoennombredeEufrocinoAlbabajoelTaxNo.12792
porvalordeP390.00,situadoenelmunicipiodeBanga,Capiz,quelindaelNorteconLorenzoRetiro,y
SilverioRelis;alEsteconlacarreteraprovincialBangaLibacao;alsurconBienvenidoM.Albayal
OesteconCiriloralayAdelaRaz;conunaextensionaproximadadeuna(1)hectarea(20)areasy(35)
centiareaspocomasomenos.(Note:SaidpropertywaspurchasedbythespousesJoseLachicaandAdela
RazLachicafromEufrocinoM.AlbaintheamountofP500.00asevidencedbyaEscriturade
CompraventaexecutedonNovember25,1940,atHimamaylan,NegrosOccidentalandnotarizedbyAtty.
ConradoGensiano,asReg.Not.122,Pag.67,LibroVIII,Serie1940).
On the other hand, the land applied for is described technically per Psu 161277 as

Aparcelofland(asshownonPlanPsu161277),situatedinPoblacion,MunicipalityofBanga,Province
ofAklan.BoundedontheNE.,alongline12,bypropertyofApoloniaRimate;ontheSE.,alongline23,
byNationalRoad;ontheSW.,alongline34,bypropertyoftheMpl.GovernmentofBanga(Public
Market);andontheNW.,alongline41,bypropertyoftheMunicipalGovernmentofBanga(Public
Market).Beginningatapointmarked1onplan,beingN.45deg.02E.,423.38m.fromB.L.L.M.1,Mp.
ofBanga,Aklan;
thenceS.33deg.46E.87.66m.topoint2
thenceS.56deg.42W.,63.81m.topoint3
thenceN.37deg.22W.,59.26m.topoint4
thenceN.33deg.42E.,73.08m.tothepointof
beginning,containinganareaofFOURTHOUSANDEIGHTHUNDREDANDFORTYFIVE(4,845)
SQUAREMETERS.Allpointsreferredtoareindicatedontheplanandaremarkedonthegroundby
P.L.S.Cyl.Conc.Mons.Bearingstruedateofsurvey,January25,1957,andthatoftheapproval,October
3,1957.[31]
It will be readily noted vis--vis the foregoing that: a.] the land applied for is covered by Tax Declaration No. 14181
while the parcel allegedly purchased from Eufrocino Alba is covered by Tax Declaration No. 15792; b.] the land
applied for is palayero whereas the land allegedly acquired from Eufrocino Alba is cocal secano. Palay is unhusked
rice,[32] thus, the term palayero refers to land devoted to the planting of rice; cocal, on the other hand, means coconut

tree plantation[33] while secano denotes unwatered land or a dry sand bank; [34] c.] the land applied for has an area of
4,845 square meters whereas the land supposedly sold by Eufrocino Alba measures 12,035 square meters; d.] the land
applied for is bounded on the NE by the Banga Public Market, on the SE by Apolonia Rimate, on the SW by the BangaKalibo National Road; and on the NW by the Banga Public Market whereas the land allegedly obtained from Eufrocino
Alba is bounded on the N by Ernesto Retino and Silverio Relis, on the E by the Banga-Libacao Carretera Provincial,
on the S by Bienvenido Alba and on the W by Cirilo Rala and Adela Raz. It needs be stressed in this regard that a
person who claims that he has better right to real property must prove not only his ownership of the same but also must
satisfactorily prove the identity thereof.[35]
Third, both trial and appellate courts placed undue reliance on Tax Declaration No. 14181 considering that there is
no satisfactory explanation of how the area of land covered by Tax Declaration No. 14181 geometrically ballooned
from a modest 620 square meter lot to a huge parcel measuring 4, 845 square meters.
As pointed out by petitioners, Tax Declaration No. 14181 was preceded by 1954 Tax Declaration No. 13578 in the
name of private respondent/applicant and his spouse which shows that the land declared therein for taxation purposes
covers an area of 620 square meters. Tax Declaration No. 13578 was preceded by 1953 Tax Declaration No. 13040 in
the name of Adela Raz, private respondents wife. The land declared for taxation purposes therein also has an area of
620 square meters. Tax Declaration No. 134040 was preceded by 1947 Tax Declaration No. 6528 in the name of private
respondents wife, Adela Raz. The land declared therein for taxation purposes likewise measures 620 square meters.
It appears that the quantum leap from 620 square meters in 1947 to 4,845 square meters in 1956 came about on
account of an affidavit dated November 17, 1956 wherein private respondent/applicant requested [36] the Municipal
Assessor of Banga to issue a revised tax declaration covering 4,845 square meters on the bare claim that the area has
been decreased to only 620 square meters. The timing of the revision and its proximity to the date of filing of the
application can not but engender serious doubts on the application more so considering that prior thereto realty tax
payments covering the period 1945 to 1956 covered an area measuring 620 square meters and private
respondent/applicant is banking on said payments to claim possession and ownership over the same period for an
infinitely larger area of 4,845 square meters.
A tax declaration, by itself, is not conclusive evidence of ownership. [37] Tax declarations for a certain number of
years, although constituting proof of claim of title to land, [38] is not incontrovertible evidence of ownership unless they
are supported by other effective proof.[39] It was, thus, held in one case[40] that where realty taxes covering thirty-one (31)
years were paid only a few months prior to the filing of an application, such payment does not constitute sufficient
proof that the applicant had a bona fide claim of ownership prior to the filing of the application. Still in another case,
[41]
the claim that the applicant had been in continuous and uninterrupted possession of the disputed land was not given
credence because it was negated by the fact that he declared the land for taxation purposes in October 1959 when he
filed his application for registration although he could have done so in 1937 when he allegedly purchased the land. A
belated declaration is, furthermore, indicative that the applicant had no real claim of ownership over the subject land
prior to the declaration[42] and where there are serious discrepancies in the tax declarations as in this case, registration
must be denied.[43] If at all, the foregoing facts only serves to underscore private respondent/applicants crafty attempt to
cloak with judicial color his underhanded scheme to seize the adjoining parcels of land and to enrich himself at the
expense of its rightful owners.
Fourth, the lower courts reliance on prescription is not well-taken given the peculiar facts prevailing in this case.
The law in force at the time an action accrues is what governs the proceeding consistent with the fundamental
dictum that laws shall have no retroactive effect, unless the contrary is proved. [44]Basic is the rule that no statute, decree,
ordinance, rule, regulation or policy shall be given retrospective effect unless explicitly stated so. [45] Along the same
vein, a courts jurisdiction depends on the law existing at the time an action is filed [46]and a law continues to be in force
with regard to all rights which accrued prior to the amendment thereof.[47]
In this case, the controlling statute when the private respondent/applicant filed his application for registration on
April 28, 1958 is Section 48 of Commonwealth Act 141, as amended by RA Nos. 1942 and 6236,[48] which states that:

SEC.48.ThefollowingdescribedcitizensofthePhilippines,occupyinglandsofthepublicdomainor
claimingtoownanysuchlandsoraninteresttherein,butwhosetitleshavenotbeenperfectedor
completed,mayapplytotheCourtofFirstInstanceoftheprovincewherethelandislocatedfor
confirmationoftheirclaimsandtheissuanceofacertificateoftitletherefor,undertheLandRegistration
Act,towit:
(a)ThosewhopriortothetransferofsovereigntyfromSpaintotheUnitedStateshaveappliedforthe
purchase,compositionorotherformofgrantoflandsofthepublicdomainunderthelawsandroyal
decreestheninforceandhaveinstitutedandprosecutedtheproceedingsinconnectiontherewith,buthave
withorwithoutdefaultupontheirpart,orforanyothercause,notreceivedtitletherefor,ifsuch
applicantsorgranteesandtheirheirshaveoccupiedandcultivatedsaidlandscontinuouslysincethefiling
oftheirapplications.[49]

(b)Thosewhobythemselvesorthroughtheirpredecessorsininteresthavebeeninopen,continuous,
exclusiveandnotoriouspossessionandoccupationofagriculturallandsofthepublicdomainunder
abonafideclaimofownership,foratleastthirtyyearsimmediatelyprecedingthefilingoftheapplication
forconfirmationoftitleexceptwhenpreventedbywarorforcemajeure.Theseshallbeconclusively
presumedtohaveperformedalltheconditionsessentialtoaGovernmentgrantandshallbeentitledtoa
certificateoftitleundertheprovisionsofthischapter. [50]
(c)Membersofthenationalculturalminoritieswhobythemselvesorthroughtheirpredecessorsin
interesthavebeeninopen,continuous,exclusiveandnotoriouspossessionandoccupationoflandsofthe
publicdomainsuitabletoagriculture,whetherdisposableornot,underabonafideclaimofownershipfor
atleast30yearsshallbeentitledtotherightsgrantedinsubsection(b)hereof. [51]
A circumspect scrutiny of the assailed Decision readily shows that in affirming the ruling of the trial court, the
Court of Appeals relied on the provisions of Section 19 of Act 496 [52] in relation to the Civil Codes provisions on
prescription on the assumption that the subject land is private land. Therein lies the flaw in the appellate courts
postulate. The application for registration of private respondent is for the judicial confirmation of an imperfect title
considering that the land is presumed under the Regalian Doctrine to be part of the public domain.
Public lands are broadly classified into 1.] Alienable or disposable lands; and, 2.] Inalienable or non-disposable
public lands. Non-disposable public lands or those not susceptible of private appropriation include a.] Timber lands;
and, b.] Mineral lands.[53] For purposes of administration and disposition, the lands of the public domain classified as
disposable or alienable are further sub-classified into a.] Agricultural; b.] Residential, commercial, industrial or for
similar productive purposes; c.] Educational, charitable or other similar purposes, and d.] Reservations for town sites
and for public and quasi-public purposes.[54]
From the foregoing classifications, public agricultural land may be defined as those alienable portions of the public
domain which are neither timber nor mineral lands. Thus the term includesresidential, commercial and industrial lands
for the reason that these lands are neither timber nor mineral lands.[55]
On the other hand, Section 19 of Act No. 496, as amended, permits the registration of private lands claimed to be
owned by the applicant in fee simple which refer to:
1.] Lands acquired by various types of titles from the government during the Spanish Regime by way of grants
by the Spanish crown namely the: a.] Titulo real or royal grant; b.]Concession especial or special grant; c.]
Composicion con el estado title or adjustment title; d.] Titulo de compra or title by purchase and; e.] Informacion
posesoria or possessory information title, which could become a Titulo gratuito or a gratuitous title;[56]
2.] Lands that are claimed to be owned by accession, i.e. accretion, avulsion, formation of islands, abandoned river beds,
as provided for in Articles 457, 461 and 464 of the Civil Code; and
3.] Lands which have been acquired in any other manner provided by law.

Suffice it to state that the land sought to be registered by private respondent hardly falls under any of the latter
classifications of land referred to by Act No. 496, as amended. Given the foregoing facts, prescription in the manner
invoked by both courts can not be pleaded to bolster private respondent/applicants claim because

...[N]opubliclandcanbeacquiredbyprivatepersonswithoutanygrant,expressorimpliedfromthe
government;itisindispensablethattherebeashowingoftitlefromthestate.... [57]
xxxxxxxxx
Indeed,thepossessionofpublicagriculturalland,however,longtheperiodmayhaveextended,neverconferstitle
theretouponthepossessor.[58]Thereason,toreiterateourruling,isbecausethestatuteoflimitationswithregardto
publicagriculturallanddoesnotoperateagainsttheState,unlesstheoccupantcanprovepossessionandoccupationof
thesameunderclaimofownershipfortherequirednumberofyearstoconstituteagrantfromtheState.[59]
Fifth, even assuming ex gratia argumenti that prescription can be applied in the manner invoked by the trial court
and the appellate court, it must be pointed out that

...[W]hileArt.1134oftheCivilCodeprovidesthat(o)wnershipandotherrealrightsoverimmovable
propertyareacquiredbyordinaryprescriptionthroughpossessionoftenyears,thisprovisionoflawmust
bereadinconjunctionwithArt.1117ofthesameCode.Thisarticlestatesthatxxx(o)rdinaryacquisitive
prescriptionofthingsrequirespossessioningoodfaithandwithjusttitleforthetimefixedby
law.Hence,aprescriptivetitletorealestateisnotacquiredbymerepossessionthereofunderclaimof
ownershipforaperiodoftenyearsunlesssuchpossessionwasacquiredconjustotituloybuenafe(with

coloroftitleandgoodfaith).[60]Thegoodfaithofthepossessorconsistsinthereasonablebeliefthatthe
personfromwhomhereceivedthethingwastheownerthereof,andcouldtransmithisownership. [61]For
purposesofprescription,thereisjusttitlewhentheadverseclaimantcameintopossessionoftheproperty
throughoneoftherecognizedmodesofacquisitionofownershiporotherrealrightsbutthegrantorwas
nottheownerorcouldnottransmitanyright.[62]
It can not be said that private respondents possession was con justo titulo y buena fe. On the contrary, private
respondent/applicants act of appropriating for himself the entire area of 4,845 square meters to the exclusion of
petitioners who have been occupying portions of the disputed land constituted acts of deprivation of the latters rights
which is tantamount to bad faith. Indeed this Court has ruled that the

...[c]oncealmentandmisrepresentationintheapplicationthatnootherpersonshadanyclaimorinterest
inthesaidland,constitutespecificallegationsofextrinsicfraudsupportedbycompetentproof.Failure
andintentionalomissionoftheapplicantstodisclosethefactofactualphysicalpossessionbyanother
personconstitutesanallegationofactualfraud.[63]Likewise,itisfraudtoknowinglyomitorconcealafact,uponwhichbenefit
isobtainedtotheprejudiceofathirdperson.[64]

Suffice it to state in this regard that to allow private respondent/applicant to benefit from his own wrong would run
counter to the maxim ex dolo malo non oritur actio - no man can be allowed to found a claim upon his own
wrongdoing.[65]
It need not be overemphasized that extraordinary acquisitive prescription can not similarly vest ownership over the
property upon private respondent/applicant because Article 1137 of the Civil Code states in no uncertain terms that

ART.1137.Ownershipandotherrealrightsoverimmovablesalsoprescribethroughuninterrupted
adversepossessionthereofforthirtyyears,withoutneedofgoodfaith.
Needless to state, private respondent/applicants possession of thirteen (13) years falls way below the thirty-year
requirement mandated by Article 1137.
Sixth, petitioners/oppositors have, in stark contrast to the secondary proof of private respondent, adduced
overwhelming evidence to prove their ownership of the portions they claim in the subject land. The evidence on record
clearly points to the fact that private respondent/applicants right, if at all, is confined to only 620 square meters or what
has been left of the 840 square meters he purchased from Faustino Martirez after 220 square meters thereof were
appropriated by the Municipality of Banga for the Public Market Road.[66]
The records further bear out that the original owner of the whole area was one Dionisia Regado who executed three
(3) deeds of sale covering certain portions of the disputed lands, namely: 1.] the Deed of Sale dated April 29, 1914
covering 1,850 square meters executed in favor of the Municipality of Banga; [67] 2.] the Deed of Sale dated July 10,
1915 covering 1,320 square meters executed in favor of Eulalio Raz;[68] and, 3.] the Deed of Sale dated September 6,
1918 covering the balance with an area of 2,938 square meters in favor of Eufrocino Alba.[69]
Faustino Martirez acquired only an 840 square meter portion of the land by purchase from Eulalio Raz on January
15, 1933 as confirmed in paragraph 2 of the Escritura De Venta Absolutaexecuted by him on August 13, 1941.[70] After
selling 840 square meters to Faustino Martirez, Eulalio Raz retained 480 square meters but on November 5, 1956
Eulalio Raz and his wife Octabela Alba conveyed 240 square meters to Susana Braulio [71] leaving a balance of 240
square meters which remained undisposed.
On May 29, 1969, Virginia Alba, Inocentes Alba and Estrella Alba, children of the deceased Eufrocino Alba, sold a
676 square meter portion of the 2,938 square meter lot purchased by their father from Dionisia Regado to
petitioner/oppositor Octabela alba Vda. De Raz.[72] This Deed was duly registered with the Registry of Deeds of Aklan
in accordance with Act No. 3344 on June 17, 1969.[73] The land is covered by Tax Declaration No. 332 in the name of
Octabela Alba Vda. De Razs husband.[74]
Petitioner/oppositor Octabela Alba Vda. De Razs ownership of the remaining 240 square meter portion which she
and her husband Eulalio Raz bought from Dionisia Regado [75] and the 676 square meter portion which they bought from
the heirs of Eufrocino Alba[76] is fully substantiated by documentary proof.[77] Rodolfo Alba, Lourdes Alba and Beatriz
Albas ownership of a portion measuring 1,335 square meters[78] and another portion measuring 2,262 square meters[79] is
likewise backed by documentary evidence. Susana Braulios ownership of a 240 square meter portion [80]which she
acquired from Octabela Alba Vda. De Raz on November 11, 1956 [81] is also documented, her predecessor-in-interest
having acquired the same from Dionisia Regado on September 6, 1918.[82]
The foregoing only serves to underscore the paucity of the proof of private respondent/applicant to support his
claim of ownership over the entire 4, 845 square meter area. He has not adduced evidence to show how and when he
was able to acquire, with the exception of 840 square meters further reduced to 620 square meters on account of 220

square meters appropriated for the market road, the bigger area of 3,755 square meters from anybody let alone the
ancestral owner, Dionisia Regado.
His claim is anchored mainly on Revised Tax Declaration No. 14181 which he was able to procure from the
Municipal Assessor of Banga in 1956 on the basis of a self-serving affidavit which proffered the lame excuse that there
was error in the statement of the area of the land which he claimed to be 4,845 square meters instead of 620 square
meters which was the area reflected in earlier tax declarations namely, 1954 Tax Declaration No. 13578; 1953 Tax
Declaration No. 13043; and 1947 Tax Declaration No. 6528.
Be that as it may, the Court has reservations on the propriety of adjudicating to petitioners the contested portions of
the subject land, in view of their failure to present the technical descriptions of these areas. Furthermore, there is no
sufficient evidence showing that petitioners have been in open, adverse, exclusive, peaceful and continuous possession
thereof in the concept of owner, considering that the testimony of Octabela Alba vda. De Raz was stricken off the
record.
WHEREFORE, based on foregoing premises, the Decision of the Regional Trial Court of Kalibo, Aklan, Branch
1 dated August 18, 1992 in Land Registration Case No. K-101, LRC Record No. K-15104 is hereby MODIFIED as
follows:
1.] The 620 square meter portion on which private respondent Jose N. Lachicas house is situated, clearly delineating its
metes and bounds, is hereby ORDERED segregated from the parcel of land described in Psu-161277 situated in
the Poblacion of the Municipality of Banga, Province of Aklan, Philippines with an area of 4,484 square meters, to be
registered and confirmed in the name of private respondent;
2.] A ten (10) meter road width along the National road mentioned in the application be segregated for future road
widening programs upon the payment of just compensation to be annotated at the back of the title.
3.] Insofar as the ownership of the remainder of the subject land is concerned, the case is hereby REMANDED to the
court of origin for the reception of further evidence for the petitioners to establish the other requisites for the confirmation of
title and registration in their names of the areas they respectively claim.

SO ORDERED.

SECOND DIVISION

[G.R. No. 104296. March 29, 1996]

REPUBLIC OF THE PHILIPPINES, represented by the DIRECTOR OF

LANDS, petitioner, vs. THE COURT OF APPEALS, HEIRS OF IRENE
BULLUNGAN, represented by her husband DOMINGO PAGGAO and THE
REGISTER OF DEEDS OF ISABELA, respondents.
DECISION
MENDOZA, J.:

This is a petition for review of the decision of the Court of Appeals reversing the decision of
the Regional Trial Court, Branch XIX, Cauayan, Isabela declaring Free Patent No. V-79740 and
Original Certificate of Title No. P-88 17 in the name of Irene Bullungan null and void so far as the
portion of Lot No. 1, Psu- 150801 involved in this case is concerned.
[1]

[2]

The facts of this case are as follows:

On September 10, 1955, Irene Bullungan (now deceased) applied for a free patent covering
lots situated in Fugaru (now San Guillermo), Angadanan, Isabela. The lots included a portion of
Lot No. 1, Psu-150801, between Lot No. 763 and Lot No. 764, consisting of 1.04 hectares,
which Vicente Carabbacan claimed. In her application, Irene Bullungan stated that the land
applied for by her was not claimed or occupied by any other person and that it was public land
which had been continuously occupied and cultivated by her since 1925.
[3]

Upon certification of Assistant Public Land Inspector Jose M. Telmo at Ilagan, Isabela that
Irene Bullungan had been in actual, continuous, open, notorious, exclusive and adverse
possession of the land since 1925, the Director of Lands approved Bullungans application
on June 4, 1957. On December 26, 1957, Original Certificate of Title No. P-8817 was issued in
the name of Irene Bullungan.
Alleging that a portion of Lot No. 1, Psu-150801 covered by the free patent issued to Irene
Bullungan overlapped the lot between Lot No. 763 and Lot No. 764, which he was occupying,
Vicente Carrabacan filed a protest on September 7, 1961. The District Land Officer at Ilagan,
Isabela recommended the dismissal of the protest on the ground that the Bureau of Lands no
longer had jurisdiction over the matter as a result of the grant of a free patent to Irene
Bullungan. But the Director of Lands on March 23, 1982 ordered an investigation of the protest.
Vicente Carabbacan also brought an action for the reconveyance of the portion of Lot No. 1,
Psu-150801 and the cancellation of free patent against Irene Bullungan onSeptember 5, 1961,
although this was dismissed by the court without prejudice.
The heirs of Irene Bullungan in turn sought to recover possession of the land in an action
which they brought in the Court of First Instance of Isabela on April 13, 1972. The case was
docketed as Civil Case No. Br. II-1102. On the other hand, refusing to give up his claim, Vicente
Carabbacan filed a case for reconveyance on August 15, 1972, which was docketed as Civil
Case No. 1108. The cases were thereafter tried jointly.
On November 22, 1972 the court rendered a decision, dismissing the complaint of Vicente
Carabbacan and ordering him to vacate the land, even as it upheld the ownership of Irene
Bullungan. Carabbacan, who had been in possession of the land in question, was finally ousted
on December 10, 1981.
As already stated, the Director of Lands ordered on March 23, 1982 an investigation of
Carabbacans protest. The investigation was undertaken by Senior Special Investigator
Napoleon R. Dulay, who found that Vicente Carabbacan had been in actual cultivation of the
land identified as Lot No. 763, Pls-594 since 1947, having acquired the same from Tomas
Tarayao on May 4, 1947. In his report dated September 17, 1985, the land investigator stated
that due to a big flood which occurred in December 1947, the Cagayan River changed its course
by moving north-east, resulting in the emergence of a piece of land, which is the subject of this
dispute. Carrabacan took possession of the land and cultivated it. He was in the continuous,

peaceful, open and adverse occupation and cultivation of the land from December 1947 until
1981 when he was ejected by virtue of the decision in Civil Cases No. 1088 and 11102.
[4]

Based on these findings, the Chief of the Legal Division of the Bureau of Lands
recommended on March 10, 1986 that steps be taken to seek the amendment of Free Patent
No. V-79740 and Original Certificate of Title No. P-8817 of the late Irene Bullungan so as to
exclude the disputed portion and for the reversion of the same to the State.
On November 28, 1986, the Solicitor General filed in behalf of the Republic of
the Philippines a complaint for the cancellation of Free Patent No. V- 79740 and OCT No. P8817 on the ground of fraud and misrepresentation in obtaining the free patent. The case was
filed in the Regional Trial Court of Cauayan, Isabela which, on September 25, 1989, rendered a
decision declaring Free Patent No. V-79740 and OCT No. P-8817 null and void insofar as the
portion of Lot No. 1, Psu-150801 between Lot No. 763 and Lot No. 764, is concerned. The lower
court found that Irene Bullungan made misrepresentations by claiming in her application for a
free patent that she was in possession of the disputed portion of Lot No. 1, Psu-150801, when in
fact Vicente Carabbacan was occupying and cultivating the land. The court justified the
reversion of the land in question as an assertion of a governmental right.
On appeal, however, the Court of Appeals reversed the lower courts ruling on the ground
that, after the lapse of one year from the date of issuance of the patent, the State could no
longer bring an action for reversion. The appellate court held that the certificate of title issued in
the name of Irene Bullungan became incontrovertible and indefeasible upon the lapse of one
year from the issuance of the free patent.
The Republic controverts the ruling of the Court of Appeals. It contends that the doctrine of
indefeasibility of Torrens Titles does not bar the filing of an action for cancellation of title and
reversion of land even if more than one year has elapsed from the issuance of the free patent in
case of fraud in obtaining patents.
We agree with petitioner. To begin with, there is no question that Free Patent No. 79740 and
Original Certificate of Title P-8817 were obtained through fraud. The trial court found that Irene
Bullungan falsely stated in her application for a free patent that Lot No. 1, Psu-150801 was not
claimed or occupied by any other person. The trial court found that a portion of the lot in
question had been in the possession and cultivation of Vicente Carabbacan since December
1947. Indeed private respondents admit that before Irene Bullungan filed her application for a
free patent, she had filed a complaint for forcible entry against Vicente Carrabacan. The
complaint, which was filed in the Justice of the Peace Court of Angadanan, Isabela, was
dismissed precisely because the court found that Carabbacan had been in possession of the
land long before it was sold to Irene Bullungan by Leonida Tarayao.
[5]

[6]

The Court of Appeals did not disturb the trial courts finding in this case that Irene Bullungan
committed fraud and misrepresentation. Its decision rests solely on the ground that after the
lapse of one year from the date of issuance of a free patent an action for the cancellation of
patent and title on ground of fraud and misrepresentation can no longer be maintained.
We think that this is error. It is settled that once a patent is registered under Act No. 496 (now
P.D. No. 1529) and the corresponding certificate of title is issued, the land ceases to be part of
the public domain and becomes private property over which the Director of Lands will no longer
have either control or jurisdiction. The Torrens Title issued on the basis of a free patent or
homestead patent becomes as indefeasible as one which was judicially secured upon the
expiration of one year from date of issuance of patent as provided in P.D. No. 1529, 32 (formerly
Act No. 496, 38). However, as held in Director of Lands v. De Luna, even after the lapse of one
year, the State may still bring an action under 101 of the Public Land Act for the reversion to the
public domain of lands which have been fraudulently granted to private individuals. This has
been the consistent ruling of this Court.
[7]

[8]

[9]

[10]

The failure of Irene Bullungan to disclose that Vicente Carrabacan was in possession of the
portion of land in dispute constitutes fraud and misrepresentation and is a ground for annulling
her title. Thus 91 of the Public Land Act provides:
[11]

91.Thestatementsmadeintheapplicationshallbeconsideredasessentialconditionsandpartsofany
concession,title,orpermitissuedonthebasisofsuchapplication,andanyfalsestatementthereinor
omissionoffactsaltering,changing,ormodifyingtheconsiderationofthefactssetforthinsuch
statements,andanysubsequentmodification,alteration,orchangeofthematerialfactssetforthinthe
applicationshallipsofactoproducethecancellationoftheconcession,title,orpermitgranted.Itshallbe
thedutyoftheDirectorofLands,fromtimetotimeandwheneverhemaydeemitadvisable,tomakethe
necessaryinvestigationsforthepurposeofascertainingwhetherthematerialfactssetoutinthe
applicationaretrue,orwhethertheycontinuetoexistandaremaintainedandpreservedingoodfaith,and
forthepurposeofsuchinvestigation,theDirectorofLandsisherebyempoweredto
issuesubpoenasandsubpoenasducestecumand,ifnecessary,toobtaincompulsoryprocessfromthe
courts.Ineveryinvestigationmadeinaccordancewiththissection,theexistenceofbadfaith,fraud,
concealment,orfraudulentandillegalmodificationofessentialfactsshallbepresumedifthegranteeor
possessorofthelandshallrefuseorfailtoobeyasubpoenaorsubpoenaducestecumlawfullyissuedby
theDirectorofLandsorhisauthorizeddelegatesoragents,orshallrefuseorfail.togivedirectand
specificanswerstopertinentquestions,andonthebasisofsuchpresumption,anorderofcancellation
mayissueoutfurtherproceedings.
The appellate court said in its decision:
Wearenot,ofcourse,unawareofcaseswherethepatentandthecertificateoftitleissuedpursuantthereto
weredeclarednullandvoidnotwithstandingtheexpirationoftheaforementionedperiodofone(1)year
simplybecauseoffalsestatementofmaterialandessentialfactsmadeintheapplicationtherefor.Beit
noted,however,thatinthesecasesthelotspatentedorgrantedwerenolongerpartofthepublicdomain
butprivateonessegregatedfromthemassthereof.Consequently,norightwhatsoeverwasawardedin
saidcasesforitisalreadysettledthatafreepatentwhichpurportstoconveylandtowhichthe
governmentdidnothaveanytitleatthetimeofitsissuancedoesnotvestanytitleinthepatenteeas
againstthetrueowner(Suvav.Ventura,40O.G.8,4thsup.August23,1941;Vitalv.Anore,90Phil.
855;DirectorofLandsv.Abanilla,G.R.No.L26324,August31,1983).Thisdoesnotobtaininthe
presentcaseforitisbeyonddisputethatthesubjectlandwasstillapartofthepublicdomainwhenthe
samewaspatentedbytheGovernmentinfavorofappellantspredecessorininterest.Accordingly,there
wasindeedatitleawardedsuchthatwhenthesamewasbroughtunderoperationofLandRegistrationAct
in1957,itbecameincontrovertiblein1958.
[12]

This is not so. Where public land is acquired by an applicant through fraud and
misrepresentation, as in the case at bar, the State may institute reversion proceedings even
after the lapse of the one-year period.
Nor is there merit in the claim of private respondents that the action taken by the Republic in
this case is not in keeping with the policy of State to foster families as the factors of society, to
give them a sense. of protection and permanency in their homes. Public policy demands that
one who obtains title to a public land through fraud should not be allowed to benefit
therefrom. Vicente Carabbacan had been in possession of the land even. before Irene
Bullungan bought the possessory rights to the land. It was therefore a misrepresentation for her
to state in her application for a free patent that she had been in possession of the lot in question
when the fact is that Carabbacan had been there ahead of her.
[13]

WHEREFORE, the decision appealed from is REVERSED and the decision

dated September 25, 1989 of the Regional Trial Court of Cauayan, Isabela, Branch XIX is
REINSTATED.
SO ORDERED.

G.R. No. 91189 November 27, 1992

THE DIRECTOR OF LANDS, petitioner,
vs.
SAMUEL BUYCO and EDGAR BUYCO, represented by their attorney-in-fact, RIEVEN H. BUYCO and THE COURT
OF APPEALS, respondents.

DAVIDE, JR., J.:

In its Decision of 5 February 1985, 1 Branch 82 of the Regional Trial Court (RTC) at Odiongan, Romblon granted the application
of the private respondents, who are American citizens, to bring within the operation of the Land Registration Act a parcel of land
with an area of 3,194,788 square meters (319.4788 hectares) which spreads across the barangays of Canduyong, Anahao and
Ferrol in the municipality of Odiongan, Province of Romblon, and to confirm their title thereto.
Petitioner appealed the decision to the Court of Appeals; he alleged therein that the trial court erred (a) in not declaring the
private respondents barred by the Constitution from applying for registration because they are American citizens and are
thus disqualified from acquiring lands in the Philippines, (b) in holding that private respondents had established proprietary
rights over the land even before acquiring American citizenship through naturalization, and (c) independently of the issue of
alienage, in not dismissing the application for registration on the basis of the private respondents failure to overthrow, by
conclusive or well-nigh incontrovertible proof, the presumption that the land applied for is public land belonging to the
State. 2
In its Decision of 21 November 1989 in CA-G.R. CV No. 05824, 3 public respondent dismissed the appeal "for lack of merit." 4
Petitioner consequently filed this petition on 11 January 1990 under Rule 45 of the Rules of Court. Reiterating the issues he
raised before the respondent Court, he seeks a review and reversal of the latter's decision. 5
In the Resolution of 11 July 1990, this Court gave due course to the petition after the filing by the private respondents of
their Comment to the same and by the petitioner of his reply thereto. 6 On 17 April 1991, the parties were required to file their
respective Memoranda. 7
The records disclose the following material operative facts and procedural antecedents:
A certain Charles Hankins, an American who was married to Laura Crescini and who resided in Canduyong, Odiongan,
Romblon, died on 31 May 1937 leaving a will (Exhibit "N"). He was survived by his widow; his son Alexander and William;
and his grandchildren Ismael Samuel and Edgar, all surnamed Buyco, who are the legitimate issues of his deceased
daughter Lilia and her husband Marcelino Buyco. The will was submitted for probate before the then Court of First Instance
(now Regional Trial Court) of Romblon. Charles Hankins' son Alexander was appointed administrator of the estate in
Special Proceedings No. 796.
Laura Crescini died on 22 December 1941.
It appears that in a Project of Partition dated 25 June 1947 (Exhibit "O") and submitted to the probate court in the aforesaid
Special Proceedings No. 796, one of the properties of Charles Hankins described as "a parcel of pastureland, riceland and
coconut land containing an area of about 250 hectares, 21 ares and 63 untares . . . assessed at for P6,950.00 as per Tax
Declaration No. 15853," was partitioned among his heirs as follows:
xxx xxx xxx
TO LAURA C. HANKINS, . . .
(a) 157 acres . . . comprised in what is known as Carabao Pastureland and Milk-Cow
Pasture. (This land is a portion of the land described in tax declaration N0. 15853 . . .)
xxx xxx xxx
TO ALEXANDER HANKINS, . . .
(a) 80 acres of land (pasture) which is a portion of the land described in Tax declaration No.
15853 . . . .
xxx xxx xxx
TO LILIA HANKINS, . . .

(a) 100 acres of pastureland situated in the barrio of Canduyong and which is a portion of the
entire parcel described in tax declaration No. 15853 . . . .
(b) 25 acres of pasture land situated in the barrio of Canduyong and which is a portion of the
entire parcel described in tax declaration No. 15853.
xxx xxx xxx
TO WILLIAM B. HANKINS, . . .
(a) 100 acres of pastureland situated in the barrio of Canduyong and which is a portion of the
entire parcel described in tax declaration No. 15853 . . . .
(b) 25 acres of pasture land situated in barrio Anajao and which is a portion of the entire
parcel described in tax declaration No. 15853 . . . . 8
The total area so adjudicated is 487 acres, or 197.086 hectares (1 hectare = 2.471 acres)
On 30 July 1948, Laura's share in the estate of her husband Charles was partitioned among her children. Alexander and
William, and her grandchildren, Ismael, Samuel and Edgar who were represented by their father Marcelino Buyco (Exhibit
"P"). Thereafter, on the same date, William sold his hereditary shares in the estate of his parents to Marcelino Buyco
(Exhibit "R").
On 20 August 1962, Marcelino Buyco donated to his children the property acquired from William together with other
properties (Exhibit "S").
On 8 September 1970, the Buyco brothers partitioned among themselves the properties acquired by inheritance from their
grandparents and by donation from their father (Exhibit "T"). However, Ismael waived his right to his share therein in favor of
Samuel, one of the private respondents in this case.
Edgar and Samuel Buyco became naturalized American citizens on 29 January 1972 and 12 September 1975, respectively.
On 14 October 1967, Edgar and Samuel, through their attorney-in-fact, Rieven H. Buyco, filed before the then Court of First
Instance of Romblon an application for the registration of a parcel of land, described as follows:
A parcel of land (Lot I, under surveyed for the heirs of Lilia Hankins situated in the barrios of Canduyong,
Anahao and Ferrol, Municipality of Odiongan, province of Romblon, Tablas Island under PSU 127238) LRC
Record No. ________: Bounded on the North by properties of the heirs of Rita Fiedacan and Alexander
Hankins; on the Northeast, by Canduyong River and property of Alexander Hankins; on the East, by
properties of Andres Cuasay, Escolastica Feruelo, Candido Mendoza, Raymundo Goray, Pedro Goray,
Manuel Yap, Feliza Fedri and Silverio Mierculecio; on the Southeast, by properties of Candido Mendoza, the
Heirs of Benita Formilleza Silverio Mierculecio, Zosimo Llorca, Lot 2, and properties of Beatrice Hankins and
Zosimo Llorca; on the West, by properties of Maria Llorca and Miguel Llorca; and on the Northwest, by
property of Catalino Fabio. Point "I" is S. 33 deg. 24"., 4075.50 m. from B.L.L.M. 1, Odiongan, Romblon.
Area THREE MILLION ONE HUNDRED NINETY FOUR THOUSAND SEVEN HUNDRED EIGHTY EIGHT
(3,194,788) SQUARE METERS, more or less as Exhibit "C". 9
which they claim to own in fee simple as they acquired the same by inheritance and donation inter vivos. However, they
allege in paragraph 9 of the application that should the Land Registration Act be inapplicable, the benefits provided for
under C.A. No. 141, as amended, be made to extend to them since both they and their predecessors-in-interest have been
in possession thereof since time immemorial. The application was docketed as Land Registration Case No. N-48 LRC
Record No. N-51706.
The above description is based on a survey plan prepared by private land surveyor Santiago Espaol in 1950 (Exhibit "C")
and subsequently approved by the Director of Lands. While in their application, private respondents invoked the provisions
of the Land Registration Act, 10 they eventually sought for a confirmation of imperfect title pursuant to paragraph (b), Section 48 of
the Public Land Act 11, as further amended by P.D. No. 1073.
While only the herein petitioner filed an opposition thereto, the Development Bank of the Philippines (DBP) manifested that
the portion of the property pertaining to Samuel Buyco is covered by a mortgage in its favor. After the jurisdictional facts had
been established during the initial hearing and a general order of default entered against all other parties, the lower court
designated the Judge of the Municipal Trial Court of Odiongan as commissioner to receive the evidence for the parties.
Samuel Buyco, William Hankins, Manuel Firmalo and Jacinta Gomez Gabay (who was 83 years old when she took the
witness stand in October 1979) testified for the applicants. The first two (2) recounted the history of the tract of land up to
the time of the abovementioned partitions and the alleged possession of the entire area by the applicants (private
respondents herein).
On 5 February 1985, the land registration court handed down a Decision

12

the dispositive portion of which reads:

PREMISES CONSIDERED, this Court hereby orders the registration of title to the parcel of land designated
as Lot No. 1 Psu-127238 and its technical description together with all the improvements thereon, in the
name of the herein applicants, recognizing the interest of the Development Bank of the Philippines to be
annotated on the certificate of title to be issued as mortgagee for the amount of P200,000.00 with respect to
the share of applicants (sic) Samuel H. Buyco.

Upon the decision become (sic) final let the corresponding decree and certificate of title be issued
accordingly.
The favorable decision is based on the court's conclusion that:
The oral and documentary evidence indubitably show applicants and their predecessors-in-interest their
grandparents Charles Hankins and Laura Crescini, to their uncle Alexander Hankins, to them thru their
administrators Gregorio Gabay and later Manuel Firmalo have possessed the property herein sought to
be registered in the concept of owners thereof, and such possession has been continuous, uninterrupted,
adverse, open and public for a period of more than eighty years. And their right over the property is duly
recognized by the adjoining owners in their individual affidavits marked as Exhibits "V", "V-1" to "V-21",
inclusive. Moreover, none of the adjoining owners filed any opposition to the herein land registration case,
thereby indubitably showing their recognition of the correctness of the boundary (sic) between their
individual lots and that of applicants land subject of this registration.
The late Charles Hankins declared said land for taxation purposes under Tax Declaration No. 15853 (please
see description of lot in Exh. "N") and thereafter in the name of applicants and/or their father Marcelino
Buyco since 1949 up to the present time (Exhs. "W", "W-1" to "W-19").
Applicants have also paid the real estate taxes thereon since 1948 up to the present time (Exhs. "X", "X-1"
to "X-194").
In 1950, the land of applicants was surveyed by Private Surveyor Santiago Espaol and its exact metes and
bounds were determined with accuracy in his survey plan PSU-127238 (Exh. "C"). This survey corrected the
impreciseness of the land area as mentioned in the several instruments the will, project of partition, deed
of partition, deed of sale (Exhs. "N", "O", "P", and "R") under which applicants acquired the land in
question. The correctness of this survey is further shown by the fact that none of the other heirs, like
Alexander Hankins nor (sic) the adjoining owners ever made a claim over any portion of the lot shown in
said Psu-127238.
The land in question has been primarily devoted to cattle grazing (sic) and to the cultivation of rice and
coconut and it was (sic) the applicants and their predecessors-in-interest have (sic) been reaping the fruits
thereof.
The evidence further show (sic) that applicants can rightfully and did validly acquire title and ownership over
the land in question because they were then Filipino citizens, their father Marcelino Buyco being a Filipino
citizen himself (please see personal circumstances of Marcelino Buyco in Exhs. "P" and "R") and their
modes of acquisition by inheritance, intestate succession, and donation inter-vivos are all legally
recognized modes to transfer ownership to them from their predecessors-in-interest.
Since time immemorial, applicants and their predecessors-in-interest have exercised all the attributes of
dominion and absolute ownership over the land in question, and have therefore established their vested
proprietary rights and registrable (sic) title over the land in question, rights which they have acquired long
before they became citizens of the United States (Edgar Buyco became a U.S. citizen only on January 29,
1972; while Samuel H. Buyco, only on September 12, 1975. As a matter of fact, applicant Samuel H. Buyco
mortgaged in favor of the Development Bank of the Philippines (Exhs. "U", "U-1" and "U-2") the portion
belonging to him in Lot 1, Psu-127238.
From the foregoing evidence it has been satisfactorily established that the applicants have acquired an
imperfect and incomplete title over the parcel of land subject of this registration proceedings in their own
right as citizens of the Philippines so as to entitle them to a confirmation and registration of said lot in their
names. Consequently Section II, Article XVII of the 1973 Constitution does not apply to this case, neither
(sic) does this case fall under the provisions of Presidential Decree No. 713. 13
More specifically, the conclusion regarding possession is based on the testimonies of Manuel Firmalo, William Hankins and
Jacinta Gomez Gabay which, as summarized by the court, are as follows:
xxx xxx xxx
Witness Manuel Firmalo testified that from 1970 to 1978 he was the administrator, of the property of
applicants; that the said property is located in the Barrios of Anahao, Canduyong, and Tubigon (now forming
part of the municipality of Ferrol) and the same is shown in the survey may marked as Exh. "C" (Psu127238); that said lot is separated from the adjacent properties by concrete monuments, big tress and some
barb (sic) wire fence (sic); that previous to his administration thereof, the same property was administered
by his father-in-law, Gregorio Gabay; . . . that during his administration, a large part of the land was devoted
to cattle grazing and a little portion, to coconut (sic) which are now fruit bearing; that when he took over the
administration of the ranch, there was a total of 120 heads of cattle and at the time of termination of his
administration there were 300 heads; that from time to time, some cattle in the ranch were sold by him and
he rendered an accounting to the applicants, the owners of the ranch; that he employed cowhands to help
him ran (sic) the ranch of applicants and the salaries of said cowhands were paid out of the funds of
applicant Samuel Buyco from the sale of the cattle; that the proceeds of the coconuts harvested, the money
was (sic) deposited with the bank and a portion was used for the payment of the real estate taxes on the
land; that during his administration no third person ever claimed ownership over applicants land; that he was
the one who procured the execution of the affidavits of adjoining owners (Exhs. "V", "V-1" to "V-21") which
were used to support the real estate mortgage with the DBP over said land; that from the proceeds of the
sale of the copra harvested from the land of applicants,. he paid the real estate taxes thereon specifically the

taxes covered by Exhs. "X-83" to "X-144"; . . . that his administration over said land was adverse, open
continuous and public.
William Hankins, then 72 years old and resident (sic) of Odiongan, Romblon, testified . . .; that ever since he
was still a small kid, he know (sic) that the big tract of land subject of their partition was already owned by
his father (Charles Hankins); that the possession of his father was in the concept of owner, continuous,
adverse, public, and open, up to his (Charles Hankins) death; that after receiving his hereditary share from
the estates of his father and mother, he sold his said shares to Marcelino Buyco, father of applicants by
executing a Deed of Sale (Exh. "R") dated July 30, 1948; that during the lifetime of Charles Hankins; the big
tract of land was devoted primarily to cattle grazing and to coconut and rice; that after he sold his hereditary
share of (sic) Marcelino Buyco, the latter took possession of his said portion; that after Marcelino Buyco
died, the property of Marcelino Buyco (including his share (sic) hereditary share sold under Ex. (sic) "R")
was transmitted to his children, namely: Edgar H. Buyco, Ismael Buyco and Samuel H. Buyco (Samuel and
Edgar Buyco, the (sic) applicants herein); that he known that at present the owners in possession of the
property subject of this registration proceedings are applicants Samuel Buyco and Edgar Buyco; that the
said land is devoted to cattle grazing and planted with coconuts and rice.
xxx xxx xxx
Jacinta Gomez Gabay, 83 years (as of October, 1979) . . . testified that she knew the spouses Charles
Hankins and Laura Crescini because since the time she can remember, she stayed with said spouses up to
the (sic) their death (sic); that having stayed with the Hankins couple, she knew of their properties because
she lived with them in Canduyong where the property was situated; that the property is a big tract of
land; . . . that when she was living with the Hankins spouses, said spouses already owned and were in
possession of this big tract of land, and this land was fenced off with barbed wires, and that said big tract of
land has been used for grazing purposes since she reached the age of reason up to the present time; that
during all the time that she has been with said Hankins spouses, nobody ever claimed any portion thereof;
that this property extended from barrio Canduyong up to barrio Anahao; that after Charles Hankins died, his
property was divided among his children Alexander Hankins, William Hankins and Lilia Hankins and the
latter's share was received by her children named Ismael, Samuel and Edgar all surnamed Buyco; that
before Charles Hankins' estate was partitioned it was placed under the administration of Alexander Hankins
(one of the heirs); that after the partition, the portion (sic) that went to the Buyco children (as heirs of Lilia
Hankins) were administered by her husband Gregorio Gabay; that her husband's administration over said
property started 3 or 4 years after the war which (sic) lasted 25 years or until Gregorio Gabay died; that his
son-in-law Manuel Firmalo took over the administration of applicants' property; that the land she was
referring to is utilized as a pasture land and it has been a pasture since the time it was it was owned by
spouses Charles Hankins and Laura Crescini up to the present time; that Edgar, Samuel and Ismael, all
surnamed Buyco have been receiving the fruits of the portion that went to Lilia Hankins; that Charles
Hankins' possession of that big tract of land was in the concept of owner, continuous, adverse, open and
public; that a portion of this big tract of land went to Edgar H. Buyco, Samuel H. Buyco and Ismael H. Buyco
as the heirs of Lilia Hankins; that the possession of the said heirs of the late Lilia Hankins over the portion
that went to them was in the concept of owner, continuous, adverse, open and public up to the present time;
that as far as she can remember the Hankins family possessed said property for more than eighty (80)
years. 14
The land registration court also summarized the testimony of private respondent Samuel H. Buyco as to possession in this
wise:
Applicant Samuel H. Buyco testified that he was 51 years of age, . . .; that prior to the death of his
grandfather Charles Hankins, that big parcel of pastureland was about 500 to 550 hectares, the boundaries
of which were marked off by concrete monuments, some big trees, some big stones until it was partitioned in
1948, and to fix the actual boundaries, the land was surveyed by private surveyor Espaol (Exh. "D"); that
during the lifetime of their grandfather Charles Hankins this big land was primarily used as a ranch and it
was fenced off by barb (sic) wires to prevent the cattle from getting out; that after the death of his
grandfather Charles Hankins, the property was administered by his uncle Alexander Hankins, and such
administration was terminated when there was a partition in 1948 in accordance with the will of his
grandfather; that during the administration of the property by Alexander Hankins, this property was used as a
cattle ranch, even during the Japanese time; that after receiving their share form the partition of the estate,
they initially planted rice and coconut and later on they reverted to cattle ranch operation (sic); that after he
and his brother Edgar became the possessor (sic) of said land, they were the one (sic) who have been
harvesting the fruits of the land; that they did not personally managed (sic) the land but hired in 1949 the
services of Mr. Gregorio Gabay to administer the estate for them until 1970 when the latter died, and Manuel
Firmalo was hired to take over the administration until 1977 when applicant took over active management of
the property because he obtained a loan of P200,000.00 from the Development Bank of the Philippines; . . .
that the land was declared in their name (sic) for taxation purposes by their administrator Gregorio Gabay in
1949 (Exhs. "W", "W-1" to "W-19", inclusive) and that the taxes thereon were paid out of their own money
since 1948 up to the present (Exhs. "X", "X-1" to "X-194", inclusive); that applicants' possession in the
concept of owner over the property sought to be registered has been open, continuous, uninterrupted,
adverse and
public. 15
As earlier adverted to petitioner's appeal from the said decision was dismissed by the public respondent for lack of merit. As
to the private respondents' title to the land subject of the application, public respondent makes the following findings:
Undisputably, applicant-appellees anchored their title to the land in question by means of hereditary
succession as well as donation from their own father, Marcelino Buyco, who purchased the entire hereditary
share of William Hankins (Exhs. "R"). Subsequently, applicants-appellees and their brother, Ismael,

partitioned their hereditary share from their grandparents, the spouses Hankins, including the property
donated by their father, Marcelino Buyco, in an instrument dated September 8, 1970 (Exh. "T"). In this
partition, the share of Ismael H. Buyco went to applicant-appellee Samuel H. Buyco (Exh. "T-1").
From the records extant in this case, it is Our considered view that from almost (sic) time immemorial or a
period of eighty (80) years, applicant-appellees through their predecessors-in-interest have been in actual,
continuous, and peaceful possession of the property in question so that the inescapable conclusion is that
all along it is private land and had been segregated from the dominion (sic) of the State. Thus, We sustain
the conclusion reached by the court a quo that the latter (applicants-appellees) thru their predecessors-ininterest have acquired title by acquisitive prescription over the same. . . . 16
As to the issue of the private respondents citizenship, public respondent held that:
. . . it is beyond per adventure (sic) of doubt that applicants-appellees were still Filipinos when they acquired
their title thereto. From the death of their grandfather Charles Hankins on May 31, 1937, applicantsappellees right of succession was already vested. Moreover, as early as the year 1962, their father
Marcelino Buyco transferred his title thereto by donation inter-vivos so that on September 8, 1970, when the
Buyco brothers partitioned the property in question, among themselves, they could validly register the same
as they already possess the necessary qualifications to have their title perfected under the Torrens system
of registration. 17
The petition is meritorious.
As could be gleaned from the evidence adduce, the private respondents do not rely on fee simple ownership base on a
Spanish grant or possessory information title under Section 19 of the Land Registration Act; the private respondents did not
present any proof that they or their predecessors-in-interest derived title from an old Spanish grant such as (a) the "titulo
real" or royal; (b) the "concession especial" or special grant; (c) the "composicion con el estado" title or adjustment title; (d)
the "titulo de compra" or title of purchase; and (e) the "informacion posesoria" or possessory information title, which could
become a "titulo gratuito" or gratuitous title. 18 The primary basis of their claim is possession, by themselves and their
predecessors-in-interest, since time immemorial. The land registration court and the public respondent are of the opinion, and so
held, that the private respondents had this in their favor. Thus, both courts declared that the land applied for had been segregated
from the public domain and had become private land.
If indeed private respondents and their predecessors have been in possession since time immemorial, the rulings of both
courts could be upheld for, as this Court stated in Oh Cho vs. Director of Lands; 19
. . . All lands that were not acquired from the Government, either by purchase or by grant, belong to the
public domain. An exception to the rule would be any land that should have been in the possession of an
occupant and of his predecessors in interest since time immemorial, for such possession would justify the
presumption that the land had never been part of the public domain even before the Spanish conquest.
(Cario vs. Insular Government, 212 U.S., 449; 53 Law. ed., 594.) 20 The applicant does not come under the
exception, for the earliest possession of the lot by his first predecessor in interest began in 1880.
This exception was reiterated in Susi vs. Razon, 21 where the first possessor was in possession was in possession for an
undetermined period of time prior to 1880. We stated therein:
. . . In favor of Valentin Susi, there is, moreover, the presumption juris et de jure established, in paragraph
(b) of section 45 of Act No. 2874, 22 amending Act No. 926, that all the necessary requirements for a grant by the
Government were complied with, for he has been in actual and physical possession, personally and through his
predecessors, of an agricultural land of the public domain openly, continuously, exclusively and publicly since July
26, 1894, with a right to a certificate of title to said land under the provisions of Chapter VIII of said Act. . . . If by a
legal fiction, Valentin Susi had acquired the land in question by a grant of the State, it had already ceased to be of
the public domain and had become private property, at least by presumption, of Valentin Susi, beyond the control
of the Director of Lands.
Although this additional pronouncement was rippled by the ruling Manila Electric Co. vs. Castro-Bartolome 23, to the effect
that land would cease to be public only upon the issuance of a certificate of title to any Filipino citizen claiming it under Section 48
(b) of the Public Land Act, 24 and that a piece of land over which an imperfect title is sought to be confirmed remains public, this
Court, speaking through then Associate Justice, now Chief Justice Andres R. Narvasa, in Director of Lands vs. Intermediate
Appellate Court, 25 reiterated the Cario and Susi doctrine, thus:
The Court, in the light of the foregoing, is of the view, and so holds, that the majority ruling in Meralcomust
be reconsidered and no longer deemed to be binding precedent. The correct rule, as enunciated in the line
of cases already referred to, 26 is that alienable public land held by a possessor, personally or through his
predecessor-in-interest, openly, continuously and exclusively for the prescribed statutory period (30 years under
The Public Land Act, as amended) is covered to private property by the mere lapse or completion of said
period, ipso jure.
It is obvious from the foregoing rule that the applicant must prove that (a) the land is alienable public land and (b) his
possession, in the concept abovestated, must be either since time immemorial, as ruled in both Cario and Susi, or for the
period prescribe in the Public Land Act. As to the latter, this Court, in Gutierrez Hermanos vs. Court of Appeals, 27 adopted
the rule enunciated by the Court of Appeals, per then Associate Justice Hugo E. Gutierrez, Jr., now a distinguished member of this
Court, that an applicant for registration under Section 48 of the Public Land Act must secure a certification from the Government
that the lands which he claims to have possessed as owner for more than thirty (30) years are alienable and disposable. It is the
burden of the applicant to prove its positive averments.

In the instant case, private respondents offered no evidence at all to prove that the property subject of the application is an
alienable and disposable parcel of land of the public domain. On the contrary, based on their own evidence, the entire
property which is alleged to have originally belonged to Charles Hankins was pasture land. According to witness Jacinta
Gomez Gabay, this land has been pasture land, utilized for grazing purposes, since the time it was "owned" by the spouses
Charles Hankins and Laura Crescini up to the present time (i.e., up to the date she testified). In Director of Lands
vs. Rivas, 28 this Court ruled:
Grazing lands and timber lands are not alienable under section 1, Article XIII of the 1935 Constitution and
sections 8, 10 and 11 of Article XIV of the 1973 Constitution. Section 10 distinguishes strictly agricultural
lands (disposable) from grazing lands (inalienable).
The instant application was filed, heard and decided under the regime of the 1973 Constitution.
As to the second matter to be proved, the applicant must present evidence of an imperfect title such as those derived from
the old Spanish grants. He may also show that he has been in continuous, open and notorious possession and occupation
of agricultural lands of the public domain under a bona fide claim of acquisition of ownership and for the period prescribed
under Section 48(b) of the Public Land Act. 29 Simply put, a person who seeks the registration of title to a piece of land on the
basis of possession by himself and his predecessors-in-interest must prove his claim by clear and convincing evidence; he should
not rely on the weakness of the evidence of the
oppositors. 30 This rule is certainly not new. In the 1913 case of Maloles vs. Director of Lands, 31 this Court already held that in
order that a petitioner may be entitled to have a parcel of land registered under the Torrens system, he has to show that he is the
real and absolute owner, in fee simple, of the said land; moreover, it is the duty of the court, even in the absence of any oppositor,
to require the petitioner to show, by a preponderance of the evidence and by positive and absolute proof, so far as it is possible,
that he is the owner in fee simple of the land in question.
In Santiago vs. de los Santos, 32 this rule was to find anchorage in policy considerations based no less on one of the fundamental
objectives of the Constitution, namely the conservation and utilization of our natural resources. We held in the said case that there
would be a failure to abide by its command if the judiciary does not scrutinize with care applications to private ownership of real
estate. This Court then set the quantum of evidence needed to be established by the applicant, to wit: well-nigh incontrovertible
evidence.
In the instant case, private respondents evidence miserably failed to establish their imperfect title to the property in
question. Their allegation of possession since time immemorial, which was conceded by the land registration court and the
public respondent, is patently baseless. There is an evident failure to comprehend the meaning and import of the
term immemorial. As defined, immemorial simply means beyond the reach of memory, 33 beyond human memory, or time out
of mind. 34 When referring to possession, specifically "immemorial possession," it means possession of which no man living has
seen the beginning, and the existence of which he has learned form his elders. 35 Such possession was never present in the case
of the private respondents. The trial court and the public respondent based the finding of the more than eighty (80) years of
possession by the private respondents and their predecessors-in-interest on the sole testimony of Mrs. Gabay who was eightythree (83) years old when she testified in October of 1979. Thus, she must have been born in 1896. If the asserted possession
lasted for a period of more than eighty (80) years at the time she testified the same must have commenced sometime in 1899, or
at the time that she was barely three (3) years old. It is quite impossible that she could fully grasp, before coming to the age of
reason, the concept of possession of such a big tract of land and testify on the same some eight (8) decades later. In short,
therefore, she cannot be relied upon to prove the possession by Charles Hankins of the said property from 1899.
Charles Hankins was an American citizen. There is no evidence to show the date of his birth, his arrival in the Philippines
particularly in Odiongan, Romblon or his acquisition of the big tract of land; neither is there any evidence to prove the
manner of his acquisition thereof. Thus, there does not even exist a reasonable basis for the finding that the private
respondents and their predecessors-in-interest possessed the land for more than eighty (80) years, much less since time
immemorial. In Oh Cho vs. Director of Lands, 36 possession which began in 1880 was not considered as possession "since time
immemorial."
There is as well, no evidence on record to show that Charles Hankins cultivated, had control over or used the whole or even
a greater portion of the big tract of land for grazing purposes. None of the witnesses testified as to the number of heads of
cattle which were bought by Charles into the land. There is likewise no competent proof that he declared the land in his
name for taxation purposes or that he had paid the taxes thereon. Although his will (Exhibit "N") made mention of Tax
Declaration No. 15853, neither the said declaration nor any tax receipt was presented in evidence. Because of such nonproduction, it cannot be determined when Charles initially declared his alleged land for taxation purpose and what exactly
were its natural boundaries, if any. It is clear that the non-production of this tax declaration accounted for the obvious
inability of the witnesses to testify with certainty as to the extent of the area of the property. As correctly observed by the
petitioner, none of the private respondents' witnesses could give the court a definite idea thereon. Thus, Samuel Buyco
declared:
I really don't know the exact area, but it is between 500 to 550 hectares.

37

while William Hankins admitted:

I cannot exactly tell because that is a very big estate. 38
On the other hand, witness Jacinta Gomez Gabay averred:
I could not exactly tell but I have heard that it was a big tract of land because we were staying there.

39

In any event, even if Charles had indeed declared the property for taxation purposes and actually paid taxes, such facts are
still insufficient to justify possession thereof, much less a claim of ownership thereon. This Court has repeatedly held that
the declaration of ownership for purposes of assessment on the payment of the tax is not sufficient to prove ownership. 40

To this Court's mind, private respondents failed to prove that Charles Hankins had possessed the property allegedly
covered by Tax Declaration No. 15853 and made the subject of both his last will and testament and the project of partition of
his estate among his heirs in such a manner as to remove the same from the public domain under the Cario and Susi
doctrines. Thus, when he died on 31 May 1937, he transmitted no right whatsoever, with respect to the said property, to his
heirs. This being the case, his possession cannot be tacked to that of the private respondents for the latter's benefit
pursuant to Section 48(b) of the Public Land Act, the alternative ground relied upon in their application. It would have been
entirely different if the possession of Charles was open, continuous, exclusive, notorious and under a bona fide claim of
ownership as provided under Section 48 of the Public Land Act. Even if he were an American citizen at that time, he would
have had the same civil rights as Filipino citizens pursuant to the original ordinance appended to the 1935 Constitution. the
pertinent portion of said ordinance reads:
(17) Citizens and corporations of the United States shall enjoy in the Commonwealth of the Philippines all
the civil rights of the citizens and corporations, respectively, thereof.
The import of said paragraph (17) was confirmed and reinforced the originally by Section 44 of Act No. 2874 and Section
127 of C.A. No. 141 (The Public Land Act of 1936); the latter provided that:
Sec. 127. During the existence and continuance of the Commonwealth and before the Republic of the
Philippines is established, citizens and corporations of the United States shall enjoy the same rights granted
to citizens and corporations of the Philippines under this Act.
This right, however, vanished with the advent of the Philippine Republic on 4 July 1946.

41

Verily, private respondents had to rely exclusively on their own possession. under the applicable law at the time, it was
incumbent upon them to prove that they had been in open, continuous, exclusive and notorious possession and occupation
of agricultural land of the public domain, under a bona fide claim of acquisition of ownership for at least thirty (30) years
immediately preceding the filing of the applications for confirmation of title, except when prevented by war or force
majeure. 42
By their own evidence, private respondents admitted that they were never in actual possession of the property prior to the
filing of their application. During the pendency of Special Proceedings No. 796, the estate of Charles Hankins appeared to
have been administered by his son Alexander. This administration was terminated in 1948 upon the execution of the Project
of Partition. Private respondents and their brother Ismael did not take possession of the share which pertained to their
mother, Lilia; instead; they allegedly hired Gregorio Gabay to administer the same. There is, however, no competent
evidence to show the extent of such administration. Moreover, notwithstanding the fact that Gregorio had the property
declared for taxation purposes, the correct area and boundaries of the same have not been proven. As evidenced by the
Project of Partition, the share of Lilia was only 125 acres or 50.59 hectares, which is clearly not the portion applied for. The
area applied for consists of 319.4788 hectares of land based on a survey plan prepared by private land surveyor Espaol
on the basis of a survey conducted in 1950. Obviously, therefore, the plan was not prepared to determine Lilia's share alone
for, as admitted by the private respondents themselves, this plan includes William Hankins' share which was sold to
Marcelino Buyco, private respondents father, and the other properties which the latter donated to the private respondents
and Ismael Buyco on 20 August 1962 (Exhibit "S"). However, there is no competent evidence as to the respective
boundaries and areas of the properties constituting the said share of William Hankins; neither are there reliable descriptions
of the other alleged properties belonging to Marcelino Buyco. Be that as it may, when the survey was conducted by
Espaol, private respondents and their brother Ismael did not immediately acquire the portion originating from William
Hankins and the other alleged properties of Marcelino Buyco; hence, there was no valid basis for the inclusion of said
properties in the survey. And even if both William's share and Marcelino Buyco's properties were included there would still
be nothing to support the application for the entire 319,4788 hectares considering that as per the Project of Partition, the
share pertaining to William consisted only of 50.59 hectares. There was, moreover, no evidence to show the extent of the
alleged "other properties" of Marcelino Buyco. Given such circumstances, it would be reasonable to presume that what was
surveyed in 1950 was the entire pasture land alleged to form part of the estate of Charles Hankins, covered by Tax
Declaration No. 15853, and which necessarily included the share of Alexander Hankins. Significantly, per Exhibit "O" the
latter's share is specified as part of the property covered by Tax Declaration No. 15853. The inclusion then of Alexander's
share in the survey and the plan may provide the clue to this unusual increase in the area covered by the survey plan.
Nevertheless, even if We are to assume for argument's sake that there was nothing irregular in the inclusion in the survey
plan of the share of William Hankins and the other properties of Marcelino Buyco, the fact remains that the "ownership"
thereof could have been acquired by the private respondents and Ismael Buyco only on 20 August 1962 upon the execution
of the deed of donation in their favor. To be thus benefited by the possession of William or Marcelino for purposes of Section
48 (b) of the Public Land Act, there should be proof that said predecessors had been in open, continuous, exclusive and
notorious possession and occupation thereof. Unfortunately, no such proof was offered.
It is palpably obvious then that at the time Land Registration Case No. N-48 was filed in the Regional Trial Court of Romblon
on 14 October 1976, private respondents did not have in their favor an imperfect title over that which they claimed to have
inherited, by representation, from the estate of Charles Hankins. With greater force does this conclusion likewise apply with
respect to the properties donated to them in 1962 by their father Marcelino Buyco. This is because they were not able to
prove open, continuous, exclusive and notorious possession and occupation thereof under a bona fide claim of acquisition
of ownership for at least thirty (30) years immediately preceding the filing of the application, 43 or from 12 June 1945. 44
Considering that the private respondents became American citizens before such filing, it goes without saying that they had
acquired no vested right, consisting of an imperfect title over to property before they lost their Philippine citizenship.
WHEREFORE, the Petition is GRANTED. The challenged Decision of the public respondent of 21 November 1989 in CAG.R. CV No. 05824 is hereby SET ASIDE and the Decision of 5 February 1985 of Branch 82 of the Regional Trial Court of
Romblon in Land Registration Case No. N-48, LRC Record No. N-51706 is REVERSED.

Costs against the private respondents.

SO ORDERED.

G.R. No. 83609 October 26, 1989

DIRECTOR OF LANDS, petitioner,
vs.
COURT OF APPEALS, IBARRA BISNAR and AMELIA BISNAR, respondents.
Ibarra L. Bisnar for himself and for and in behalf of co-private respondent Amelia Bisnar.

GRIO-AQUINO, J.:
Petitioner Director of Lands, through the Solicitor General, seeks a review of the decision dated May 27, 1988, of the Court
of Appeals in CA-G.R. CV No. 66426, entitled "Ibarra Bisnar, et al. vs. Director of Lands," affirming in totothe decision of the
Court of First Instance of Capiz, granting the private respondents' application for confirmation and registration of their title to
two (2) parcels of land in LRC Cad. Rec. 1256.
In their joint application for registration of title to two (2) parcels of land filed on July 20,1976, the applicants Ibarra and
Amelia Bisnar claimed to be the owners in fee simple of Lots 866 and 870 of the Pilar Cadastre Plan AP-06-000869,
respectively containing an area of 28 hectares (284,424 sq. m.) and 34 hectares (345,385 sq. m.) situated in barrio Gen.
Hizon, Municipality of President Roxas, Province of Capiz (p. 14, Rollo). The applicants alleged that they inherited those
parcels of land (p. 41, Rollo) and they had been paying the taxes thereon (p. 40, Rollo).
On December 16,1976, the Director of Lands and the Director of the Bureau of Forest Development, opposed the
application on the grounds that:
1. Neither the applicants nor their predecessors-in-interest possess sufficient title to acquire ownership in fee
simple of the land or lots applied for, the same not having been acquired by any of the various types of title
issued by the Spanish Government, such as, (1) 'titulo real' or royal grant, (2) the 'concession especial' or
special grant, (3) the 'composicion con el estado titulo' or adjustment title, (4) the 'titulo de compra 'or title by
purchase, and (5) the 'informacion possessoria' or possessory information under the Royal Decree of 13
February 1894, or any other recognized mode of acquisition of title over realty under pertinent applicable
laws.
2. Neither the applicants nor their predecessors-in-interest have been in open, continuous, exclusive and
notorious possession and occupation of the land in question for at least thirty (30) years immediately
preceding the filing of the application.
3. The properties in question are a portion of the public domain belonging to the Republic of the Philippines,
not subject to private appropriation, (pp. 17-19, Record on Appeal). (pp. 14-15, Rollo.)
On February 24,1977, the applicants filed an amended application, which was approved on March 14, 1977, and included
the following allegation:
Should the Land Registration Act invoked be not applicable to the case, they hereby apply for the benefits of
Chapter 8, Commonwealth Act 141, as amended, as they and their predecessors-in-interest have been in
possession of the land as owners for more than fifty (50) years. (p. 16, Rollo.)
After hearing, the trial court ordered the registration of the title of the lots in the names of the applicants, herein private
respondents. It found that applicants and their predecessors- in-interest have been in open, public, continuous, peaceful
and adverse possession of the subject parcels of land under bona fide claims of ownership for more than eighty (80) years
(not only 30) prior to the filing of the application for registration, introduced improvements on the lands by planting coconuts,
bamboos and other plants, and converted a part of the land into productive fishponds (p. 68, Rollo).
On appeal, the Appellate Court affirmed the trial court's decision. It held that the classification of the lots as timberland by
the Director of Forestry cannot prevail in the absence of proof that the said lots are indeed more valuable as forest land than
as agricultural land, citing as authority the case of Ankron vs. Government of the Philippine Islands (40 Phil. 10). In this
petition, the government alleges that:
1. the classification or reclassification of public lands into alienable or disposable agricultural land, mineral
land or forest land is a prerogative of the Executive Department of the government and not of the courts;
2. that possession of forest lands, no matter how long, cannot ripen into private ownership; and
3. that an applicant for registration of title has the burden of proving that he meets the requirements of
Section 48 of Com. Act No. 141, as amended. (p. 19, Rollo.)
The principal issue in this appeal is whether the lots in question may be registered under Section 48 (b) of CA 141, as
amended.

The petition is impressed with merit.

In the case of Bureau of Forestry vs. Court of Appeals, 153 SCRA 351, we ruled:
As provided for under Section 6 of Commonwealth Act 141, which was lifted from Act 2874, the classification
or reclassification of public lands into alienable or disposable, mineral or forest lands is now a prerogative of
the Executive Department of the government and not the courts. With these rules, there should be no more
room for doubt that it is not the court which determines the classification of lands of the public domain into
agricultural, forest or mineral but the Executive Branch of the government, through the Office of the
President. Hence, it was grave error and/or abuse of discretion for respondent court to ignore the
uncontroverted facts that (1) the disputed area is within a timberland block, and (2) as certified to by the then
Director of Forestry, the area is needed for forest purposes. (pp. 21-22, Rollo.)
It bears emphasizing that a positive act of the government is needed to declassify land which is classified as forest and to
convert it into alienable or disposable land for agricultural or other purposes (Republic vs. Animas, 56 SCRA 499). Unless
and until the land classified as forest is released in an official proclamation to that effect so that it may form part of the
disposable agricultural lands of the public domain, the rules on confirmation of imperfect title do not apply (Amunategui vs.
Director of Forestry, 126 SCRA 69; Director of Lands vs. Court of Appeals, 129 SCRA 689; Director of Lands vs. Court of
Appeals, 133 SCRA 701; Republic vs. Court of Appeals, 148 SCRA 480; Vallarta vs. Intermediate Appellate Court, 151
SCRA 679).
Thus, possession of forest lands, however long, cannot ripen into private ownership (Vano vs. Government, 41 Phil. 161
[1920]; Adorable vs. Director of Forestry, 107 Phil. 401 [1960]). A parcel of forest land is within the exclusive jurisdiction of
the Bureau of Forestry and beyond the power and jurisdiction of the cadastral court to register under the Torrens System
(Republic vs. Court of Appeals, 89 SCRA 648; Republic vs. Vera, 120 SCRA 210 [1983]; Director of Lands vs. Court of
Appeals, 129 SCRA 689 [1984]).
Section 48 (b) of Commonwealth Act No. 141, as amended, applies exclusively to public agricultural land. Forest lands or
areas covered with forests are excluded (p. 26, Rollo). We reiterate our ruling in Amunategui that:
In confirmation of imperfect title cases, the applicant shoulders the burden of proving that he meets the
requirements of Section 48, Commonwealth Act No. 141, as amended by Republic Act 1942. He must
overcome the presumption that the land he is applying for is part of the public domain but that he has an
interest therein sufficient to warrant registration in his name because of an imperfect title such as those
derived from old Spanish grants or that he has had continuous, open and notorious possession and
occupation of agricultural lands of the public domain under a bona fide claim of acquisition of ownership for
at least thirty (30) years preceding the filing of his application. (Heirs of Amunategui vs. Director of Forestry,
126 SCRA 69.)
WHEREFORE, the appealed decision is reversed and set aside. The application for registration in LRC Cad. Rec. 1256 of
the former Court of First Instance, is hereby dismissed without costs.
SO ORDERED.

EN BANC
G.R. No. L-11988 April 4, 1918
JACINTO MOLINA, Plaintiff-Appellee, vs. JAMES J. RAFFERTY, Collector of
Internal Revenue, Defendant-Appellant.
Acting Attorney-General Paredes for appellant.
Araneta & Zaragoza for appellee.
FISHER, J.:
After the publication of the decision announced under the date of February 1st.,
1918, 1counsel for appellee presented a petition for a rehearing. This petition was
granted and oral argument of the motion was permitted. Two of the members of the
court, as constituted at the time of the argument on the motion for a rehearing,
were not present when the case was first submitted and did not participate in the
original decision.
chanroblesvirtualawlibrary

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Upon the facts, as correctly stated in the original majority decision, a majority of
the members of the court as now constituted is in favor of setting aside the original
decision and affirming the judgment of the trial court.
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Plaintiff contends that the fish produced by him are to be regarded as an

"agricultural product" within the meaning of that term as used in paragraph ( c) of
section 41 of Act No. 2339 (now section 1460 of the Administrative Code of 1917),
in forced when the disputed tax was levied, and that he is therefore exempt from
the percentage tax on merchants' sales established by section 40 of Act No. 2339,
as amended.
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The provision upon which the plaintiff relies reads as follows:

In computing the tax above imposed transactions in the following commodities shall
be excluded: . . . ( c) Agricultural products when sold by the producer or owner of
the land where grown, whether in their original state or not. (Act No. 2339, sec.
41.)
The same exemption, with a slight change in wording, is now embodied in section
1460 of the Administrative Code, of 1917.
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The question of law presented by this appeal, as we view, is not whether fish in
general constitute an agricultural products, but whether fish produced as were those
upon which the tax in question was levied are an agricultural product.
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As stated by judged Cooley in his great work on taxation:

The underlying principle of all construction is that the intent of the legislature
should be sought in the words employed to express it, and that when found it
should be made to govern, . . . . If the words of the law seem to be of doubtful
import, it may then perhaps become necessary to look beyond them in order to
ascertain what was in the legislative mind at the time the law was enacted; what
the circumstances were, under which the action was taken; what evil, if any, was
meant to be redressed; . . . . And where the law has contemporaneously been put
into operation, and in doing so a construction has necessarily been put upon it, this
construction, especially if followed for some considerable period, is entitled to great

respect, as being very probably a true expression of the legislative purpose, and is
not lightly to be overruled, although it is not conclusive. (Cooley on Taxation [Vol.
1] 3d. Ed., p. 450.)
The first inquiry, therefore, must relate to the purpose of the Legislative had in mind
in establishing the exemption contained in the clause now under consideration. It
seems reasonable to assume that it was due to the belief on the part of the law
making body that by exempting agricultural products from this tax the farming
industry would be favored and the development of the resources of the country
encouraged. It is a fact, of which we take judicial cognizance, that there are
immense tracts of public land in this country, at present wholly unproductive, which
might be made fruitful by cultivation, and that large sums of money go abroad
every year for the purchase of food substances which might be grown here. Every
dollar's worth of food which the farmer produces and sells in these Islands adds
directly to the wealth of the country. On the other hand, in the process of
distribution of commodities to the ultimate consumer, no direct increase in value
results solely from their transfer from one person to another in the course of
commercial transactions. It is fairly to be inferred from the statute that the object
and purpose of the Legislature was, in general terms, to levy the tax in question,
significantly termed the "merchant's tax," upon all persons engaged in making a
profit upon goods produced by others, but to exempt from the tax all persons
directly producing goods from the land. In order to accomplish this purpose the
Legislature, instead of attempting an enumeration of exempted products, has
grouped them all under the general designation of "agricultural products."
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It seems to require no argument to demonstrate that it is just as much to the public

interest to encourage the artificial propagation and growth of fish as of corn, pork,
milk or any other food substance. If the artificial production of fish is held not to be
included within the exemption of the statute this conclusion must be based upon the
inadequacy of the language used by the Legislature to express its purpose, rather
than the assumption that it was actually intended to exclude producers of artificially
grown fish from the benefits conferred upon producers of other substances brought
into the store of national wealth by the arts of husbandry and animal industry.
chanroblesvirtualawlibrary

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While we have no doubt that the land occupied by the ponds in which the fish in
question are grown is agricultural land within the meaning of the Acts of Congress
and of the Philippine Commission under consideration in the case of Map vs. Insular
Government (10 Phil. Rep., 175) and others cited in the original majority opinion, it
does not seem to us that this conclusion solves the problem. A man might cultivate
the surface of a tract of land patented to him under the mining law, but the
products of such soil would not for that reason, we apprehend, be any the less
"agricultural products." Conversely, the admission that the land upon which these
fishponds are constructed is not to be classified as mineral or forest land, does not
lead of necessity to the conclusion that everything produced upon them is for that
reason alone to be deemed an "agricultural product" within the meaning of the
statute under consideration.
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"Agriculture" is an English word made upon of Latin words " ager," a field, and
" cultura," cultivation. It is defined by Webster's New International Dictionary as
meaning in its broader sense, "The science and art of the production of plants
and animal useful to man . . ."
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In Dillard vs. Webb (55 Ala., 468) it is held that the words "agriculture" includes
"the rearing, feeding and managing of live stock." The same view was expressed in
the case of Binzel vs. Grogan (67 Wis., 147).
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Webster defines "product" to be "anything that is produced, whether as the result of

generation, growth, labor, or thought ... ," while "grow" is defined in the Century
Dictionary as meaning "to cause to grow; cultivate; produce, raise . . .."
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While it is true that in a narrow and restricted sense agricultural products are
limited to vegetable substances directly resulting from the tillage of the soil, it is
evident from the definitions quoted that the term also includes animal which derived
their sustenance from vegetable growths, and are therefore indirectly the product of
the land. Thus it has been held that "The product of the dairy and the product of the
poultry yard, while it does not come directly out of the soil is necessarily connected
with the soil . . . and is therefore farm produce. (District of Columbia vs. Oyster, 15
D. C., 285.)
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In the case of Mayor vs. Davis (6 Watts & Sergeant [Penn. Rep.], 269) the court
said:
Swine horses, meat cattle, sheep, manure, cordwood, hay, vegetables, fruits, eggs,
milk, butter, lard . . . are strictly produce of the farm . . .
Without attempting to further multiply examples, we think it may safely be asserted
that courts and lexicographers are in accord in holding that the term "agricultural
products" is not limited in its meaning to vegetable growth, but includes everything
which serves to satisfy human needs which is grown upon the land, whether it
pertain to the vegetable kingdom, or to the animal kingdom. It is true that there is
no decision which as yet has held that the fish grown in ponds are an agricultural
product, but that is no reason why we should not so hold if we find that such fish
fall within the scope of the meaning of the term. Of necessity, the products of land
tend constantly to multiply in number and variety, as population increases and new
demands spring up. In California there are farms devoted to the growth of frogs for
the market. In many places in North America foxes and other animals usually found
wild are reared in confinement for their fur. In Japan land is devoted to the culture
of the silkworm and the growth of the plants necessary for the food of those
insects. Bees are everywhere kept for the wax and honey into which the land is
made to produce by those engaged in these occupations are "agricultural products"
in the same sense in which poultry, eggs, and butter have been held to be
agricultural products.
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Now, if the purpose of agriculture, in the broader sense of the term, is to obtain
from the land the products to which it is best adapted and through which it will yield
the greatest return upon the expenditure of a given amount of labor and capital,
can it not be said that it is just as much an agricultural process to enclose a given
area of land with dykes, flood it with water, grow aquatic plants in it, and feed fish
with the plants so produced as to fence in it and allow poultry to feed upon the
plants naturally or artificially grown upon the surface? In the last analysis the result
is the same - a given area of land produces a certain amount of food. In the one
case it is the flesh of poultry, in the other the flesh of fish. It has been agreed
between the parties that an important article of diet consumed by fish grown in a
pond consists of certain marine plants which grow from roots which affix themselves
to the bottom of the pond. In a real sense, therefore, the fish are just as truly a
product of the land as are poultry or swine, living upon its vegetable growths,
aquatic or terrestrial. Thus, land may truly be said to produce fish, although it is
true that the producer is not a fisherman. Neither is one who grows foxes for their
pelts a hunter. As contended by counsel, the inquiry is not whether fish in general
constitute an agricultural product, but whether fish artificially grown and fed in
confinement are to be so regarded. Honey produced by one who devotes his land to
apiculture might be so regarded, even if we were to admit that wild honey gathered
in the forest is not. Pigeons kept in domestication and fed by the owner would fall
within the definition. Wild pigeons obtained by a hunter would not. Firewood

gathered in a natural forest is not an agricultural product, but firewood cut

from bacauan trees planted for that purpose has been held to be such a product,
and its producer exempt from the merchant's tax. (Mercado vs. Collector of Internal
Revenue, 32 Phil. Rep., 271.) Other comparisons might be made, many of which will
be found in the opinion in which two of the members of the court expressed their
dissent from the original majority opinion, but enough have been given to make our
position clear.
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During the many hears that the statute before us has been in existence, since it
first appeared, substantially in its present form, in section 142 of Act No. 1189,
passed in 1904, no attempt has been made, until this case arose, to construe it as
not applying to fish grown in ponds, and much weight should be given to this long
continued administrative interpretation. The opinion of the Attorney-General, cited
by Justice Malcolm, will be found on examination to have no bearing upon the
present inquiry, as in that case question was, not whether fish grown and fed in
ponds were agricultural products, but whether ". . .fishermen, shell and pearl
gatherers . . ." were liable to the occupation tax. There is nothing in the opinion to
indicate that the word "fishermen" was used to mean men growing fish in ponds,
and it must, therefore, be assumed that it was used in its proper grammatical sense
to designate persons engaged in catching fish not artificially produced.
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The decision in the case of The United States vs. Laxa (36 Phil. Rep., 670) is not
controlling, as the reasoning upon which it is based was not concurred in by four
members of the court. Furthermore, the Laxa case might be distinguished from the
one now under consideration, were it necessary to do so, in that it has been
stipulated in this case that fish cultivated in ponds subsist largely upon aquatic
plants which grow from roots which attach themselves to the bottom of the pond,
and are therefore in a real sense a product of the land, while in the Laxa case the
evidence was that they subsisted solely upon free floating algae.
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We are therefore of the opinion, and so hold, that the decision heretofore rendered
herein must be set aside, and the judgment of the lower court affirmed. So
ordered.
chanroble svirtualaw

G.R. No. L-37995 August 31, 1987

BUREAU OF FORESTRY vs. COURT OF APPEALS
PARAS, J.:
Before Us is a petition for review on certiorari, which seeks to annul and set aside the Decision 1 (promulgated on April 11, 1973) of the
respondent court in CA-G.R. No. 38163-R, affirming the decision 2 (dated April 6, 1966) of the then Court of First Instance of Iloilo in Land
Registration Case No. N-506, G.L.R.O. Record No. N-20783 entitled "Filomeno Gallo, Applicant vs. Bureau of Forestry, Bureau of
Lands, and Philippine Fisheries Commission, oppositors. " The dispositive portion of the trial court's decision reads as follows:
WHEREFORE, the court Orders the registration of Lots Nos. 2, 3, and 4 and the bigger portion of Lot No. 1
after excluding the portion Identified as Lot 1-A together with the improvements thereon in the name of
Filomeno Gallo, of legal age, widower, Filipino citizen, and resident of 155 Fuentes Street, Iloilo City,
Philippines. Lots Nos. 1, 2 and 3 are subject to the road right-of-way of 15 meters wide which is presently
known as Sto. Rosario Rizal Montpiller provincial Road and Buenavista-Daraga provincial Road they being
properties of the Province of Iloilo and should be registered in the name of said province. The oppositions of
the Director of Lands, Director of Forestry and the Philippine Fisheries Commission are dismissed. Lot 1-A
with an area of 2.6864 hectares which is enclosed in red pencil and is found inside Lot No. 1 in the plan
Exhibit is hereby declared public land. After the decision has become final let the corresponding decree be
issued.
SO ORDERED. (p. 38, Joint Record on Appeal Annex "A." p. 25, Rollo)
This appeal also seeks to annul and set aside respondent court's resolution dated December 14, 1973 denying for lack of
merit, herein petitioners' motion for reconsideration.
The basic issue which petitioners raise in this appeal is
Whether or not the classification of lands of the public domain by the Executive Branch of the Government
into agricultural, forest or mineral can be changed or varied by the court depending upon the evidence
adduced before it. (p. 9, Brief for the Petitioners, p. 105, Rollo)
The antecedent facts of the case are as follows:
On July 11, 1961, four (4) parcels of land situated in Buenavista, Iloilo described in Plan Psu-150727, containing an
approximate area of 30.5943 hectares were the subject of an application for registration by Mercedes Diago who alleged
among others that she herself occupied said parcels of land having bought them from the testate estate of the late Jose Ma.
Nava who, in his lifetime, had bought the lands in turn from Canuto Gustilo on June 21, 1934. The Director of Lands
opposed said application on the ground that neither the applicant nor her predecessors-in-interest have sufficient title over
the lands applied for, which could be registered under the Torrens systems, and that they have never been in open,
continuous and exclusive possession of the said lands for at least 30 years prior to the filing of the application. The Director
of Forestry on the other hand anchored his opposition principally on the ground that certain specific portions of the lands
subject matter of the application, with an area of approximately 194,080 square meters are mangrove swamps and are
within Timberland Block "B " L.C. Project No. 38, L.C. Map No. 1971 of Buenavista, Iloilo.
On June 30, 1965, respondent Filomeno Gallo, having purchased the subject parcels of land from Mercedes Diago on April
27, 1965, moved to be substituted in place of the latter, attaching to his motion an Amended Application for Registration of
Title substantially reproducing the allegations in the application of Mercedes Diago. Petitioner Philippine Fisheries
Commission also moved on August 30, 1965 to be substituted in place of petitioner Bureau of Forestry as oppositor over a
portion of the land sought to be registered, supervision and control of said portion having been transferred from the Bureau
of Forestry to the Philippine Fisheries Commission.
On April 6, 1966, the trial court rendered its decision ordering the registration of the four (4) parcels of land in the name of
respondent Filomeno Gallo after excluding a portion Identified as Lot "1-A" which is the site of the municipal hall of
Buenavista town, and subjecting Lots Nos. 1, 2 and 3 to the road-of-way of 15 meters width.
Petitioners appealed from said decision to the respondent Court of Appeals assigning the following errors in their brief:
THE TRIAL COURT ERRED IN ORDERING THE REGISTRATION OF THE SUBJECT LAND WHICH
CONSISTS OF TIMBERLAND, FORESHORELAND AND LAND BELONGING TO THE PUBLIC DOMAIN
HENCE UNREGISTERABLE.
THE TRIAL COURT ERRED IN HOLDING THAT THE POSSESSION OF THE APPLICANT-APPELLEE
AND HIS PREDECESSORS-IN-INTEREST HAD BEEN PEACEFUL, OPEN, CONTINUOUS,
UNINTERRUPTED AND ADVERSE TO CLAIMANTS AND IN THE CONCEPT OF OWNER. (p. 6, Brief for
the Petitioners, p. 105, Rollo)
Respondent court affirmed said decision and denied a motion for reconsideration of the same hence the present petition
with two (2) assigned errors, basically the same issues raised with the respondent court:

RESPONDENT COURT ERRED IN NOT HOLDING THAT THE DETERMINATION OF WHETHER A

PUBLIC LAND IS AGRICULTURAL OR STILL A FOREST LAND RESTS EXCLUSIVELY UPON THE
DIRECTOR OF FORESTRY (NOW DIRECTOR OF FOREST DEVELOPMENT), THE SECRETARY OF
NATURAL RESOURCES) AND THE PRESIDENT OF THE PHILIPPINES.
RESPONDENT COURT ERRED IN NOT HOLDING THAT THE LAND IS PRESUMED TO BELONG TO
THE PUBLIC DOMAIN AND PRIVATE RESPONDENT HEREIN HAS NOT CONVINCINGLY SHOWN THAT
THE REMOTE PREDECESSOR-IN-INTEREST POSSESSED THE LAND IN QUESTION SINCE TIME
IMMEMORIAL. (pp. 9 & 20, Brief for the Petitioners, p. 105, Rollo)
Out of the 30.5943 hectares applied for registration under the Torrens System, 11.1863 hectares are coconut lands and
admittedly within the disposable portion of the public domain. These are more particularly Identified as parcels "B," B-1", "B2" and "B-3" of the sketch plan Exh. "1-A." The rest, consisting of 19.4080 hectares and Identified as parcels A, A-1, A-2 and
A-3 of the same plan Exh. "1-A," is now the center of controversy of the present appeal.
Petitioners contend that respondent court completely ignored the undisputed facts that 1) the controverted area is within
Timberland Block "B," L.C. Project No. 38, L.C. Map No. 1971 of Buenavista, Iloilo and that 2) the certification of February
18, 1956 of the then Director of Forestry to the effect that the area in question is needed for forest purposes. Respondent
court in affirming the decision of the Iloilo trial court ruled that although the controverted portion of 19.4080 hectares are
mangrove and nipa swamps within Timberland Block "B," L.C. Project No. 38, same cannot be considered part of the public
forest not susceptible of private ownership since petitioners failed to submit convincing proof that these lands are more
valuable for forestry than for agricultural purposes, and the presumption is that these are agricultural lands. Respondent
court based its conclusion upon the premise that whether or not a controverted parcel of land is forest land, is a question of
fact which should be settled by competent proofs, and if such a question be an issue in a land registration proceeding, it is
incumbent upon the Director of Forestry to submit to the court convincing proofs that the land in dispute is not more
valuable for agriculture than for forest purposes. It is the position of respondent that respondent court did "not hesitate to
apply this presumption with full force particularly where, as in the case at bar, the lands applied for have been possessed
and cultivated by the applicant and his predecessors-in-interest for a long number of years without the government taking
any positive step to dislodge the occupants from their holdings which have passed from one to another by inheritance or by
purchase." (p. 9, Brief for private respondents) Otherwise stated, it is Our impression that private respondents claim the rule
of prescription against the government.
Such contentions of private respondents do not hold water. Admittedly the controversial area is within a timberland block as
classification of the municipality and certified to by the Director of Forestry on February 18, 1956 as lands needed for forest
purposes and hence they are portions of the public domain which cannot be the subject of registration proceedings. Clearly
therefore the land is public land and there is no need for the Director of Forestry to submit to the court convincing proofs
that the land in dispute is not more valuable for agriculture than for forest purposes, as there was no question of whether the
land is forest land or not. Be it remembered that said forest land had been declared and certified as such by the Director of
the Bureau of Forestry on February 18, 1956, several years before the original applicant of the lands for registration
Mercedes Diago, filed it on July 11, 1961. In the case of Government of the Philippine Islands vs. Abella, 49 Phil. 49, cited
by private respondents themselves in their brief, We held
Following the decision of Ankon vs. Government of the Philippine Islands (40 Phil. 10), it is again held, that
whether a particular parcel of land is more valuable for forestry purposes than for agricultural purposes, or
vice versa, is a fact which must be established during the trial of the case. Whether the particular land is
agricultural, forestry or mineral is a question to be settled in each particular caseunless the Bureau of
Forestry has, under the authority conferred upon it by law, prior to the intervention of private interest, set
aside said land for forestry or mineral resources. (Italics for emphasis)
We also held in the case of Republic vs. Animas, 56 SCRA 499, 503 that... As a general rule, timber or forest lands are not alienable or disposable under either the Constitution of
1935 or the Constitution of 1973.
... It is the Bureau of Forestry that has jurisdiction and authority over the demarcation, protection,
management, reproduction, occupancy and use of all public forests and forest reservations and over the
granting of licenses for the taking of products therefrom, including stone and earth (Section 1816 of the
Revised Administrative Code). That the area in question is a forest or timber land is clearly established by
the certification made by the Bureau of Forest Development that it is within the portion of the area which was
reverted to the category of forest land, approved by the President on March 7, 1958.
As provided for under Sec. 6 of Commonwealth Act No. 141, which was lifted from Act No. 2874, the classification or
reclassification of public lands into alienable or disposable, mineral or forest lands is now a prerogative of the Executive
Department of the government and not of the courts. With these rules, there should be no more room for doubt that it is not
the court which determines the classification of lands of the public domain into agricultural, forest or mineral but the
Executive Branch of the Government, through the Office of the President. Hence, it was grave error and/or abuse of
discretion for the respondent court to ignore the uncontroverted facts that (1) the disputed area is within a timberland block
and (2) as certified to by the then Director of Forestry, the area is needed for forest purposes.
Furthermore, private respondents Cannot claim to have obtained their title by prescription inasmuch as the application filed
by them necessarily implied an admission that the portions applied for are part of the public domain which cannot be
acquired by prescription, unless the law expressly permits it. It is a rule of law that possession of forest lands, however long,
cannot ripen into private ownership (Director of Forestry vs. Munoz, 23 SCRA 1184).
WHEREFORE, in the light of the foregoing, the assailed decision is hereby SET ASIDE, and a new one is hereby rendered, declaring that:

1) Parcels "B," "B-1," "B-2 and "B-3" of the sketch plan Exhibit "1-A" consisting of 11.1863 hectares of coconut land and admittedly within the
disposable portion of the public domain are hereby ordered registered in the name of the applicant Filomeno Gallo and/or his successors-ininterest as provided for by the Public Land Law; and
2) Parcels "A," "A-1," and "A-2," and "A-3" of the same plan Exh. "1-A," consisting of 19.4080 hectares, are forest lands or lands of the public
domain of the Republic of the Philippines and are therefore inalienable. SO ORDERED.

G.R. No. L-20189 October 31, 1923

VALENTINA JOCSON, Plaintiff-Appellant, vs. ANTERO SORIANO, administrator
of the estate of Silvestre Estacion, deceased, Defendant-Appellee.
Salinas and Salinas for appellant.
Fidel Ibaez and Eusebio C. Encarnacion for appellee.
JOHNSON, J.:
The only question presented by this appeal is: When the purchaser from the
Government of lots or parcels of land formerly belonging to the Friar State dies
before complete payment is made, leaving a widow surviving him, do such lots or
parcels belong to the estate of the deceased to be administered by his
administrator, or may the wife have the inchoate title in such lots or parcels
transferred to her and thus be eliminated or excluded from the state of her
deceased husband?
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The facts in the present case may be stated as follows:

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( a) that some time prior to November 1, 1918, the said Silvestre Estacion
purchased from the Government the following lots or parcels of land Nos. 1018,
723, 1007, 687, 270, 742, and 386; ( b) that said lots had therefore been
purchased by the Government as part of the Hacienda de los Frailes en el Municipio
de Santa Cruz de Malabon; ( c) that Silvestre Estacion and his predecessors had
been in possession, as tenants, of said parcels of land since before the American
occupation of the Philippine Islands; ( d) that he was the occupant, as tenant, of
said parcels of land at the time the said hacienda was purchased; (e) that after he
had purchased said lots he continued to make the partial payments under his
contract, up to the time of his death; (f) that he left a widow surviving him, who in
the present plaintiff; ( g) that after the death of Silvestre Estacion, and on the 12th
day of September, 1919, the said Valentina Jocson, as the surviving widow of
Silvestre Estacion, taking advantage of the provisions of section 16 of Act No. 1120,
had said lots transferred to her (see Exhibits A, B, C, D, E, F, and G); ( h) that
notwithstanding the fact that the widow, Valentina Jocson, of Silvestre Estacion had
said lots transferred to her in accordance with said section 16 after the death of her
husband, the administrator of the estate of Silvestre Estacion took possession of the
same, included them in the inventory of the estate and continued to administer the
same as a part of the estate of the deceased.
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Valentina Jocson, under the foregoing facts, prayed that said seven lots be excluded
from the inventory of the administrator of the estate of Silvestre Estacion, and that
the same be returned to her immediately. The lower court denied her petition and
decided that said lots were a part of the estate of Silvestre Estacion and that, as
such, Antero Soriano, as administrator, had a right to include them in his inventory
and to administer them. From that judgment the plaintiff appealed.
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The appellant now contends that the inchoate title to said lots belongs to her and
that she has the sole and exclusive right to occupy and administer them. Her
contention is based upon the provisions of Act No. 1120, with special reference to
section 16 of the same. Act No. 1120 provides, among other things, that the actual
occupant of any portion of the Friar Lands at the time of the purchase by the
Government should be given a preference in the right to purchase the land or lot
occupied. Silvestre Estacion was the actual occupant, as tenant, of the said seven

parcels of land at the time of the purchase by the Government and at the time of
his purchase from the Government, and he continued to be in possession of the
same until his death. Said Act further provides that the purchaser had a right to
make a partial payments until the full payment purchase price was paid. The Act
further provides that the title to each and every parcel land sold should remain in
the Government until the full payment of all installments of purchase money and
interest by the purchaser has been made, and that any incumbrance created by the
purchaser against said parcels or lots shall be invalid as against the Government
Section 16 provides that "in the event of the death of a holder of a certificate (of
purchase of any portion of said land), the issuance of which is provided for in
section 12 hereof, prior to the execution of a deed by the Government of any
purchaser, his widow shall be entitled to receive a deed of the land stated in the
certificate upon showing that she has complied with the requirements of law for the
purchase of the same. . . ."
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At the time of the death of Silvestre Estacion, he had nothing but an inchoate right
in the parcels of land. The title was still in the Government. The Government being
the owner, until full payment was made, had a perfect right to prescribe how such
property should be disposed of in case of the death of the husband. The character
of the right of Silvestre Estacion was very analogous to that of a homesteader. At
No. 926, which provides for the granting of homesteads, in its section 3 contains a
very similar provision to that of section 16 of Act No. 1120, for the disposition of the
homestead in case the applicant dies before title in him is perfected, leaving
surviving him a wife. Said section 3 provides that "in the event of the death of an
applicant (for a homestead) prior to the issuance of a patent (title), his widow shall
be entitled to have a patent for the land applied for issue to her" upon a proper
showing, and until a final title or patent is issued for the land to the applicant the
Government remains the owner.
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Acts Nos. 1120 and 926 were patterned after the laws granting homestead rights
and special privileges under the laws of United States and the various states of the
Union. The statutes of the United States as well as of the various states of the
Union contain provisions for the granting and protection of homesteads. Their object
is to provide a home for each citizen of the Government, where his family may
shelter and live beyond the reach of financial misfortune, and to inculcate in
individuals those feelings of independence which are essential to the maintenance of
three institutions. Furthermore, the state itself is concerned that the citizens shall
not be divested of a means of support, and reduced to pauperism. (Cook and
Burgwall vs. McChristian, 4 Cal., 24; Franklin vs. Coffee, 70 Am. Dec., 292;
Richardson, vs. Woodward, 104 Fed. Rep., 873; 21 Cyc., 459.)
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The conservation of a family home is the purpose of homestead laws. The policy of
the state is to foster families as the factors of society, and thus promote general
welfare. The sentiment of patriotism and independence, the spirit of free citizenship,
the feeling of interest in public affairs, are cultivated and fostered more readily
when the citizen lives permanently in his own home, with a sense of its protection
and durability. (Waples on Homestead and Exemptions, p. 3.)
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Under the statutory and constitutional provisions of the various states of the Union
it has been held that "homestead privilege does not determine on the husband's
death but is transmitted to his widow and children." (21 Cyc., 562.)
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In the case of the Estate of Fath (132 Cal., 609) the Supreme Court of California
held that "a homestead selected by the husband in his lifetime . . . vests absolutely
in his surviving wife . . . The descent of the homestead to the surviving widow was
governed by the law in force at the death of her husband." (Dickey vs. Gibson, 54
Am. St. Rep., 321.)
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Neither does a widow lose her right in the homestead estate of her first husband by
a second marriage. (Sanders vs. Rusell, 21 Am. St. Rep., 29; Miles vs. Miles, 88
Am. Dec., 208.)
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Upon the death of the husband, the wife may continue to occupy the whole of the
homestead. (Nicholas vs. Purczell, 89 Am. Dec., 572.)
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The doctrine announced with reference to the right of the widow in the homestead
upon the death of her husband, does no injustice to the creditors of the deceased,
since they have it always in their power to protect themselves either by refusing
credit or by demanding such security as will protect the from loss. (Keyes vs. Cyrus,
38 Am. St. Rep., 296.)
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Said section 16 (Act No. 1120) provides that in the event of the death of a holder of
a certificate prior to the execution of a deed by the Government, his widow shall be
entitled to receive a deed of the land upon a showing that she has complied with
the requirements of the law for the purchase of the same. In the present case the
widow took the steps necessary under the law to protect her right, and had the
necessary certificates of transfer made to her (Exhibits A to H). From that date the
inchoate right which her husband possessed passed to her, and to her alone, and
she had a right to continue making the partial payments required, and when
completed, to secure an absolute conveyance from the Government. The law
conceded to her the right held by her husband, without diminution of control,
subject only to her completing the contract with the Government. That being true,
we are fully persuaded that the administrator of the estate of Silvestre Estacion had
no interest nor any control whatever in the administration of said lots or parcels of
land. Under the law they did not belong to the estate of Silvestre Estacion.
Whatever interest he had, passed immediately upon his death to his widow. The
said lots constituted no part of the estate of Silvestre Estacion.
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Therefore, it is hereby ordered and decreed that the judgment of the lower court be
revoked; that the defendant, as administrator of the estate of Silvestre Estacion,
exclude the said seven parcels of land immediately from the inventory of said
estate, return the possession thereof to the plaintiff, and that he render to the Court
of First Instance of the Province of Cavite, within a period of thirty days, a full and
correct account of his administration of said parcels of land, and that he pay over to
Valentina Jocson whatever sum or sums may be due her. And, without any finding
as to costs, it is so ordered.
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SECOND DIVISION
G.R. No. L-54106 February 16, 1982
LUCRECIO PATRICIO, SEGUNDO DALIGDIG, FRANCISCO DALIGDIG,
FLORENCIO ARELLANO and EPIFANIO DALIGDIG, Petitioners, vs. ISABELO
BAYOG, CONRADA, PEDRO, EMILIO, ALFONSO, DIONISIO and ARSENIO, all
surnamed MENDEZ, and COURT OF APPEALS, Respondents.
AQUINO, J.:
The legal issue in this case is whether the tenants hired by the purchaser of a
homestead planted to coconuts and bananas may be ejected by the homesteader's
heirs who were allowed by the Court of Appeals to repurchase the homestead and
who desire to personally possess and till the land.
chanroblesvirtualawlibrary

chanrobles virtual law library

As factual background, it should be stated that in 1934 Policarpio Mendez obtained

a patent and Torrens title for a homestead with an area of about twenty-three
hectares located at Sitio Badiangon, Barrio Dalipuga, Iligan City. He and his wife,
Petra Macaliag and their nine children lived on the land, cleared it and planted
coconuts thereon.
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In 1956, Mendez sold the homestead to the spouses Eugenio Lamberang and Ester
Fuentes. In 1958, Mendez and his children filed an action to annul the sale.
Lamberang countered with an ejectment suit. On March 20, 1961, Mendez and his
children filed an action against the Lamberang spouses for the reconveyance of the
homestead.
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The three cases reached the Court of Appeals which in a decision dated January 3,
1977 ordered Lamberang to reconvey the homestead to the Mendezes "free of all
liens and encumbrances " upon their payment to Lamberang of P19,411.28 as
redemption price. That judgment became final and executory.
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The Court of Appeals also held that upon the execution of the deed of reconveyance
and the delivery of the redemption price to the Lamberang spouses, the Mendezes
Would be "entitled to the possession and occupancy" of the homestead. (Mendez vs.
Lamberang, Lamberang vs. Bayug, and Mendez vs. Fuentes-Lamberang CA-G.R.
Nos. 50819-81-R.)
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The Mendezes paid the redemption price and the Lamberang spouses reconveyed
the homestead. Pursuant to a writ of possession, a deputy sheriff placed Isabelo
Bayog, the representative of the Mendez family in possession of the homestead
after ejecting the tenants of the Lamberang spouses named Lucrecio Patricio,
Florencio Arellano, Epifanio Daligdig, Francisco Daligdig and Segundo Daligdig, now
the petitioners herein.
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However, the tenants reentered the homestead allegedly upon instruction of

Bernardino O. Nuez, a trial attorney of the Bureau of Agrarian Legal Assistant.
Hence, the Mendezes filed a motion to declare them and Nuez in contempt of
court.
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Before that contempt incident could be resolved, or on April 10, 1979, the tenants,
represented by Nuez, filed in the Court of Agrarian Relations at Iligan City a
complaint for damages against the heirs of Policarpio Mendez named Isabelo Bayog

and Conrada, Pedro, Emilio, Alfonso, Dionisio and Arsenio, all surnamed Mendez
(CAR Case No. 92), now private respondents.
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By reason of an agreement between the parties at the hearing on October 22, 1979,
the said tenants vacated the land. They are now not in possession of the land (p. 5,
Rollo).
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The Agrarian Court in its decision of December 12, 1979 held that the plaintiffs
were "tenants of the landholding in question" and ordered their reinstatement
therein. The lower court directed the Mendezes to pay them their "unrealized
shares" in the coconuts.
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The Agrarian Court concluded that the plaintiffs became the tenants of the
Mendezes because the Lamberangs, with whom they established a tenancy
relationship, were not illegal possessors of the land, having acquired it through a
sale. The court said that under Section 10 of the Code of Agrarian Reform tenants
are entitled to security of tenure and that under section 36 of that Code, personal
cultivation by the landowner is no longer a ground for terminating tenancy. The
Agrarian Court noted that Presidential Decree No. 152 dated March 13, 1973, which
prohibits the employment or use of share tenants in complying with the
requirements regarding entry, occupation and cultivation of public lands, is not
applicable to the case.
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The Mendezes appealed to the Court of Appeals which on May 8, 1980 reversed the
decision of the Agrarian Court and declared that the Mendezes are "entitled to the
homestead without the gravamen of plaintiffs' tenancies" because the purpose of
granting homesteads is "to distribute disposable agricultural lots of the State to land
destitute citizens for their home and cultivation" (Pascua vs. Talens, 80 Phil. 792,
793). That policy would be defeated " if the buter can install permanents tenants in
the homestead who would even have the right of preemption" (Patricio vs. Bayog,
CA-G. R. No. 10611-CAR ).
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The tenants appealed to this Court. They contend (a) that under section 118 of the
Public Land Law, share tenancy may be constituted in homestead after five years
from the grant of the patent because section 119 of the same law does not prohibit
any encumbrance on the homestead after that period and (b) that they cannot be
ejected because they were not parties in any of the cases involving the Mendezes
and Lamberang.
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This is a case where two competing interests have to be weighed against each
other: the tenant's right to security of tenure as against the right of the
homesteader or his heirs to own a piece of land for their residence and
livelihood.
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We hold that the more paramount and superior policy consideration is to uphold the
right of the homesteader and his heirs to own and cultivate personally the land
acquired from the State without being encumbered by tenancy relations. *
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This holding is consistent with the intention of the Code of Agrarian Reform to
abolish agricultural share tenancy, "to establish owner-cultivatorship and the
economic family-size farm as the basis of Philippine agriculture and "to achieve a
dignified existence for the small farmers free from pernicious institutional restraints
and practices" (Sec. 2).
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WHEREFORE, the judgment of the Court of Appeals is affirmed. No costs.

SO ORDERED.

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G.R. No. L-31035

October 12, 1929

PHILIPPINE NATIONAL BANK, plaintiff-appellant,

vs.
JULIA ORTIZ LUIS, defendant-appellee.
Dionisio de Leon and Nat. M. Balboa for appellant.
Constancio Padilla for appellee.
STATEMENT
Plaintiff is a domestic banking corporation with its principal office in the City of Manila and a branch office in
Cabanatuan.
For a cause of action, that it is the absolute owner of a parcel of rice land evidenced by transfer certificate
title No. 1825 regularly issued by the register of the deeds of Nueva Ecija, containing an area of 16 hectares.
That the land was seized and distrained by the Government for and on account of taxes for the years 1921,
1922, 1923, 1924, 1925, and 1926. That on May 28, 1926, the plaintiff redeemed the land and paid the
Government P301.82. That it is paying the annual land taxes, and that no other person has ever paid taxes
thereon from the year 1921 up to date. The defendant against the will and without the consent of the plaintiff,
has been in possession of the land. That her possession is wrongful and unlawful. That the products of the
property is 300 cavanes of palay per annum. Plaintiff prays for judgment that it is the owner and entitled to
the possession of the land and for an accounting.
For answer the defendant made a general and specific denial, and as a special defense alleged that she is
in the possession of 168 hectares of land in the same barrio, all covered by transfer certificate of title No.
1639 of the office of the register of deeds of Nueva Ecija, which covers and includes the land which plaintiff
claims, and has never been delinquent in the payment of taxes. That defendant's land was formerly
registered under the Land Registration Act in the name of the defendant's vendor. That the land occupied by
the plaintiff was formerly a homestead within the land of the defendant. But in the land registration
proceedings, the homestead was cancelled by the Court of First Instance, and it was for this reason that the
homesteader refused to pay the taxes, and that a public inspector managed to have this homesteader's title
mortgaged to the bank. Defendant prays that plaintiff's complaint be dismissed, with costs.
From a judgment for the defendant, the plaintiff appeals and assigns the following errors:
The learned trial court erred:
1. In not declaring that Narciso Pascua, the original predecessor in the interest of plaintiff, has
the better title to and the right of the land herein involved.
2. In not declaring that Romero and plaintiff were and are purchasers in good faith and for
value and their title to and the right of the said land cannot, under the very findings of the facts
of the trial court, be prejudiced and defeated.
3. In absolving the defendant from the complaint with costs against the plaintiff.
4. In not sentencing the defendant to immediately vacate the property described in the
complain and deliver the same to plaintiff; to render an accounting to plaintiff of all the products
and benefits received by said defendant from and after she took wrongful possession of said
property up to and including the date of actual delivery of said land to plaintiff, with costs.
JOHNS, J.:
In 1910 Narciso Pascua, from whom plaintiff claims and deraigns title, filed an application for the land in
dispute as a homestead, which was accepted by the Director of Lands. After such filing and before final
proof, Leon Zarate and Juan Berenger applied for the registration of 168 hectares of land in the Court of
First Instance of Nueva Ecija, which included the homestead of Pascua, who with the Director of Lands,
represented by the Attorney-General, appeared and contested the land registration proceedings of Zarate
and Berenguer. On December 28, 1914, and after a hearing, the court ordered the registration of the land in
favor of Zarate and Berenguer and dismissed the opposition of Narciso Pascua and the Director of Lands.
On appeal that judgment was affirmed by this court March 13, 1918. 1 Notwithstanding that proceeding and
those decisions, on August 20, 1918, the Director of Lands issued a homestead patent to Narciso Pascua
for the land in dispute. February 2, 1919, Narciso Pascua sold the land to Severo J. Romero, a public land
inspector and employee of the Bureau of Lands, who in the same month and year, and for an expressed

consideration of 2,000, mortgaged the land to the plaintiff for 1,200, which foreclosed the mortgaged and
acquired title to the property, through a sheriff's sale.
The question is thus squarely presented whether or not the homestead patent issued to Pascua, known in
the record as plaintiff's Exhibit A, through which plaintiff claims title, is prior and superior to the Torrens title of
the defendant, known in the record as Exhibit 1. At the time the homestead patent was issued on August 20,
1918, the land therein described was previously declared to be private land, not only by the Court of First
Instance, but also by this court.
As the appellee points out, proceedings for the acquisition of a homestead patent are not in rem, but a land
registration case is and is directed against any and all the persons, "including the Government of the
Philippine Islands and any of its dependencies"1awph!l.net
It also appears in the homestead patent issued to Pascua that the tile is "subject to any and all vested and
accrued rights."
The legal question involved on this appeal is squarely decided against the plaintiff in the case of De los
Reyes vs. Razon (38 Phil., 480). In a well written, exhaustive opinion, this court says:
1 HOMESTEADS; PATENTS. A homestead patent which attempts to convey land to which the
Government had no title at the time of its issuance vests no title in the patentee as against the real
owner.
2 ID.; ID.; REGISTRATION OF PATENT; CONCLUSIVENESS OF CERTIFICATE OF TITLE. A
certificate of title issued to the grantee of the homestead patent pursuant to the provisions of section
122 of the Land Registration Act is not conclusive proof of title and confers no better right than the
conferred by the patent.
The legal principles laid down in that decision have been approved and followed ever since. That is to say, in
the land registration case, both Pascua and the Government appeared and presented their proofs and
contested the application of the defendant's grantors for the registration of the land, and after hearing the
evidence of all parties, the court decided that the land in question was a private land, and that it should be
registered in the name of the applicants as such, and that it was not public land, and denied Pascua's right
to his homestead. That decision became final, and on appeal was affirmed by this court.
Hence, you have a legal adjudication, in which all parties appeared and filed their respective claims, that
Pascua's homestead filing was null and void, for the simple reason that it was then private and not public
land.
In the final analysis, the legal effect of plaintiff's claim as to nullify that final decision and to again relitigate
the identical question which was decided in the land registration case.
There is no merit in the appeal. The judgment of the lower court is affirmed, with costs. So ordered.

G.R. No. L-14722

May 25, 1960

IGNACIO MESINA, plaintiff-appellant,

vs.
EULALIA PINEDA VDA. DE SONZA, ET AL., defendants.
EULALIA PINEDA VDA. DE SONZA, defendant-appellee.
Agustin C. Bagasao for appellant.
Luis Manalang and Associates for appellee.
BAUTISTA ANGELO, J.:
Plaintiff brought this action before the Court of First Instance of Nueva Ecija praying that Original Certificate
of Title No. P-1137 of the Register of Deeds of Nueva Ecija be ordered cancelled and that the registration
case pending before the same court covering the property described therein be given due course and that
defendants be ordered to pay plaintiff P1,000.00 as attorney's fees and costs.
Defendants filed a motion to dismiss on the ground that plaintiff's action is already barred by the statute of
limitations. The reasons advanced are: the complaint was filed on March 25, 1958. The decree of
registration or issuance of patent over the property was issued "sometime on September 12, 1953 or
thereabout", while the transfer certificate of title covering the same was issued on September 16, 1953. The
present action which calls for the cancellation of said decree and title has, therefore, been filed after the
elapse of more than four years, which cannot be done, because the title has already become indefeasible
and incontrovertible. The court sustained this motion and dismissed the complaint. Hence the present
appeal.
Plaintiff claims that he is the owner in fee simple of Lot No. 3259, with improvements thereon, situated in
San Antonio, Nueva Ecija; that he has been in actual possession thereof since 1914, publicly, openly,
peacefully and against the whole world and up to the present time he is the only one who benefits from the
produce thereof; that said lot is at present the subject of registration proceedings pending in the same court
known as Registration Case No. N-372, L.R.C. Cad. Record No. N-12238; that sometime in September 12,
1953, the Director of Lands, without exercising due care, and in spite of his knowledge that defendants had
not complied with the knowledge that defendants had not complied with the requirements of Commonwealth
Act No. 141, issued a homestead patent in their favor as a consequence of which a certificate of title was
issued in their name by the register of deeds; that said title was procured by defendants through frauds,
deception and misrepresentation since they knew that the lot belonged to the plaintiff; and that the Director
of Lands has no authority nor jurisdiction to issue a patent covering said land because it is a private property
of plaintiff. For these reasons, plaintiff prays that said decree and title be cancelled.
Republic Act No. 1942, which took effect on June 22, 1957 (amending Section 48-b of Commonwealth Act
141), provides:
(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, for at least thirty years immediately
preceeding 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.
In the case of Susi vs. Razon, et al., 48 Phil., 424, it was observed that where all the necessary
requirements for a grant by the Government are complied with through actual physical possession openly,
continuously, and publicly, with a right to a certificate of title to said land under the provisions of Chapter VIII
of Act No. 2874, amending Act No. 926 (carried over as Chapter VIII of Commonwealth Act No. 141), the
possessor is deemed to have already acquired by operation of law not only a right to a grant, but a grant of
the Government, for it is not necessary that a certificate of title be issued in order that said grant may be
sanctioned by the court an application therefor being sufficient under the provisions of Section 47 of Act
No. 2874 (reproduced as Section 50, Commonwealth Act No. 141). Thus, the following is what this Court
said on the matter:
It clearly appears from the evidence that Valentin Susi has been in possession of the land in question
openly, continuously, adversely and publicly, personally and through his predecessors, since the year
1880, that is, for about forty-five years. ... When on August 15, 1914, Angela Razon applied for the
purchase of said land, Valentin Susi had already been in possession thereof personally and through
his predecessors for thirty-forty years. And if it is taken into account that Nemesio Pinlac had already
made said land a fish pond when he sold it on December 13, 1880, it can hardly be estimated when
he began to possess and occupy it, the period of time being so long that it is beyond the reach of

memory. ... In favor of Valentin Susi, there is, moreover the presumption juris et de jure established
paragraph (b) of section 45 of Act No. 2874, amending Act No. 926, that all the necessary
requirements for a grant by the Government were complied with, for he has been in actual and
physical possession, personally and through his predecessors, of an agricultural land of the public
domain openly, continuously, exclusively and publicly since July 26, 1894, with a right to a certificate
of title to said land under the provisions of Chapter VIII of said Act. So that when Angela Razon
applied for the grant in her favor, Valentin Susi had already acquired, by operation of law, not only a
right to grant, but a grant of the Government, for it is not necessary that certificate of title should be
issued in order that said grant may be sanctioned by the courts, an application therefor is sufficient,
under the provisions of section 47 of Act No. 2874. If by a legal fiction, Valentin Susi had acquired the
land in question by a grant of the State, it had already ceased to be of the public domain and had
become private property, at least by presumption, of Valentin Susi, beyond the control, of the Director
of Lands. Consequently, in selling the land in question to Angela Razon, the Director of Lands
disposed of a land over which he had no longer any title or control, and the sale thus made was void
and of no effect, and Angela Razon did not thereby acquire any right. (Emphasis supplied)
Such is the situation in which the plaintiff claims to be in his complaint. He alleges that he is the owner in fee
simple of the lot in question, with the improvements thereon, situated in San Antonio, Nueva Ecija, and that
he has been in actual possession thereof since 1914, publicly, openly, peacefully and against the whole
world, and that up to the present time he is the only one who benefits from the produce thereof. He further
claims that said lot is present the subject of a registration proceeding pending in the same court, known as
Registration Case No. N-372, L.R.C. Cad. Record No. N-12238. If by legal fiction, as stated in the Susi case,
plaintiff is deemed to have acquired the lot by a grant of the State, it follows that the same had ceased to be
part of the public domain and had become private property and, therefore, is beyond the control of the
Director of Lands. Consequently, the homestead patent and the original certificate of title covering said lot
issued by the Director of Lands in favor of the defendants can be said to be null and void, for having been
issued through fraud, deceit and misrepresentation.
Considering that this case was dismissed by the trial court merely on a motion to dismiss on the ground that
plaintiff's action is already barred by the statute of limitations, which apparently is predicated on the theory
that a decree of registration can no longer be impugned on the ground of fraud one year after the issuance
and entry of the decree,1 which theory does not apply here because the property involved is allegedly private
in nature and has ceased to be part of the public domain, we are of the opinion that the trial court erred in
dismissing the case outrightwithout giving plaintiff a chance to prove his claim. It would have been more
proper for the court to deny the motion on the ground that its object does not appear to be indubitable, rather
than to have dismissed it, as was done by the trial court.
Wherefore, the order appealed from is set aside. The case is remanded to the trial court for further
proceedings. No costs.

G.R. No. L-19615

December 24, 1964

IN THE MATTER OF THE APPLICATION FOR REGISTRATION OF LAND. LEONOR DE

LOS ANGELES, FEDERICO DE LOS ANGELES, ET AL., applicants-appellants,
vs.
ISIDORO O. SANTOS, ANTONIO ASTUDILLO, ET AL., THE DIRECTOR OF LANDS and
THE PROVINCE OF RIZAL, oppositors-appellees.
Antonio G. Ibarra and H. I. Benito for other oppositors-appellees.
Jose W. Diokno for applicants-appellants
Office of the Solicitor General for oppositors-appellees Director of Lands and Province of
Rizal.
BENGZON, JP, J.:
Squarely before this Court in this appeal is the important and fundamental question of
whether a land registration court which has validly acquired jurisdiction over a parcel of land
for registration of title thereto could be divested of said jurisdiction by
a subsequent administrative act consisting in the issuance by the Director of Lands of a
homestead patent covering the same parcel of land.
The court a quo held in effect that it could be, as it dismissed the application to register title
to the land in its order brought here on appeal.
On November 21, 1959 an application for registration of title to 12 parcels of land in Ampid
San Mateo Rizal was filed in the Court of First Instance of Rizal by Leonor de los Angeles
and seven co-applicants. Among other things it alleged that "applicants are owners proindiviso and in fee simple of the aforesaid land."
The required notices were given in which May 27, 1960 was set for the initial hearing. On
March 3, 1960 the Director of Lands filed an opposition stating that the land "is a portion of
the public domain". The Province of Rizal also interposed an opposition on May 24, 1960,
asserting "the required 3.00 meters strips of public easement" on lots along Ampid River and
a creek.
At the initial hearing on May 27, 1960 an order of general default was issued except as
against the Director of Lands, the Province of Rizal and eleven private oppositors who
appeared therein. On July 10, 1960 the aforesaid private oppositors, Julio Hidalgo among
them, filed their written opposition claiming they "are the lawful owners of the parcels of land
in question for having acquired homestead patents over said lots".
On July 25, 1961 a "Report" was filed in court by the Land Registration Commissioner,
stating:
1. That the parcel of land described as Lot 11 of plan Psu-158857, applied for in the
above-entitled land registration case, is a portion of that described on plan Psu148997, previously patented on June 12, 1961 under Patent No. 95856 in the name of
Julio Hidalgo; and
2. That Case No. N-2671, LRC Record No. N-18332, was set for hearing on May 27,
1960 but no decision has as yet been received by this Commissioner.
WHEREFORE, it is respectfully recommended to this Honorable Court that Case No.
N-2671, LRC Record No. N-18332, be dismissed with respect to Lot 11 of plan Psu158857 only, giving due course, however, to the other lots in the application.
Acting thereon, the court required applicants in its order of July 29, 1961, to show cause why
their application should not be dismissed as to Lot 11 (10.6609 hectares). On August 15,
1961 applicants filed an "opposition to motion to dismiss". But on September 18, 1961 the
court issued an order dismissing the application with respect to Lot 11 "without prejudice on

the part of applicants to pursue the corresponding remedy in any ordinary action". After a
motion for reconsideration was filed and denied, applicants appealed to this Court.
As lone assignment of error it is alleged that "the lower, court grievously erred in
dismissing the application for registration as regards Lot No. 11, over which a
homestead patent was issued by the Director of Lands during the pendency of the
registration proceeding". (Emphasis supplied.)
To start with, it is well settled that the Director of Lands' jurisdiction, administrative
supervision and executive control extend only over lands of the public domain and not to
lands already of private ownership. (Susi vs. Razon, 48 Phil. 424; Vital vs. Anore 53 O.G.
3739; Republic vs. Heirs of Carle L-12485, July 31, 1959; Director of Lands vs. De Luna, L1441, Nov. 23, 1960.) Accordingly, a homestead patent issued by him over land not of the
public domain is a nullity, devoid of force and effect against the owner (Zarate vs. Director of
Lands, 34 Phil. 416; Vital vs. Anoresupra).
Now, in the land registration proceedings applicants contended that as of November 21,
1959 the date they applied for registration they were already "owners pro-indiviso and
in fee simple of the aforesaid land". As a result, if applicants were to successfully prove this
averment, and thereby show their alleged registrable title to the land, it could only result in
the finding that when Julio Hidalgo's homestead patent was issued over Lot 11 on June 12,
1961 said lot was no longer public. The land registration court, in that event, would have to
order a decree of title issued in applicants' favor and declare the aforesaid homestead patent
a nullity which vested no title in the patentee as against the real owners (Rodriguez vs.
Director of Lands, 31 Phil. 273; Zarate vs. Director of Lands, supra; Lacaste vs. Director of
Lands, 63 Phil. 654).
Since the existence or non-existence of applicants' registrable title to Lot 11 is decisive of the
validity or nullity of the homestead patent issued as aforestated on said lot the court a
quo's jurisdiction in the land registration proceedings could not have been divested by the
homestead patent's issuance.
Proceedings for land registration are in rem whereas proceedings for acquisition of
homestead patent are not (De los Reyes vs. Razon, 38 Phil. 480; Philippine National Bank
vs. Ortiz Luis, 53 Phil. 649). A homestead patent, therefore, does not finally dispose of the
public or private character of the land as far as courts upon proceedings in rem are
concerned (De los Reyes vs. Razon, supra). Applicants should thus be given opportunity to
prove registrable title to Lot 11.
WHEREFORE, we hereby set aside the orders appealed from and remand the case to the
court a quo for further proceedings, without costs. So ordered.

G.R. No. 94542. March 1, 1993.

SPOUSES FRANCISCO JIMENEZ and MARY H. JIMENEZ, petitioners, vs. HON. CATALINO MACARAIG, in his capacity
as Executive Secretary, HON. FULGENCIO S. FACTORAN, JR., in his capacity as Secretary of the Department of
Environment and Natural Resources and EUFROCINA GUIRNALDA, respondents.
J.P. Cortez & Associates Law Offices for petitioners.
Dizon, Farias, Datuin, Velasco Law Office for private respondent.
DECISION
ROMERO, J p:
On June 23, 1954, petitioner Francisco Jimenez filed with the Bureau of Lands a Townsite Sales Application (TSA) over a
piece of land designated as Lot No. 30, Residence Section "K" with an area of 750 square meters situated in Lourdes
Subdivision, Baguio City. An auction sale of the land was held on November 23, 1955 where the only bid received was that
from petitioner Francisco Jimenez. In an Order Award dated April 1, 1957, the Bureau of Lands awarded the land to
Jimenez. In a subsequent Order dated October 16, 1963, the Director of Lands modified the Award by increasing the land
area awarded from 750 square meters to 1,000 square meters. The purchase price was correspondingly increased.
The Award issued in favor of Jimenez provides that:
"1. The applicant shall commence the construction of the improvements appropriate for the purpose for which the land is
purchased within six (6) months from the date of receipt hereof and shall complete the said construction within eighteen (18)
months from the date of award."
Furthermore, the Award specifically states that "non-compliance with any of the terms and conditions hereof and/or of the
rules and regulations governing the sale will result in the rescission of the sale and the cancellation of the application. . . "
Sometime in 1972, private respondent Eufrocina Guirnalda occupied the disputed land. She cleared the land, introduced
leveling and riprapping and built a shack which she and her family used as residence.
In 1984, the daughter and son-in-law of petitioners informed private respondent about the Award made in favor of petitioner
Francisco Jimenez and ordered private respondent and her family to vacate the land.
On December 17, 1984, private respondent filed a letter-protest with the Bureau of Lands in connection with the Award
made in favor of Francisco Jimenez.
On July 23, 1985, Mr. Pastor Teodoro, Administrative Assistant and Deputy Land Inspector of the Bureau of Lands, Natural
Resources District No. I-13, Baguio City submitted to the Director of Lands a final investigation, comment and
recommendation with respect to private respondent's protest, the relevant portion of which reads:
"A necessary hearing on the case is not deemed necessary by the investigator, considering that a final investigation report
is sufficient to resolve the issues at hand. Both parties are represented during the investigation and ocular inspection of the
area under consideration. Further investigation would not alter or change greatly the material facts of the case, namely:
A. The awardee, Francisco Jimenez failed to comply with the construction requirements stipulated in the Order of Award
and the Public Land Law as amended within the period of 18 months since 1957 April and up to the present time or for
about 28 years stretch, and that no improvements by the awardee, were introduced on the area. In his case the maxim `He
who sleeps on ones (sic) right, forfeits that right' is applicable in a way.
B. On the other hand, the occupant E. Guirnalda, with a semi invalid husband and her family of 8 members, entered and
built his (sic) house and introduced improvements on the lot without permit and consent of the awardee and/or the
government. However, her uninterrupted, peaceful and continuous (sic) occupation of the land since 1972 up to the present
time should be considered in her favor in the light of compassionate (sic) Government Policy on the matter.
Premises considered the following recommendations are submitted:
1. The cancellation of T.S.A. V-3426 (B515) forfeiting in favor of the Government whatever payments made on account
thereof on the grounds of non-compliance with the construction requirements of the law.
2. Thereafter, to consider only Lot 1 of survey plan TSI-3426 P AMD, open for disposition to any qualified applicant, but
particularly to the occupant Eufrocina Guirnalda. Lot 2 is now part of the existing road.
3. And for such other remedies that maybe applicable in the case.
xxx xxx xxx." 1
On September 22, 1986, Rolleo L. Ignacio, the Deputy Minister and Officer in Charge of the Bureau of Lands, acting on the
abovequoted report, issued an Order canceling the Townsite Sales Application previously approved in favor of petitioner
Francisco Jimenez. The said Order reads:

"In the investigation and field verification of the premises conducted by a representative of this Office, both parties
presented their respective evidence in support of their respective claims. It was ascertained that the land in question has
been actually occupied by protestant since 1972 up to the present; that protestant has introduced thereon considerable
improvements such as leveling, riprapping, built her residential house where she and her family resides (sic), built a septic
tank and planted plants of economic value like bananas, sayote, camote, guava trees and fences; that she declared the
land for taxation purposes in 1975 under Tax Declaration No. 12582 and has paid the taxes thereon since then to the
present; and that prior to the occupation of protestant, the land in question remained unoccupied and uncultivated and that
respondent-awardee Francisco Jimenez has never occupied, much less introduced any improvements thereon.
Evidently, respondent Francisco Jimenez, now represented by Rodolfo Singson, has failed to comply with the first condition
of his award which provides:
'1. The applicant shall commence the construction of the improvements appropriate for the purpose for which the land is
purchased within six (6) months from the date of receipt hereof and shall complete the said construction within eighteen (18)
months from the date of the award.'
In accordance with the terms and conditions of the order of the award, non-compliance with the aforecited condition can be
a cause for the cancellation thereof.
In the light of the foregoing facts, there is obviously a violation of the aforequoted condition that warrant (sic) the
cancellation of the townsite sales application of Francisco Jimenez. On the other hand, the protestant, on basis of actual
possession, may be allowed to file appropriate application for the same land.
WHEREFORE, it is ordered that the Townsite Sales Application No. V-3126 (B515) of Francisco Jimenez be, as hereby it is,
canceled, forfeiting in favor of the Government whatever amount that has been paid on account thereof. The District Land
Officer is directed to take the administration of the land in question pending its disposition.
SO ORDERED." 2
From this Order, Francisco Jimenez filed a Motion for Reconsideration. On November 24, 1986, Rolleo L. Ignacio of the
Bureau of Lands issued an Order granting the Motion for Reconsideration and ordering an investigation of the case. The
relevant portion of the Order states:
WHEREFORE, it is ordered that the District Land Officer in Baguio City cause an immediate investigation of this case in
accordance with Land Office Circular No. 68 and thereafter, submit the corresponding report to this office for appropriate
disposition.
The order of this office dated September 22, 1986 is hereby set aside.
SO ORDERED." 3
Private respondent filed an appeal with the respondent Secretary of Environmental and Natural Resources 4 assailing the
November 24, 1986 Order of the Bureau of Lands. On March 2, 1987, the respondent Secretary, through his Assistant
Secretary for Legal Affairs Alexander G. Castro, issued an Order setting aside the Order of the Bureau of Lands dated
November 24, 1986. The dispositive portion of the Order reads:
"In the LIGHT OF THE FOREGOING CONSIDERATION, the order appealed from should be, as hereby it is SET ASIDE
conformably herewith, the order of September 22, 1986, REINSTATED.
SO ORDERED." 5
Petitioner Francisco Jimenez filed a Motion for Reconsideration of the Order dated March 2, 1987 issued by the respondent
Secretary. In the Motion for Reconsideration, petitioner husband maintained that the decision, dated March 2, 1987, was
rendered without notice to him and therefore without opportunity to present his side and that the order of the Director of
Lands, dated September 22, 1986, was made without a formal hearing in derogation of the guarantee of due process. He
further alleged that the investigation report, dated July 23, 1985, does not show that both parties presented their respective
claims and that well settled is the rule that no one shall be personally bound, until he has had a day in court or has been
afforded an opportunity to be heard. 6
Acting on the claim of denial of due process contained in the Motion for Reconsideration, the respondent Secretary,
preparatory to actually deciding the said Motion, issued on January 26, 1988, an Order, the dispositive portion of which
reads:
"Wherefore, in the interest of justice and to erase the impression that appellee had been denied due process in this case,
Atty. Miguel Manalo and Janet Du, both of the Legal Service of the Department of Environment and Natural Resources, are
directed to conduct a formal investigation/hearing to afford the parties involved, the opportunity to adduce therein respective
evidence. The investigators are authorized to issue subpoena/subpoena duces tecum to secure the compulsory attendance
with the parties and their witnesses and the production of materials or relevant papers, documents, to traveling expenses
and per diems, subject to the usual accounting and auditing rules and regulations, to enlist the assistance of all personnel of
the department, its bureau and agencies, as well as law enforcement agencies, to accomplish their task and to submit a
report thereon within fifteen (15) days from termination of the investigation/hearing.
SO ORDERED." 7

Pursuant to this Order, representatives of the Office of the Secretary, Department of Environment and Natural Resources
(DENR) proceeded, on February 16, 1988, to Baguio City to conduct a formal investigation/hearing. After several
postponements, the case was set for hearing on May 4, 1988 in Baguio City. The parties and their respective counsel were
present during the hearing. Because the parties could not agree to settle their case, they opted to submit their respective
memoranda and supporting documents.
On October 12, 1988, the respondent Secretary, after considering the evidence presented by the parties, issued an Order
denying the Motion for Reconsideration of the Order dated March 2, 1987. Respondent Secretary ruled that petitioner
Francisco Jimenez's failure to build a house on the disputed land and establish a residence therein constitutes a valid
ground for the rescission of the Award. In effect, the respondent Secretary's Order dated October 12, 1988 affirmed the
Order of the Bureau of Lands Order dated September 22, 1986 canceling the Award made in favor of petitioner Francisco
Jimenez.
On September 14, 1989, Jimenez filed a second Motion for Reconsideration which was denied by the respondent Secretary
in an Order dated October 6, 1989. The respondent Secretary observed that the second Motion for Reconsideration was
filed by Jimenez ten (10) months after receiving the Order dated October 12, 1988 denying the first Motion for
Reconsideration. According to the respondent Secretary, his October 12, 1988 Order has already become final, thus:
"Appellee's Second Motion for Reconsideration having been filed only on September 14, 1989 or more than ten (10) months
from receipt by appellee's counsel of the questioned Order, the Decision and Order of this Office, dated March 2, 1987 and
October 12, 1988, respectively, have already become final and executory. So the Supreme Court has held that where a
motion for reconsideration is filed out of time, the decision or order subject of reconsideration becomes final (Elizalde & Co.,
Inc. vs. Court of Industrial Relations, 25 SCRA 58). Thus, this Office is now bereft of jurisdiction to entertain the Second
Motion for Reconsideration." 8
Francisco Jimenez filed an appeal with the Office of the President which issued an Order dated July 13, 1990 affirming the
Order of the respondent Secretary dated October 6, 1989. Jimenez, now joined by his wife Mary H. Jimenez, filed the
present petition assailing the abovementioned Order of the Office of the President and the various Orders of the respondent
Secretary of Environment and Natural Resources.
Petitioners contend that the respondent Executive Secretary committed grave abuse of discretion in not holding that the
respondent Secretary did not have jurisdiction to entertain the appeal filed by private respondent from the Order of the
Bureau of Lands dated November 24, 1986.
According to petitioners, the November 24, 1986 Order of the Bureau of Lands was interlocutory and was, therefore, not
appealable. Because the respondent Secretary allegedly did not have jurisdiction to take cognizance over the appeal, the
Orders he issued in relation thereto are, it is argued, null and void.
Petitioners' challenge to the jurisdiction of the respondent Secretary is, however, too late. When private respondent
appealed the November 24, 1986 Order of the Bureau of Lands, petitioners did not question respondent Secretary's
jurisdiction over the case but instead actively participated in the proceedings conducted to settle the appeal. In a long line of
decisions, the Court has consistently held that while an order or decision rendered without jurisdiction is a total nullity and
may be assailed at any stage, a party's active participation in the proceedings in the tribunal which rendered the order or
decision will bar such party from attacking its jurisdiction. 9 In Tijam v. Sibonghanoy, 10 the case often cited to support this
doctrine, the Court made these pronouncements:
" . . . a party can not invoke the jurisdiction of a court to secure affirmative relief against his opponent and, after obtaining or
failing to obtain such relief, repudiate or question that same jurisdiction (Dean v. Dean, 136 Or. 694, 86 A.L.R. 79). In the
case just cited, by way of explaining the rule, it was further said that the question whether the court had jurisdiction either of
the subject-matter of the action or of the parties is barred from such conduct not because the judgment or order of the court
is valid and conclusive as an adjudication, but for the reason that such a practice can not be tolerated - obviously for
reasons of public policy.
Furthermore, it has also been held that after voluntarily submitting a cause and encountering an adverse decision on the
merits, it is too late for the loser to question the jurisdiction or power of the court .. And in Littleton vs. Burges, 16 Wyo, 58,
the Court said that it is not right for a party who has affirmed and invoked the jurisdiction of a court in a particular matter to
secure an affirmative relief, to afterwards deny that same jurisdiction to escape a penalty." 11
Elaborating on the rationale for the doctrine, the Court, in Crisostomo v. CA, 12 stated that:
"The petitioners, to borrow the language of Mr. Justice Bautista Angelo (People vs. Archilla, G.R. No. L-15632, February 28,
1961, 1 SCRA 699, 700-701), cannot adopt a posture of double-dealing without running afoul of the doctrine of estoppel.
The principle of estoppel is in the interest of a sound administration of the laws. It should deter those who are disposed to
trifle with the courts by taking inconsistent positions contrary to the elementary principles of right dealing and good faith
(People v. Acierto, 92 Phil. 534, 541 [1953]). For this reason, this Court closes the door to the petitioners' challenge against
the jurisdiction of the Court of Appeals and will not even honor the question with a pronouncement."
In Marquez v. Secretary of Labor, 13 the Court further observed that the doctrine applies not only to the plaintiff or the party
who, by filing the action, initiated the case but also the defendant or respondent, if the latter fails to timely raise the
jurisdictional issue and instead actively participates in the proceedings.
In the instant case, private respondent filed with the respondent Secretary an appeal of the Bureau of Lands Order dated
November 24, 1986. On March 2, 1987, the respondent Secretary issued an Order setting aside the November 24, 1986
Order of the Bureau of Lands. Petitioner Francisco Jimenez filed a Motion for Reconsideration of the respondent Secretary's
Order. In the said Motion for Reconsideration, Jimenez did not question the respondent Secretary's jurisdiction over the
case but instead invoked denial of due process. 14 Without ruling on the Motion for Reconsideration, the respondent

Secretary relented on the due process argument of Jimenez by issuing an Order dated January 26, 1988 directing his legal
staff to conduct a formal investigation. Hearings were set and reset with the acquiescence of petitioner Jimenez. During the
hearing set on May 4, 1988, Jimenez and private respondent, assisted by their respective counsel , agreed to submit their
respective Memoranda. Jimenez, in his Memorandum of July 18, 1988, 15 again did not question the jurisdiction of
respondent Secretary but discussed the merits of the case and impliedly invoked the jurisdiction of respondent Secretary
when it made the following prayer: "WHEREFORE, premises considered, it is respectfully prayed that the appeal be
dismissed and that the award and other rights already granted to the Appellee (Petitioner Francisco Jimenez) be
maintained." 16
Not only did petitioners fail to seasonably raise the jurisdictional issue but, on the other hand, participated earnestly in the
proceedings conducted before the respondent Secretary. Petitioners' conduct, while the case was pending before the
respondent Secretary, bars them from assailing the latter's jurisdiction for "[t]he active participation of a party against whom
the action is brought, coupled with his failure to object to the jurisdiction of the court or quasi-judicial body where the action
is pending, is tantamount to an invocation of that jurisdiction and a willingness to abide by the resolution of the case and will
bar said part from later on impugning the court or body's jurisdiction." 17
Petitioners next contend that "[p]ublic respondent officials had incorrectly, rather invalidly, disposed of or resolved the
controversy on the basis of mere technicality without taking into account or considering the merits of the case.." 18
The contention is without merit for although the second Motion for Reconsideration of the respondent Secretary's Order
dated March 2, 1986 filed by petitioners was dismissed on the ground that it was filed out of time, which dismissal was
affirmed by the respondent Executive Secretary, the merits of the case were discussed in the Order of respondent Secretary
dated October 12, 1988 denying the first Motion for Reconsideration. In said Order, which was issued only after an
investigation was conducted, the respondent Secretary ruled that petitioner Francisco Jimenez, by not building a house and
establishing his residence within the time prescribed in the Award, abandoned his rights and violated the Award, thus
justifying its rescission.
Indeed, the land was granted to Jimenez subject to the following condition stipulated in the Award:
"1. The applicant shall commence the construction of the improvements appropriate for the purpose for which the land is
purchased within six (6) months from the date of receipt hereof and shall complete the said construction within eighteen (18)
months from the date of the award."
This condition is required by law since Commonwealth Act No. 141 (1936), under which the land was awarded to Jimenez,
provides:
"SECTION 65. The sale of the lands comprised in class (d) of section fifty-nine shall, among others, comprise the following
conditions:
(a) The purchaser shall make improvements of a permanent character appropriate for the purpose for which the land is
purchased, shall commence work thereon within six months from the receipt of the order of the award, and shall complete
the construction of said improvements within eighteen months from the date of such award; otherwise the Secretary of
Agriculture and Commerce may rescind the contract." 19
The abovequoted provision in the Award issued to Jimenez is also consistent with the rules and regulations which were
effective at the time the Award was granted, governing the filing and disposition of applications for alienable lands of the
public domain, under the following pertinent paragraph:
"24. Period allowed for cultivation of land or construction of improvements. Purchasers of agricultural lands shall occupy
and begin to cultivate the same within six (6) months from the date of award, and shall continue such occupation and
cultivation until the issuance of patent therefor, and shall have at least one-fourth (1/4) of the area cultivated in order to be
entitled to a patent. Purchasers of lands used for residential, commercial or industrial purposes shall commence the
construction thereon of the improvements appropriate for the purpose for which the land was purchased, within six (6)
months from the date of award, and shall complete the construction of such improvement within eighteen (18) months from
said date." 20
The Award spells out the penalty for failure to comply with its terms, thus: "non-compliance with any of the terms and
conditions hereof and/or of the rules and conditions governing the sale will result in the rescission of the sale and the
cancellation of the application. . . ."
Petitioners claim in their Memorandum that they have complied with the aforequoted condition in their award because they
cleared, levelled and fenced the land. 21 They have not, however, proved that these improvements were commenced and
completed within the time specified in the Award and under Commonwealth Act No. 141 (1936). Moreover, in the
proceedings conducted before the respondent Secretary, petitioner Francisco Jimenez actually admitted that he has failed
to comply with the condition to construct improvements on the land, thus:
"It is true that the applicant/awardee/winner at public auction/purchaser and initial possessor of the property failed to build
the residential house within the period stated in the award. But this office can take judicial notice of the fact that most
awardees fall in the same situation without loss of their rights to the lands awarded to them." 22
Both the Bureau of Lands 23 and the respondent Secretary 24 found that the required improvements were not constructed
on the land within the time prescribed by the Award and by law. This Court, which is not a trier of facts, finds no cogent
reason to depart from these findings for it generally accords respect to the factual findings of administrative tribunals. 25
Having found that petitioner Francisco Jimenez breached the terms of the Award, the public respondents committed no
grave abuse of discretion then they ordered the rescission of the Award over the disputed land.

Finally, petitioners stated in their petition that "the actions of public respondents have allowed an unlawful occupant of public
land to prevail over a legitimate awardee of the same in utter disregard of public land laws and policies. This circumstance
has permitted private respondent, who is not even a public land applicant (her application was not accepted), to dispossess
petitioners of the land which they legitimately acquired." 26
These statements are baseless. While public respondents rescinded the Award made in favor of petitioner Francisco
Jimenez, they have not awarded the land to private respondent. Whatever claim private respondent might hold over the
land must still be presented before the proper forum and must still go through the appropriate procedure required by law.
Hence, by deciding that public respondents did not lack jurisdiction nor commit grave abuse of discretion in rescinding the
Award issued to petitioner over the disputed land, we are not thereby recognizing private respondent's claim over the
property.
WHEREFORE, the Petition is DISMISSED.
SO ORDERED.