La Bugal-B’laan Tribal Association, Inc.

Vs Ramos
Natural Resources and Environmental Laws

G.R. No. 127882; January 27, 2004

FACTS:
This petition for prohibition and mandamus challenges the constitutionality of Republic
Act No. 7942 (The Philippine Mining Act of 1995), its implementing rules and
regulations and the Financial and Technical Assistance Agreement (FTAA) dated March
30, 1995 by the government with Western Mining Corporation(Philippines) Inc.
(WMCP).
Accordingly, the FTAA violated the 1987 Constitution in that it is a service contract and
is 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.

ISSUE:
What is the proper interpretation of the phrase “Agreements involving Either Technical
or Financial Assistance” contained in paragraph 4, Section 2, Article XII of the
Constitution.

HELD:
The Supreme Court upheld 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.
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.
FRANCISCO I. CHAVEZ v. PUBLIC ESTATES AUTHORITY, GR No. 133250, 2002-07-09
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 Ba... y
On February 4, 1977, then President Ferdinand E. Marcos issued Presidential Decree No.
1084 creating PEA.
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).
April 25, 1995, PEA entered into a Joint Venture Agreement ("JVA" for brevity) with AMARI,
a private corporation, to develop the Freedom Islands.
Issues:
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
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.
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)
Ruling:
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.
The Spanish Law of Waters of 1866 and the Civil Code of 1889
"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."
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."
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
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.
Act No. 1654 mandated that the government should retain title to all lands reclaimed by the
government.
Act No. 1654, however, did not repeal Section 5 of the Spanish Law of Waters of 1866.
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
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.
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 Governor-
General, 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)
These provisions vested upon the Governor-General the power to classify inalienable lands
of the public domain into disposable lands of the public domain
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 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.
Dispositions under the 1935 Constitution
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 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.
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.
Commonwealth Act No. 141 of the Philippine National Assembly
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
Section 6 of CA No. 141 empowers the President to classify lands of the public domain into
"alienable or disposable
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.
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.
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.
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.
The congressional authority required in Section 60 of CA No. 141 mirrors the legislative
authority required in Section 56 of Act No. 2874.
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
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."
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.
Thus, under the 1973 Constitution, private corporations could hold alienable lands of the
public domain only through lease
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
Submerged areas are those... permanently under water regardless of the ebb and flow of
the tide.
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.
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.
Dispositions under the 1987 Constitution... he 1987 Constitution, like the 1935 and 1973
Constitutions before it, has adopted the Regalian doctrine.
The Rationale behind the Constitutional Ban
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.
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 Amended Joint Venture Agreement
In short, the Amended JVA covers a reclamation area of 750 hectares. Only 157.84
hectares of the 750-hectare reclamation project have been reclaimed, and the rest of the
592.15 hectares are still submerged areas forming part of Manila Bay.
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.
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.
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
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.
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.
The Freedom Islands are thus alienable or disposable lands of the public domain, open to
disposition or concession to qualified... parties.
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.
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.
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.
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.
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."
DENR also exercises exclusive jurisdiction over the disposition of all lands of the public
domain.
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.
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.
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.
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,... 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."
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."
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... properties in 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.
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."
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.
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.
We can now summarize our conclusions as follows:
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.
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.
In their present state, the 592.15... hectares of submerged areas are inalienable and
outside the commerce of man.
Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of
77.34 hectares[110] of the Freedom Islands, such transfer is void for being contrary to
Section 3,... Article XII of the 1987 Constitution which prohibits private corporations from
acquiring any kind of alienable land of the public domain.
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.
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.
Principles:
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."
Article 339 of the Civil Code of 1889, which is now Article 420 of the Civil Code of 1950,...
incorporated the Regalian doctrine.
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."
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."
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.
aking 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."
Like the 1973 Constitution, the 1987 Constitution allows private corporations to hold...
alienable lands of the public domain only through l
 G.R. No. 124293, November 20, 2000
FACTS:

The National Investment and Development Corporation (NIDC), a government

corporation, entered into a Joint Venture Agreement (JVA) with Kawasaki Heavy
Industries, Ltd. for the construction, operation and management of the Subic National
Shipyard, Inc., later became the Philippine Shipyard and Engineering Corporation
(PHILSECO). Under the JVA, NIDC and Kawasaki would maintain a shareholding
proportion of 60%-40% and that the parties have the right of first refusal in case of a
sale.

Through a series of transfers, NIDC’s rights, title and interest in PHILSECO eventually
went to the National Government. In the interest of national economy, it was decided
that PHILSECO should be privatized by selling 87.67% of its total outstanding capital
stock to private entities. After negotiations, it was agreed that Kawasaki’s right of first
refusal under the JVA be “exchanged” for the right to top by five percent the highest bid
for said shares. Kawasaki that Philyards Holdings, Inc. (PHI), in which it was a
stockholder, would exercise this right in its stead.

During bidding, Kawasaki/PHI Consortium is the losing bidder. Even so, because of the
right to top by 5% percent the highest bid, it was able to top JG Summit’s bid. JG
Summit protested, contending that PHILSECO, as a shipyard is a public utility and,
hence, must observe the 60%-40% Filipino-foreign capitalization. By buying 87.67% of
PHILSECO’s capital stock at bidding, Kawasaki/PHI in effect now owns more than 40%
of the stock.

ISSUE:

o Whether or not PHILSECO is a public utility

o Whether or not Kawasaki/PHI can purchase beyond 40% of PHILSECO’s stocks

HELD:

In arguing that PHILSECO, as a shipyard, was a public utility, JG Summit relied on sec.
13, CA No. 146. On the other hand, Kawasaki/PHI argued that PD No. 666 explicitly
stated that a “shipyard” was not a “public utility.” But the SC stated that sec. 1 of PD No.
666 was expressly repealed by sec. 20, BP Blg. 391 and when BP Blg. 391 was
subsequently repealed by EO 226, the latter law did not revive sec. 1 of PD No. 666.
Therefore, the law that states that a shipyard is a public utility still stands.

A shipyard such as PHILSECO being a public utility as provided by law is therefore

required to comply with the 60%-40% capitalization under the Constitution. Likewise,
the JVA between NIDC and Kawasaki manifests an intention of the parties to abide by
this constitutional mandate. Thus, under the JVA, should the NIDC opt to sell its shares
 of stock to a third party, Kawasaki could only exercise its right of first refusal to the
extent that its total shares of stock would not exceed 40% of the entire shares of stock.
The NIDC, on the other hand, may purchase even beyond 60% of the total shares. As a
government corporation and necessarily a 100% Filipino-owned corporation, there is
nothing to prevent its purchase of stocks even beyond 60% of the capitalization as the
Constitution clearly limits only foreign capitalization.

Kawasaki was bound by its contractual obligation under the JVA that limits its right of
first refusal to 40% of the total capitalization of PHILSECO. Thus, Kawasaki cannot
purchase beyond 40% of the capitalization of the joint venture on account of both
constitutional and contractual proscriptions.
CASE DIGEST: Krivenko vs. The Register of Deeds, City of
Manila
G.R. No. L-360 November 15, 1947

ALEXANDER A. KRIVENKO, petitioner-appelant, vs. THE REGISTER OF DEEDS, CITY

OF MANILA, respondent and appellee.

FACTS:

Alexander Krivenko, an alien, bought a residential lot in December of 1941. The registration was
interrupted by war. In 1945, he sought to accomplish the registration but was denied by the register
of deed on ground that, being an alien, he cannot acquire land within the jurisdiction. Krivenko
appealed to the Court.

ISSUES:

1. Whether or not an alien under our Constitution may acquire residential land?
2. Whether or not the prohibitions of the rights to acquire residential lot that was already of private
ownership prior to the approval of this Constitutions is applicable at the case at bar?

RULING:

1. NO. Under the Article XIII, Section 1, of the Constitution states that: All agricultural, timber, and
mineral lands of the public domain, water, 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. This means to say that, under the provisions of the
Constitutions, aliens are not allowed to acquire the ownership of urban or residential lands in the
Philippines and, as consequence, all acquisitions made in contravention of the prohibitions since the
fundamental law became effective are null and void per se and ab initio.

2. Prior to the Constitution, there were in the Public Land Act No. 2874 sections 120 and 121 which
granted aliens the right to acquire private only by way of reciprocity. It is to be observed that the
pharase "no land" used in this section refers to all private lands, whether strictly agricultural,
residential or otherwise, there being practically no private land which had not been acquired by any
of the means provided in said two sections. Therefore, the prohibition contained in these two
provisions was, in effect, that no private land could be transferred to aliens except "upon express
authorization by the Philippine Legislature, to citizens of Philippine Islands the same right to acquire,
hold, lease, encumber, dispose of, or alienate land." In other words, aliens were granted the right to
acquire private land merely by way of reciprocity.
 Mateo Cariño vs The Insular Government (February 1909)
Political Law – Regalian Doctrine – Due Process – Property Rights
In 1903, Mateo Cariño filed a petition for him to be granted a certificate of title over a 40
hectare land in Baguio, Benguet. He claimed that he and his predecessors in interest had
been in possession over said parcel of land since time immemorial; that the Igorot community
where the said land was located had always considered Mateo Cariño and his
predecssors/ancestors as the owner of said land; that said parcel of land had been transferred
to his predecessors and unto him in accordance with the Igorot custom.
The land registration court granted his petition but the government through the Solicitor
General opposed said grant on the ground that Mateo Cariño and ancestors failed to register
said land during the Spanish Era. It was argued that in 1880, the Spanish government
decreed that all privately held land must be registered or else they will be reverted back to
the public domain (pursuant to the regalian doctrine).
The case reached the Philippine Supreme Court. The latter ruled against Mateo Cariño
hence Cariño further appealed to the U.S. Supreme Court.
ISSUE: Whether or not Mateo Cariño’s should be granted.
HELD: Yes, the U.S. Supreme Court reversed the decision held by the Philippine Supreme
Court. Mateo Cariño cannot be deprived of his land simply because he failed to comply with
the formalities required by the Spanish law (or by a Philippine law). Cariño’s title, which he
acquired from his ancestors predates, by more than 50 years, the establishment of the
American government in the Philippines (in fact, even before the establishment of the Spanish
government in the Philippines).
The US Supreme Court also noted that even the Solicitor General admitted that the Igorots
were hardly ruled by the Spanish government. That being, it is unlikely that the Spanish
government would grant land titles to the Igorots even if they will register their land under the
old Spanish Law. The US Supreme Court also ruled that to follow the stand of the Solicitor
General is to deprive the land titles of the natives (not only Igorots but all native inhabitants
of the Philippine Islands). Under the Constitution: “no law shall be enacted in said islands
which shall deprive any person of life, liberty, or property without due process of law, or deny
to any person therein the equal protection of the laws.” The term “any person” includes the
natives (in this case, the Igorots). All lands held under private ownership during the Spanish
era shall therefore be presumed to be such. Failure to register under Spanish Law did not
revert said lands to the public domain.
Cruz vs Secretary of DENR
Natural Resources and Environmental Law; Constitutional Law; IPRA; Regalian
Doctrine

GR. No. 135385, Dec. 6, 2000

FACTS:
Petitioners Isagani Cruz and Cesar Europa filed a suit for prohibition and mandamus as
citizens and taxpayers, assailing the constitutionality of certain provisions of Republic Act
No. 8371, otherwise known as the Indigenous People’s Rights Act of 1997 (IPRA) and its
implementing rules and regulations (IRR). The petitioners assail certain provisions of the
IPRA and its IRR on the ground that these amount to an unlawful deprivation of the State’s
ownership over lands of the public domain as well as minerals and other natural resources
therein, in violation of the regalian doctrine embodied in section 2, Article XII of the
Constitution.

ISSUE:
Do the provisions of IPRA contravene the Constitution?

HELD:
No, the provisions of IPRA do not contravene the Constitution. Examining the IPRA, there
is nothing in the law that grants to the ICCs/IPs ownership over the natural resources
within their ancestral domain. Ownership over the natural resources in the ancestral
domains remains with the State and the rights granted by the IPRA to the ICCs/IPs over the
natural resources in their ancestral domains merely gives them, as owners and occupants of
the land on which the resources are found, the right to the small scale utilization of these
resources, and at the same time, a priority in their large scale development and exploitation.

Additionally, ancestral lands and ancestral domains are not part of the lands of the public
domain. They are private lands and belong to the ICCs/IPs by native title, which is a concept
of private land title that existed irrespective of any royal grant from the State. However, the
right of ownership and possession by the ICCs/IPs of their ancestral domains is a limited
form of ownership and does not include the right to alienate the same.
 GAMBOA vs TEVES

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 176579 June 28, 2011
WILSON P. GAMBOA, Petitioner,
vs.
FINANCE SECRETARY MARGARITO B. TEVES, FINANCE UNDERSECRETARY JOHN
P. SEVILLA, AND COMMISSIONER RICARDO ABCEDE OF THE PRESIDENTIAL
COMMISSION ON GOOD GOVERNMENT (PCGG) IN THEIR CAPACITIES AS CHAIR
AND MEMBERS, RESPECTIVELY, OF THE PRIVATIZATION COUNCIL, CHAIRMAN
ANTHONI SALIM OF FIRST PACIFIC CO., LTD. IN HIS CAPACITY AS DIRECTOR OF
METRO PACIFIC ASSET HOLDINGS INC., CHAIRMAN MANUEL V. PANGILINAN OF
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY (PLDT) IN HIS CAPACITY AS
MANAGING DIRECTOR OF FIRST PACIFIC CO., LTD., PRESIDENT NAPOLEON L.
NAZARENO OF PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, CHAIR FE
BARIN OF THE SECURITIES EXCHANGE COMMISSION, and PRESIDENT FRANCIS LIM
OF THE PHILIPPINE STOCK EXCHANGE, Respondents.
PABLITO V. SANIDAD and ARNO V. SANIDAD, Petitioners-in-Intervention.
DECISION
CARPIO, J.:
The Case
This is an original petition for prohibition, injunction, declaratory relief and declaration of nullity
of the sale of shares of stock of Philippine Telecommunications Investment Corporation (PTIC)
by the government of the Republic of the Philippines to Metro Pacific Assets Holdings, Inc.
(MPAH), an affiliate of First Pacific Company Limited (First Pacific).
The Antecedents
The facts, according to petitioner Wilson P. Gamboa, a stockholder of Philippine Long
Distance Telephone Company (PLDT), are as follows:1
On 28 November 1928, the Philippine Legislature enacted Act No. 3436 which granted PLDT
a franchise and the right to engage in telecommunications business. In 1969, General
Telephone and Electronics Corporation (GTE), an American company and a major PLDT
stockholder, sold 26 percent of the outstanding common shares of PLDT to PTIC. In 1977,
Prime Holdings, Inc. (PHI) was incorporated by several persons, including Roland Gapud and
Jose Campos, Jr. Subsequently, PHI became the owner of 111,415 shares of stock of PTIC
by virtue of three Deeds of Assignment executed by PTIC stockholders Ramon Cojuangco
and Luis Tirso Rivilla. In 1986, the 111,415 shares of stock of PTIC held by PHI were
sequestered by the Presidential Commission on Good Government (PCGG). The 111,415
PTIC shares, which represent about 46.125 percent of the outstanding capital stock of PTIC,
were later declared by this Court to be owned by the Republic of the Philippines. 2
In 1999, First Pacific, a Bermuda-registered, Hong Kong-based investment firm, acquired the
remaining 54 percent of the outstanding capital stock of PTIC. On 20 November 2006, the
Inter-Agency Privatization Council (IPC) of the Philippine Government announced that it
would sell the 111,415 PTIC shares, or 46.125 percent of the outstanding capital stock of
PTIC, through a public bidding to be conducted on 4 December 2006. Subsequently, the
public bidding was reset to 8 December 2006, and only two bidders, Parallax Venture Fund
XXVII (Parallax) and Pan-Asia Presidio Capital, submitted their bids. Parallax won with a bid
of P25.6 billion or US$510 million.
Thereafter, First Pacific announced that it would exercise its right of first refusal as a PTIC
stockholder and buy the 111,415 PTIC shares by matching the bid price of Parallax. However,
First Pacific failed to do so by the 1 February 2007 deadline set by IPC and instead, yielded
its right to PTIC itself which was then given by IPC until 2 March 2007 to buy the PTIC shares.
On 14 February 2007, First Pacific, through its subsidiary, MPAH, entered into a Conditional
Sale and Purchase Agreement of the 111,415 PTIC shares, or 46.125 percent of the
outstanding capital stock of PTIC, with the Philippine Government for the price
of P25,217,556,000 or US$510,580,189. The sale was completed on 28 February 2007.
Since PTIC is a stockholder of PLDT, the sale by the Philippine Government of 46.125
percent of PTIC shares is actually an indirect sale of 12 million shares or about 6.3 percent
of the outstanding common shares of PLDT. With the sale, First Pacific’s common
shareholdings in PLDT increased from 30.7 percent to 37 percent, thereby increasing
the common shareholdings of foreigners in PLDT to about 81.47 percent. This violates
Section 11, Article XII of the 1987 Philippine Constitution which limits foreign ownership of
the capital of a public utility to not more than 40 percent.3
On the other hand, public respondents Finance Secretary Margarito B. Teves,
Undersecretary John P. Sevilla, and PCGG Commissioner Ricardo Abcede allege the
following relevant facts:
On 9 November 1967, PTIC was incorporated and had since engaged in the business of
investment holdings. PTIC held 26,034,263 PLDT common shares, or 13.847 percent of the
total PLDT outstanding common shares. PHI, on the other hand, was incorporated in 1977,
and became the owner of 111,415 PTIC shares or 46.125 percent of the outstanding capital
stock of PTIC by virtue of three Deeds of Assignment executed by Ramon Cojuangco and
Luis Tirso Rivilla. In 1986, the 111,415 PTIC shares held by PHI were sequestered by the
PCGG, and subsequently declared by this Court as part of the ill-gotten wealth of former
President Ferdinand Marcos. The sequestered PTIC shares were reconveyed to the Republic
of the Philippines in accordance with this Court’s decision4 which became final and executory
on 8 August 2006.
The Philippine Government decided to sell the 111,415 PTIC shares, which represent 6.4
percent of the outstanding common shares of stock of PLDT, and designated the Inter-
Agency Privatization Council (IPC), composed of the Department of Finance and the PCGG,
as the disposing entity. An invitation to bid was published in seven different newspapers from
13 to 24 November 2006. On 20 November 2006, a pre-bid conference was held, and the
original deadline for bidding scheduled on 4 December 2006 was reset to 8 December 2006.
The extension was published in nine different newspapers.
During the 8 December 2006 bidding, Parallax Capital Management LP emerged as the
highest bidder with a bid of P25,217,556,000. The government notified First Pacific, the
majority owner of PTIC shares, of the bidding results and gave First Pacific until 1 February
2007 to exercise its right of first refusal in accordance with PTIC’s Articles of Incorporation.
First Pacific announced its intention to match Parallax’s bid.
On 31 January 2007, the House of Representatives (HR) Committee on Good Government
conducted a public hearing on the particulars of the then impending sale of the 111,415 PTIC
shares. Respondents Teves and Sevilla were among those who attended the public hearing.
The HR Committee Report No. 2270 concluded that: (a) the auction of the government’s
111,415 PTIC shares bore due diligence, transparency and conformity with existing legal
procedures; and (b) First Pacific’s intended acquisition of the government’s 111,415
PTIC shares resulting in First Pacific’s 100% ownership of PTIC will not violate the 40
percent constitutional limit on foreign ownership of a public utility since PTIC holds
only 13.847 percent of the total outstanding common shares of PLDT. 5 On 28 February
2007, First Pacific completed the acquisition of the 111,415 shares of stock of PTIC.
Respondent Manuel V. Pangilinan admits the following facts: (a) the IPC conducted a public
bidding for the sale of 111,415 PTIC shares or 46 percent of the outstanding capital stock of
PTIC (the remaining 54 percent of PTIC shares was already owned by First Pacific and its
affiliates); (b) Parallax offered the highest bid amounting to P25,217,556,000; (c) pursuant to
the right of first refusal in favor of PTIC and its shareholders granted in PTIC’s Articles of
Incorporation, MPAH, a First Pacific affiliate, exercised its right of first refusal by matching the
highest bid offered for PTIC shares on 13 February 2007; and (d) on 28 February 2007, the
sale was consummated when MPAH paid IPC P25,217,556,000 and the government
delivered the certificates for the 111,415 PTIC shares. Respondent Pangilinan denies the
other allegations of facts of petitioner.
On 28 February 2007, petitioner filed the instant petition for prohibition, injunction, declaratory
relief, and declaration of nullity of sale of the 111,415 PTIC shares. Petitioner claims, among
others, that the sale of the 111,415 PTIC shares would result in an increase in First Pacific’s
common shareholdings in PLDT from 30.7 percent to 37 percent, and this, combined with
Japanese NTT DoCoMo’s common shareholdings in PLDT, would result to a total foreign
common shareholdings in PLDT of 51.56 percent which is over the 40 percent constitutional
limit.6 Petitioner asserts:
If and when the sale is completed, First Pacific’s equity in PLDT will go up from 30.7 percent
to 37.0 percent of its common – or voting- stockholdings, x x x. Hence, the consummation of
the sale will put the two largest foreign investors in PLDT – First Pacific and Japan’s NTT
DoCoMo, which is the world’s largest wireless telecommunications firm, owning 51.56
percent of PLDT common equity. x x x With the completion of the sale, data culled from the
official website of the New York Stock Exchange (www.nyse.com) showed that those foreign
entities, which own at least five percent of common equity, will collectively own 81.47 percent
of PLDT’s common equity. x x x
x x x as the annual disclosure reports, also referred to as Form 20-K reports x x x which PLDT
submitted to the New York Stock Exchange for the period 2003-2005, revealed that First
Pacific and several other foreign entities breached the constitutional limit of 40 percent
ownership as early as 2003. x x x”7
Petitioner raises the following issues: (1) whether the consummation of the then impending
sale of 111,415 PTIC shares to First Pacific violates the constitutional limit on foreign
ownership of a public utility; (2) whether public respondents committed grave abuse of
discretion in allowing the sale of the 111,415 PTIC shares to First Pacific; and (3) whether
the sale of common shares to foreigners in excess of 40 percent of the entire subscribed
common capital stock violates the constitutional limit on foreign ownership of a public utility.8
On 13 August 2007, Pablito V. Sanidad and Arno V. Sanidad filed a Motion for Leave to
Intervene and Admit Attached Petition-in-Intervention. In the Resolution of 28 August 2007,
the Court granted the motion and noted the Petition-in-Intervention.
Petitioners-in-intervention “join petitioner Wilson Gamboa x x x in seeking, among others, to
enjoin and/or nullify the sale by respondents of the 111,415 PTIC shares to First Pacific or
assignee.” Petitioners-in-intervention claim that, as PLDT subscribers, they have a “stake in
the outcome of the controversy x x x where the Philippine Government is completing the sale
of government owned assets in [PLDT], unquestionably a public utility, in violation of the
nationality restrictions of the Philippine Constitution.”
The Issue
This Court is not a trier of facts. Factual questions such as those raised by petitioner, 9 which
indisputably demand a thorough examination of the evidence of the parties, are generally
beyond this Court’s jurisdiction. Adhering to this well-settled principle, the Court shall confine
the resolution of the instant controversy solely on the threshold and purely legal issue of
whether the term “capital” in Section 11, Article XII of the Constitution refers to the total
common shares only or to the total outstanding capital stock (combined total of common and
non-voting preferred shares) of PLDT, a public utility.
The Ruling of the Court
The petition is partly meritorious.
Petition for declaratory relief treated as petition for mandamus
At the outset, petitioner is faced with a procedural barrier. Among the remedies petitioner
seeks, only the petition for prohibition is within the original jurisdiction of this court, which
however is not exclusive but is concurrent with the Regional Trial Court and the Court of
Appeals. The actions for declaratory relief,10 injunction, and annulment of sale are not
embraced within the original jurisdiction of the Supreme Court. On this ground alone, the
petition could have been dismissed outright.
While direct resort to this Court may be justified in a petition for prohibition,11 the Court shall
nevertheless refrain from discussing the grounds in support of the petition for prohibition since
on 28 February 2007, the questioned sale was consummated when MPAH paid
IPC P25,217,556,000 and the government delivered the certificates for the 111,415 PTIC
shares.
However, since the threshold and purely legal issue on the definition of the term “capital” in
Section 11, Article XII of the Constitution has far-reaching implications to the national
economy, the Court treats the petition for declaratory relief as one for mandamus. 12
In Salvacion v. Central Bank of the Philippines,13 the Court treated the petition for declaratory
relief as one for mandamus considering the grave injustice that would result in the
interpretation of a banking law. In that case, which involved the crime of rape committed by a
foreign tourist against a Filipino minor and the execution of the final judgment in the civil case
for damages on the tourist’s dollar deposit with a local bank, the Court declared Section 113
of Central Bank Circular No. 960, exempting foreign currency deposits from attachment,
garnishment or any other order or process of any court, inapplicable due to the peculiar
circumstances of the case. The Court held that “injustice would result especially to a citizen
aggrieved by a foreign guest like accused x x x” that would “negate Article 10 of the Civil
Code which provides that ‘in case of doubt in the interpretation or application of laws, it is
presumed that the lawmaking body intended right and justice to prevail.’” The Court therefore
required respondents Central Bank of the Philippines, the local bank, and the accused to
comply with the writ of execution issued in the civil case for damages and to release the dollar
deposit of the accused to satisfy the judgment.
In Alliance of Government Workers v. Minister of Labor,14 the Court similarly brushed aside
the procedural infirmity of the petition for declaratory relief and treated the same as one for
mandamus. In Alliance, the issue was whether the government unlawfully excluded
petitioners, who were government employees, from the enjoyment of rights to which they
were entitled under the law. Specifically, the question was: “Are the branches, agencies,
subdivisions, and instrumentalities of the Government, including government owned or
controlled corporations included among the four ‘employers’ under Presidential Decree No.
851 which are required to pay their employees x x x a thirteenth (13th) month pay x x x ?”
The Constitutional principle involved therein affected all government employees, clearly
justifying a relaxation of the technical rules of procedure, and certainly requiring the
interpretation of the assailed presidential decree.
In short, it is well-settled that this Court may treat a petition for declaratory relief as one for
mandamus if the issue involved has far-reaching implications. As this Court held in Salvacion:
The Court has no original and exclusive jurisdiction over a petition for declaratory
relief. However, exceptions to this rule have been recognized. Thus, where the petition
has far-reaching implications and raises questions that should be resolved, it may be
treated as one for mandamus.15 (Emphasis supplied)
In the present case, petitioner seeks primarily the interpretation of the term “capital” in Section
11, Article XII of the Constitution. He prays that this Court declare that the term “capital” refers
to common shares only, and that such shares constitute “the sole basis in determining foreign
equity in a public utility.” Petitioner further asks this Court to declare any ruling inconsistent
with such interpretation unconstitutional.
The interpretation of the term “capital” in Section 11, Article XII of the Constitution has far-
reaching implications to the national economy. In fact, a resolution of this issue will determine
whether Filipinos are masters, or second class citizens, in their own country. What is at stake
here is whether Filipinos or foreigners will have effective control of the national economy.
Indeed, if ever there is a legal issue that has far-reaching implications to the entire nation,
and to future generations of Filipinos, it is the threshold legal issue presented in this case.
The Court first encountered the issue on the definition of the term “capital” in Section 11,
Article XII of the Constitution in the case of Fernandez v. Cojuangco, docketed as G.R. No.
157360.16 That case involved the same public utility (PLDT) and substantially the same private
respondents. Despite the importance and novelty of the constitutional issue raised therein
and despite the fact that the petition involved a purely legal question, the Court declined to
resolve the case on the merits, and instead denied the same for disregarding the hierarchy
of courts.17 There, petitioner Fernandez assailed on a pure question of law the Regional Trial
Court’s Decision of 21 February 2003 via a petition for review under Rule 45. The Court’s
Resolution, denying the petition, became final on 21 December 2004.
The instant petition therefore presents the Court with another opportunity to finally settle
this purely legal issue which is of transcendental importance to the national economy and a
fundamental requirement to a faithful adherence to our Constitution. The Court must forthwith
seize such opportunity, not only for the benefit of the litigants, but more significantly for the
benefit of the entire Filipino people, to ensure, in the words of the Constitution, “a self-reliant
and independent national economy effectively controlled by Filipinos.”18 Besides, in the light
of vague and confusing positions taken by government agencies on this purely legal issue,
present and future foreign investors in this country deserve, as a matter of basic fairness, a
categorical ruling from this Court on the extent of their participation in the capital of public
utilities and other nationalized businesses.
Despite its far-reaching implications to the national economy, this purely legal issue has
remained unresolved for over 75 years since the 1935 Constitution. There is no reason for
this Court to evade this ever recurring fundamental issue and delay again defining the term
“capital,” which appears not only in Section 11, Article XII of the Constitution, but also in
Section 2, Article XII on co-production and joint venture agreements for the development of
our natural resources,19 in Section 7, Article XII on ownership of private lands,20 in Section 10,
Article XII on the reservation of certain investments to Filipino citizens,21 in Section 4(2),
Article XIV on the ownership of educational institutions,22 and in Section 11(2), Article XVI on
the ownership of advertising companies.23
Petitioner has locus standi
There is no dispute that petitioner is a stockholder of PLDT. As such, he has the right to
question the subject sale, which he claims to violate the nationality requirement prescribed in
Section 11, Article XII of the Constitution. If the sale indeed violates the Constitution, then
there is a possibility that PLDT’s franchise could be revoked, a dire consequence directly
affecting petitioner’s interest as a stockholder.
More importantly, there is no question that the instant petition raises matters of transcendental
importance to the public. The fundamental and threshold legal issue in this case, involving
the national economy and the economic welfare of the Filipino people, far outweighs any
perceived impediment in the legal personality of the petitioner to bring this action.
In Chavez v. PCGG,24 the Court upheld the right of a citizen to bring a suit on matters of
transcendental importance to the public, thus:
In Tañada 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 Tañada, 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. (Emphasis supplied)
Clearly, since the instant petition, brought by a citizen, involves matters of transcendental
public importance, the petitioner has the requisite locus standi.
Definition of the Term “Capital” in
Section 11, Article XII of the 1987 Constitution
Section 11, Article XII (National Economy and Patrimony) of the 1987 Constitution mandates
the Filipinization of public utilities, to wit:
Section 11. No franchise, certificate, or any other form of authorization for the operation
of a public utility shall be granted except to citizens of the Philippines or to
corporations or associations organized under the laws of the Philippines, at least sixty
per centum of whose capital is owned by such citizens; nor shall such franchise,
certificate, or authorization be exclusive in character or for a longer period than fifty years.
Neither shall any such franchise or right be granted except under the condition that it shall be
subject to amendment, alteration, or repeal by the Congress when the common good so
requires. The State shall encourage equity participation in public utilities by the general public.
The participation of foreign investors in the governing body of any public utility enterprise shall
be limited to their proportionate share in its capital, and all the executive and managing
officers of such corporation or association must be citizens of the Philippines. (Emphasis
supplied)
The above provision substantially reiterates Section 5, Article XIV of the 1973 Constitution,
thus:
Section 5. No franchise, certificate, or any other form of authorization for the operation
of a public utility shall be granted except to citizens of the Philippines or to
corporations or associations organized under the laws of the Philippines at least sixty
per centum of the capital of which is owned by such citizens, nor shall such franchise,
certificate, or authorization be exclusive in character or for a longer period than fifty years.
Neither shall any such franchise or right be granted except under the condition that it shall be
subject to amendment, alteration, or repeal by the National Assembly when the public interest
so requires. The State shall encourage equity participation in public utilities by the general
public. The participation of foreign investors in the governing body of any public utility
enterprise shall be limited to their proportionate share in the capital thereof. (Emphasis
supplied)
The foregoing provision in the 1973 Constitution reproduced Section 8, Article XIV of the 1935
Constitution, viz:
Section 8. No franchise, certificate, or any other form of authorization for the operation
of a public utility shall be granted except to citizens of the Philippines or to
corporations or other entities organized under the laws of the Philippines sixty per
centum of the capital of which is owned by citizens of the Philippines, nor shall such
franchise, certificate, or authorization be exclusive in character or for a longer period than fifty
years. No franchise or right shall be granted to any individual, firm, or corporation, except
under the condition that it shall be subject to amendment, alteration, or repeal by the
Congress when the public interest so requires. (Emphasis supplied)
Father Joaquin G. Bernas, S.J., a leading member of the 1986 Constitutional Commission,
reminds us that the Filipinization provision in the 1987 Constitution is one of the products of
the spirit of nationalism which gripped the 1935 Constitutional Convention. 25 The 1987
Constitution “provides for the Filipinization of public utilities by requiring that any form of
authorization for the operation of public utilities should be granted only to ‘citizens of the
Philippines or to corporations or associations organized under the laws of the Philippines at
least sixty per centum of whose capital is owned by such citizens.’ The provision is [an
express] recognition of the sensitive and vital position of public utilities both in the
national economy and for national security.”26 The evident purpose of the citizenship
requirement is to prevent aliens from assuming control of public utilities, which may be
inimical to the national interest.27 This specific provision explicitly reserves to Filipino citizens
control of public utilities, pursuant to an overriding economic goal of the 1987 Constitution: to
“conserve and develop our patrimony”28 and ensure “a self-reliant and independent national
economy effectively controlled by Filipinos.”29
Any citizen or juridical entity desiring to operate a public utility must therefore meet the
minimum nationality requirement prescribed in Section 11, Article XII of the Constitution.
Hence, for a corporation to be granted authority to operate a public utility, at least 60 percent
of its “capital” must be owned by Filipino citizens.
The crux of the controversy is the definition of the term “capital.” Does the term “capital” in
Section 11, Article XII of the Constitution refer to common shares or to the total outstanding
capital stock (combined total of common and non-voting preferred shares)?
Petitioner submits that the 40 percent foreign equity limitation in domestic public utilities refers
only to common shares because such shares are entitled to vote and it is through voting that
control over a corporation is exercised. Petitioner posits that the term “capital” in Section 11,
Article XII of the Constitution refers to “the ownership of common capital stock subscribed
and outstanding, which class of shares alone, under the corporate set-up of PLDT, can vote
and elect members of the board of directors.” It is undisputed that PLDT’s non-voting
preferred shares are held mostly by Filipino citizens.30 This arose from Presidential Decree
No. 217,31 issued on 16 June 1973 by then President Ferdinand Marcos, requiring every
applicant of a PLDT telephone line to subscribe to non-voting preferred shares to pay for the
investment cost of installing the telephone line.32
Petitioners-in-intervention basically reiterate petitioner’s arguments and adopt petitioner’s
definition of the term “capital.”33 Petitioners-in-intervention allege that “the approximate
foreign ownership of common capital stock of PLDT x x x already amounts to at least 63.54%
of the total outstanding common stock,” which means that foreigners exercise significant
control over PLDT, patently violating the 40 percent foreign equity limitation in public utilities
prescribed by the Constitution.
Respondents, on the other hand, do not offer any definition of the term “capital” in Section 11,
Article XII of the Constitution. More importantly, private respondents Nazareno and
Pangilinan of PLDT do not dispute that more than 40 percent of the common shares of PLDT
are held by foreigners.
In particular, respondent Nazareno’s Memorandum, consisting of 73 pages, harps mainly on
the procedural infirmities of the petition and the supposed violation of the due process rights
of the “affected foreign common shareholders.” Respondent Nazareno does not deny
petitioner’s allegation of foreigners’ dominating the common shareholdings of PLDT.
Nazareno stressed mainly that the petition “seeks to divest foreign common shareholders
purportedly exceeding 40% of the total common shareholdings in PLDT of their
ownership over their shares.” Thus, “the foreign natural and juridical PLDT shareholders
must be impleaded in this suit so that they can be heard.”34 Essentially, Nazareno invokes
denial of due process on behalf of the foreign common shareholders.
While Nazareno does not introduce any definition of the term “capital,” he states that “among
the factual assertions that need to be established to counter petitioner’s allegations is
the uniform interpretation by government agencies (such as the SEC), institutions and
corporations (such as the Philippine National Oil Company-Energy Development
Corporation or PNOC-EDC) of including both preferred shares and common shares in
“controlling interest” in view of testing compliance with the 40% constitutional
limitation on foreign ownership in public utilities.“35
Similarly, respondent Manuel V. Pangilinan does not define the term “capital” in Section 11,
Article XII of the Constitution. Neither does he refute petitioner’s claim of foreigners holding
more than 40 percent of PLDT’s common shares. Instead, respondent Pangilinan focuses on
the procedural flaws of the petition and the alleged violation of the due process rights of
foreigners. Respondent Pangilinan emphasizes in his Memorandum (1) the absence of this
Court’s jurisdiction over the petition; (2) petitioner’s lack of standing; (3) mootness of the
petition; (4) non-availability of declaratory relief; and (5) the denial of due process rights.
Moreover, respondent Pangilinan alleges that the issue should be whether “owners of shares
in PLDT as well as owners of shares in companies holding shares in PLDT may be required
to relinquish their shares in PLDT and in those companies without any law requiring them to
surrender their shares and also without notice and trial.”
Respondent Pangilinan further asserts that “Section 11, [Article XII of the Constitution]
imposes no nationality requirement on the shareholders of the utility company as a
condition for keeping their shares in the utility company.” According to him, “Section 11
does not authorize taking one person’s property (the shareholder’s stock in the utility
company) on the basis of another party’s alleged failure to satisfy a requirement that is a
condition only for that other party’s retention of another piece of property (the utility company
being at least 60% Filipino-owned to keep its franchise).”36
The OSG, representing public respondents Secretary Margarito Teves, Undersecretary John
P. Sevilla, Commissioner Ricardo Abcede, and Chairman Fe Barin, is likewise silent on the
definition of the term “capital.” In its Memorandum37 dated 24 September 2007, the OSG also
limits its discussion on the supposed procedural defects of the petition, i.e. lack of standing,
lack of jurisdiction, non-inclusion of interested parties, and lack of basis for injunction. The
OSG does not present any definition or interpretation of the term “capital” in Section 11, Article
XII of the Constitution. The OSG contends that “the petition actually partakes of a collateral
attack on PLDT’s franchise as a public utility,” which in effect requires a “full-blown trial where
all the parties in interest are given their day in court.”38
Respondent Francisco Ed Lim, impleaded as President and Chief Executive Officer of the
Philippine Stock Exchange (PSE), does not also define the term “capital” and seeks the
dismissal of the petition on the following grounds: (1) failure to state a cause of action against
Lim; (2) the PSE allegedly implemented its rules and required all listed companies, including
PLDT, to make proper and timely disclosures; and (3) the reliefs prayed for in the petition
would adversely impact the stock market.
In the earlier case of Fernandez v. Cojuangco, petitioner Fernandez who claimed to be a
stockholder of record of PLDT, contended that the term “capital” in the 1987 Constitution
refers to shares entitled to vote or the common shares. Fernandez explained thus:
The forty percent (40%) foreign equity limitation in public utilities prescribed by the
Constitution refers to ownership of shares of stock entitled to vote, i.e., common shares,
considering that it is through voting that control is being exercised. x x x
Obviously, the intent of the framers of the Constitution in imposing limitations and restrictions
on fully nationalized and partially nationalized activities is for Filipino nationals to be always
in control of the corporation undertaking said activities. Otherwise, if the Trial Court’s ruling
upholding respondents’ arguments were to be given credence, it would be possible for the
ownership structure of a public utility corporation to be divided into one percent (1%) common
stocks and ninety-nine percent (99%) preferred stocks. Following the Trial Court’s ruling
adopting respondents’ arguments, the common shares can be owned entirely by foreigners
thus creating an absurd situation wherein foreigners, who are supposed to be minority
shareholders, control the public utility corporation.
xxxx
Thus, the 40% foreign ownership limitation should be interpreted to apply to both the
beneficial ownership and the controlling interest.
xxxx
Clearly, therefore, the forty percent (40%) foreign equity limitation in public utilities prescribed
by the Constitution refers to ownership of shares of stock entitled to vote, i.e., common shares.
Furthermore, ownership of record of shares will not suffice but it must be shown that the legal
and beneficial ownership rests in the hands of Filipino citizens. Consequently, in the case of
petitioner PLDT, since it is already admitted that the voting interests of foreigners which would
gain entry to petitioner PLDT by the acquisition of SMART shares through the Questioned
Transactions is equivalent to 82.99%, and the nominee arrangements between the foreign
principals and the Filipino owners is likewise admitted, there is, therefore, a violation of
Section 11, Article XII of the Constitution.
Parenthetically, the Opinions dated February 15, 1988 and April 14, 1987 cited by the Trial
Court to support the proposition that the meaning of the word “capital” as used in Section 11,
Article XII of the Constitution allegedly refers to the sum total of the shares subscribed and
paid-in by the shareholder and it allegedly is immaterial how the stock is classified, whether
as common or preferred, cannot stand in the face of a clear legislative policy as stated in the
FIA which took effect in 1991 or way after said opinions were rendered, and as clarified by
the above-quoted Amendments. In this regard, suffice it to state that as between the law and
an opinion rendered by an administrative agency, the law indubitably prevails. Moreover, said
Opinions are merely advisory and cannot prevail over the clear intent of the framers of the
Constitution.
In the same vein, the SEC’s construction of Section 11, Article XII of the Constitution is at
best merely advisory for it is the courts that finally determine what a law means.39
On the other hand, respondents therein, Antonio O. Cojuangco, Manuel V. Pangilinan, Carlos
A. Arellano, Helen Y. Dee, Magdangal B. Elma, Mariles Cacho-Romulo, Fr. Bienvenido F.
Nebres, Ray C. Espinosa, Napoleon L. Nazareno, Albert F. Del Rosario, and Orlando B. Vea,
argued that the term “capital” in Section 11, Article XII of the Constitution includes preferred
shares since the Constitution does not distinguish among classes of stock, thus:
16. The Constitution applies its foreign ownership limitation on the corporation’s “capital,”
without distinction as to classes of shares. x x x
In this connection, the Corporation Code – which was already in force at the time the present
(1987) Constitution was drafted – defined outstanding capital stock as follows:
Section 137. Outstanding capital stock defined. – The term “outstanding capital stock”, as
used in this Code, means the total shares of stock issued under binding subscription
agreements to subscribers or stockholders, whether or not fully or partially paid, except
treasury shares.
Section 137 of the Corporation Code also does not distinguish between common and
preferred shares, nor exclude either class of shares, in determining the outstanding capital
stock (the “capital”) of a corporation. Consequently, petitioner’s suggestion to reckon PLDT’s
foreign equity only on the basis of PLDT’s outstanding common shares is without legal basis.
The language of the Constitution should be understood in the sense it has in common use.
xxxx
17. But even assuming that resort to the proceedings of the Constitutional Commission is
necessary, there is nothing in the Record of the Constitutional Commission (Vol. III) – which
petitioner misleadingly cited in the Petition x x x – which supports petitioner’s view that only
common shares should form the basis for computing a public utility’s foreign equity.
xxxx
18. In addition, the SEC – the government agency primarily responsible for implementing the
Corporation Code, and which also has the responsibility of ensuring compliance with the
Constitution’s foreign equity restrictions as regards nationalized activities x x x – has
categorically ruled that both common and preferred shares are properly considered in
determining outstanding capital stock and the nationality composition thereof. 40
We agree with petitioner and petitioners-in-intervention. The term “capital” in Section 11,
Article XII of the Constitution refers only to shares of stock entitled to vote in the election of
directors, and thus in the present case only to common shares,41 and not to the total
outstanding capital stock comprising both common and non-voting preferred shares.
The Corporation Code of the Philippines42 classifies shares as common or preferred, thus:
Sec. 6. Classification of shares. – The shares of stock of stock corporations may be divided
into classes or series of shares, or both, any of which classes or series of shares may have
such rights, privileges or restrictions as may be stated in the articles of incorporation:
Provided, That no share may be deprived of voting rights except those classified and
issued as “preferred” or “redeemable” shares, unless otherwise provided in this Code:
Provided, further, That there shall always be a class or series of shares which have complete
voting rights. Any or all of the shares or series of shares may have a par value or have no par
value as may be provided for in the articles of incorporation: Provided, however, That banks,
trust companies, insurance companies, public utilities, and building and loan associations
shall not be permitted to issue no-par value shares of stock.
Preferred shares of stock issued by any corporation may be given preference in the
distribution of the assets of the corporation in case of liquidation and in the distribution of
dividends, or such other preferences as may be stated in the articles of incorporation which
are not violative of the provisions of this Code: Provided, That preferred shares of stock may
be issued only with a stated par value. The Board of Directors, where authorized in the articles
of incorporation, may fix the terms and conditions of preferred shares of stock or any series
thereof: Provided, That such terms and conditions shall be effective upon the filing of a
certificate thereof with the Securities and Exchange Commission.
Shares of capital stock issued without par value shall be deemed fully paid and non-
assessable and the holder of such shares shall not be liable to the corporation or to its
creditors in respect thereto: Provided; That shares without par value may not be issued for a
consideration less than the value of five (P5.00) pesos per share: Provided, further, That the
entire consideration received by the corporation for its no-par value shares shall be treated
as capital and shall not be available for distribution as dividends.
A corporation may, furthermore, classify its shares for the purpose of insuring compliance
with constitutional or legal requirements.
Except as otherwise provided in the articles of incorporation and stated in the certificate of
stock, each share shall be equal in all respects to every other share.
Where the articles of incorporation provide for non-voting shares in the cases allowed by this
Code, the holders of such shares shall nevertheless be entitled to vote on the following
matters:
1. Amendment of the articles of incorporation;
2. Adoption and amendment of by-laws;
3. Sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all of
the corporate property;
4. Incurring, creating or increasing bonded indebtedness;
5. Increase or decrease of capital stock;
6. Merger or consolidation of the corporation with another corporation or other corporations;
7. Investment of corporate funds in another corporation or business in accordance with this
Code; and
8. Dissolution of the corporation.
Except as provided in the immediately preceding paragraph, the vote necessary to approve
a particular corporate act as provided in this Code shall be deemed to refer only to stocks
with voting rights.
Indisputably, one of the rights of a stockholder is the right to participate in the control or
management of the corporation.43 This is exercised through his vote in the election of directors
because it is the board of directors that controls or manages the corporation.44 In the absence
of provisions in the articles of incorporation denying voting rights to preferred shares,
preferred shares have the same voting rights as common shares. However, preferred
shareholders are often excluded from any control, that is, deprived of the right to vote in the
election of directors and on other matters, on the theory that the preferred shareholders are
merely investors in the corporation for income in the same manner as bondholders. 45 In fact,
under the Corporation Code only preferred or redeemable shares can be deprived of the right
to vote.46 Common shares cannot be deprived of the right to vote in any corporate meeting,
and any provision in the articles of incorporation restricting the right of common shareholders
to vote is invalid.47
Considering that common shares have voting rights which translate to control, as opposed to
preferred shares which usually have no voting rights, the term “capital” in Section 11, Article
XII of the Constitution refers only to common shares. However, if the preferred shares also
have the right to vote in the election of directors, then the term “capital” shall include such
preferred shares because the right to participate in the control or management of the
corporation is exercised through the right to vote in the election of directors. In short, the
term “capital” in Section 11, Article XII of the Constitution refers only to shares of stock
that can vote in the election of directors.
This interpretation is consistent with the intent of the framers of the Constitution to place in
the hands of Filipino citizens the control and management of public utilities. As revealed in
the deliberations of the Constitutional Commission, “capital” refers to the voting stock
or controlling interest of a corporation, to wit:
MR. NOLLEDO. In Sections 3, 9 and 15, the Committee stated local or Filipino equity and
foreign equity; namely, 60-40 in Section 3, 60-40 in Section 9 and 2/3-1/3 in Section 15.
MR. VILLEGAS. That is right.
MR. NOLLEDO. In teaching law, we are always faced with this question: “Where do we base
the equity requirement, is it on the authorized capital stock, on the subscribed capital stock,
or on the paid-up capital stock of a corporation”? Will the Committee please enlighten me on
this?
MR. VILLEGAS. We have just had a long discussion with the members of the team from the
UP Law Center who provided us a draft. The phrase that is contained here which we
adopted from the UP draft is “60 percent of voting stock.”
MR. NOLLEDO. That must be based on the subscribed capital stock, because unless
declared delinquent, unpaid capital stock shall be entitled to vote.
MR. VILLEGAS. That is right.
MR. NOLLEDO. Thank you.
With respect to an investment by one corporation in another corporation, say, a corporation
with 60-40 percent equity invests in another corporation which is permitted by the Corporation
Code, does the Committee adopt the grandfather rule?
MR. VILLEGAS. Yes, that is the understanding of the Committee.
MR. NOLLEDO. Therefore, we need additional Filipino capital?
MR. VILLEGAS. Yes.48
xxxx
MR. AZCUNA. May I be clarified as to that portion that was accepted by the Committee.
MR. VILLEGAS. The portion accepted by the Committee is the deletion of the phrase “voting
stock or controlling interest.”
MR. AZCUNA. Hence, without the Davide amendment, the committee report would read:
“corporations or associations at least sixty percent of whose CAPITAL is owned by such
citizens.”
MR. VILLEGAS. Yes.
MR. AZCUNA. So if the Davide amendment is lost, we are stuck with 60 percent of the capital
to be owned by citizens.
MR. VILLEGAS. That is right.
MR. AZCUNA. But the control can be with the foreigners even if they are the minority.
Let us say 40 percent of the capital is owned by them, but it is the voting capital,
whereas, the Filipinos own the nonvoting shares. So we can have a situation where
the corporation is controlled by foreigners despite being the minority because they
have the voting capital. That is the anomaly that would result here.
MR. BENGZON. No, the reason we eliminated the word “stock” as stated in the 1973
and 1935 Constitutions is that according to Commissioner Rodrigo, there are
associations that do not have stocks. That is why we say “CAPITAL.”
MR. AZCUNA. We should not eliminate the phrase “controlling interest.”
MR. BENGZON. In the case of stock corporations, it is assumed.49 (Emphasis supplied)
Thus, 60 percent of the “capital” assumes, or should result in, “controlling interest” in the
corporation. Reinforcing this interpretation of the term “capital,” as referring to controlling
interest or shares entitled to vote, is the definition of a “Philippine national” in the Foreign
Investments Act of 1991,50 to wit:
SEC. 3. Definitions. – As used in this Act:
a. The term “Philippine national” shall mean a citizen of the Philippines; or a domestic
partnership or association wholly owned by citizens of the Philippines; or a corporation
organized under the laws of the Philippines of which at least sixty percent (60%) of the
capital stock outstanding and entitled to vote is owned and held by citizens of the
Philippines; or a corporation organized abroad and registered as doing business in the
Philippines under the Corporation Code of which one hundred percent (100%) of the capital
stock outstanding and entitled to vote is wholly owned by Filipinos or a trustee of funds for
pension or other employee retirement or separation benefits, where the trustee is a Philippine
national and at least sixty percent (60%) of the fund will accrue to the benefit of Philippine
nationals: Provided, That where a corporation and its non-Filipino stockholders own stocks in
a Securities and Exchange Commission (SEC) registered enterprise, at least sixty percent
(60%) of the capital stock outstanding and entitled to vote of each of both corporations must
be owned and held by citizens of the Philippines and at least sixty percent (60%) of the
members of the Board of Directors of each of both corporations must be citizens of the
Philippines, in order that the corporation, shall be considered a “Philippine national.”
(Emphasis supplied)
In explaining the definition of a “Philippine national,” the Implementing Rules and Regulations
of the Foreign Investments Act of 1991 provide:
b. “Philippine national” shall mean a citizen of the Philippines or a domestic partnership or
association wholly owned by the citizens of the Philippines; or a corporation organized
under the laws of the Philippines of which at least sixty percent [60%] of the capital
stock outstanding and entitled to vote is owned and held by citizens of the Philippines;
or a trustee of funds for pension or other employee retirement or separation benefits, where
the trustee is a Philippine national and at least sixty percent [60%] of the fund will accrue to
the benefit of the Philippine nationals; Provided, that where a corporation its non-Filipino
stockholders own stocks in a Securities and Exchange Commission [SEC] registered
enterprise, at least sixty percent [60%] of the capital stock outstanding and entitled to vote of
both corporations must be owned and held by citizens of the Philippines and at least sixty
percent [60%] of the members of the Board of Directors of each of both corporation must be
citizens of the Philippines, in order that the corporation shall be considered a Philippine
national. The control test shall be applied for this purpose.
Compliance with the required Filipino ownership of a corporation shall be determined
on the basis of outstanding capital stock whether fully paid or not, but only such
stocks which are generally entitled to vote are considered.
For stocks to be deemed owned and held by Philippine citizens or Philippine nationals,
mere legal title is not enough to meet the required Filipino equity. Full beneficial
ownership of the stocks, coupled with appropriate voting rights is essential. Thus,
stocks, the voting rights of which have been assigned or transferred to aliens cannot
be considered held by Philippine citizens or Philippine nationals.
Individuals or juridical entities not meeting the aforementioned qualifications are
considered as non-Philippine nationals. (Emphasis supplied)
Mere legal title is insufficient to meet the 60 percent Filipino-owned “capital” required in the
Constitution. Full beneficial ownership of 60 percent of the outstanding capital stock, coupled
with 60 percent of the voting rights, is required. The legal and beneficial ownership of 60
percent of the outstanding capital stock must rest in the hands of Filipino nationals in
accordance with the constitutional mandate. Otherwise, the corporation is “considered as
non-Philippine national[s].”
Under Section 10, Article XII of the Constitution, Congress may “reserve to citizens of the
Philippines or to corporations or associations at least sixty per centum of whose capital is
owned by such citizens, or such higher percentage as Congress may prescribe, certain areas
of investments.” Thus, in numerous laws Congress has reserved certain areas of investments
to Filipino citizens or to corporations at least sixty percent of the “capital” of which is owned
by Filipino citizens. Some of these laws are: (1) Regulation of Award of Government Contracts
or R.A. No. 5183; (2) Philippine Inventors Incentives Act or R.A. No. 3850; (3) Magna Carta
for Micro, Small and Medium Enterprises or R.A. No. 6977; (4) Philippine Overseas Shipping
Development Act or R.A. No. 7471; (5) Domestic Shipping Development Act of 2004 or R.A.
No. 9295; (6) Philippine Technology Transfer Act of 2009 or R.A. No. 10055; and (7) Ship
Mortgage Decree or P.D. No. 1521. Hence, the term “capital” in Section 11, Article XII of the
Constitution is also used in the same context in numerous laws reserving certain areas of
investments to Filipino citizens.
To construe broadly the term “capital” as the total outstanding capital stock, including both
common and non-voting preferred shares, grossly contravenes the intent and letter of the
Constitution that the “State shall develop a self-reliant and independent national
economy effectively controlled by Filipinos.” A broad definition unjustifiably disregards who
owns the all-important voting stock, which necessarily equates to control of the public utility.
We shall illustrate the glaring anomaly in giving a broad definition to the term “capital.” Let us
assume that a corporation has 100 common shares owned by foreigners and 1,000,000 non-
voting preferred shares owned by Filipinos, with both classes of share having a par value of
one peso (P1.00) per share. Under the broad definition of the term “capital,” such corporation
would be considered compliant with the 40 percent constitutional limit on foreign equity of
public utilities since the overwhelming majority, or more than 99.999 percent, of the total
outstanding capital stock is Filipino owned. This is obviously absurd.
In the example given, only the foreigners holding the common shares have voting rights in
the election of directors, even if they hold only 100 shares. The foreigners, with a minuscule
equity of less than 0.001 percent, exercise control over the public utility. On the other hand,
the Filipinos, holding more than 99.999 percent of the equity, cannot vote in the election of
directors and hence, have no control over the public utility. This starkly circumvents the intent
of the framers of the Constitution, as well as the clear language of the Constitution, to place
the control of public utilities in the hands of Filipinos. It also renders illusory the State policy
of an independent national economy effectively controlled by Filipinos.
The example given is not theoretical but can be found in the real world, and in fact exists in
the present case.
Holders of PLDT preferred shares are explicitly denied of the right to vote in the election of
directors. PLDT’s Articles of Incorporation expressly state that “the holders of Serial
Preferred Stock shall not be entitled to vote at any meeting of the stockholders for the
election of directors or for any other purpose or otherwise participate in any action taken
by the corporation or its stockholders, or to receive notice of any meeting of stockholders.” 51
On the other hand, holders of common shares are granted the exclusive right to vote in the
election of directors. PLDT’s Articles of Incorporation52 state that “each holder of Common
Capital Stock shall have one vote in respect of each share of such stock held by him on all
matters voted upon by the stockholders, and the holders of Common Capital Stock shall
have the exclusive right to vote for the election of directors and for all other
purposes.“53
In short, only holders of common shares can vote in the election of directors, meaning only
common shareholders exercise control over PLDT. Conversely, holders of preferred shares,
who have no voting rights in the election of directors, do not have any control over PLDT. In
fact, under PLDT’s Articles of Incorporation, holders of common shares have voting rights for
all purposes, while holders of preferred shares have no voting right for any purpose
whatsoever.
It must be stressed, and respondents do not dispute, that foreigners hold a majority of the
common shares of PLDT. In fact, based on PLDT’s 2010 General Information Sheet
(GIS),54 which is a document required to be submitted annually to the Securities and
Exchange Commission,55 foreigners hold 120,046,690 common shares of PLDT whereas
Filipinos hold only 66,750,622 common shares.56 In other words, foreigners hold 64.27% of
the total number of PLDT’s common shares, while Filipinos hold only 35.73%. Since holding
a majority of the common shares equates to control, it is clear that foreigners exercise control
over PLDT. Such amount of control unmistakably exceeds the allowable 40 percent limit on
foreign ownership of public utilities expressly mandated in Section 11, Article XII of the
Constitution.
Moreover, the Dividend Declarations of PLDT for 2009,57 as submitted to the SEC, shows that
per share the SIP58preferred shares earn a pittance in dividends compared to the common
shares. PLDT declared dividends for the common shares at P70.00 per share, while the
declared dividends for the preferred shares amounted to a measlyP1.00 per share.59 So the
preferred shares not only cannot vote in the election of directors, they also have very little
and obviously negligible dividend earning capacity compared to common shares.
As shown in PLDT’s 2010 GIS,60 as submitted to the SEC, the par value of PLDT common
shares is P5.00 per share, whereas the par value of preferred shares is P10.00 per share. In
other words, preferred shares have twice the par value of common shares but cannot elect
directors and have only 1/70 of the dividends of common shares. Moreover, 99.44% of the
preferred shares are owned by Filipinos while foreigners own only a minuscule 0.56% of the
preferred shares.61 Worse, preferred shares constitute 77.85% of the authorized capital stock
of PLDT while common shares constitute only 22.15%.62 This undeniably shows that
beneficial interest in PLDT is not with the non-voting preferred shares but with the common
shares, blatantly violating the constitutional requirement of 60 percent Filipino control and
Filipino beneficial ownership in a public utility.
The legal and beneficial ownership of 60 percent of the outstanding capital stock must rest in
the hands of Filipinos in accordance with the constitutional mandate. Full beneficial ownership
of 60 percent of the outstanding capital stock, coupled with 60 percent of the voting rights, is
constitutionally required for the State’s grant of authority to operate a public utility. The
undisputed fact that the PLDT preferred shares, 99.44% owned by Filipinos, are non-voting
and earn only 1/70 of the dividends that PLDT common shares earn, grossly violates the
constitutional requirement of 60 percent Filipino control and Filipino beneficial ownership of a
public utility.
In short, Filipinos hold less than 60 percent of the voting stock, and earn less than 60
percent of the dividends, of PLDT. This directly contravenes the express command in
Section 11, Article XII of the Constitution that “[n]o franchise, certificate, or any other form of
authorization for the operation of a public utility shall be granted except to x x x corporations
x x x organized under the laws of the Philippines, at least sixty per centum of whose capital
is owned by such citizens x x x.”
To repeat, (1) foreigners own 64.27% of the common shares of PLDT, which class of shares
exercises the sole right to vote in the election of directors, and thus exercise control over
PLDT; (2) Filipinos own only 35.73% of PLDT’s common shares, constituting a minority of the
voting stock, and thus do not exercise control over PLDT; (3) preferred shares, 99.44% owned
by Filipinos, have no voting rights; (4) preferred shares earn only 1/70 of the dividends that
common shares earn;63 (5) preferred shares have twice the par value of common shares; and
(6) preferred shares constitute 77.85% of the authorized capital stock of PLDT and common
shares only 22.15%. This kind of ownership and control of a public utility is a mockery of the
Constitution.
Incidentally, the fact that PLDT common shares with a par value of P5.00 have a current stock
market value ofP2,328.00 per share,64 while PLDT preferred shares with a par value
of P10.00 per share have a current stock market value ranging from only P10.92 to P11.06
per share,65 is a glaring confirmation by the market that control and beneficial ownership of
PLDT rest with the common shares, not with the preferred shares.
Indisputably, construing the term “capital” in Section 11, Article XII of the Constitution to
include both voting and non-voting shares will result in the abject surrender of our
telecommunications industry to foreigners, amounting to a clear abdication of the State’s
constitutional duty to limit control of public utilities to Filipino citizens. Such an interpretation
certainly runs counter to the constitutional provision reserving certain areas of investment to
Filipino citizens, such as the exploitation of natural resources as well as the ownership of land,
educational institutions and advertising businesses. The Court should never open to foreign
control what the Constitution has expressly reserved to Filipinos for that would be a betrayal
of the Constitution and of the national interest. The Court must perform its solemn duty to
defend and uphold the intent and letter of the Constitution to ensure, in the words of the
Constitution, “a self-reliant and independent national economy effectively controlled by
Filipinos.”
Section 11, Article XII of the Constitution, like other provisions of the Constitution expressly
reserving to Filipinosspecific areas of investment, such as the development of natural
resources and ownership of land, educational institutions and advertising business, is self-
executing. There is no need for legislation to implement these self-executing provisions of
the Constitution. The rationale why these constitutional provisions are self-executing was
explained in Manila Prince Hotel v. GSIS,66 thus:
x x x Hence, unless it is expressly provided that a legislative act is necessary to enforce a
constitutional mandate, the presumption now is that all provisions of the constitution are self-
executing. If the constitutional provisions are treated as requiring legislation instead of self-
executing, the legislature would have the power to ignore and practically nullify the mandate
of the fundamental law. This can be cataclysmic. That is why the prevailing view is, as it has
always been, that —
. . . in case of doubt, the Constitution should be considered self-executing rather than non-
self-executing. . . .Unless the contrary is clearly intended, the provisions of the
Constitution should be considered self-executing, as a contrary rule would give the
legislature discretion to determine when, or whether, they shall be effective. These
provisions would be subordinated to the will of the lawmaking body, which could make them
entirely meaningless by simply refusing to pass the needed implementing statute. (Emphasis
supplied)
In Manila Prince Hotel, even the Dissenting Opinion of then Associate Justice Reynato S.
Puno, later Chief Justice, agreed that constitutional provisions are presumed to be self-
executing. Justice Puno stated:
Courts as a rule consider the provisions of the Constitution as self-executing, rather than as
requiring future legislation for their enforcement. The reason is not difficult to discern. For if
they are not treated as self-executing, the mandate of the fundamental law ratified by
the sovereign people can be easily ignored and nullified by Congress. Suffused with
wisdom of the ages is the unyielding rule that legislative actions may give breath to
constitutional rights but congressional inaction should not suffocate them.
Thus, we have treated as self-executing the provisions in the Bill of Rights on arrests,
searches and seizures, the rights of a person under custodial investigation, the rights of an
accused, and the privilege against self-incrimination. It is recognized that legislation is
unnecessary to enable courts to effectuate constitutional provisions guaranteeing the
fundamental rights of life, liberty and the protection of property. The same treatment is
accorded to constitutional provisions forbidding the taking or damaging of property for public
use without just compensation. (Emphasis supplied)
Thus, in numerous cases,67 this Court, even in the absence of implementing legislation,
applied directly the provisions of the 1935, 1973 and 1987 Constitutions limiting land
ownership to Filipinos. In Soriano v. Ong Hoo,68this Court ruled:
x x x As the Constitution is silent as to the effects or consequences of a sale by a citizen of
his land to an alien, and as both the citizen and the alien have violated the law, none of them
should have a recourse against the other, and it should only be the State that should be
allowed to intervene and determine what is to be done with the property subject of the violation.
We have said that what the State should do or could do in such matters is a matter of public
policy, entirely beyond the scope of judicial authority. (Dinglasan, et al. vs. Lee Bun Ting, et
al., 6 G. R. No. L-5996, June 27, 1956.) While the legislature has not definitely decided
what policy should be followed in cases of violations against the constitutional
prohibition, courts of justice cannot go beyond by declaring the disposition to be null
and void as violative of the Constitution. x x x (Emphasis supplied)
To treat Section 11, Article XII of the Constitution as not self-executing would mean that since
the 1935 Constitution, or over the last 75 years, not one of the constitutional provisions
expressly reserving specific areas of investments to corporations, at least 60 percent of the
“capital” of which is owned by Filipinos, was enforceable. In short, the framers of the 1935,
1973 and 1987 Constitutions miserably failed to effectively reserve to Filipinos specific areas
of investment, like the operation by corporations of public utilities, the exploitation by
corporations of mineral resources, the ownership by corporations of real estate, and the
ownership of educational institutions. All the legislatures that convened since 1935 also
miserably failed to enact legislations to implement these vital constitutional provisions that
determine who will effectively control the national economy, Filipinos or foreigners. This Court
cannot allow such an absurd interpretation of the Constitution.
This Court has held that the SEC “has both regulatory and adjudicative functions.”69 Under its
regulatory functions, the SEC can be compelled by mandamus to perform its statutory duty
when it unlawfully neglects to perform the same. Under its adjudicative or quasi-judicial
functions, the SEC can be also be compelled by mandamus to hear and decide a possible
violation of any law it administers or enforces when it is mandated by law to investigate such
violation.
Under Section 17(4)70 of the Corporation Code, the SEC has the regulatory function to reject
or disapprove the Articles of Incorporation of any corporation where “the required
percentage of ownership of the capital stock to be owned by citizens of the Philippines
has not been complied with as required by existing laws or the Constitution.” Thus, the
SEC is the government agency tasked with the statutory duty to enforce the nationality
requirement prescribed in Section 11, Article XII of the Constitution on the ownership of public
utilities. This Court, in a petition for declaratory relief that is treated as a petition for mandamus
as in the present case, can direct the SEC to perform its statutory duty under the law, a duty
that the SEC has apparently unlawfully neglected to do based on the 2010 GIS that
respondent PLDT submitted to the SEC.
Under Section 5(m) of the Securities Regulation Code,71 the SEC is vested with the “power
and function” to “suspend or revoke, after proper notice and hearing, the franchise or
certificate of registration of corporations, partnerships or associations, upon any of
the grounds provided by law.” The SEC is mandated under Section 5(d) of the same Code
with the “power and function” to “investigate x x x the activities of persons to ensure
compliance” with the laws and regulations that SEC administers or enforces. The GIS that
all corporations are required to submit to SEC annually should put the SEC on guard against
violations of the nationality requirement prescribed in the Constitution and existing laws. This
Court can compel the SEC, in a petition for declaratory relief that is treated as a petition for
mandamus as in the present case, to hear and decide a possible violation of Section 11,
Article XII of the Constitution in view of the ownership structure of PLDT’s voting shares, as
admitted by respondents and as stated in PLDT’s 2010 GIS that PLDT submitted to SEC.
WHEREFORE, we PARTLY GRANT the petition and rule that the term “capital” in Section
11, Article XII of the 1987 Constitution refers only to shares of stock entitled to vote in the
election of directors, and thus in the present case only to common shares, and not to the total
outstanding capital stock (common and non-voting preferred shares). Respondent
Chairperson of the Securities and Exchange Commission is DIRECTED to apply this
definition of the term “capital” in determining the extent of allowable foreign ownership in
respondent Philippine Long Distance Telephone Company, and if there is a violation of
Section 11, Article XII of the Constitution, to impose the appropriate sanctions under the law.
SO ORDERED.
Renato Corona, Teresita Leonardo-De Castro, Arturo Brion, Diosdado Peralta, Lucas
Bersamin, Mariano Del Castillo, Martin Villarama, Jr., Jose Perez, Jose Mendoza, Maria
Lourdes Sereno, JJ., concur.
Presbitero Velasco, Jr., Roberto Abad, JJ., dissent.
REPUBLIC ACT NO. 8371
AN ACT TO RECOGNIZE, PROTECT AND PROMOTE THE RIGHTS OF
INDIGENOUS CULTURAL COMMUNITIES/ INDIGENOUS PEOPLES, CREATING A
NATIONAL COMMISSION ON INDIGENOUS PEOPLES, ESTABLISHING
IMPLEMENTING MECHANISMS, APPROPRIATING FUNDS THEREFOR, AND FOR
OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:
CHAPTER I
GENERAL PROVISIONS
SECTION 1. Short Title. - This Act shall be known as "The Indigenous Peoples Rights
Act of 1997".
SEC. 2. Declaration of State Policies. - The State shall recognize and promote all the
rights of Indigenous Cultural Communities/ Indigenous Peoples (ICCs/IPs) hereunder
enumerated within the framework of the Constitution:
a) The State shall recognize and promote the rights of ICCs/IPs within the
framework of national unity and development;
b) The State shall protect the rights of ICCs/IPs to their ancestral domains to ensure
their economic, social and cultural well being and shall recognize the applicability of
customary laws governing property rights or relations in determining the ownership
and extent of ancestral domain;
c) The State shall recognize, respect and protect the rights of ICCs/ IPs to
preserve and develop their cultures, traditions and institutions. It shall consider
these rights in the formulation of national laws and policies; d) The State shall
guarantee that members of the ICCs/IPs regardless of sex, shall equally enjoy
the full measure of Human rights and freedoms without distinction or
discrimination;
e) The State shall take measures, with the participation of the ICCs/ IPs concerned, to
protect their rights and guarantee respect for their cultural integrity, and to ensure that
members of the ICCs/IPs benefit on an equal footing from the rights and opportunities
which national laws and regulations grant to other members of the population; and
f) The State recognizes its obligations to respond to the strong expression of the
ICCs/IPs for cultural integrity by assuring maximum ICC/IP participation in the direction
of education, health, as well as other services of ICCs/lPs, in order to render such
services more responsive to the needs and desires of these communities.
Towards these ends, the State shall institute and establish the necessary mechanisms
to enforce and guarantee the realization of these rights, taking into consideration their
customs, traditions, values, beliefs interests and institutions, and to adopt and
implement measures to protect their rights to their ancestral domains.
CHAPTER II
DEFINITION OF TERMS

SEC. 3. Definition of Terms. - For purposes of this Act, the following terms shall mean:
a) Ancestral Domains - Subject to Section 56 hereof, refer to all areas generally
belonging to ICCs/IPs comprising lands, inland waters, coastal areas, and natural
resources therein, held under a claim of ownership, occupied or possessed by
ICCs/IPs, by themselves or through their ancestors, communally or individually since
time immemorial, continuously to the present except when interrupted by war, force
majeure or displacement by force, deceit, stealth or as a consequence of government
projects or any other voluntary dealings entered into by government and private
individuals/corporations, and which are necessary to ensure their economic, social and
cultural welfare. It shall include ancestral lands, forests, pasture, residential, agricultural,
and other lands individually owned whether alienable and disposable or otherwise,
hunting grounds, burial grounds, worship areas, bodies of water, mineral and other
natural resources, and lands which may no longer be exclusively occupied by ICCs/IPs
but from which they traditionally had access to for their subsistence and traditional
activities, particularly the home ranges of ICCs/IPs who are still nomadic and/or shifting
cultivators;
b) Ancestral Lands - Subject to Section 56 hereof, refers to land occupied, possessed
and utilized by individuals, families and clans who are members of the ICCs/IPs since
time immemorial, by themselves or through their predecessors-in-interest, under claims
of individual or traditional group ownership, continuously, to the present except when
interrupted by war, force majeure or displacement by force, deceit, stealth, or as a
consequence of government projects and other voluntary dealings entered into by
government and private individuals/corporations including, but not limited to, residential
lots, rice terraces or paddies, private forests, swidden farms and tree lots; c) Certificate
of Ancestral Domain Title - refers to a title formally recognizing the rights of possession
and ownership of ICCs/IPs over their ancestral domains identified and delineated in
accordance with this law;
d) Certificate of Ancestral Lands Title - refers to a title formally recognizing the rights
of ICCs/IPs over their ancestral lands;
e) Communal Claims - refer to claims on land, resources and rights thereon; belonging
to the whole community within a defined territory;
f) Customary Laws - refer to a body of written and/or unwritten rules, usages,
customs and practices traditionally and continually recognized, accepted and
observed by respective ICCs/IPs;
g) Free and Prior Informed Consent - as used in this Act shall mean the consensus of
all members of the ICCs/IPs to be determined in accordance with their respective
customary laws and practices, free from any external manipulation, interference
coercion, and obtained after fully disclosing the intent and scope of the activity, in a
language and process understandable to the community;
h) Indigenous Cultural Communities/Indigenous Peoples - refer to a group of people or
homogenous societies identified by self-ascription and ascription by others, who have
continuously lived as organized community on communally bounded and defined
territory, and who have, under claims of ownership since time immemorial, occupied,
possessed and utilized such territories, sharing common bonds of language, customs,
traditions and other distinctive cultural traits, or who have, through resistance to political,
social and cultural inroads of colonization, non-indigenous religions and cultures,
became historically differentiated from the majority of Filipinos. ICCs/IPs shall likewise
include peoples who are regarded as indigenous on account of their descent from the
populations which inhabited the country, at the time of conquest or colonization, or at
the time of inroads of non-indigenous religions and cultures, or the establishment of
present state boundaries, who retain some or all of their own social, economic, cultural
and political institutions, but who may have been displaced from their traditional
domains or who may have resettled outside their ancestral domains;
i) Indigenous Political Structures - refer to organizational and cultural leadership
systems, institutions, relationships, patterns and processes for decision-making and
participation, identified by ICCs/IPs such as, but not limited to, Council of Elders,
Council of Timuays, Bodong Holders, or any other tribunal or body of similar nature;
j) Individual Claims - refer to claims on land and rights thereon which have been
devolved to individuals, families and clans including, but not limited to, residential lots,
rice terraces or paddies and tree lots;
k) National Commission on Indigenous Peoples (NCIP) - refers to the office created
under his Act, which shall be under the Office of the President, and which shall be the
primary government agency responsible for the formulation and implementation of
policies, plans and programs to recognize, protect and promote the rights of ICCs/IPs; l)
Native Title - refers to pre-conquest rights to lands and domains which, as far back as
memory reaches, have been held under a claim of private ownership by ICCs/IPs, have
never been public lands and are thus indisputably presumed to have been held that way
since before the Spanish Conquest;
m)Nongovernment Organization - refers to a private, nonprofit voluntary organization
that has been organized primarily for the delivery of various services to the ICCs/IPs
and has an established track record for effectiveness and acceptability in the community
where it serves;
n) People's Organization - refers to a private, nonprofit voluntary organization of
members of an ICC/IP which is accepted as representative of such ICCs/IPs;
o) Sustainable Traditional Resource Rights - refer to the rights of ICCs/IPs to
sustainably use, manage, protect and conserve a) land, air, water, and minerals; b)
plants, animals and other organisms; c) collecting, fishing and hunting grounds; d)
sacred sites; and e) other areas of economic, ceremonial and aesthetic value in
accordance with their indigenous knowledge, beliefs, systems and practices; and
p) Time Immemorial - refers to a period of time when as far back as memory can go,
certain ICCs/IPs are known to have occupied, possessed in the concept of owner, and
utilized a defined territory devolved to them, by operation of customary law or inherited
from their ancestors, in accordance with their customs and traditions.
CHAPTER III
RIGHTS TO ANCESTRAL DOMAINS

SEC. 4. Concept of Ancestral Lands/Domains. - Ancestral lands/ domains shall include

such concepts of territories which cover not only the physical environment but the total
environment including the spiritual and cultural bonds to the areas which the ICCs/IPs
possess, occupy and use and to which they have claims of ownership.
SEC. 5. Indigenous Concept of Ownership. - Indigenous concept of ownership sustains
the view that ancestral domains and all resources found therein shall serve as the
material bases of their cultural integrity. The indigenous concept of ownership generally
holds that ancestral domains are the ICC's/IP's private but community property which
belongs to all generations and therefore cannot be sold, disposed or destroyed. It
likewise covers sustainable traditional resource rights.
SEC. 6. Composition of Ancestral Lands/Domains. - Ancestral lands and domains
shall consist of all areas generally belonging to ICCs/ IPs as referred under Sec. 3,
items (a) and
(b) of this Act.
SEC. 7. Rights to Ancestral Domains. - The rights of ownership and possession of
ICCs/IPs to their ancestral domains shall be recognized and protected. Such rights
shall include:
a) Right of Ownership - The right to claim ownership over lands, bodies of water
traditionally and actually occupied by ICCs/IPs, sacred places, traditional hunting and
fishing grounds, and all improvements made by them at any time within the
domains; b)Right to Develop Lands and Natural Resources. - Subject to Section 56
hereof, right to develop, control and use lands and territories traditionally occupied,
owned, or used; to manage and conserve natural resources within the territories and
uphold the responsibilities for future generations; to benefit and share the profits from
allocation and utilization of the natural resources found therein; the right to negotiate the
terms and conditions for the exploration of natural resources in the areas for the
purpose of ensuring ecological, environmental protection and the conservation
measures, pursuant to national and customary laws; the right to an informed and
intelligent participation in the formulation and implementation of any project, government
or private, that will affect or impact upon the ancestral domains and to receive just and
fair compensation for any damages which they may sustain as a result of the project;
and the right to effective measures by the government to prevent any interference with,
alienation and encroachment upon these rights;
c) Right to Stay in the Territories. - The right to stay in the territory and not to be
removed therefrom. No ICCs/IPs will be relocated without their free and prior informed
consent, nor through any means other than eminent domain. Where relocation is
considered necessary as an exceptional measure, such relocation shall take place only
with the free and prior informed consent of the ICCs/IPs concerned and whenever
possible, they shall be guaranteed the right to return to their ancestral domains, as soon
as the grounds for relocation cease to exist. When such return is not possible, as
determined by agreement or through appropriate procedures, ICCs/IPs shall be
provided in all possible cases with lands of quality and legal status at least equal to that
of the land previously occupied by them, suitable to provide for their present needs and
future development. Persons thus relocated shall likewise be fully compensated for any
resulting loss or injury;
d) Right in Case of Displacement. - In case displacement occurs as a result of natural
catastrophes, the State shall endeavor to resettle the displaced ICCs/IPs in suitable
areas where they can have temporary life support systems: Provided, That the
displaced ICCs/IPs shall have the right to return to their abandoned lands until such
time that the normalcy and safety of such lands shall be determined: Provided, further,
That should their ancestral domain cease to exist and normalcy and safety of the
previous settlements are not possible, displaced ICCs/IPs shall enjoy security of tenure
over lands to which they have been resettled: Provided furthermore, That basic
services and livelihood shall be provided to them to ensure that their needs are
adequately addressed;
e) Right to Regulate Entry of Migrants. - Right to regulate the entry of migrant settlers
and organizations into the domains;
f) Right to Safe and Clean Air and Water. - For this purpose, the ICCs/IPs shall have
access to integrated systems for the management of their inland waters and air space;
g) Right to Claim Parts of Reservations -The right to claim parts of the ancestral
domains which have been reserved for various purposes, except those reserved
and intended for common and public welfare and service; and
h) Right to Resolve Conflict. - Right to resolve land conflicts in accordance with
customary laws of the area where the land is located, and only in default thereof shall
the complaints be submitted to amicable settlement and to the Courts of Justice
whenever necessary.
SEC. 8. Rights to Ancestral Lands. - The right of ownership and possession of the
ICCs /IPs to their ancestral lands shall be recognized and protected.
a) Right to transfer land/property. - Such right shall include the right to transfer
land or property rights to/among members of the same ICCs/IPs, subject to
customary laws and traditions of the community concerned.
b) Right to Redemption. - In cases where it is shown that the transfer of land/property
rights by virtue of any agreement or devise, to a nonmember of the concerned ICCs/IPs
is tainted by the vitiated consent of the ICCs/IPs, or is transferred for an unconscionable
consideration or price, the transferor ICC/IP shall have the right to redeem the same
within a period not exceeding fifteen (15) years from the date of transfer.
SEC. 9. Responsibilities of ICCs/IPs to their`4ncestral Domains. -ICCs/IPs occupying a
duly certified ancestral domain shall have the following responsibilities:
a) Maintain Ecological Balance. - To preserve, restore, and maintain a balanced
ecology in the ancestral domain by protecting the flora and fauna, watershed areas,
and other reserves;
b) Restore Denuded Areas. - To actively initiate, undertake and participate in the
reforestation of denuded areas and other development programs and projects subject
to just and reasonable remuneration; and
c) Observe Laws. - To observe and comply with the provisions of this Act and the rules
and regulations for its effective implementation.
SEC. 10. Unauthorized and Unlawful Intrusion. - Unauthorized end unlawful intrusion
upon, or use of any portion of the ancestral domain, or any violation of the rights herein
before enumerated, shall be punishable under this law. Furthermore, the Government
shall take measures to prevent non-ICCs/IPs from taking advantage of the ICCs/IPs
customs or lack of understanding of laws to secure ownership, possession of land
belonging to said ICCs/IPs.
SEC. 11. Recognition of Ancestral Domain Rights. - The rights of ICCs/IPs to their
ancestral domains by virtue of Native Title shall be recognized and respected. Formal
recognition, when solicited by ICCs/ IPs concerned, shall be embodied in a Certificate
of Ancestral Domain Title (CADT), which shall recognize the title of the concerned
ICCs/IPs over the territories identified and delineated.
SEC. 12. Option to Secure Certificate of Title Under Commonwealth Act 141, as
amended, or the Land Registration Act 496. - Individual members of cultural
communities, with respect to their individually-owned ancestral lands who, by
themselves or through their predecessors-in-interest, have been in continuous
possession and occupation of the same in the concept of owner since time immemorial
or for a period of not less than thirty (30) years immediately preceding the approval of
this Act and uncontested by the members of the same ICCs/ IPs shall have the option to
secure title to their ancestral lands under the provisions of Commonwealth Act 141, as
amended, or the Land Registration Act 496.
For this purpose, said individually-owned ancestral lands, which are agricultural in
character and actually used for agricultural, residential, pasture, and tree farming
purposes, including those with a slope of eighteen percent (18%) or more, are hereby
classified as alienable and disposable agricultural lands.
The option granted under this section shall be exercised within twenty (20) years
from the approval of this Act.
CHAPTER IV
RIGHT TO SELF-GOVERNANCE AND EMPOWERMENT

SEC. 13. Self-Governance. - The State recognizes the inherent right of ICCs/IPs to self-
governance and self-determination and respects the integrity of their values, practices
and institutions. Consequently, the State shall guarantee the right of ICCs/IPs to freely
pursue their economic, social and cultural development.
SEC. 14. Support for Autonomous Regions. - The State shall continue to strengthen
and support the autonomous regions created under the Constitution as they may
require or need. The State shall likewise encourage other ICCs/IPs not included or
outside Muslim Mindanao and the Cordilleras to use the form and content of their ways
of life as may be compatible with the fundamental rights defined in the Constitution of
the Republic of the Philippines and other internationally recognized human rights.
SEC. 15. Justice System, Conflict Resolution Institutions, and Peace Building
Processes. - The ICCs/IPs shall have the right to use their own commonly accepted
justice systems, conflict resolution institutions, peace building processes or
mechanisms and other customary laws and practices within their respective
communities and as may be compatible with the national legal system and with
internationally recognized human rights.
SEC. 16. Right to Participate in Decision-Making - ICCs/IPs have the right to participate
fully, if they so choose, at all levels of decision making in matters which may affect their
rights, lives and destinies through procedures determined by them as well as to
maintain and develop their own indigenous political structures. Consequently, the State
shall ensure that the ICCs/IPs shall be given mandatory representation in policy-making
bodies and other local legislative councils.
SEC. 17. Right to Determine and Decide Priorities for Development. - The ICCs/IPs
shall have the right to determine and decide their own priorities for development
affecting their lives, beliefs, institutions, spiritual well-being, and the lands they own,
occupy or use. They shall participate in the formulation, implementation and evaluation
of policies, plans and programs for national, regional and local development which
may directly affect them.
SEC. 18. Tribal Barangays. - The ICCs/IPs living in contiguous areas or communities
where they form the predominant population but which are located in municipalities,
provinces or cities where they do not constitute the majority of the population, may
form or constitute a separate barangay in accordance with the Local Government Code
on the creation of tribal barangays.
SEC. 19. Role of Peoples Organizations. - The State shall recognize and respect the
role of independent ICCs/IPs organizations to enable the ICCs/IPs to pursue and
protect their legitimate and collective interests and aspirations through peaceful and
lawful means.
SEC. 20. Means for Development/Empowerment of ICCs/lPs. - The Government shall
establish the means for the full development/ empowerment of the ICCs/IPs own
institutions and initiatives and, where necessary, provide the resources needed
therefor.
CHAPTER V
SOCIAL JUSTICE AND HUMAN RIGHTS

SEC. 21. Equal Protection and Non-discrimination of ICCs/lPs. -Consistent with the
equal protection clause of the Constitution of the Republic of the Philippines, the
Charter of the United Nations, the Universal Declaration of Human Rights including the
Convention on the Elimination of Discrimination Against Women and International
Human Rights Law, the State shall, with due recognition of their distinct characteristics
and identity accord to the members of the ICCs/IPs the rights, protections and
privileges enjoyed by the rest of the citizenry. It shall extend to them the same
employment rights, opportunities, basic services, educational and other rights and
privileges available to every member of the society. Accordingly, the State shall
likewise ensure that the employment of any form of force or coercion against ICCs/IPs
shall be dealt with by law.
The State shall ensure that the fundamental human rights and freedoms as enshrined in
the Constitution and relevant international instruments are guaranteed also to
indigenous women. Towards this end, no provision in this Act shall be interpreted so as
to result in the diminution of rights and privileges already recognized and accorded to
women under existing laws of general application.
SEC. 22. Rights during Armed Conflict. - ICCs/IPs have the right to special protection
and security in periods of armed conflict. The State shall observe international
standards, in particular the Fourth Geneva Convention of 1949, for the protection of
civilian populations in circumstances of emergency and armed conflict, and shall not
recruit members of the ICCs/IPs against their will into the armed forces, and in
particular, for use against other ICCs/IPs; nor recruit children of ICCs/ IPs into the
armed forces under any circumstance; nor force indigenous individuals to abandon their
lands, territories and means of subsistence, or relocate them in special centers for
military purposes under any discriminatory condition.
SEC. 23. Freedom from Discrimination and Right to Equal Opportunity and Treatment. -
It shall be the right of the ICCs/IPs to be free from any form of discrimination, with
respect to recruitment and conditions of employment, such that they may enjoy equal
opportunities for admission to employment, medical and social assistance, safety as
well as other occupationally -related benefits, informed of their rights under existing
labor legislation and of means available to them for redress, not subject to any coercive
recruitment systems, including bonded labor and other forms of debt servitude; and
equal treatment in employment for men and women, including the protection from
sexual harassment.
Towards this end, the State shall, within the framework of national laws and regulations,
and in cooperation with the ICCs/IPs concerned, adopt special measures to ensure the
effective protection with regard to the recruitment and conditions of employment of
persons belonging to these communities, to the extent that they are not effectively
protected by laws applicable to workers in general.
ICCs/IPs shall have the right to association and freedom for all trade union activities
and the right to conclude collective bargaining agreements with employers'
organizations. They shall likewise have the right not to be subject to working conditions
hazardous to their health, particularly through exposure to pesticides and other toxic
substances.
SEC. 24. Unlawful Acts Pertaining to Employment. - It shall be unlawful for any person:
a) To discriminate against any ICC/IP with respect to the terms and conditions of
employment on account of their descent. Equal remuneration shall be paid to
ICC/IP and non-ICC/IP for work of equal value; and
b) To deny any ICC/IP employee any right or benefit herein provided for or to
discharge them for the purpose of preventing them from enjoying any of the rights or
benefits provided under this Act.
SEC. 25. Basic Services. - The ICCs/IPs have the right to special measures for the
immediate, effective and continuing improvement of their economic and social
conditions, including in the areas of employment, vocational training and retraining,
housing, sanitation, health and social security. Particular attention shall be paid to the
rights and special needs of indigenous women, elderly, youth, children and differently-
abled persons. Accordingly, the State shall guarantee the right of ICCs/IPs to
government's basic services which shall include, but not limited to, water and electrical
facilities, education, health and infrastructure.
SEC. 26. Women. - ICC/IP women shall enjoy equal rights and opportunities with men,
as regards the social, economic, political and cultural spheres of life. The participation of
indigenous women in He decision-making process in all levels, as well as in the
development of society, shall be given due respect and recognition.
The State shall provide full access to education, maternal and child care, health and
nutrition, and housing services to indigenous women. Vocational, technical, professional
and other forms of training shall be provided to enable these women to fully participate
in all aspects of social life. As far as possible, the State shall ensure that indigenous
women have access to all services in their own languages.
SEC. 27. Children and Youth. - The State shall recognize the vital role of the children
and youth of ICCs/IPs in nation-building and shall promote and protect their physical,
moral, spiritual, intellectual end social well-being. Towards this end, the State shall
support all government programs intended for the development and rearing of the
children and youth of ICCs/IPs for civic efficiency and establish such mechanisms as
may be necessary for the protection of the rights of the indigenous children and youth.
SEC. 28. Integrated System of Education. - The State shall, through the NCIP, provide
a complete, adequate and integrated system of education, relevant to the needs of the
children and young people of ICCs/ IPs.
CHAPTER VI
CULTURAL INTEGRITY

SEC. 29. Protection of Indigenous Culture, Traditions and Institutions. - The State shall
respect, recognize and protect the right of ICCs/IPs to preserve and protect their
culture, traditions and institutions. It shall consider these rights in the formulation and
application of national plans and policies.
SEC. 30. Educational Systems. - The State shall provide equal access to various
cultural opportunities to the ICCs/IPs through the educational system, public or private
cultural entities, scholarships, grants and other incentives without prejudice to their
right to establish and control their educational systems and institutions by providing
education in their own language, in a manner appropriate to their cultural methods of
teaching and learning. Indigenous children/youth shall have the right to all levels and
forms of education of the State.
SEC. 31. Recognition of Cultural Diversity. - The State shall endeavor to have the
dignity and diversity of the cultures, traditions, histories and aspirations of the ICCs/IPs
appropriately reflected in all forms of education, public information and cultural-
educational exchange. Consequently, the State shall take effective measures, in
consultation with ICCs/IPs concerned, to eliminate prejudice and discrimination and to
promote tolerance, understanding and good relations among ICCs/IPs and all segments
of society. Furthermore, the Government shall take effective measures to ensure that
State-owned media duly reflect indigenous cultural diversity. The State shall likewise
ensure the participation of appropriate indigenous leaders in schools, communities and
international cooperative undertakings like festivals, conferences, seminars and
workshops to promote and enhance their distinctive heritage and values.
SEC. 32. Community Intellectual Rights. - ICCs/IPs have the right to practice and
revitalize their own cultural traditions and customs. The State shall presence, protect
and develop the past, present and future manifestations of their cultures as well as the
right to the restitution of cultural, intellectual religious, and spiritual property taken
without their free and prior informed consent or in violation of their laws, traditions and
customs.
SEC. 33. Rights to Religious, Cultural Sites and Ceremonies. -ICCs/IPs shall have the
right to manifest, practice, develop and teach their spiritual and religious traditions,
customs and ceremonies; the right to maintain, protect and have access to their
religious and cultural sites; the right to use and control of ceremonial objects; and, the
right to the repatriation of human remains. Accordingly, the State shall take effective
measures, in cooperation with the ICCs/IPs concerned to ensure that indigenous sacred
places, including burial sites, be preserved, respected and protected. To achieve this
purpose, it shall be unlawful to:
a) Explore, excavate or make diggings on archeological sites of the ICCs/IPs for the
purpose of obtaining materials of cultural values without the free and prior informed
consent of the community concerned; and
b) Deface, remove or otherwise destroy artifacts which are of great importance
to the ICCs/IPs for the preservation of their cultural heritage.
SEC. 34. Right to Indigenous Knowledge Systems and Practices and to Develop own
Sciences and Technologies. - ICCs/IPs are entitled to the recognition of the full
ownership and control end protection of their cultural and intellectual rights. They shall
have the right to special measures to control, develop and protect their sciences,
technologies and cultural manifestations, including human and other genetic resources,
seeds, including derivatives of these resources, traditional medicines and hearth
practices, vital medicinal plants, animals and minerals, indigenous knowledge systems
and practices, knowledge of the properties of fauna and flora, oral traditions, literature,
designs, and visual and performing arts.
SEC. 35. Access to Biological and Genetic Resources. - Access to biological and
genetic resources and to indigenous knowledge related to the conservation, utilization
and enhancement of these resources, shall be allowed within ancestral lands and
domains of the ICCs/IPs only with a free and prior informed consent of such
communities, obtained in accordance with customary laws of the concerned
community.
SEC. 36. Sustainable Agro-Technical Development. - The State shall recognize the
right of ICCs/IPs to a sustainable agro-technological development and shall formulate
and implement programs of action for its effective implementation. The State shall
likewise promote the big-genetic and resource management systems among the
ICCs/IPs shall encourage cooperation among government agencies to ensure the
successful sustainable development of ICCs/IPs.
SEC. 37. Funds for Archeological and Historical Sites. - The ICCs/ IPs shall have the
right to receive from the national government all funds especially earmarked or
allocated for the management and preservation of their archeological and historical sites
and artifacts with the financial and technical support of the national government
agencies.
CHAPTER VII
NATIONAL COMMISSION ON INDIGENOUS PEOPLES (NCIP)

SEC. 38. National Commission on Indigenous Cultural Communities/lndigenous

Peoples (NCIP). - To carry out the policies herein set forth, there shall be created
the National Commission on ICCs/ IPs (NCIP), which shall be the primary
government agency responsible for the formulation and implementation of policies,
plans and programs to promote and protect the rights and well-being of the
ICCs/IPs and the recognition of their ancestral domains as well as their rights
thereto.
SEC. 39. Mandate. - The NCIP shall protect and promote the interest and well-being
of the ICCs/IPs with due regard to their beliefs, customs, traditions and institutions.
SEC. 40. Composition. - The NCIP shall be an independent agency under the Office of
the President and shall be composed of seven (7) Commissioners belonging to
ICCs/IPs, one (1) of whom shall be the Chairperson. The Commissioners shall be
appointed by the President of the Philippines from a list of recommenders submitted by
authentic ICCs/ IPs: Provided, That the seven (7) Commissioners shall be appointed
specifically from each of the following ethnographic areas: Region I and the Cordilleras,
Region II, the rest of Luzon, Island Groups including Mindoro, Palawan, Romblon,
Panay and the rest of the Visayas; Northern and Western Mindanao; Southern and
Eastern Mindanao; and Central Mindanao: Provided, That at least two (2) of the
seven(7) Commissioners shall be women.
SEC. 41. Qualifications, Tenure, Compensation. - The Chairperson and the six (6)
Commissioners must tee natural born Filipino citizens, bonafide members of ICCs/IPs
as certified by his/her tribe, experienced in ethnic affairs and who have worked for at
least ten
(10) years with an ICC/IP community and/or any government agency involved in ICC/IP,
at least 35 years of age at the time of appointment, and must be of proven honesty and
integrity: Provided, That at least two (2) of the seven (7) Commissioners shall be
members of the Philippine Bar: Provided, farther, the members of the NCIP shall hold
office for a period of three (3) years, and may be subject to re-appointment for another
term: Provided, furthermore, That no person shall serve for more than two (2) terms.
Appointment to any vacancy shall only be for the unexpired term of the predecessor and
in no case shall a member be appointed or designated in a temporary or acting
capacity: Provided, finally, That the Chairperson and the Commissioners shall be
entitled to compensation m accordance with the Salary Standardization Law.
SEC. 42. Removal from office. - Any member of the NCIP may be removed from office
by the President, on his own initiative or upon recommendation by any indigenous
community, before the expiration of his term for cause and after complying with due
process requirement of law.
SEC. 43. Appointment of Commissioners. - The President shall appoint the
seven (7) Commissioners of the NCIP within ninety (90) days from the effectivity
of this Act.
SEC. 44. Powers and Functions. - To accomplish its mandate, the NCIP shall
have the following powers, jurisdiction and function:
a) To serve as the primary government agency through which ICCs/IPs can seek
government assistance and as the medium, through which such assistance may be
extended;
b) To review and assess the conditions of ICCs/IPs including existing laws and
policies pertinent thereto and to propose relevant laws and policies to address their
role in national development;
c) To formulate and implement policies, plans, programs and projects for the
economic, social and cultural development of the ICCs/IPs and to monitor the
implementation thereof;
d) To request and engage the services and support of experts from other agencies of
government or employ private experts and consultants as may be required in the pursuit
of its objectives;
e) To issue certificate of ancestral land/domain title;
f) Subject to existing laws, to enter into contracts, agreements, or arrangement, with
government or private agencies or entities as may be necessary to attain the objectives
of this Act, and subject to the approval of the President, to obtain loans from
government lending institutions and other lending institutions to finance its
programs; g)To negotiate for funds and to accept grants, donations, gifts and/or
properties in whatever form and from whatever source, local and international, subject
to the approval of the President of the Philippines, for the benefit of ICCs/IPs and
administer the same in accordance with the terms thereof; or in the absence of any
condition, in such manner consistent with the interest of ICCs/IPs as well as existing
laws;
h) To coordinate development programs and projects for the advancement of the
ICCs/IPs and to oversee the proper implementation thereof;
i) To convene periodic conventions or assemblies of IPs to review, assess as well as
propose policies or plans;
j) To advise the President of the Philippines on all matters relating to the ICCs/IPs and
to submit within sixty (60) days after the close of each calendar year, a report of its
operations and achievements;
k) To submit to Congress appropriate legislative proposals intended to carry out the
policies under this Act;
1) To prepare and submit the appropriate budget to the Office of the President;
m)To issue appropriate certification as a pre-condition to the grant of permit, lease,
grant, or any other similar authority for the disposition, utilization, management and
appropriation by any private individual, corporate entity or any government agency,
corporation or subdivision thereof on any part or portion of the ancestral domain taking
into consideration the consensus approval of the ICCs/IPs concerned;
n) To decide all appeals from the decisions and acts of all the various offices
within the Commission;
o) To promulgate the necessary rules and regulations for the implementation of this Act;
p) To exercise such other powers and functions as may be directed by the
President of the Republic of the Philippines; and
q) To represent the Philippine ICCs/IPs in all international conferences and conventions
dealing with indigenous peoples and other related concerns. SEC. 45. Accessibility and
Transparency. - Subject to such limitations as may be provided by law or by rules and
regulations promulgated pursuant thereto, all official records, documents and papers
pertaining to official acts, transactions or decisions, as well as research data used as
basis for policy development of the Commission shall be made accessible to the public.
SEC. 46. Offices within the NCIP. - The NCIP shall have the following offices which
shall be responsible for the implementation of the policies hereinafter provided:
a) Ancestral Domains Office - The Ancestral Domain Office shall be responsible for the
identification, delineation and recognition of ancestral lands/domains. It shall also be
responsible for the management of ancestral lands/domains in accordance with a
master plan as well as the implementation of the ancestral domain rights of the
ICCs/IPs as provided in Chapter III of this Act. It shall also issue, upon the free and
prior informed consent of the ICCs/IPs concerned, certification prior to the grant of any
license, lease or permit for the exploitation of natural resources affecting the interests
of ICCs/IPs or their ancestral domains and to assist the ICCs/IPs in protecting the
territorial integrity of all ancestral domains. It shall likewise perform such other
functions as the Commission may deem appropriate and necessary;
b) Office on Policy, Planning and Research - The Of lice on Policy, Planning and
Research shall be responsible for the formulation of appropriate policies and programs
for ICCs/IPs such as, but not limited to, the development of a Five-Year Master Plan
for the lCCs/IPs. Such plan shall undergo a process such that every five years, the
Commission shall endeavor to assess the plan and make ramifications in accordance
with the changing situations. The Office shall also undertake the documentation of
customary law and shall establish and maintain a Research Center that would serve as
a depository of ethnographic information for monitoring, evaluation and policy
formulation. It shall assist the legislative branch of the national government in the
formulation of appropriate legislation benefiting ICCs/IPs;
c) Office of Education, Culture and Health - The Office on Culture, Education and Health
shall be responsible for the effective implementation of the education, cultural and
rented rights as provided in this Act. It shall assist, promote and support community
schools, both formal and non-formal, for the benefit of the local indigenous community,
especially in areas where existing educational facilities are not accessible to members
of the indigenous group. It shall administer all scholarship programs and other
educational rights intended for ICC/IP beneficiaries in coordination with the Department
of Education, Culture and Sports and the Commission on Higher Education. It shall
undertake, within the limits of available appropriation, a special program which includes
language and vocational training, public health and family assistance program and
rented subjects.
It shall also identify ICCs/IPs with potential training in the health profession and
encourage and assist them to enroll in schools of medicine, nursing, physical therapy
and other allied courses pertaining to the health profession.
Towards this end, the NCIP shall deploy a representative in each of the said of offices
personally perform the foregoing task and who shall receive complaints from the
ICCs/IPs and compel action from appropriate agency. It shall also monitor the activities
of the National Museum and other similar government agencies generally intended to
manage and presence historical and archeological artifacts of the ICCs/IPs and shall be
responsible for the implementation of such other functions as the NCIP may deem
appropriate and necessary;
d) Office on Socio-Economic Services and Special Concerns. - The Office on Socio-
Economic Services and Special Concerns shall serve as the Office through which the
NCIP shall coordinate with pertinent government agencies specially charged with the
implementation of various basic socio-economic services, policies, plans and
programs affecting the ICCs/IPs to ensure that the same are properly and directly
enjoyed by them. It shall also be responsible for such other functions as the NCIP
may deem appropriate and necessary;
e) Office of Empowerment and Human Rights - The Office of Empowerment and
Human Rights shall ensure that indigenous sociopolitical, cultural and economic rights
are respected and recognized. It shall ensure that capacity building mechanisms are
instituted and ICCs/IPs are afforded every opportunity, if they so choose, to participate
in all levels of decision-making. It shall likewise ensure that the basic human rights,
and such other rights as the NCIP may determine, subject to existing laws, rules and
regulations, are protected and promoted;
f) Administrative Office - The Administrative Office shall provide the NCIP with
economical, efficient and effective services pertaining to personnel, finance,
records, equipment, security, supplies and related services. It shall also
administer the Ancestral Domains Fund; and
g) Legal Affairs Office- There shall be a Legal Affairs Office which shall advice the NCIP
on all legal matters concerning ICCs/IPs and which shall be responsible for providing
ICCs/IPs with legal assistance in litigation involving community interest. It shall conduct
preliminary investigation on the basis of complaints filed by the ICCs/IPs against a
natural or juridical person believed to have violated ICCs/UPs rights. On the basis of its
findings, it shall initiate the filing of appropriate legal or administrative action to the
NCIP.
SEC. 47. Other Offices. - The NCIP shall have the power to create additional of
offices it may deem necessary subject to existing rules and regulations.
SEC. 48. Regional and Field Offices. - Existing regional and field offices shall remain to
function under the strengthened organizational structure of the NCIP. Other field offices
shall be created wherever appropriate and the staffing pattern thereof shall be
determined by the NCIP: Provided, That in provinces where there are ICCs/IPs but
without field of offices, the NCIP shall establish field offices in said provinces.
SEC. 49. (office of the Executive Director. - The NCIP shall create the Office of the
Executive Director which shall serve as its secretariat. The office shall be headed by an
Executive Director who shall be appointed by the President of the Republic of the
Philippines upon recommendation of the NCIP on a permanent basis. The staffing
pattern of the office shall be determined by the NCIP subject to existing rules and
regulations.
SEC. 50. Consultative Body. - A body consisting of the traditional leaders, elders
and representatives from the women and youth sectors of the different ICCs/IPs
shall be constituted by the NCIP from time to time to advise it on matters relating to
the problems, aspirations and interests of the ICCs/IPs.
CHAPTER VIII
DELINEATION AND RECOGNITION OF ANCESTRAL DOMAINS

SEC. 51. Delineation and Recognition of Ancestral Domains. -Self-delineation shall be

the guiding principle in the identification and delineation of ancestral domains. As
such, the ICCs/IPs concerned shall have a decisive role in all the activities pertinent
thereto. The Sworn Statement of the Elders as to the scope of the territories and
agreements/ pacts made with neighboring ICCs/IPs, if any, will be essential to the
determination of these traditional territories. The Government shall take the necessary
steps to identify lands which the ICCs/IPs concerned traditionally occupy and
guarantee effective protection of their rights of
ownership and possession thereto. Measures shall be taken in appropriate cases to
safeguard
the right of the ICCs/IPs concerned to land which may no longer be exclusively
occupied by
them, but to which they have traditionally had access for their subsistence and
traditional
activities, particularly of ICCs/IPs who are still nomadic and/or shifting cultivators.

SEC. 52. Delineation Process. - The identification and delineation of ancestral domains
shall
be done in accordance with the following procedures:

a) Ancestral Domains Delineated Prior to this Act.- The provisions hereunder shall not
apply
to ancestral domains/lands already delineated according to DENR Administrative Order
No.
2, series of 1993, nor to ancestral lands and domains delineated under any other
community/
ancestral domain program prior to the enactment of this law. ICCs/IPs whose ancestral
lands/domains were officially delineated prior to the enactment of this law shall have
the
right to apply for the issuance of a Certificate of Ancestral Domain Title (CADT) over
the
area without going through the process outlined hereunder;

b) Petition for Delineation. - The process of delineating a specific perimeter may be

initiated
by the NCIP with the consent of the ICC/IP concerned, or through a Petition for
Delineation
filed with the NCIP, by a majority of the members of the ICCs/IPs;

c) Delineation Proper. - The official delineation of ancestral domain boundaries

including
census of all community members therein, shall be immediately undertaken by the
Ancestral
Domains Office upon filing of the application by the ICCs/IPs concerned. Delineation will
be
done in coordination with the community concerned and shall at all times include
genuine
involvement and participation by the members of the communities concerned;

d) Proof Required. - Proof of Ancestral Domain Claims shall include the testimony of
elders
or community under oath, and other documents directly or indirectly attesting to the
possession or occupation of the area since time immemorial by such ICCs/IPs in the
concept
of owners which shall be any one ( I ) of the following authentic documents:
1) Written accounts of the ICCs/IPs customs and traditions;
2) Written accounts of the ICCs/IPs political structure and institution;
3) Pictures showing long term occupation such as those of old improvements, burial
grounds,
sacred places and old villages;
4) Historical accounts, including pacts and agreements concerning boundaries entered
into by
the ICCs/IPs concerned with other ICCs/lPs;
5) Survey plans and sketch maps;
6) Anthropological data;
7) Genealogical surveys;
8) Pictures and descriptive histories of traditional communal forests and hunting
grounds;
9) Pictures and descriptive histories of traditional landmarks such as mountains, rivers,
creeks, ridges, hills, terraces and the like; and
10) Write-ups of names and places derived from the native dialect of the community.

e) Preparation of Maps. - On the basis of such investigation and the findings of fact
based
thereon, the Ancestral Domains Office shall prepare a perimeter map, complete
with
technical descriptions, and a description of the natural features and landmarks
embraced
therein;

f) Report of Investigation and Other Documents. - A complete copy of the preliminary

census and a report of investigation, shall be prepared by the Ancestral Domains Office
of the NCIP;
g) Notice and Publication. - A copy of each document, including a translation in the
native language of the ICCs/IPs concerned shall be posted in a prominent place therein
for at least fifteen ( 15) days. A copy of the document shall also be posted at the local,
provincial and regional offices of the NCIP, and shall be published in a newspaper of
general circulation once a week for two (2) consecutive weeks to allow other claimants
to file opposition thereto within fifteen (15) days from date of such publication: Provided,
That in areas where no such newspaper exists, broadcasting in a radio station will be a
valid substitute: Provided, further, That mere posting shall be deemed sufficient if both
newspaper and radio station are not available;
h)Endorsement to NCIP. - Within fifteen (15) days from publication, and of the
inspection process, the Ancestral Domains Office shall prepare a report to the NCIP
endorsing a favorable action upon a claim that is deemed to have sufficient proof.
However, if the proof is deemed insufficient, the Ancestral Domains Office shall require
the submission of additional evidence: Provided, That the Ancestral Domains Office
shall reject any claim that is deemed patently false or fraudulent after inspection and
verification: Provided, further, That in case of rejection, the Ancestral Domains Office
shall give the applicant due notice, copy furnished all concerned, containing the grounds
for denial. The denial shall be appealable to the NCIP: Provided, furthermore, That in
cases where there are conflicting claims among ICCs/IPs on the boundaries of
ancestral domain claims, the Ancestral Domains Office shall cause the contending
parties to meet and assist them in coming up with a preliminary resolution of the conflict,
without prejudice to its full adjudication according to the section below.
i) Turnover of Areas Within Ancestral Domains Managed by Other Government
Agencies. - The Chairperson of the NCIP shall certify Blat the area covered is an
ancestral domain. The secretaries of the Department of Agrarian Reform, Department of
Environment and Natural Resources, Department of the Interior and Local Government,
and Department of Justice, the Commissioner of the National Development Corporation,
and any other government agency claiming jurisdiction over the area shall be notified
Thereof. Such notification shall terminate any legal basis for the jurisdiction previously
claimed;
j) Issuance of CADT. - ICCs/IPs whose ancestral domains have been officially
delineated and determined by the NCIP shall be issued a CADT in the name of the
community concerned, containing a list of all dose identified in the census; and
k) Registration of CADTs. - The NCIP shall register issued certificates of ancestral
domain titles and certificates of ancestral lands tides before She Register of Deeds in
the place where the property is situated.
SEC. 53. Identification, Delineation and Certification of Ancestral
a) The allocation of lands within any ancestral domain to individual or indigenous
corporate (family or clan) claimants shall be left to the ICCs/IPs concerned to decide in
accordance with customs and traditions; b) Individual and indigenous corporate
claimants of ancestral lands which are not within ancestral domains, may have their
claims officially established by filing applications for the identification and delineation
of their claims with the Ancestral Domains Office. An individual or recognized head of
a family or clan may file such application in his behalf or in behalf of his family or clan,
respectively;
c) Proofs of such claims shall accompany the application form which shall include the
testimony under oath of elders of the community and other documents directly or
indirectly attesting to the possession or occupation of the areas since time immemorial
by the individual or corporate claimants in the concept of owners which shall be any of
the authentic documents enumerated under Sec. 52 (d) of this Act, including tax
declarations and proofs of payment of taxes;
d) The Ancestral Domains Office may require from each ancestral claimant the
submission of such other documents, Sworn Statements and the like, which in its
opinion, may shed light on the veracity of the contents of the application/claim;
e) Upon receipt of the applications for delineation and recognition of ancestral land
claims, the Ancestral Domains Office shall cause the publication of the application and a
copy of each document submitted including a translation in the native language of the
ICCs/IPs concerned in a prominent place therein for at least fifteen (15) days. A copy of
the document shall also be posted at the local, provincial, and regional offices of the
NCIP and shall be published in a newspaper of general circulation once a week for two
(2) consecutive weeks to allow other claimants to file opposition thereto within fifteen
(15) days from the date of such publication: Provided, That in areas where no such
newspaper exists, broadcasting in a radio station will be a valid substitute: Provided,
further, That mere posting shall be deemed sufficient if both newspapers and radio
station are not available;
f) Fifteen (15) days after such publication, the Ancestral Domains Office shall
investigate and inspect each application, and if found to be meritorious, shall cause a
parcellary survey of the area being claimed. The Ancestral Domains Office shall reject
any claim that is deemed patently false or fraudulent after inspection and verification. In
case of rejection, the Ancestral Domains Office shall give the applicant due notice, copy
furnished all concerned, containing the grounds for denial. The denial shall be
appealable to the NCIP. In case of conflicting claims among individual or indigenous
corporate claimants, the Ancestral Domains Office shall cause the contending parties to
meet and assist them in coming up with a preliminary resolution of the conflict, without
prejudice to its full adjudication according to Sec. 62 of this Act. In all proceedings for
the identification or delineation of the ancestral domains as herein provided, the Director
of Lands shall represent the interest of the Republic of the Philippines; and
g) The Ancestral Domains Office shall prepare and submit a report on each and
every application surveyed and delineated to the NCIP, which shall, in turn, evaluate
the report submitted. If the NCIP finds such claim meritorious, it shall issue a
certificate of ancestral land, declaring and certifying the claim of each individual or
corporate (family or clan) claimant over ancestral lands.
SEC. 54. Fraudulent Claims. - The Ancestral Domains Of lice may, upon written
request from the ICCs/lPs, review existing claims which have been fraudulently
acquired by any person or community. Any claim found to be fraudulently acquired
by, and issued to, any person or community may be cancelled by the NCIP after
due notice and hearing of all parties concerned.
SEC. 55. Communal Rights. - Subject to Section 56 hereof, areas within the ancestral
domains, whether delineated or not, shall be presumed to be communally held:
Provided, That communal rights under this Act shall not be construed as co-
ownership as provided in Republic Act. No. 386, otherwise known as the New Civil
Code.
SEC. 56. Existing Property Rights Regimes. - Property rights within the ancestral
domains already existing and/or vested upon effectivity of this Act, shall be recognized
and respected.
SEC. 57. Natural Resources within Ancestral Domains. - The ICCs/ IPs shall have
priority rights in the harvesting, extraction, development or exploitation of any natural
resources within the ancestral domains. A non-member of the ICCs/IPs concerned may
be allowed to take part in the development and utilization of the natural resources for a
period of not exceeding twenty-five (25) years renewable for not more than twenty-five
(25) years: Provided, That a formal and written agreement is entered into with the
ICCs/IPs concerned or that the community, pursuant to its own decision making
process, has agreed to allow such operation: Provided, finally, That the NCIP may
exercise visitorial powers and take appropriate action to safeguard the rights of the
ICCs/IPs under the same contract.
SEC. 58. Environmental Considerations. - Ancestral domains or portions thereof, which
are found to be necessary for critical watersheds, mangroves, wildlife sanctuaries,
wilderness, protected areas, forest cover, or reforestation as determined by appropriate
agencies with the full participation of the ICCs/IPs concerned shall be maintained,
managed and developed for such purposes. The ICCs/IPs concerned shall be given the
responsibility to maintain, develop, protect and conserve such areas with the full and
effective assistance of government agencies. Should the ICCs/IPs decide to transfer the
responsibility over the areas, said decision must be made in writing. The consent of the
ICCs/IPs should be arrived at in accordance with its customary laws without prejudice to
the basic requirements of existing laws on free and prior informed consent: Provided,
That the transfer shall be temporary and will ultimately revert to the ICCs/IPs in
accordance with a program for technology transfer: Provided, further, That no ICCs/IPs
shall be displaced or relocated for the purpose enumerated under this section without
the written consent of the specific persons authorized to give consent.
SEC. 59. Certification Precondition. - All departments and other governmental agencies
shall henceforth be strictly enjoined from issuing, renewing, or granting any concession,
license or lease, or entering into any production-sharing agreement, without prior
certification from the NCIP that the area affected does not overlap with any ancestral
domain. Such certification shall only be issued after a field-based investigation is
conducted by the Ancestral Domains Office of the area concerned: Provided, That no
certification shall be issued by the NCIP without the free and prior informed and written
consent of ICCs/IPs concerned: Provided, further, That no department, government
agency or government-owned or -controlled corporation may issue new concession,
license, lease, or production sharing agreement while there is a pending application for
a CADT: Provided, finally, That the ICCs/IPs shall have the right to stop or suspend, in
accordance with this Act, any project that has not satisfied the requirement of this
consultation process.
SEC. 60. Exemption from Taxes. - All lands certified to be ancestral domains shall be
exempt from real property taxes, special levies, end other forms of exaction except such
portion of the ancestral domains as are actually used for large-scale agriculture,
commercial forest plantation and residential purposes or upon titling by private persons:
Provided, That all exactions shall be used to facilitate the development and
improvement of the ancestral domains.
SEC. 61. Temporary Requisition Powers. - Prior to the establishment of an institutional
surveying capacity whereby it can effectively fulfill its mandate, but in no case beyond
three
(3) years after its creation, the NCIP is hereby authorized to request the Department of
Environment and Natural Resources (DENR) survey teams as well as other equally
capable private survey teams, through a Memorandum of Agreement (MOA), to
delineate ancestral domain perimeters. The DENR Secretary shall accommodate any
such request within one ( I ) month of its issuance: Provided, That the Memorandum of
Agreement shall stipulate, among others, a provision for technology transfer to the
NCIP.
SEC. 62. Resolution of Conflicts. - In cases of conflicting interest, where there are
adverse claims within the ancestral domains as delineated in the survey plan, and which
can not be resolved, the NCIP shall hear and decide, after notice to the proper parties,
the disputes arising from the delineation of such ancestral domains: Provided, That if
the dispute is between and/or among ICCs/IPs regarding the traditional boundaries of
their respective ancestral domains, customary process shall be followed. The NCIP
shall promulgate the necessary rules and regulations to carry out its adjudicatory
functions: Provided, further, That any decision, order, award or ruling of the NCIP on
any ancestral domain dispute or on any matter pertaining to the application,
implementation, enforcement and interpretation of this Act may be brought for Petition
for Review to the Court of Appeals within fifteen( 15) days from receipt of a copy thereof
SEC. 63. Applicable Laws. - Customary laws, traditions and practices of the ICCs/IPs of
the land where the conflict arises shall be applied first with respect to property rights,
claims and ownerships, hereditary succession and settlement of land disputes. Any
doubt or ambiguity in the application and interpretation of laws shall be resolved in favor
of the ICCs/IPs.
SEC. 64. Remedial Measures. - Expropriation may be resorted to in the resolution of
conflicts of interest following the principle of the "common good." The NCIP shall take
appropriate legal action for the cancellation of officially documented titles which were
acquired illegally: Provided, That such procedure shall ensure that the rights of
possessors in good faith shall be respected: Provided further, That the action for
cancellation shall be initiated within two (2j years from the effectivity of this Act:
Provided, finally, that the action for reconveyance shall be within a period of ten ( 10)
years in accordance with existing laws.
CHAPTER IX
JURISDICTION AND PROCEDURES FOR ENFORCEMENT OF RIGHTS

SEC. 65. Primacy of Customary Laws and Practices. - When disputes involve
ICCs/IPs, customary laws and practices shall be used to resolve the dispute.
SEC. 66. Jurisdiction of the NClP. - The NCIP, through its regional offices, shall have
jurisdiction over all claims and disputes involving rights of ICCs/IPs: Provided,
however, That no such dispute shall be brought to the NCIP unless the parties have
exhausted all remedies provided under their customary laws. For this purpose, a
certification shall be issued by the Council of Elders/Leaders who participated in the
attempt to settle the dispute that the same has not been resolved, which certification
shall be a condition precedent to the filing of a petition with the NCIP.
SEC. 67. Appeals to the Court of Appeals. - Decisions of the NCIP shall be appealable
to the Court of Appeals byway of a petition for review.
SEC. 68. Execution of Decisions, Awards Orders. - Upon expiration of the period
herein provided and no appeal is perfected by any of the contending parties, the
Hearing Of ricer of the NCIP, on its own initiative or upon motion by the prevailing
party, shall issue a writ of execution requiring the sheriff or the proper officer to execute
final decisions, orders or awards of the Regional Hearing Officer of the NCIP.
SEC. 69. Quasi-Judicial Powers of the NClP. - The NCIP shall have the power and
authority: a) To promulgate rules and regulations governing the hearing and disposition
of cases filed before it as well as those pertaining to its internal functions and such rules
and regulations as may be necessary to carry out the purposes of this Act;
b)To administer oaths, summon the parties to a controversy, issue subpoenas
requiring the attendance and testimony of witnesses or the production of such books,
papers, contracts, records, agreements and other document of similar nature as may
be material to a just determination of the matter under investigation or hearing
conducted in pursuance of this Act;
c) To hold any person in contempt, directly or indirectly, and impose appropriate
penalties therefor; and
d) To enjoin any or all acts involving or arising from any case pending before it which, if
not restrained forthwith, may cause grave or irreparable damage to any of the parties to
the case or seriously affect social or economic activity.
SEC. 70. No Restraining Order or Preliminary Injunction. - No inferior court of the
Philippines shall have jurisdiction to issue an restraining order or writ of preliminary
injunction against the NCIP or any of its duly authorized or designated offices in any
case, dispute or controversy arising from, necessary to, or interpretation of this Act
and other pertinent laws relating to ICCs/IPs and ancestral domains.
CHAPTER X
ANCESTRAL DOMAINS FUND

SEC. 71. Ancestral Domains Fund. - There is hereby created a special fund, to be
known as the Ancestral Domains Fund, an initial amount of One hundred thirty million
pesos (P130,000,000) to cover compensation for expropriated lands, delineation and
development of ancestral domains. An amount of Fifty million pesos (P50,000,000) shall
be sourced from the gross income of the Philippine Charity Sweepstakes Office (PCSO)
from its lotto operation, Ten million pesos (P10,000,000) from the gross receipts of the
travel tax of the preceding year, the fund of the Social Reform Council intended for
survey and delineation of ancestral lands/domains, and such other source as the
government may deem appropriate. Thereafter, such amount shall be included in the
annual General Appropriations Act. Foreign as well as local funds which are made
available for the ICCs/lPs through the government of the Philippines shall be coursed
through the NCIP. The NCIP may also solicit and receive donations, endowments and
grants in the form of contributions, and such endowments shall be exempted from
income or gift taxes and all other taxes, charges or fees imposed by the government or
any political subdivision or instrumentality thereof.
CHAPTER XI
PENALTIES

SEC. 72. Punishable Acts and Applicable Penalties.- Any person who commits violation
of any of the provisions of this Act, such as, but not limited to, unauthorized and/or
unlawful intrusion upon any ancestral lands or domains as stated in Sec. 10, Chapter III,
or shall commit any of the prohibited acts mentioned in Sections 21 and 24, Chapter V,
Section 33, Chapter VI hereof, shall be punished in accordance with the customary laws
of the ICCs/IPs concerned: Provided, That no such penalty shall be cruel, degrading or
inhuman punishment: Provided, further, That neither shall the death penalty or
excessive fines be imposed. This provision shall be without prejudice to the right of any
ICCs/IPs to avail of the protection of existing laws. In which case, any person who
violates any provision of this Act shall, upon conviction, be punished by imprisonment of
not less than nine (9) months but not more than twelve (12) years or a fine of not less
than One hundred thousand pesos (P100,000) nor more than Five hundred thousand
pesos (P500,000) or both such fine and imprisonment upon the discretion of the court.
In addition, he shall be obliged to pay to the ICCs/IPs concerned whatever damage may
have been suffered by the latter as a consequence of the unlawful act.
SEC. 73. Persons Subject to Punishment. - If the offender is a juridical person, all
officers such as, but not limited to, its president, manager, or head of office
responsible for their unlawful act shall be criminally liable therefor, in addition to the
cancellation of certificates of their registration and/or license: Provided, That if the
offender is a public official, the penalty shall include perpetual disqualification to hold
public office..
CHAPTER XII
MERGER OF THE OFFICE FOR NORTHERN CULTURAL COMMUNITIES
(ONCC)
AND THE OFFICE FOR SOUTHERN CULTURAL COMMUNIONS (OSCC)

SEC. 74. Merger of ONCC/OSCC. - The Office for Northern Cultural Communities
(ONCC) and the Office of Southern Cultural Communities (OSCC), created under
Executive Order Nos. 122-B and 122-C respectively, are hereby merged as organic
offices of the NCIP and shall continue to function under a revitalized and strengthened
structures to achieve the objectives of the NCIP: Provided, That the positions of Staff
Directors, Bureau Directors, Deputy Executive Directors and Executive Directors,
except positions of Regional Directors and below, are hereby phased-out upon the
effectivity of this Act: Provided, further, That officials of the phased-out offices who may
be qualified may apply for reappointment with the NCIP and may be given prior rights in
the filling up of the newly created positions of NCIP, subject to the qualifications set by
the Placement Committee: Provided, furthermore, That in the case where an indigenous
person and a non-indigenous person with similar qualifications apply for the same
position, priority shall be given to the former. Officers and employees who are to be
phased-out as a result of the merger of their offices shall be entitled to gratuity a rate
equivalent to one and a half (1 1/2) months salary for every year of continuous and
satisfactory service rendered or the equivalent nearest fraction thereof favorable to
them on the basis of the highest salary received. If they are already entitled to
retirement or gratuity, they shall have the option to select either such retirement benefits
or the gratuity herein provided. Officers and employees who may be reinstated shall
refund such retirement benefits or gratuity received: Provided, finally, That absorbed
personnel must still meet the qualifications and standards set by the Civil Service and
the Placement Committee herein created.
SEC. 75. Transition Period. - The ONCC/OSCC shall have a period of six (6) months
from the effectivity of this Act within which to wind up its affairs and to conduct audit
of its finances.
SEC. 76. Transfer of Assets/Properties. - All real and personal properties which are
vested in, or belonging to, the merged offices as aforestated shall be transferred to the
NCIP without further need of conveyance, transfer or assignment and shall be held for
the same purpose as they were held by the former offices: Provided, That all contracts,
records and documents relating to the operations of the merged offices shall be
transferred to the NCIP. All agreements and contracts entered into by the merged
offices shall remain in full force and effect unless otherwise terminated, modified or
amended by the NCIP.
SEC. 77. Placement Committee. - Subject to rules on government reorganization, a
Placement Committee shall be created by the NCIP, in coordination with the Civil
Service Commission, which shall assist in the judicious selection and placement of
personnel in order that the best qualified and most deserving persons shall be
appointed in the reorganized agency. The Placement Committee shall be composed of
seven (7) commissioners and an ICCs'/IPs' representative from each of the first and
second level employees association in the Offices for Northern and Southern Cultural
Communities (ONCC/OSCC), nongovernment organizations (NGOs) who have served
the community for at least five (5) years and peoples organizations (POs) with at least
five (5) years of existence. They shall be guided by the criteria of retention and
appointment to be prepared by the consultative body and by the pertinent provisions of
the civil service law.
CHAPTER XIII
FINAL PROVISIONS

SEC. 78. Special Provision. - The City of Baguio shall remain to be governed by its
Charter and all lands proclaimed as part of its town site reservation shall remain as
such until otherwise reclassified by appropriate legislation: Provided, That prior land
rights and titles recognized and/or acquired through any judicial, administrative or other
processes before the
effectivity of this Act shall remain valid: Provided, further, That this provision shall not
apply
to any territory which becomes part of the City of Baguio after the effectivity of this Act.

SEC. 79. Appropriations. - The amount necessary to finance the initial implementation
of this
Act shall be charged against the current year's appropriation of the ONCC and the
OSCC.
Thereafter, such sums as may be necessary for its continued implementation shall be
included
in the annual General Appropriations Act.

SEC. 80. Implementing Rules and Regulations. - Within sixty (60) days immediately
after
appointment, the NCIP shall issue the necessary rules and regulations, in
consultation with
the Committees on National Cultural Communities of the House of Representatives
and the
Senate, for the effective implementation of this Act.

SEC. 81. Saving Clause. - This Act will not in any manner adversely affect the rights
and
benefits of the ICCs/IPs under other conventions, recommendations, international
treaties,
national laws, awards, customs and agreements.

SEC. 82. Separability Clause. - In case any provision of this Act or any portion
thereof is
declared unconshtubona1 by a competent court, other provisions shall not be
affected
thereby.

SEC. 83. Repealing Clause. - Presidential Decree No. 410, Executive Order Nos. 122-
B and
122-C, and all other laws, decrees, orders, rules and regulations or parts thereof
inconsistent
with this Act are hereby repealed or modified accordingly.

SEC. 84. Effectivity. - This Act shall take effect fifteen (15) days upon its publication in
the
(official Gazette or in any two (2) newspapers of general circulation.

Approved,

JOSE DE VENECIA, JR.

Speaker of the House of Representatives

ERNESTO M. MACEDA
President of the Senate

This Act, which is a consolidation of Senate Bill No. 1728 and House Bill No. 9125
was
finally passed by the Senate and the House of Representatives on October 22,
1997.

ROBERTO P. NAZARENO
Secretary General
House of Representatives

LORENZO E. LEYNES, JR.

Secretary of the Senate

Approved: Oct 29 1997

FIDEL V. RAMOS

President of the Philippines