335 Phil.

82
SECOND DIVISION
[ G.R. No. 122156, February 03, 1997 ]
MANILA PRINCE HOTEL, PETITIONER, VS. GOVERNMENT SERVICE INSURANCE SYSTEM, MANILA HOTEL CORPORATION,
COMMITTEE ON PRIVATIZATION AND OFFICE OF THE GOVERNMENT CORPORATE COUNSEL, RESPONDENTS.
DECISION
BELLOSILLO, J.:
The Filipino First Policy enshrined in the 1987 Constitution, i.e., in the grant of rights, privileges, and concessions covering the national
economy and patrimony, the State shall give preference to qualified Filipinos,[1] is invoked by petitioner in its bid to acquire 51% of the
shares of the Manila Hotel Corporation (MHC) which owns the historic Manila Hotel. Opposing, respondents maintain that the provision
is not self-executing but requires an implementing legislation for its enforcement. Corollarily, they ask whether the 51% shares form part
of the national economy and patrimony covered by the protective mantle of the Constitution.
The controversy arose when respondent Government Service Insurance System (GSIS), pursuant to the privatization program of the
Philippine Government under Proclamation No. 50 dated 8 December 1986, decided to sell through public bidding 30% to 51% of the
issued and outstanding shares of respondent MHC. The winning bidder, or the eventual strategic partner, is to provide management
expertise and/or an international marketing/reservation system, and financial support to strengthen the profitability and performance of
the Manila Hotel.[2] In a close bidding held on 18 September 1995 only two (2) bidders participated: petitioner Manila Prince Hotel
Corporation, a Filipino corporation, which offered to buy 51% of the MHC or 15,300,000 shares at P41.58 per share, and Renong
Berhad, a Malaysian firm, with ITT-Sheraton as its hotel operator, which bid for the same number of shares at P44.00 per share, or
P2.42 more than the bid of petitioner.
Pertinent provisions of the bidding rules prepared by respondent GSIS state I. EXECUTION OF THE NECESSARY CONTRACTS WITH GSIS/MHC 1. The Highest Bidder must comply with the conditions set forth below by October 23, 1995 (reset to November 3, 1995) or the Highest
Bidder will lose the right to purchase the Block of Shares and GSIS will instead offer the Block of Shares to the other Qualified Bidders:
a. The Highest Bidder must negotiate and execute with the GSIS/MHC the Management Contract, International Marketing/Reservation
System Contract or other type of contract specified by the Highest Bidder in its strategic plan for the Manila Hotel x x x x
b. The Highest Bidder must execute the Stock Purchase and Sale Agreement with GSIS x x x x
K. DECLARATION OF THE WINNING BIDDER/STRATEGIC PARTNER The Highest Bidder will be declared the Winning Bidder/Strategic Partner after the following conditions are met:
a. Execution of the necessary contracts with GSIS/MHC not later than October 23, 1995 (reset to November 3, 1995); and
b. Requisite approvals from the GSIS/MHC and COP (Committee on Privatization)/ OGCC (Office of the Government Corporate
Counsel) are obtained.[3]
Pending the declaration of Renong Berhard as the winning bidder/strategic partner and the execution of the necessary contracts,
petitioner in a letter to respondent GSIS dated 28 September 1995 matched the bid price of P44.00 per share tendered by Renong
Berhad.[4] In a subsequent letter dated 10 October 1995 petitioner sent a managers check issued by Philtrust Bank for Thirty-three
Million Pesos (P33,000,000.00) as Bid Security to match the bid of the Malaysian Group, Messrs. Renong Berhad x x x x[5] which
respondent GSIS refused to accept.
On 17 October 1995, perhaps apprehensive that respondent GSIS has disregarded the tender of the matching bid and that the sale of

51% of the MHC may be hastened by respondent GSIS and consummated with Renong Berhad, petitioner came to this Court on
prohibition and mandamus. On 18 October 1995 the Court issued a temporary restraining order enjoining respondents from perfecting
and consummating the sale to the Malaysian firm.
On 10 September 1996 the instant case was accepted by the Court En Banc after it was referred to it by the First Division. The case
was then set for oral arguments with former Chief Justice Enrique M. Fernando and Fr. Joaquin G. Bernas, S.J., as amici curiae.
In the main, petitioner invokes Sec. 10, second par., Art. XII, of the 1987 Constitution and submits that the Manila Hotel has been
identified with the Filipino nation and has practically become a historical monument which reflects the vibrancy of Philippine heritage
and culture. It is a proud legacy of an earlier generation of Filipinos who believed in the nobility and sacredness of independence and
its power and capacity to release the full potential of the Filipino people. To all intents and purposes, it has become a part of the
national patrimony.[6] Petitioner also argues that since 51% of the shares of the MHC carries with it the ownership of the business of the
hotel which is owned by respondent GSIS, a government-owned and controlled corporation, the hotel business of respondent GSIS
being a part of the tourism industry is unquestionably a part of the national economy. Thus, any transaction involving 51% of the shares
of stock of the MHC is clearly covered by the term national economy, to which Sec. 10, second par., Art. XII, 1987 Constitution, applies.
[7]

It is also the thesis of petitioner that since Manila Hotel is part of the national patrimony and its business also unquestionably part of the
national economy petitioner should be preferred after it has matched the bid offer of the Malaysian firm. For the bidding rules mandate
that if for any reason, the Highest Bidder cannot be awarded the Block of Shares, GSIS may offer this to the other Qualified Bidders
that have validly submitted bids provided that these Qualified Bidders are willing to match the highest bid in terms of price per share.[8]
Respondents except. They maintain that: First, Sec. 10, second par., Art. XII, of the 1987 Constitution is merely a statement of principle
and policy since it is not a self-executing provision and requires implementing legislation(s) x x x x Thus, for the said provision to
operate, there must be existing laws to lay down conditions under which business may be done.[9]
Second, granting that this provision is self-executing, Manila Hotel does not fall under the term national patrimony which only refers to
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 all marine wealth in its territorial sea, and exclusive marine zone as cited in the first and second
paragraphs of Sec. 2, Art. XII, 1987 Constitution. According to respondents, while petitioner speaks of the guests who have slept in the
hotel and the events that have transpired therein which make the hotel historic, these alone do not make the hotel fall under the
patrimony of the nation. What is more, the mandate of the Constitution is addressed to the State, not to respondent GSIS which
possesses a personality of its own separate and distinct from the Philippines as a State.
Third, granting that the Manila Hotel forms part of the national patrimony, the constitutional provision invoked is still inapplicable since
what is being sold is only 51% of the outstanding shares of the corporation, not the hotel building nor the land upon which the building
stands. Certainly, 51% of the equity of the MHC cannot be considered part of the national patrimony. Moreover, if the disposition of the
shares of the MHC is really contrary to the Constitution, petitioner should have questioned it right from the beginning and not after it
had lost in the bidding.
Fourth, the reliance by petitioner on par. V., subpar. J. 1., of the bidding rules which provides that if for any reason, the Highest Bidder
cannot be awarded the Block of Shares, GSIS may offer this to the other Qualified Bidders that have validly submitted bids provided
that these Qualified Bidders are willing to match the highest bid in terms of price per share, is misplaced. Respondents postulate that
the privilege of submitting a matching bid has not yet arisen since it only takes place if for any reason, the Highest Bidder cannot be
awarded the Block of Shares. Thus the submission by petitioner of a matching bid is premature since Renong Berhad could still very
well be awarded the block of shares and the condition giving rise to the exercise of the privilege to submit a matching bid had not yet
taken place.
Finally, the prayer for prohibition grounded on grave abuse of discretion should fail since respondent GSIS did not exercise its
discretion in a capricious, whimsical manner, and if ever it did abuse its discretion it was not so patent and gross as to amount to an
evasion of a positive duty or a virtual refusal to perform a duty enjoined by law. Similarly, the petition for mandamus should fail as
petitioner has no clear legal right to what it demands and respondents do not have an imperative duty to perform the act required of
them by petitioner.
We now resolve. A constitution is a system of fundamental laws for the governance and administration of a nation. It is supreme,
imperious, absolute and unalterable except by the authority from which it emanates. It has been defined as the fundamental and

paramount law of the nation.[10] It prescribes the permanent framework of a system of government, assigns to the different departments
their respective powers and duties, and establishes certain fixed principles on which government is founded. The fundamental
conception in other words is that it is a supreme law to which all other laws must conform and in accordance with which all private
rights must be determined and all public authority administered.[11] Under the doctrine of constitutional supremacy, if a law or contract
violates any norm of the constitution that law or contract whether promulgated by the legislative or by the executive branch or entered
into by private persons for private purposes is null and void and without any force and effect. Thus, since the Constitution is the
fundamental, paramount and supreme law of the nation, it is deemed written in every statute and contract.
Admittedly, some constitutions are merely declarations of policies and principles. Their provisions command the legislature to enact
laws and carry out the purposes of the framers who merely establish an outline of government providing for the different departments of
the governmental machinery and securing certain fundamental and inalienable rights of citizens.[12] A provision which lays down a
general principle, such as those found in Art. II of the 1987 Constitution, is usually not self-executing. But a provision which is complete
in itself and becomes operative without the aid of supplementary or enabling legislation, or that which supplies sufficient rule by means
of which the right it grants may be enjoyed or protected, is self-executing. Thus a constitutional provision is self-executing if the nature
and extent of the right conferred and the liability imposed are fixed by the constitution itself, so that they can be determined by an
examination and construction of its terms, and there is no language indicating that the subject is referred to the legislature for action.[13]
As against constitutions of the past, modern constitutions have been generally drafted upon a different principle and have often become
in effect extensive codes of laws intended to operate directly upon the people in a manner similar to that of statutory enactments, and
the function of constitutional conventions has evolved into one more like that of a legislative body. 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.[14] This can be cataclysmic. That
is why the prevailing view is, as it has always been, that x x x x in case of doubt, the Constitution should be considered self-executing rather than non-self-executing x x x x 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.[15]
Respondents argue that Sec. 10, second par., Art. XII, of the 1987 Constitution is clearly not self-executing, as they quote from
discussions on the floor of the 1986 Constitutional Commission MR. RODRIGO. Madam President, I am asking this question as the Chairman of the Committee on Style. If the wording of
PREFERENCE is given to QUALIFIED FILIPINOS, can it be understood as a preference to qualified Filipinos vis-a-vis Filipinos who
are not qualified. So, why do we not make it clear? To qualified Filipinos as against aliens?
THE PRESIDENT. What is the question of Commissioner Rodrigo? Is it to remove the word QUALIFIED?
MR. RODRIGO. No, no, but say definitely TO QUALIFIED FILIPINOS as against whom? As against aliens or over aliens ?
MR. NOLLEDO. Madam President, I think that is understood. We use the word QUALIFIED because the existing laws or prospective
laws will always lay down conditions under which business may be done. For example, qualifications on capital, qualifications on the
setting up of other financial structures, et cetera (underscoring supplied by respondents).
MR. RODRIGO. It is just a matter of style.
MR. NOLLEDO. Yes.[16]
Quite apparently, Sec. 10, second par., of Art XII is couched in such a way as not to make it appear that it is non-self-executing but
simply for purposes of style. But, certainly, the legislature is not precluded from enacting further laws to enforce the constitutional
provision so long as the contemplated statute squares with the Constitution. Minor details may be left to the legislature without
impairing the self-executing nature of constitutional provisions.
In self-executing constitutional provisions, the legislature may still enact legislation to facilitate the exercise of powers directly granted
by the constitution, further the operation of such a provision, prescribe a practice to be used for its enforcement, provide a convenient
remedy for the protection of the rights secured or the determination thereof, or place reasonable safeguards around the exercise of the
right. The mere fact that legislation may supplement and add to or prescribe a penalty for the violation of a self-executing constitutional
provision does not render such a provision ineffective in the absence of such legislation. The omission from a constitution of any

express provision for a remedy for enforcing a right or liability is not necessarily an indication that it was not intended to be selfexecuting. The rule is that a self-executing provision of the constitution does not necessarily exhaust legislative power on the subject,
but any legislation must be in harmony with the constitution, further the exercise of constitutional right and make it more available.[17]
Subsequent legislation however does not necessarily mean that the subject constitutional provision is not, by itself, fully enforceable.
Respondents also argue that the non-self-executing nature of Sec. 10, second par., of Art. XII is implied from the tenor of the first and
third paragraphs of the same section which undoubtedly are not self-executing.[18] The argument is flawed. If the first and third
paragraphs are not self-executing because Congress is still to enact measures to encourage the formation and operation of enterprises
fully owned by Filipinos, as in the first paragraph, and the State still needs legislation to regulate and exercise authority over foreign
investments within its national jurisdiction, as in the third paragraph, then a fortiori, by the same logic, the second paragraph can only
be self-executing as it does not by its language require any legislation in order to give preference to qualified Filipinos in the grant of
rights, privileges and concessions covering the national economy and patrimony. A constitutional provision may be self-executing in one
part and non-self-executing in another.[19]
Even the cases cited by respondents holding that certain constitutional provisions are merely statements of principles and policies,
which are basically not self-executing and only placed in the Constitution as moral incentives to legislation, not as judicially enforceable
rights - are simply not in point. Basco v. Philippine Amusements and Gaming Corporation[20] speaks of constitutional provisions on
personal dignity,[21] the sanctity of family life,[22] the vital role of the youth in nation-building,[23] the promotion of social justice,[24] and the
values of education.[25] Tolentino v. Secretary of Finance[26] refers to constitutional provisions on social justice and human rights[27] and
on education.[28] Lastly, Kilosbayan, Inc. v. Morato[29] cites provisions on the promotion of general welfare,[30] the sanctity of family life,[31]
the vital role of the youth in nation-building[32] and the promotion of total human liberation and development.[33] A reading of these
provisions indeed clearly shows that they are not judicially enforceable constitutional rights but merely guidelines for legislation. The
very terms of the provisions manifest that they are only principles upon which legislations must be based. Res ipsa loquitur.
On the other hand, Sec. 10, second par., Art. XII of the 1987 Constitution is a mandatory, positive command which is complete in itself
and which needs no further guidelines or implementing laws or rules for its enforcement. From its very words the provision does not
require any legislation to put it in operation. It is per se judicially enforceable. When our Constitution mandates that [i]n the grant of
rights, privileges, and concessions covering national economy and patrimony, the State shall give preference to qualified Filipinos, it
means just that - qualified Filipinos shall be preferred. And when our Constitution declares that a right exists in certain specified
circumstances an action may be maintained to enforce such right notwithstanding the absence of any legislation on the subject;
consequently, if there is no statute especially enacted to enforce such constitutional right, such right enforces itself by its own inherent
potency and puissance, and from which all legislations must take their bearings. Where there is a right there is a remedy. Ubi jus ibi
remedium.
As regards our national patrimony, a member of the 1986 Constitutional Commission[34] explains The patrimony of the Nation that should be conserved and developed refers not only to our rich natural resources but also to the
cultural heritage of our race. It also refers to our intelligence in arts, sciences and letters. Therefore, we should develop not only our
lands, forests, mines and other natural resources but also the mental ability or faculty of our people.
We agree. In its plain and ordinary meaning, the term patrimony pertains to heritage.[35] When the Constitution speaks of national
patrimony, it refers not only to the natural resources of the Philippines, as the Constitution could have very well used the term natural
resources, but also to the cultural heritage of the Filipinos.
Manila Hotel has become a landmark - a living testimonial of Philippine heritage. While it was restrictively an American hotel when it
first opened in 1912, it immediately evolved to be truly Filipino. Formerly a concourse for the elite, it has since then become the venue
of various significant events which have shaped Philippine history. It was called the Cultural Center of the 1930s. It was the site of the
festivities during the inauguration of the Philippine Commonwealth. Dubbed as the Official Guest House of the Philippine Government it
plays host to dignitaries and official visitors who are accorded the traditional Philippine hospitality.[36]
The history of the hotel has been chronicled in the book The Manila Hotel: The Heart and Memory of a City.[37] During World War II the
hotel was converted by the Japanese Military Administration into a military headquarters. When the American forces returned to
recapture Manila the hotel was selected by the Japanese together with Intramuros as the two (2) places for their final stand. Thereafter,
in the 1950s and 1960s, the hotel became the center of political activities, playing host to almost every political convention. In 1970 the
hotel reopened after a renovation and reaped numerous international recognitions, an acknowledgment of the Filipino talent and

ingenuity. In 1986 the hotel was the site of a failed coup d etat where an aspirant for vice-president was proclaimed President of the
Philippine Republic.
For more than eight (8) decades Manila Hotel has bore mute witness to the triumphs and failures, loves and frustrations of the Filipinos;
its existence is impressed with public interest; its own historicity associated with our struggle for sovereignty, independence and
nationhood. Verily, Manila Hotel has become part of our national economy and patrimony. For sure, 51% of the equity of the MHC
comes within the purview of the constitutional shelter for it comprises the majority and controlling stock, so that anyone who acquires or
owns the 51% will have actual control and management of the hotel. In this instance, 51% of the MHC cannot be disassociated from
the hotel and the land on which the hotel edifice stands. Consequently, we cannot sustain respondents claim that the Filipino First
Policy provision is not applicable since what is being sold is only 51% of the outstanding shares of the corporation, not the Hotel
building nor the land upon which the building stands.[38]
The argument is pure sophistry. The term qualified Filipinos as used in our Constitution also includes corporations at least 60% of
which is owned by Filipinos. This is very clear from the proceedings of the 1986 Constitutional Commission THE PRESIDENT. Commissioner Davide is recognized.
MR. DAVIDE. I would like to introduce an amendment to the Nolledo amendment. And the amendment would consist in substituting the
words QUALIFIED FILIPINOS with the following: CITIZENS OF THE PHILIPPINES OR CORPORATIONS OR ASSOCIATIONS
WHOSE CAPITAL OR CONTROLLING STOCK IS WHOLLY OWNED BY SUCH CITIZENS.
xxxx
MR. MONSOD. Madam President, apparently the proponent is agreeable, but we have to raise a question. Suppose it is a corporation
that is 80-percent Filipino, do we not give it preference?
MR. DAVIDE. The Nolledo amendment would refer to an individual Filipino. What about a corporation wholly owned by Filipino
citizens?
MR. MONSOD. At least 60 percent, Madam President.
MR. DAVIDE. Is that the intention?
MR. MONSOD. Yes, because, in fact, we would be limiting it if we say that the preference should only be 100-percent Filipino.
MR. DAVIDE. I want to get that meaning clear because QUALIFIED FILIPINOS may refer only to individuals and not to juridical
personalities or entities.
MR. MONSOD. We agree, Madam President.[39]
xxxx
MR. RODRIGO. Before we vote, may I request that the amendment be read again.
MR. NOLLEDO. The amendment will read: IN THE GRANT OF RIGHTS, PRIVILEGES AND CONCESSIONS COVERING THE
NATIONAL ECONOMY AND PATRIMONY, THE STATE SHALL GIVE PREFERENCE TO QUALIFIED FILIPINOS. And the word
Filipinos here, as intended by the proponents, will include not only individual Filipinos but also Filipino-controlled entities or entities
fully-controlled by Filipinos.[40]
The phrase preference to qualified Filipinos was explained thus MR. FOZ. Madam President, I would like to request Commissioner Nolledo to please restate his amendment so that I can ask a
question.
MR. NOLLEDO. IN THE GRANT OF RIGHTS, PRIVILEGES AND CONCESSIONS COVERING THE NATIONAL ECONOMY AND
PATRIMONY, THE STATE SHALL GIVE PREFERENCE TO QUALIFIED FILIPINOS.

MR. FOZ. In connection with that amendment, if a foreign enterprise is qualified and a Filipino enterprise is also qualified, will the
Filipino enterprise still be given a preference?
MR. NOLLEDO. Obviously.
MR. FOZ. If the foreigner is more qualified in some aspects than the Filipino enterprise, will the Filipino still be preferred?
MR. NOLLEDO. The answer is yes.
MR. FOZ. Thank you.[41]
Expounding further on the Filipino First Policy provision Commissioner Nolledo continues
MR. NOLLEDO. Yes, Madam President. Instead of MUST, it will be SHALL - THE STATE SHALL GIVE PREFERENCE TO
QUALIFIED FILIPINOS. This embodies the so-called Filipino First policy. That means that Filipinos should be given preference in the
grant of concessions, privileges and rights covering the national patrimony.[42]
The exchange of views in the sessions of the Constitutional Commission regarding the subject provision was still further clarified by
Commissioner Nolledo[43]
Paragraph 2 of Section 10 explicitly mandates the Pro-Filipino bias in all economic concerns. It is better known as the FILIPINO
FIRST Policy x x x x This provision was never found in previous Constitutions x x x x
The term qualified Filipinos simply means that preference shall be given to those citizens who can make a viable contribution to the
common good, because of credible competence and efficiency. It certainly does NOT mandate the pampering and preferential
treatment to Filipino citizens or organizations that are incompetent or inefficient, since such an indiscriminate preference would be
counterproductive and inimical to the common good.
In the granting of economic rights, privileges, and concessions, when a choice has to be made between a qualified foreigner and a
qualified Filipino, the latter shall be chosen over the former.
Lastly, the word qualified is also determinable. Petitioner was so considered by respondent GSIS and selected as one of the qualified
bidders. It was pre-qualified by respondent GSIS in accordance with its own guidelines so that the sole inference here is that petitioner
has been found to be possessed of proven management expertise in the hotel industry, or it has significant equity ownership in another
hotel company, or it has an overall management and marketing proficiency to successfully operate the Manila Hotel.[44]
The penchant to try to whittle away the mandate of the Constitution by arguing that the subject provision is not self-executory and
requires implementing legislation is quite disturbing. The attempt to violate a clear constitutional provision - by the government itself - is
only too distressing. To adopt such a line of reasoning is to renounce the duty to ensure faithfulness to the Constitution. For, even some
of the provisions of the Constitution which evidently need implementing legislation have juridical life of their own and can be the source
of a judicial remedy. We cannot simply afford the government a defense that arises out of the failure to enact further enabling,
implementing or guiding legislation. In fine, the discourse of Fr. Joaquin G. Bernas, S.J., on constitutional government is apt The executive department has a constitutional duty to implement laws, including the Constitution, even before Congress acts - provided
that there are discoverable legal standards for executive action. When the executive acts, it must be guided by its own understanding
of the constitutional command and of applicable laws. The responsibility for reading and understanding the Constitution and the laws is
not the sole prerogative of Congress. If it were, the executive would have to ask Congress, or perhaps the Court, for an interpretation
every time the executive is confronted by a constitutional command. That is not how constitutional government operates.[45]
Respondents further argue that the constitutional provision is addressed to the State, not to respondent GSIS which by itself possesses
a separate and distinct personality. This argument again is at best specious. It is undisputed that the sale of 51% of the MHC could only
be carried out with the prior approval of the State acting through respondent Committee on Privatization. As correctly pointed out by Fr.
Joaquin G. Bernas, S.J., this fact alone makes the sale of the assets of respondents GSIS and MHC a state action. In constitutional
jurisprudence, the acts of persons distinct from the government are considered state action covered by the Constitution (1) when the
activity it engages in is a public function; (2) when the government is so significantly involved with the private actor as to make the
government responsible for his action; and, (3) when the government has approved or authorized the action. It is evident that the act of
respondent GSIS in selling 51% of its share in respondent MHC comes under the second and third categories of state action. Without
doubt therefore the transaction, although entered into by respondent GSIS, is in fact a transaction of the State and therefore subject to

the constitutional command.[46]

When the Constitution addresses the State it refers not only to the people but also to the government as elements of the State. After all,
government is composed of three (3) divisions of power - legislative, executive and judicial. Accordingly, a constitutional mandate
directed to the State is correspondingly directed to the three (3) branches of government. It is undeniable that in this case the subject
constitutional injunction is addressed among others to the Executive Department and respondent GSIS, a government instrumentality
deriving its authority from the State.
It should be stressed that while the Malaysian firm offered the higher bid it is not yet the winning bidder. The bidding rules expressly
provide that the highest bidder shall only be declared the winning bidder after it has negotiated and executed the necessary contracts,
and secured the requisite approvals. Since the Filipino First Policy provision of the Constitution bestows preference on qualified
Filipinos the mere tending of the highest bid is not an assurance that the highest bidder will be declared the winning bidder. Resultantly,
respondents are not bound to make the award yet, nor are they under obligation to enter into one with the highest bidder. For in
choosing the awardee respondents are mandated to abide by the dictates of the 1987 Constitution the provisions of which are
presumed to be known to all the bidders and other interested parties.
Adhering to the doctrine of constitutional supremacy, the subject constitutional provision is, as it should be, impliedly written in the
bidding rules issued by respondent GSIS, lest the bidding rules be nullified for being violative of the Constitution. It is a basic principle
in constitutional law that all laws and contracts must conform with the fundamental law of the land. Those which violate the Constitution
lose their reason for being.
Paragraph V. J. 1 of the bidding rules provides that [i]f for any reason the Highest Bidder cannot be awarded the Block of Shares, GSIS
may offer this to other Qualified Bidders that have validly submitted bids provided that these Qualified Bidders are willing to match the
highest bid in terms of price per share.[47] Certainly, the constitutional mandate itself is reason enough not to award the block of shares
immediately to the foreign bidder notwithstanding its submission of a higher, or even the highest, bid. In fact, we cannot conceive of a
stronger reason than the constitutional injunction itself.
In the instant case, where a foreign firm submits the highest bid in a public bidding concerning the grant of rights, privileges and
concessions covering the national economy and patrimony, thereby exceeding the bid of a Filipino, there is no question that the Filipino
will have to be allowed to match the bid of the foreign entity. And if the Filipino matches the bid of a foreign firm the award should go to
the Filipino. It must be so if we are to give life and meaning to the Filipino First Policy provision of the 1987 Constitution. For, while this
may neither be expressly stated nor contemplated in the bidding rules, the constitutional fiat is omnipresent to be simply disregarded.
To ignore it would be to sanction a perilous skirting of the basic law.
This Court does not discount the apprehension that this policy may discourage foreign investors. But the Constitution and laws of the
Philippines are understood to be always open to public scrutiny. These are given factors which investors must consider when venturing
into business in a foreign jurisdiction. Any person therefore desiring to do business in the Philippines or with any of its agencies or
instrumentalities is presumed to know his rights and obligations under the Constitution and the laws of the forum.
The argument of respondents that petitioner is now estopped from questioning the sale to Renong Berhad since petitioner was well
aware from the beginning that a foreigner could participate in the bidding is meritless. Undoubtedly, Filipinos and foreigners alike were
invited to the bidding. But foreigners may be awarded the sale only if no Filipino qualifies, or if the qualified Filipino fails to match the
highest bid tendered by the foreign entity. In the case before us, while petitioner was already preferred at the inception of the bidding
because of the constitutional mandate, petitioner had not yet matched the bid offered by Renong Berhad. Thus it did not have the right
or personality then to compel respondent GSIS to accept its earlier bid. Rightly, only after it had matched the bid of the foreign firm and
the apparent disregard by respondent GSIS of petitioners matching bid did the latter have a cause of action.
Besides, there is no time frame for invoking the constitutional safeguard unless perhaps the award has been finally made. To insist on
selling the Manila Hotel to foreigners when there is a Filipino group willing to match the bid of the foreign group is to insist that
government be treated as any other ordinary market player, and bound by its mistakes or gross errors of judgment, regardless of the
consequences to the Filipino people. The miscomprehension of the Constitution is regrettable. Thus we would rather remedy the
indiscretion while there is still an opportunity to do so than let the government develop the habit of forgetting that the Constitution lays
down the basic conditions and parameters for its actions.
Since petitioner has already matched the bid price tendered by Renong Berhad pursuant to the bidding rules, respondent GSIS is left
with no alternative but to award to petitioner the block of shares of MHC and to execute the necessary agreements and documents to

effect the sale in accordance not only with the bidding guidelines and procedures but with the Constitution as well. The refusal of
respondent GSIS to execute the corresponding documents with petitioner as provided in the bidding rules after the latter has matched
the bid of the Malaysian firm clearly constitutes grave abuse of discretion.
The Filipino First Policy is a product of Philippine nationalism. It is embodied in the 1987 Constitution not merely to be used as a
guideline for future legislation but primarily to be enforced; so must it be enforced. This Court as the ultimate guardian of the
Constitution will never shun, under any reasonable circumstance, the duty of upholding the majesty of the Constitution which it is
tasked to defend. It is worth emphasizing that it is not the intention of this Court to impede and diminish, much less undermine, the
influx of foreign investments. Far from it, the Court encourages and welcomes more business opportunities but avowedly sanctions the
preference for Filipinos whenever such preference is ordained by the Constitution. The position of the Court on this matter could have
not been more appropriately articulated by Chief Justice Narvasa As scrupulously as it has tried to observe that it is not its function to substitute its judgment for that of the legislature or the executive
about the wisdom and feasibility of legislation economic in nature, the Supreme Court has not been spared criticism for decisions
perceived as obstacles to economic progress and development x x x x in connection with a temporary injunction issued by the Courts
First Division against the sale of the Manila Hotel to a Malaysian Firm and its partner, certain statements were published in a major
daily to the effect that that injunction again demonstrates that the Philippine legal system can be a major obstacle to doing business
here.
Let it be stated for the record once again that while it is no business of the Court to intervene in contracts of the kind referred to or set
itself up as the judge of whether they are viable or attainable, it is its bounden duty to make sure that they do not violate the
Constitution or the laws, or are not adopted or implemented with grave abuse of discretion amounting to lack or excess of jurisdiction. It
will never shirk that duty, no matter how buffeted by winds of unfair and ill-informed criticism.[48]
Privatization of a business asset for purposes of enhancing its business viability and preventing further losses, regardless of the
character of the asset, should not take precedence over non-material values. A commercial, nay even a budgetary, objective should not
be pursued at the expense of national pride and dignity. For the Constitution enshrines higher and nobler non-material values. Indeed,
the Court will always defer to the Constitution in the proper governance of a free society; after all, there is nothing so sacrosanct in any
economic policy as to draw itself beyond judicial review when the Constitution is involved.[49]
Nationalism is inherent in the very concept of the Philippines being a democratic and republican state, with sovereignty residing in the
Filipino people and from whom all government authority emanates. In nationalism, the happiness and welfare of the people must be the
goal. The nation-state can have no higher purpose. Any interpretation of any constitutional provision must adhere to such basic
concept. Protection of foreign investments, while laudible, is merely a policy. It cannot override the demands of nationalism.[50]
The Manila Hotel or, for that matter, 51% of the MHC, is not just any commodity to be sold to the highest bidder solely for the sake of
privatization. We are not talking about an ordinary piece of property in a commercial district. We are talking about a historic relic that
has hosted many of the most important events in the short history of the Philippines as a nation. We are talking about a hotel where
heads of states would prefer to be housed as a strong manifestation of their desire to cloak the dignity of the highest state function to
their official visits to the Philippines. Thus the Manila Hotel has played and continues to play a significant role as an authentic repository
of twentieth century Philippine history and culture. In this sense, it has become truly a reflection of the Filipino soul - a place with a
history of grandeur; a most historical setting that has played a part in the shaping of a country.[51]
This Court cannot extract rhyme nor reason from the determined efforts of respondents to sell the historical landmark - this Grand Old
Dame of hotels in Asia - to a total stranger. For, indeed, the conveyance of this epic exponent of the Filipino psyche to alien hands
cannot be less than mephistophelian for it is, in whatever manner viewed, a veritable alienation of a nations soul for some pieces of
foreign silver. And so we ask: What advantage, which cannot be equally drawn from a qualified Filipino, can be gained by the Filipinos if
Manila Hotel - and all that it stands for - is sold to a non-Filipino? How much of national pride will vanish if the nations cultural heritage
is entrusted to a foreign entity? On the other hand, how much dignity will be preserved and realized if the national patrimony is safekept
in the hands of a qualified, zealous and well-meaning Filipino? This is the plain and simple meaning of the Filipino First Policy provision
of the Philippine Constitution. And this Court, heeding the clarion call of the Constitution and accepting the duty of being the elderly
watchman of the nation, will continue to respect and protect the sanctity of the Constitution.
WHEREFORE, respondents GOVERNMENT SERVICE INSURANCE SYSTEM, MANILA HOTEL CORPORATION, COMMITTEE ON
PRIVATIZATION and OFFICE OF THE GOVERNMENT CORPORATE COUNSEL are directed to CEASE and DESIST from selling
51% of the shares of the Manila Hotel Corporation to RENONG BERHAD, and to ACCEPT the matching bid of petitioner MANILA

PRINCE HOTEL CORPORATION to purchase the subject 51% of the shares of the Manila Hotel Corporation at P44.00 per share and
thereafter to execute the necessary agreements and documents to effect the sale, to issue the necessary clearances and to do such
other acts and deeds as may be necessary for the purpose.
SO ORDERED.
Regalado, Davide, Jr., Romero, Kapunan, Francisco, and Hermosisima, Jr., JJ, concur.Narvasa, C.J., (Chairman), and Melo, J., joins J.
Puno in his dissent.
Padilla, J., see concurring opinion.
Vitug, J., see separate concurring opinion
Mendoza, J.,see concurring opinion
Torres, J., with separate opinion
Puno, J., see dissent.
Panganiban J., with separate dissenting opinion.

G.R. No. 101083

EN BANC
[ G.R. No. 101083, July 30, 1993 ]
JUAN ANTONIO, ANNA ROSARIO AND JOSE ALFONSO, ALL SURNAMED OPOSA, MINORS, AND REPRESENTED BY THEIR
PARENTS ANTONIO AND RIZALINA OPOSA, ROBERTA NICOLE SADIUA, MINOR, REPRESENTED BY HER PARENTS, CALVIN
AND ROBERTA SADIUA, CARLO, AMANDA SALUD AND PATRISHA, ALL SURNAMED FLORES, MINORS AND REPRESENTED
BY THEIR PARENTS ENRICO AND NIDA FLORES, GIANINA DITA R. FORTUN, MINOR, REPRESENTED BY HER PARENTS
SIGFRID AND DOLORES FORTUN, GEORGE II AND MA. CONCEPCION, ALL SURNAMED MISA, MINORS AND REPRESENTED
BY THEIR PARENTS GEORGE AND MYRA MISA, BENJAMIN ALAN V. PESIGAN, MINOR, REPRESENTED BY HIS PARENTS
ANTONIO AND ALICE PESIGAN, JOVIE MARIE ALFARO, MINOR, REPRESENTED BY HER PARENTS JOSE AND MARIA
VIOLETA ALFARO, MARIA CONCEPCION T. CASTRO, MINOR, REPRESENTED BY HER PARENTS FREDENIL AND JANE
CASTRO, JOHANNA DESAMPARADO, MINOR, REPRESENTED BY HER PARENTS JOSE AND ANGELA DESAMPARADO,
CARLO JOAQUIN T. NARVASA, MINOR, REPRESENTED BY HIS PARENTS GREGORIO II AND CRISTINE CHARITY NARVASA,
MA. MARGARITA, JESUS IGNACIO, MA. ANGELA AND MARIE GABRIELLE, ALL SURNAMED SAENZ, MINORS,
REPRESENTED BY THEIR PARENTS ROBERTO AND AURORA SAENZ, KRISTINE, MARY ELLEN, MAY, GOLDA MARTHE AND
DAVID IAN, ALL SURNAMED KING, MINORS, REPRESENTED BY THEIR PARENTS MARIO AND HAYDEE KING, DAVID,
FRANCISCO AND THERESE VICTORIA, ALL SURNAMED ENDRIGA, MINORS, REPRESENTED BY THEIR PARENTS BALTAZAR
AND TERESITA ENDRIGA, JOSE MA. AND REGINA MA., ALL SURNAMED ABAYA, MINORS, REPRESENTED BY THEIR
PARENTS ANTONIO AND MARICA ABAYA, MARILIN, MARIO, JR. AND MARIETTE, ALL SURNAMED CARDAMA, MINORS,
REPRESENTED BY THEIR PARENTS MARIO AND LINA CARDAMA, CLARISSA, ANN MARIE, NAGEL AND IMEE LYN, ALL
SURNAMED OPOSA, MINORS AND REPRESENTED BY THEIR PARENTS RICARDO AND MARISSA OPOSA, PHILIP JOSEPH,
STEPHEN JOHN AND ISAIAH JAMES, ALL SURNAMED QUIPIT, MINORS, REPRESENTED BY THEIR PARENTS JOSE MAX
AND VILMI QUIPIT, BUGHAW CIELO, CRISANTO, ANNA, DANIEL AND FRANCISCO, ALL SURNAMED BIBAL, MINORS,
REPRESENTED BY THEIR PARENTS FRANCISCO, JR. AND MILAGROS BIBAL, AND THE PHILIPPINE ECOLOGICAL
NETWORK, INC., PETITIONERS, VS. THE HONORABLE FULGENCIO S. FACTORAN, JR., IN HIS CAPACITY AS THE
SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, AND THE HONORABLE ERIBERTO U.
ROSARIO, PRESIDING JUDGE OF THE RTC, MAKATI, BRANCH 66, RESPONDENTS.
DECISION
DAVIDE, JR., J.:
In a broader sense, this petition bears upon the right of Filipinos to a balanced and healthful ecology which the petitioners dramatically
associate with the twin concepts of "inter-generational responsibility" and "inter-generational justice." Specifically, it touches on the
issue of whether the said petitioners have a cause of action to "prevent the misappropriation or impairment" of Philippine rainforests
and "arrest the unabated hemorrhage of the country's vital life-support systems and continued rape of Mother Earth."
The controversy has its genesis in Civil Case No. 90-777 which was filed before Branch 66 (Makati, Metro Manila) of the Regional Trial
Court (RTC), National Capital Judicial Region. The principal plaintiffs therein, now the principal petitioners, are all minors duly
represented and joined by their respective parents. Impleaded as an additional plaintiff is the Philippine Ecological Network, Inc.
(PENI), a domestic, non-stock and non-profit corporation organized for the purpose of, inter alia, engaging in concerted action geared
for the protection of our environment and natural resources. The original defendant was the Honorable Fulgencio S. Factoran, Jr., then
Secretary of the Department of Environment and Natural Resources (DENR). His substitution in this petition by the new Secretary, the
Honorable Angel C. Alcala, was subsequently ordered upon proper motion by the petitioners.[1] The complaint[2] was instituted as a
taxpayers class suit[3] and alleges that the plaintiffs "are all citizens of the Republic of the Philippines, taxpayers, and entitled to the full
benefit, use and enjoyment of the natural resource treasure that is the country's virgin tropical rainforests." The same was filed for
themselves and others who are equally concerned about the preservation of said resource but are "so numerous that it is impracticable

[
[2]
[3]

to bring them all before the Court." The minors further asseverate that they "represent their generation as well as generations yet
unborn."[4] Consequently, it is prayed for that judgment be rendered:
"x x x ordering defendant, his agents, representatives and other persons acting in his behalf to -(1) Cancel all existing timber license agreements in the country;
(2) Cease and desist from receiving, accepting, processing, renewing or approving new timber license agreements."
and granting the plaintiffs "x x x such other reliefs just and equitable under the premises."[5]
The complaint starts off with the general averments that the Philippine archipelago of 7,100 islands has a land area of thirty million
(30,000,000) hectares and is endowed with rich, lush and verdant rainforests in which varied, rare and unique species of flora and
fauna may be found; these rainforests contain a genetic, biological and chemical pool which is irreplaceable; they are also the habitat
of indigenous Philippine cultures which have existed, endured and flourished since time immemorial; scientific evidence reveals that in
order to maintain a balanced and healthful ecology, the country's land area should be utilized on the basis of a ratio of fifty-four per cent
(54%) for forest cover and forty-six per cent (46%) for agricultural, residential, industrial, commercial and other uses; the distortion and
disturbance of this balance as a consequence of deforestation have resulted in a host of environmental tragedies, such as (a) water
shortages resulting from the drying up of the water table, otherwise known as the "aquifer," as well as of rivers, brooks and streams, (b)
salinization of the water table as a result of the intrusion therein of salt water, incontrovertible examples of which may be found in the
island of Cebu and the Municipality of Bacoor, Cavite, (c) massive erosion and the consequential loss of soil fertility and agricultural
productivity, with the volume of soil eroded estimated at one billion (1,000,000,000) cubic meters per annum -- approximately the size
of the entire island of Catanduanes, (d) the endangering and extinction of the country's unique, rare and varied flora and fauna, (e) the
disturbance and dislocation of cultural communities, including the disappearance of the Filipino's indigenous cultures, (f) the siltation of
rivers and seabeds and consequential destruction of corals and other aquatic life leading to a critical reduction in marine resource
productivity, (g) recurrent spells of drought as is presently experienced by the entire country, (h) increasing velocity of typhoon winds
which result from the absence of windbreakers, (i) the flooding of lowlands and agricultural plains arising from the absence of the
absorbent mechanism of forests, (j) the siltation and shortening of the lifespan of multi-billion peso dams constructed and operated for
the purpose of supplying water for domestic uses, irrigation and the generation of electric power, and (k) the reduction of the earth's
capacity to process carbon dioxide gases which has led to perplexing and catastrophic climatic changes such as the phenomenon of
global warming, otherwise known as the "greenhouse effect."
Plaintiffs further assert that the adverse and detrimental consequences of continued deforestation are so capable of unquestionable
demonstration that the same may be submitted as a matter of judicial notice. This notwithstanding, they expressed their intention to
present expert witnesses as well as documentary, photographic and film evidence in the course of the trial.
As their cause of action, they specifically allege that:
"CAUSE OF ACTION
7.Plaintiffs replead by reference the foregoing allegations.
8.
Twenty-five (25) years ago, the Philippines had some sixteen (16) million hectares of rainforests constituting roughly 53% of
the country's land mass.
9.
Satellite images taken in 1987 reveal that there remained no more than 1.2 million hectares of said rainforests or four per cent
(4.0%) of the country's land area.
10.
More recent surveys reveal that a mere 850,000 hectares of virgin old-growth rainforests are left, barely 2.8% of the entire
land mass of the Philippine archipelago and about 3.0 million hectares of immature and uneconomical secondary growth forests.
11.
Public records reveal that defendant's predecessors have granted timber license agreements (TLA's,) to various corporations
to cut the aggregate area of 3.89 million hectares for commercial logging purposes.
A copy of the TLA holders and the corresponding areas covered is hereto attached as Annex A.
12.
At the present rate of deforestation, i.e. about 200,000 hectares per annum or 25 hectares per annum or 25 hectares per hour
-- nighttime, Saturdays, Sundays and holidays included -- the Philippines will be bereft of forest resources after the end of this ensuing
decade, if not earlier.
[4]
[5]

13.
The adverse effects, disastrous consequences, serious injury and irreparable damage of this continued trend of deforestation
to the plaintiff minors generation and to generations yet unborn are evident and incontrovertible. As a matter of fact, the environmental
damages enumerated in paragraph 6 hereof are already being felt, experienced and suffered by the generation of plaintiff adults.
14.
The continued allowance by defendant of TLA holders to cut and deforest the remaining forest stands will work great damage
and irreparable injury to plaintiffs -- especially plaintiff minors and their successors -- who may never see, use, benefit from and enjoy
this rare and unique natural resource treasure.
This act of defendant constitutes a misappropriation and/or impairment of the natural resource property he holds in trust for the benefit
of plaintiff minors and succeeding generations.
15.
Plaintiffs have a clear and constitutional right to a balanced and healthful ecology and are entitled to protection by the State in
its capacity as the parens patriae.
16.
Plaintiffs have exhausted all administrative remedies with the defendant's office. On March 2, 1990, plaintiffs served upon
defendant a final demand to cancel all logging permits in the country.
A copy of the plaintiffs letter dated March 1, 1990 is hereto attached as Annex B.
17.
Defendant, however, fails and refuses to cancel the existing TLA's, to the continuing serious damage and extreme prejudice of
plaintiffs.
18.
The continued failure and refusal by defendant to cancel the TLA's is an act violative of the rights of plaintiffs, especially
plaintiff minors who may be left with a country that is desertified (sic), bare, barren and devoid of the wonderful flora, fauna and
indigenous cultures which the Philippines has been abundantly blessed with.
19.
Defendant's refusal to cancel the aforementioned TLA's is manifestly contrary to the public policy enunciated in the Philippine
Environmental Policy which, in pertinent part, states that it is the policy of the State -(a)

to create, develop, maintain and improve conditions under which man and nature can thrive in productive and
enjoyable harmony with each other;

(b)

to fulfill the social, economic and other requirements of present and future generations of Filipinos and;

(c)

to ensure the attainment of an environmental quality that is conducive to a life of dignity and well-being. (P.D.
1151, 6 June 1977)

20.
Furthermore, defendant's continued refusal to cancel the aforementioned TLA's is contradictory to the Constitutional policy of
the State to -a.

effect a more equitable distribution of opportunities, income and wealth and 'make full and efficient use of
natural resources (sic).' (Section 1, Article XII of the Constitution);

b.

protect the nation's marine wealth.' (Section 2, ibid);

c.

conserve and promote the nation's cultural heritage and resources (sic). (Section 14, Article XIV, id.);

d.

protect and advance the right of the people to a balanced and healthful ecology in accord with the rhythm and
harmony of nature. (Section 16, Article II, id.).

21.
Finally, defendant's act is contrary to the highest law of humankind -- the natural law -- and violative of plaintiffs' right to selfpreservation and perpetuation.
22.
There is no other plain, speedy and adequate remedy in law other than the instant action to arrest the unabated hemorrhage
of the country's vital life-support systems and continued rape of Mother Earth."[6]
On 22 June 1990, the original defendant, Secretary Factoran, Jr., filed a Motion to Dismiss the complaint based on two (2) grounds,
namely: (1) the plaintiffs have no cause of action against him and (2) the issue raised by the plaintiffs is a political question which
properly pertains to the legislative or executive branches of Government. In their 12 July 1990 Opposition to the Motion, the petitioners
maintain that (1) the complaint shows a clear and unmistakable cause of action, (2) the motion is dilatory and (3) the action presents a
justiciable question as it involves the defendant's abuse of discretion.

[6]

On 18 July 1991, respondent Judge issued an order granting the aforementioned motion to dismiss.[7] In the said order, not only was
the defendant's claim -- that the complaint states no cause of action against him and that it raises a political question -- sustained, the
respondent Judge further ruled that the granting of the reliefs prayed for would result in the impairment of contracts which is prohibited
by the fundamental law of the land.
Plaintiffs thus filed the instant special civil action for certiorari under Rule 65 of the Revised Rules of Court and ask this Court to rescind
and set aside the dismissal order on the ground that the respondent Judge gravely abused his discretion in dismissing the action.
Again, the parents of the plaintiffs-minors not only represent their children, but have also joined the latter in this case.[8]
On 14 May 1992, We resolved to give due course to the petition and required the parties to submit their respective Memoranda after
the Office of the Solicitor General (OSG) filed a Comment in behalf of the respondents and the petitioners filed a reply thereto.
Petitioners contend that the complaint clearly and unmistakably states a cause of action as it contains sufficient allegations concerning
their right to a sound environment based on Articles 19, 20 and 21 of the Civil Code (Human Relations), Section 4 of Executive Order
(E.O.) No. 192 creating the DENR, Section 3 of Presidential Decree (P.D.) No. 1151 (Philippine Environmental Policy), Section 16,
Article II of the 1987 Constitution recognizing the right of the people to a balanced and healthful ecology, the concept of generational
genocide in Criminal Law and the concept of man's inalienable right to self-preservation and self-perpetuation embodied in natural law.
Petitioners likewise rely on the respondent's correlative obligation, per Section 4 of E.O. No. 192, to safeguard the people's right to a
healthful environment.
It is further claimed that the issue of the respondent Secretary's alleged grave abuse of discretion in granting Timber License
Agreements (TLAs) to cover more areas for logging than what is available involves a judicial question.
Anent the invocation by the respondent Judge of the Constitution's non-impairment clause, petitioners maintain that the same does not
apply in this case because TLAs are not contracts. They likewise submit that even if TLAs may be considered protected by the said
clause, it is well settled that they may still be revoked by the State when public interest so requires.
On the other hand, the respondents aver that the petitioners failed to allege in their complaint a specific legal right violated by the
respondent Secretary for which any relief is provided by law. They see nothing in the complaint but vague and nebulous allegations
concerning an "environmental right" which supposedly entitles the petitioners to the "protection by the state in its capacity as parens
patriae." Such allegations, according to them, do not reveal a valid cause of action. They then reiterate the theory that the question of
whether logging should be permitted in the country is a political question which should be properly addressed to the executive or
legislative branches of Government. They therefore assert that the petitioners recourse is not to file an action in court, but to lobby
before Congress for the passage of a bill that would ban logging totally.
As to the matter of the cancellation of the TLAs, respondents submit that the same cannot be done by the State without due process of
law. Once issued, a TLA remains effective for a certain period of time -- usually for twenty-five (25) years. During its effectivity, the same
can neither be revised nor cancelled unless the holder has been found, after due notice and hearing, to have violated the terms of the
agreement or other forestry laws and regulations. Petitioners proposition to have all the TLAs indiscriminately cancelled without the
requisite hearing would be violative of the requirements of due process.
Before going any further, We must first focus on some procedural matters. Petitioners instituted Civil Case No. 90-777 as a class suit.
The original defendant and the present respondents did not take issue with this matter. Nevertheless, We hereby rule that the said civil
case is indeed a class suit. The subject matter of the complaint is of common and general interest not just to several, but to all citizens
of the Philippines. Consequently, since the parties are so numerous, it becomes impracticable, if not totally impossible, to bring all of
them before the court. We likewise declare that the plaintiffs therein are numerous and representative enough to ensure the full
protection of all concerned interests. Hence, all the requisites for the filing of a valid class suit under Section 12, Rule 3 of the Revised
Rules of Court are present both in the said civil case and in the instant petition, the latter being but an incident to the former.
This case, however, has a special and novel element. Petitioners minors assert that they represent their generation as well as
generations yet unborn. We find no difficulty in ruling that they can, for themselves, for others of their generation and for the succeeding
generations, file class suit. Their personality to sue in behalf of the succeeding generations can only be based on the concept of
intergenerational responsibility insofar as the right to a balanced and healthful ecology is concerned. Such a right, as hereinafter
[
[

expounded, considers the "rhythm and harmony of nature." Nature means the created world in its entirety.[9] Such rhythm and harmony
indispensably include, inter alia, the judicious disposition, utilization, management, renewal and conservation of the country's forest,
mineral, land, waters, fisheries, wildlife, off-shore areas and other natural resources to the end that their exploration, development and
utilization be equitably accessible to the present as well as future generations.[10] Needless to say, every generation has a responsibility
to the next to preserve that rhythm and harmony for the full enjoyment of a balanced and healthful ecology. Put a little differently, the
minors' assertion of their right to a sound environment constitutes, at the same time, the performance of their obligation to ensure the
protection of that right for the generations to come.
The locus standi of the petitioners having thus been addressed, We shall now proceed to the merits of the petition.
After a careful perusal of the complaint in question and a meticulous consideration and evaluation of the issues raised and arguments
adduced by the parties, We do not hesitate to find for the petitioners and rule against the respondent Judge's challenged order for
having been issued with grave abuse of discretion amounting to lack of jurisdiction. The pertinent portions of the said order read as
follows:
xxx
After a careful and circumspect evaluation of the Complaint, the Court cannot help but agree with the defendant. For although we
believe that plaintiffs have but the noblest of all intentions, it (sic) fell short of alleging, with sufficient definiteness, a specific legal right
they are seeking to enforce and protect, or a specific legal wrong they are seeking to prevent and redress (Sec. 1, Rule 2, RRC).
Furthermore, the Court notes that the Complaint is replete with vague assumptions and vague conclusions based on unverified data. In
fine, plaintiffs fail to state a cause of action in its Complaint against the herein defendant.
Furthermore, the Court firmly believes that the matter before it, being impressed with political color and involving a matter of public
policy, may not be taken cognizance of by this Court without doing violence to the sacred principle of 'Separation of Powers' of the
three (3) co-equal branches of the Government.
The Court is likewise of the impression that it cannot, no matter how we stretch our jurisdiction, grant the reliefs prayed for by the
plaintiffs, i.e., to cancel all existing timber license agreements in the country and to cease and desist from receiving, accepting,
processing renewing or approving new timber license agreements. For to do otherwise would amount to 'impairment of contracts'
abhored (sic) by the fundamental law.[11]
We do not agree with the trial court's conclusion that the plaintiffs failed to allege with sufficient definiteness a specific legal right
involved or a specific legal wrong committed, and that the complaint is replete with vague assumptions and conclusions based on
unverified data. A reading of the complaint itself belies these conclusions.
The complaint focuses on one specific fundamental legal right -- the right to a balanced and healthful ecology which, for the first time in
our nation's constitutional history, is solemnly incorporated in the fundamental law. Section 16, Article II of the 1987 Constitution
explicitly provides:
"SEC. 16. The State shall protect and advance the right of the people to a balanced and healthful ecology in accord with the rhythm
and harmony of nature."
This right unites with the right to health which is provided for in the preceding section of the same article:
"SEC. 15. The State shall protect and promote the right to health of the people and instill health consciousness among them."
While the right to a balanced and healthful ecology is to be found under the Declaration of Principles and State Policies and not under
the Bill of Rights, it does not follow that it is less important than any of the civil and political rights enumerated in the latter. Such a right
belongs to a different category of rights altogether for it concerns nothing less than self-preservation and self-perpetuation -- aptly and
fittingly stressed by the petitioners -- the advancement of which may even be said to predate all governments and constitutions. As a
[9]
[10]
[11]

matter of fact, these basic rights need not even be written in the Constitution for they are assumed to exist from the inception of
humankind. If they are now explicitly mentioned in the fundamental charter, it is because of the well-founded fear of its framers that
unless the rights to a balanced and healthful ecology and to health are mandated as state policies by the Constitution itself, thereby
highlighting their continuing importance and imposing upon the state a solemn obligation to preserve the first and protect and advance
the second, the day would not be too far when all else would be lost not only for the present generation, but also for those to come -generations which stand to inherit nothing but parched earth incapable of sustaining life.
The right to a balanced and healthful ecology carries with it the correlative duty to refrain from impairing the environment. During the
debates on this right in one of the plenary sessions of the 1986 Constitutional Commission, the following exchange transpired between
Commissioner Wilfrido Villacorta and Commissioner Adolfo Azcuna who sponsored the section in question:
"MR. VILLACORTA:
Does this section mandate the State to provide sanctions against all forms of pollution -- air, water and noise pollution?
MR. AZCUNA:
Yes, Madam President. The right to healthful (sic) environment necessarily carries with it the correlative duty of not impairing the same
and, therefore, sanctions may be provided for impairment of environmental balance."[12]
The said right implies, among many other things, the judicious management and conservation of the country's forests. Without such
forests, the ecological or environmental balance would be irreversibly disrupted.
Conformably with the enunciated right to a balanced and healthful ecology and the right to health, as well as the other related
provisions of the Constitution concerning the conservation, development and utilization of the country's natural resources,[13] then
President Corazon C. Aquino promulgated on 10 June 1987 E.O. No. 192,[14] Section 4 of which expressly mandates that the
Department of Environment and Natural Resources "shall be the primary government agency responsible for the conservation,
management, development and proper use of the country's environment and natural resources, specifically forest and grazing lands,
mineral resources, including those in reservation and watershed areas, and lands of the public domain, as well as the licensing and
regulation of all natural resources as may be provided for by law in order to ensure equitable sharing of the benefits derived therefrom
for the welfare of the present and future generations of Filipinos." Section 3 thereof makes the following statement of policy:
"SEC. 3. Declaration of Policy. -- It is hereby declared the policy of the State to ensure the sustainable use, development,
management, renewal, and conservation of the country's forest, mineral, land, off-shore areas and other natural resources, including
the protection and enhancement of the quality of the environment, and equitable access of the different segments of the population to
the development and use of the country's natural resources, not only for the present generation but for future generations as well. It is
also the policy of the state to recognize and apply a true value system including social and environmental cost implications relative to
their utilization, development and conservation of our natural resources."
This policy declaration is substantially re-stated in Title XIV, Book IV of the Administrative Code of 1987,[15] specifically in Section 1
thereof which reads:
"SEC. 1. Declaration of Policy. -- (1) The State shall ensure, for the benefit of the Filipino people, the full exploration and development
as well as the judicious disposition, utilization, management, renewal and conservation of the country's forest, mineral, land, waters,
fisheries, wildlife, off-shore areas and other natural resources, consistent with the necessity of maintaining a sound ecological balance
and protecting and enhancing the quality of the environment and the objective of making the exploration, development and utilization of
such natural resources equitably accessible to the different segments of the present as well as future generations.
(2) The State shall likewise recognize and apply a true value system that takes into account social and environmental cost implications
relative to the utilization, development and conservation of our natural resources."

[12]
[13]
[14]
[

The above provision stresses "the necessity of maintaining a sound ecological balance and protecting and enhancing the quality of the
environment." Section 2 of the same Title, on the other hand, specifically speaks of the mandate of the DENR; however, it makes
particular reference to the fact of the agency's being subject to law and higher authority. Said section provides:
"SEC. 2. Mandate. -- (1) The Department of Environment and Natural Resources shall be primarily responsible for the implementation
of the foregoing policy.
(2) It shall, subject to law and higher authority, be in charge of carrying out the State's constitutional mandate to control and supervise
the exploration, development, utilization, and conservation of the country's natural resources."
Both E.O. No. 192 and the Administrative Code of 1987 have set the objectives which will serve as the bases for policy formulation, and
have defined the powers and functions of the DENR.
It may, however, be recalled that even before the ratification of the 1987 Constitution, specific statutes already paid special attention to
the "environmental right" of the present and future generations. On 6 June 1977, P.D. No. 1151 (Philippine Environmental Policy) and
P.D. No. 1152 (Philippine Environment Code) were issued. The former "declared a continuing policy of the State (a) to create, develop,
maintain and improve conditions under which man and nature can thrive in productive and enjoyable harmony with each other, (b) to
fulfil the social, economic and other requirements of present and future generations of Filipinos, and (c) to insure the attainment of an
environmental quality that is conducive to a life of dignity and well-being."[16] As its goal, it speaks of the "responsibilities of each
generation as trustee and guardian of the environment for succeeding generations.[17] The latter statute, on the other hand, gave flesh
to the said policy.
Thus, the right of the petitioners (and all those they represent) to a balanced and healthful ecology is as clear as the DENR's duty -under its mandate and by virtue of its powers and functions under E.O. No. 192 and the Administrative Code of 1987 -- to protect and
advance the said right.
A denial or violation of that right by the other who has the correlative duty or obligation to respect or protect the same gives rise to a
cause of action. Petitioners maintain that the granting of the TLAs, which they claim was done with grave abuse of discretion, violated
their right to a balanced and healthful ecology; hence, the full protection thereof requires that no further TLAs should be renewed or
granted.
A cause of action is defined as:
"x x x an act or omission of one party in violation of the legal right or rights of the other; and its essential elements are legal right of the
plaintiff, correlative obligation of the defendant, and act or omission of the defendant in violation of said legal right."[18]
It is settled in this jurisdiction that in a motion to dismiss based on the ground that the complaint fails to state a cause of action,[19] the
question submitted to the court for resolution involves the sufficiency of the facts alleged in the complaint itself. No other matter should
be considered; furthermore, the truth or falsity of the said allegations is beside the point for the truth thereof is deemed hypothetically
admitted. The only issue to be resolved in such a case is: admitting such alleged facts to be true, may the court render a valid judgment
in accordance with the prayer in the complaint?[20] In Militante vs. Edrosolano,[21] this Court laid down the rule that the judiciary should
"exercise the utmost care and circumspection in passing upon a motion to dismiss on the ground of the absence thereof [cause of
action] lest, by its failure to manifest a correct appreciation of the facts alleged and deemed hypothetically admitted, what the law grants
or recognizes is effectively nullified. If that happens, there is a blot on the legal order. The law itself stands in disrepute."
After a careful examination of the petitioners' complaint, We find the statements under the introductory affirmative allegations, as well
as the specific averments under the subs-heading CAUSE OF ACTION, to be adequate enough to show, prima facie, the claimed
violation of their rights. On the basis thereof, they may thus be granted, wholly of partly, the reliefs prayed for. It bears stressing,
[16]
[17]
[18]
[
[20]
[21]

however, that insofar as the cancellation of the TLAs is concerned, there is the need to implead, as party defendants, the grantees
thereof for they are indispensable parties.
The foregoing considered, Civil Case No. 90-777 cannot be said to raise a political question. Policy formulation or determination by the
executive or legislative branches of Government is not squarely put in issue. What is principally involved is the enforcement of a right
vis-a-vis policies already formulated and expressed in legislation. It must, nonetheless, be emphasized that the political question
doctrine is no longer the insurmountable obstacle to the exercise of judicial power or the impenetrable shield that protects executive
and legislative actions from judicial inquiry or review. The second paragraph of section 1, Article VIII of the Constitution states that:
"Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on
the part of any branch or instrumentality of the Government."
Commenting on this provision in his book, Philippine Political Law,[22] Mr. Justice Isagani A. Cruz, a distinguished member of his Court,
says:
"The first part of the authority represents the traditional concept of judicial power, involving the settlement of conflicting rights as
conferred by law. The second part of the authority represents a broadening of judicial power to enable the courts of justice to review
what was before forbidden territory, to wit, the discretion of the political departments of the government.
As worded, the new provision vests in the judiciary, and particularly the Supreme Court, the power to rule upon even the wisdom of the
decisions of the executive and the legislature and to declare their acts invalid for lack or excess of jurisdiction because tainted with
grave abuse of discretion. The catch, of course, is the meaning of grave abuse of discretion, which is a very elastic phrase that can
expand or contract according to the disposition of the judiciary."
In Daza vs. Singson,[23] Mr. Justice Cruz, now speaking for this Court, noted:
"In the case now before us, the jurisdictional objection becomes even less tenable and decisive. The reason is that, even if we were to
assume that the issue presented before us was political in nature, we would still not be precluded from resolving it under the expanded
jurisdiction conferred upon us that now covers, in proper cases, even the political question. Article VII, Section 1, of the Constitution
clearly provides: x x x."
The last ground invoked by the trial court in dismissing the complaint is the non-impairment of contracts clause found in the
Constitution. The court a quo declared that:
"The Court is likewise of the impression that it cannot, no matter how we stretch our jurisdiction, grant the reliefs prayed for by the
plaintiffs, i.e., to cancel all existing timber license agreements in the country and to cease and desist from receiving, accepting,
processing, renewing or approving new timber license agreements. For to do otherwise would amount to 'impairment of contracts'
abhored (sic) by the fundamental law."[24]
We are not persuaded at all; on the contrary, We are amazed, if not shocked, by such a sweeping pronouncement. In the first place,
the respondent Secretary did not, for obvious reasons, even invoke in his motion to dismiss the non-impairment clause. If he had done
so, he would have acted with utmost infidelity to the Government by providing undue and unwarranted benefits and advantages to the
timber license holders because he would have forever bound the Government to strictly respect the said licenses according to their
terms and conditions regardless of changes in policy and the demands of public interest and welfare. He was aware that as correctly
pointed out by the petitioners, into every timber license must be read Section 20 of the Forestry Reform Code (P.D. No. 705) which
provides:
"x x x Provided, That when the national interest so requires, the President may amend, modify, replace or rescind any contract,
concession, permit, licenses or any other form of privilege granted herein x x x."

[
[
[24]

Needless to say, all licenses may thus be revoked or rescinded by executive action. It is not a contract, property or a property right
protected by the due process clause of the Constitution. In Tan vs. Director of Forestry,[25] this Court held:
"x x x A timber license is an instrument by which the State regulates the utilization and disposition of forest resources to the end that
public welfare is promoted. A timber license is not a contract within the purview of the due process clause; it is only a license or
privilege, which can be validly withdrawn whenever dictated by public interest or public welfare as in this case.
A license is merely a permit or privilege to do what otherwise would be unlawful, and is not a contract between the authority, federal,
state, or municipal, granting it and the person to whom it is granted; neither is it property or a property right, nor does it create a vested
right; nor is it taxation (37 C.J. 168). Thus, this Court held that the granting of license does not create irrevocable rights, neither is it
property or property rights (People vs. Ong Tin, 54 O.G. 7576). x x x"
We reiterated this pronouncement in Felipe Ysmael, Jr. & Co., Inc. vs. Deputy Executive Secretary:[26]
"x x xTimber licenses, permits and license agreements are the principal instruments by which the State regulates the utilization and
disposition of forest resources to the end that public welfare is promoted. And it can hardly be gainsaid that they merely evidence a
privilege granted by the State to qualified entities, and do not vest in the latter a permanent or irrevocable right to the particular
concession area and the forest products therein. They may be validly amended, modified, replaced or rescinded by the Chief Executive
when national interests so require. Thus, they are not deemed contracts within the purview of the due process of law clause [See
Sections 3(ee) and 20 of Pres. Decree No. 705, as amended. Also, Tan v. Director of Forestry, G.R. No. L-24548, October 27, 1983,
125 SCRA 302]."
Since timber licenses are not contracts, the non-impairment clause, which reads:
"SEC. 10. No law impairing the obligation of contracts shall be passed."[27]
cannot be invoked.
In the second place, even if it is to be assumed that the same are contracts, the instant case does not involve a law or even an
executive issuance declaring the cancellation or modification of existing timber licenses. Hence, the non-impairment clause cannot as
yet be invoked. Nevertheless, granting further that a law has actually been passed mandating cancellations or modifications, the same
cannot still be stigmatized as a violation of the non-impairment clause. This is because by its very nature and purpose, such a law
could have only been passed in the exercise of the police power of the state for the purpose of advancing the right of the people to a
balanced and healthful ecology, promoting their health and enhancing the general welfare. In Abe vs. Foster Wheeler Corp.,[28] this
Court stated:
"The freedom of contract, under our system of government, is not meant to be absolute. The same is understood to be subject to
reasonable legislative regulation aimed at the promotion of public health, moral, safety and welfare. In other words, the constitutional
guaranty of non-impairment of obligations of contract is limited by the exercise of the police power of the State, in the interest of public
health, safety, moral and general welfare."
The reason for this is emphatically set forth in Nebia vs. New York,[29] quoted in Philippine American Life Insurance Co. vs. Auditor
General,[30] to wit:
"Under our form of government the use of property and the making of contracts are normally matters of private and not of public
concern. The general rule is that both shall be free of governmental interference. But neither property rights nor contract rights are
absolute; for government cannot exist if the citizen may at will use his property to the detriment of his fellows, or exercise his freedom of
contract to work them harm. Equally fundamental with the private right is that of the public to regulate it in the common interest."
[
[
[27]
[
[
[30]

In short, the non-impairment clause must yield to the police power of the state.[31]
Finally, it is difficult to imagine, as the trial court did, how the non-impairment clause could apply with respect to the prayer to enjoin the
respondent Secretary from receiving, accepting, processing, renewing or approving new timber licenses for, save in cases of renewal,
no contract would have as of yet existed in the other instances. Moreover, with respect to renewal, the holder is not entitled to it as a
matter of right.
WHEREFORE, being impressed with merit, the instant Petition is hereby GRANTED, and the challenged Order of respondent Judge of
18 July 1991 dismissing Civil Case No. 90-777 is hereby set aside. The petitioners may therefore amend their complaint to implead as
defendants the holders or grantees of the questioned timber license agreements.
No pronouncement as to costs.
SO ORDERED.
Cruz, Padilla, Bidin, Grio-Aquino, Regalado, Romero, Nocon, Bellosillo, Melo, and Quiason, JJ., concur.
Feliciano, J., see separate opinion concurring in the result.
Narvasa, C.J., Puno, and Vitug, JJ., no part.

343 Phil. 670

EN BANC
[ G.R. No. 110249, August 21, 1997 ]
ALFREDO TANO, BALDOMERO TANO, DANILO TANO, ROMUALDO TANO, TEOCENES MIDELLO, ANGEL DE MESA, EULOGIO
TREMOCHA, FELIPE ONGONION, JR., ANDRES LINIJAN, ROBERT LIM, VIRGINIA LIM, FELIMON DE MESA, GENEROSO
ARAGON, TEODORICO ANDRE, ROMULO DEL ROSARIO, CHOLITO ANDRE, ERICK MONTANO, ANDRES OLIVA, VITTORIO
SALVADOR, LEOPOLDO ARAGON, RAFAEL RIBA, ALEJANDRO LEONILA, JOSE DAMACINTO, RAMIRO MANAEG, RUBEN
MARGATE, ROBERTO REYES, DANILO PANGARUTAN, NOE GOLPAN, ESTANISLAO ROMERO, NICANOR DOMINGO,
ROLDAN TABANG, PANGANIBAN, ADRIANO TABANG, FREDDIE SACAMAY, MIGUEL TRIMOCHA, PACENCIO LABABIT,
PABLO H. OMPAD, CELESTINO A. ABANO, ALLAN ALMODAL, BILLY D. BARTOLAY, ALBINO D. LIQUE, MELCHOR J. LAYSON,
MELANI AMANTE, CLARO E. YATOC, MERGELDO B. BALDEO, EDGAR M. ALMASET A., JOSELITO MANAEG, LIBERATO
ANDRADA, JR., ROBERTO BERRY, RONALD VILLANUEVA, EDUARDO VALMORIA, WILDREDO MENDOZA, NAPOLEON
BABANGA, ROBERTO TADEPA, RUBEN ASINGUA, SILVERIO GABO, JERRY ROMERO, DAVID PANGAGARUTAN, DANIEL
PANGGARUTAN, ROMEO AGAWIN, FERNANDO EQUIZ, DITO LEQUIZ, RONILO ODERABLE, BENEDICTO TORRES, ROSITO A.
VALDEZ, CRESENCIO A. SAYANG, NICOMEDES S. ACOSTA, ERENEO A. SEGARINO, JR., WILDREDO A. RAUTO, DIOSDADO
A. ACOSTA, BONIFACIO G. SISMO, TACIO ALUBA, DANIEL B. BATERZAL, ELISEO YBAEZ, DIOSDADO E. HANCHIC, EDDIE
ESCALICAS, ELEAZAR B. BATERZAL, DOMINADOR HALICHIC, ROOSEVELT RISMO-AN, ROBERT C. MERCADER, TIRSO
ARESGADO, DANIEL CHAVEZ, DANILO CHAVEZ, VICTOR VILLAROEL, ERNESTO C. YABANEZ, ARMANDO T. SANTILLAN,
RUDY S. SANTILLAN, JODJEN ILUSTRISIMO, NESTOR SALANGRON, ALBERTO SALANGRON, ROGER L. ROXAS,
FRANCISCO T. ANTICANO, PASTOR SALANGRON, BIENVENIDO SANTILLAN, GILBUENA LADDY, FIDEL BENJAMIN
JOVELITO BELGANO, HONEY PARIOL, ANTONIO SALANGRON, NICASIO SALANGRON, & AIRLINE SHIPPERS ASSOCIATION
OF PALAWAN, PETITIONERS, VS. GOV. SALVADOR P. SOCRATES, MEMBERS OF SANGGUNIAN PANLALAWIGAN OF
PALAWAN, NAMELY, VICE-GOVERNOR JOEL T. REYES, JOSE D. ZABALA, ROSALINO R. ACOSTA, JOSELITO A. CADLAON,
ANDRES R. BAACO, NELSON P. PENEYRA, CIPRIANO C. BARROMA, CLARO E. ORDINARIO, ERNESTO A. LLACUN,
RODOLFO C. FLORDELIZA, GILBERT S. BAACO, WINSTON G. ARZAGA, NAPOLEON F. ORDONEZ AND GIL P. ACOSTA, CITY
MAYOR EDWARD HAGEDORN, MEMBERS OF SANGGUNIANG PANLUNGSOD NG PUERTO PRINCESA, ALL MEMBERS OF
BANTAY DAGAT, MEMBERS OF PHILIPPINE NATIONAL POLICE OF PALAWAN, PROVINCIAL AND CITY PROSECUTORS OF
PALAWAN AND PUERTO PRINCESA CITY, AND ALL JUDGES OF PALAWAN, REGIONAL, MUNICIPAL AND METROPOLITAN,
RESPONDENTS.
DECISION
DAVIDE, JR., J.:
Petitioners caption their petition as one for Certiorari, Injunction With Preliminary Mandatory Injunction,with Prayer for Temporary
Restraining Order and pray that this Court: (1) declare as unconstitutional: (a) Ordinance No. 15-92, dated 15 December 1992, of the
Sangguniang Panlungsod of Puerto Princesa; (b) Office Order No. 23, Series of 1993, dated 22 January 1993, issued by Acting City
Mayor Amado L. Lucero of Puerto Princesa City; and (c) Resolution No. 33, Ordinance No. 2, Series of 1993, dated 19 February 1993,
of the Sangguniang Panlalawigan of Palawan; (2) enjoin the enforcement thereof; and (3) restrain respondents Provincial and City
Prosecutors of Palawan and Puerto Princesa City and Judges of Regional Trial Courts, Metropolitan Trial Courts[1] and Municipal Circuit
Trial Courts in Palawan from assuming jurisdiction over and hearing cases concerning the violation of the Ordinances and of the Office
Order.
More appropriately, the petition is, and shall be treated as, a special civil action for certiorari and prohibition.
The following is petitioners summary of the factual antecedents giving rise to the petition:
1.
On December 15, 1992, the Sangguniang Panlungsod ng Puerto Princesa City enacted Ordinance No. 15-92 which took effect
on January 1, 1993 entitled: AN ORDINANCE BANNING THE SHIPMENT OF ALL LIVE FISH AND LOBSTER OUTSIDE PUERTO
PRINCESA CITY FROM JANUARY 1, 1993 TO JANUARY 1, 1998 AND PROVIDING EXEMPTIONS, PENALTIES AND FOR OTHER
PURPOSES THEREOF, the full text of which reads as follows:
Section 1. Title of the Ordinance. - This Ordinance is entitled: AN ORDINANCE BANNING THE SHIPMENT OF ALL LIVE FISH AND
LOBSTER OUTSIDE PUERTO PRINCESA CITY FROM JANUARY 1, 1993 TO JANUARY 1, 1998 AND PROVIDING EXEMPTIONS,

PENALTIES AND FOR OTHER PURPOSES THEREOF.

Section 2. Purpose, Scope and Coverage. - To effectively free our City Sea Waters from Cyanide and other Obnoxious substance, and
shall cover all persons and/or entities operating within and outside the City of Puerto Princesa who is are [sic] directly or indirectly in the
business or shipment of live fish and lobster outside the City.
Section 3. Definition of terms. - For purpose of this Ordinance the following are hereby defined:
A. SEA BASS - A kind of fish under the family of Centropomidae, better known as APAHAP;
B. CATFISH - A kind of fish under the family of Plotosidae, better known as HITO-HITO;
C. MUDFISH - A kind of fish under the family of Orphicaphalisae better known as DALAG
D. ALL LIVE FISH - All alive, breathing not necessarily moving of all specie[s] use for food and for aquarium purposes.
E. LIVE LOBSTER - Several relatively, large marine crustaceans of the genus Homarus that are alive and breathing not necessarily
moving.
Section 4. It shall be unlawful [for] any person or any business enterprise or company to ship out from Puerto Princesa City to any point
of destination either via aircraft or seacraft of any live fish and lobster except SEA BASS, CATFISH, MUDFISH, AND MILKFISH FRIES.
Section 5. Penalty Clause. - Any person/s and or business entity violating this Ordinance shall be penalized with a fine of not more than
P5,000.00 or imprisonment of not more than twelve (12) months, cancellation of their permit to do business in the City of Puerto
Princesa or all of the herein stated penalties, upon the discretion of the court.
Section 6. If the owner and/or operator of the establishment found vilating the provisions of this ordinance is a corporation or a
partnership, the penalty prescribed in Section 5 hereof shall be imposed upon its president and/or General Manager or Managing
Partner and/or Manager, as the case maybe [sic].
Section 7. Any existing ordinance or any provision of any ordinance inconsistent to [sic] this ordinance is deemed repealed.
Section 8. This Ordinance shall take effect on January 1, 1993.
SO ORDERED.
xxx
2.
To implement said city ordinance, then Acting City Mayor Amado L. Lucero issued Office Order No. 23, Series of 1993 dated
January 22, 1993 which reads as follows:
In the interest of public service and for purposes of City Ordinance No. PD426-14-74, otherwise known as AN ORDINANCE
REQUIRING ANY PERSON ENGAGED OR INTENDING TO ENGAGE IN ANY BUSINESS, TRADE, OCCUPATION, CALLING OR
PROFESSION OR HAVING IN HIS POSSESSION ANY OF THE ARTICLES FOR WHICH A PERMIT IS REQUIRED TO BE HAD, TO
OBTAIN FIRST A MAYORS PERMIT and City Ordinance No. 15-92, AN ORDINANCE BANNING THE SHIPMENT OF ALL LIVE
FISH AND LOBSTER OUTSIDE PUERTO PRINCESA CITY FROM JANUARY 1, 1993 TO JANUARY 1, 1998, you are hereby
authorized and directed to check or conduct necessary inspections on cargoes containing live fish and lobster being shipped out from
the Puerto Princesa Airport, Puerto Princesa Wharf or at any port within the jurisdiction of the City to any point of destinations [sic]
either via aircraft or seacraft.
The purpose of the inspection is to ascertain whether the shipper possessed the required Mayors Permit issued by this Office and the
shipment is covered by invoice or clearance issued by the local office of the Bureau of Fisheries and Aquatic Resources and as to
compliance with all other existing rules and regulations on the matter.
Any cargo containing live fish and lobster without the required documents as stated herein must be held for proper disposition.

In the pursuit of this Order, you are hereby authorized to coordinate with the PAL Manager, the PPA Manager, the local PNP Station
and other offices concerned for the needed support and cooperation. Further, that the usual courtesy and diplomacy must be observed
at all times in the conduct of the inspection.
Please be guided accordingly.
xxx
3.
On February 19, 1993, the Sangguniang Panlalawigan, Provincial Government of Palawan enacted Resolution No. 33 entitled: A
RESOLUTION PROHIBITING THE CATCHING, GATHERING, POSSESSING, BUYING, SELLING AND SHIPMENT OF LIVE MARINE
CORAL DWELLING AQUATIC ORGANISMS, TO WIT: FAMILY: SCARIDAE (MAMENG), EPINE PHELUS FASCIATUS (SUNO).
CROMILEPTES ALTIVELIS (PANTHER OR SENORITA), LOBSTER BELOW 200 GRAMS AND SPAWNING, TRADACNA GIGAS
(TAKLOBO), PINCTADA MARGARITEFERA (MOTHER PEARL, OYSTERS, GIANT CLAMS AND OTHER SPECIES), PENAEUS
MONODON (TIGER PRAWN-BREEDER SIZE OR MOTHER), EPINEPHELUS SUILLUS (LOBA OR GREEN GROUPER) AND
FAMILY: BALISTIDAE (TROPICAL AQUARIUM FISHES) FOR A PERIOD FIVE (5) YEARS IN AND COMING FROM PALAWAN
WATERS, the full text of which reads as follows:
WHEREAS, scientific and factual researches [sic] and studies disclose that only five (5) percent of the corals of our province remain to
be in excellent condition as [a] habitat of marine coral dwelling aquatic organisms;
WHEREAS, it cannot be gainsaid that the destruction and devastation of the corals of our province were principally due to illegal fishing
activities like dynamite fishing, sodium cyanide fishing, use of other obnoxious substances and other related activities;
WHEREAS, there is an imperative and urgent need to protect and preserve the existence of the remaining excellent corals and allow
the devastated ones to reinvigorate and regenerate themselves into vitality within the span of five (5) years;
WHEREAS, Sec. 468, Par. 1, Sub-Par. VI of the [sic] R.A. 7160 otherwise known as the Local Government Code of 1991 empowers
the Sangguniang Panlalawigan to protect the environment and impose appropriate penalties [upon] acts which endanger the
environment such as dynamite fishing and other forms of destructive fishing, among others.
NOW, THEREFORE, on motion by Kagawad Nelson P. Peneyra and upon unanimous decision of all the members present;
Be it resolved as it is hereby resolved, to approve Resolution No. 33, Series of 1993 of the Sangguniang Panlalawigan and to enact
Ordinance No. 2 for the purpose, to wit:
ORDINANCE NO. 2
Series of 1993
BE IT ORDAINED BY THE SANGGUNIANG PANLALAWIGAN IN SESSION ASSEMBLED:
Section 1. TITLE - This Ordinance shall be known as an Ordinance Prohibiting the catching, gathering, possessing, buying, selling and
shipment of live marine coral dwelling aquatic organisms, to wit: 1. Family: Scaridae (Mameng), 2. Epinephelus Fasciatus (Suno), 3.
Cromileptes altivelis (Panther or Senorita), lobster below 200 grams and spawning), 4. Tridacna Gigas (Taklobo), 5. Pinctada
Margaretefera (Mother Pearl, Oysters, Giant Clams and other species), 6. Penaeus Monodon (Tiger Prawn-breeder size or mother), 7.
Epinephelus Suillus (Loba or Green Grouper) and 8. Family: Balistidae (Topical Aquarium Fishes) for a period of five (5) years in and
coming from Palawan Waters.
Section II. PRELIMINARY CONSIDERATIONS
1. Sec. 2-A (Rep. Act 7160). It is hereby declared, the policy of the state that the territorial and political subdivisions of the State shall
enjoy genuine and meaningful local autonomy to enable them to attain their fullest development as self reliant communities and make
them more effective partners in the attainment of national goals. Toward this end, the State shall provide for [a] more responsive and
accountable local government structure instituted through a system of decentralization whereby local government units shall be given
more powers, authority, responsibilities and resources.

2. Sec. 5-A (R.A. 7160). Any provision on a power of [a] local Government Unit shall be liberaly interpreted in its favor, and in case of
doubt, any question thereon shall be resolved in favor of devolution of powers and of the lower government units. Any fair and
reasonable doubts as to the existence of the power shall be interpreted in favor of the Local Government Unit concerned.
3. Sec. 5-C (R.A. 7160). The general welfare provisions in this Code shall be liberally interpreted to give more powers to local
government units in accelerating economic development and upgrading the quality of life for the people in the community.
4. Sec. 16 (R.A. 7160). General Welfare. - Every local government unit shall exercise the powers expressly granted, those necessarily
implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and effective governance; and those which are
essential to the promotion of the general welfare.
Section III. DECLARATION OF POLICY. - It is hereby declared to be the policy of the Province of Palawan to protect and conserve the
marine resources of Palawan not only for the greatest good of the majority of the present generation but with [the] proper perspective
and consideration of [sic] their prosperity, and to attain this end, the Sangguniang Panlalawigan henceforth declares that is [sic] shall be
unlawful for any person or any business entity to engage in catching, gathering, possessing, buying, selling and shipment of live marine
coral dwelling aquatic organisms as enumerated in Section 1 hereof in and coming out of Palawan Waters for a period of five (5) years;
Section IV. PENALTY CLAUSE. - Any person and/or business entity violating this Ordinance shall be penalized with a fine of not more
than Five Thousand Pesos (P5,000.00), Philippine Currency, and/or imprisonment of six (6) months to twelve (12) months and
confiscation and forfeiture of paraphernalias [sic] and equipment in favor of the government at the discretion of the Court;
Section V. SEPARABILITY CLAUSE. - If for any reason, a Section or provision of this Ordinance shall be held as unconditional [sic] or
invalid, it shall not affect the other provisions hereof.
Section VI. REPEALING CLAUSE. - Any existing Ordinance or a provision of any ordinance inconsistent herewith is deemed modified,
amended or repealed.
Section VII. EFFECTIVITY. - This Ordinance shall take effect ten (10) days after its publication.
SO ORDAINED.
xxx
4.
The respondents implemented the said ordinances, Annexes A and C hereof thereby depriving all the fishermen of the whole
province of Palawan and the City of Puerto Princesa of their only means of livelihood and the petitioners Airline Shippers Association of
Palawan and other marine merchants from performing their lawful occupation and trade;
5.
Petitioners Alfredo Tano, Baldomero Tano, Teocenes Midello, Angel de Mesa, Eulogio Tremocha, and Felipe Ongonion, Jr. were
even charged criminally under criminal case no. 93-05-C in the 1st Municipal Circuit Trial Court of Cuyo-Agutaya-Magsaysay, an
original carbon copy of the criminal complaint dated April 12, 1993 is hereto attached as Annex D; while xerox copies are attached as
Annex D to the copies of the petition;
6.
Petitioners Robert Lim and Virginia Lim, on the other hand, were charged by the respondent PNP with the respondent City
Prosecutor of Puerto Princesa City, a xerox copy of the complaint is hereto attached as Annex E;
Without seeking redress from the concerned local government units, prosecutors office and courts, petitioners directly invoked our
original jurisdiction by filing this petition on 4 June 1993. In sum, petitioners contend that:
First, the Ordinances deprived them of due process of law, their livelihood, and unduly restricted them from the practice of their trade, in
violation of Section 2, Article XII and Sections 2 and 7 of Article XIII of the 1987 Constitution.
Second, Office Order No. 23 contained no regulation nor condition under which the Mayors permit could be granted or denied; in other
words, the Mayor had the absolute authority to determine whether or not to issue permit.
Third, as Ordinance No. 2 of the Province of Palawan altogether prohibited the catching, gathering, possession, buying, selling and
shipping of live marine coral dwelling organisms, without any distinction whether it was caught or gathered through lawful fishing

method, the Ordinance took away the right of petitioners-fishermen to earn their livelihood in lawful ways; and insofar as petitionersmembers of Airline Shippers Association are concerned, they were unduly prevented from pursuing their vocation and entering into
contracts which are proper, necessary, and essential to carry out their business endeavors to a successful conclusion.
Finally, as Ordinance No. 2 of the Sangguniang Panlalawigan is null and void, the criminal cases based thereon against petitioners
Tano and the others have to be dismissed.
In the Resolution of 15 June 1993 we required respondents to comment on the petition, and furnished the Office of the Solicitor
General with a copy thereof.
In their comment filed on 13 August 1993, public respondents Governor Socrates and Members of the Sangguniang Panlalawigan of
Palawan defended the validity of Ordinance No.2, Series of 1993, as a valid exercise of the Provincial Governments power under the
general welfare clause (Section 16 of the Local Government Code of 1991 [hereafter, LGC]), and its specific power to protect the
environment and impose appropriate penalties for acts which endanger the environment, such as dynamite fishing and other forms of
destructive fishing under Section 447 (a) (1) (vi), Section 458 (a) (1) (vi), and Section 468 (a) (1) (vi), of the LGC. They claimed that in
the exercise of such powers, the Province of Palawan had the right and responsibilty to insure that the remaining coral reefs, where
fish dwells [sic], within its territory remain healthy for the future generation. The Ordinance, they further asserted, covered only live
marine coral dwelling aquatic organisms which were enumerated in the ordinance and excluded other kinds of live marine aquatic
organisms not dwelling in coral reefs; besides the prohibition was for only five (5) years to protect and preserve the pristine coral and
allow those damaged to regenerate.
Aforementioned respondents likewise maintained that there was no violation of due process and equal protection clauses of the
Constitution. As to the former, public hearings were conducted before the enactment of the Ordinance which, undoubtedly, had a lawful
purpose and employed reasonable means; while as to the latter, a substantial distinction existed between a fisherman who catches
live fish with the intention of selling it live, and a fisherman who catches live fish with no intention at all of selling it live, i.e., the former
uses sodium cyanide while the latter does not. Further, the Ordinance applied equally to all those belonging to one class.
On 25 October 1993 petitioners filed an Urgent Plea for the Immediate Issuance of a Temporary Restraining Order claiming that despite
the pendency of this case, Branch 50 of the Regional Trial Court of Palawan was bent on proceeding with Criminal Case No. 11223
against petitioners Danilo Tano, Alfredo Tano, Eulogio Tremocha, Romualdo Tano, Baldomero Tano, Andres Lemihan and Angel de
Mesa for violation of Ordinance No. 2 of the Sangguniang Panlalawigan of Palawan. Acting on said plea, we issued on 11 November
1993 a temporary restraining order directing Judge Angel Miclat of said court to cease and desist from proceeding with the arraignment
and pre-trial of Criminal Case No. 11223.
On 12 July 1994, we excused the Office of the Solicitor General from filing a comment, considering that as claimed by said office in its
Manifestation of 28 June 1994, respondents were already represented by counsel.
The rest of the respondents did not file any comment on the petition.
In the resolution of 15 September 1994, we resolved to consider the comment on the petition as the Answer, gave due course to the
petition and required the parties to submit their respective memoranda.[2]
On 22 April 1997 we ordered impleaded as party respondents the Department of Agriculture and the Bureau of Fisheries and Aquatic
Resources and required the Office of the Solicitor General to comment on their behalf. But in light of the latters motion of 9 July 1997
for an extension of time to file the comment which would only result in further delay, we dispensed with said comment.
After due deliberation on the pleadings filed, we resolved to dismiss this petition for want of merit, on 22 July 1997, and assigned it to
the ponente for the writing of the opinion of the Court.
I
There are actually two sets of petitioners in this case. The first is composed of Alfredo Tano, Baldomero Tano, Danilo Tano, Romualdo
Tano, Teocenes Midello, Angel de Mesa, Eulogio Tremocha, Felipe Ongonion, Jr., Andres Linijan, and Felimon de Mesa, who were
criminally charged with violating Sangguniang Panlalawigan Resolution No. 33 and Ordinance No. 2, Series of 1993, of the Province of
Palawan, in Criminal Case No. 93-05-C of the 1st Municipal Circuit Trial Court (MCTC) of Palawan;[3] and Robert Lim and Virginia Lim
who were charged with violating City Ordinance No. 15-92 of Puerto Princesa City and Ordinance No. 2, Series of 1993, of the

Province of Palawan before the Office of the City Prosecutor of Puerto Princesa.[4] All of them, with the exception of Teocenes Midello,
Felipe Ongonion, Jr., Felimon de Mesa, Robert Lim and Virginia Lim, are likewise the accused in Criminal Case No. 11223 for the
violation of Ordinance No. 2 of the Sangguniang Panlalawigan of Palawan, pending before Branch 50 of the Regional Trial Court of
Palawan.[5]
The second set of petitioners is composed of the rest of the petitioners numbering seventy-seven (77), all of whom, except the Airline
Shippers Association of Palawan -- an alleged private association of several marine merchants -- are natural persons who claim to be
fishermen.
The primary interest of the first set of petitioners is, of course, to prevent the prosecution, trial and determination of the criminal cases
until the constitutionality or legality of the Ordinances they allegedly violated shall have been resolved. The second set of petitioners
merely claim that they being fishermen or marine merchants, they would be adversely affected by the ordinances.
As to the first set of petitioners, this special civil for certiorari must fail on the ground of prematurity amounting to a lack of cause of
action. There is no showing that the said petitioners, as the accused in the criminal cases, have filed motions to quash the informations
therein and that the same were denied. The ground available for such motions is that the facts charged therein do not constitute an
offense because the ordinances in question are unconstitutional.[6] It cannot then be said that the lower courts acted without or in
excess of jurisdiction or with grave abuse of discretion to justify recourse to the extraordinary remedy of certiorari or prohibition. It must
further be stressed that even if the petitioners did file motions to quash, the denial thereof would not forthwith give rise to a cause of
action under Rule 65 of the Rules of Court. The general rule is that where a motion to quash is denied, the remedy therefrom is not
certiorari, but for the party aggrieved thereby to go to trial without prejudice to reiterating special defenses involved in said motion, and
if, after trial on the merits of adverse decision is rendered, to appeal therefrom in the manner authorized by law.[7] And , even where in
an exceptional circumstance such denial may be the subject of a special civil action for certiorari, a motion for reconsideration must
have to be filed to allow the court concerned an opportunity to correct its errors, unless such motion may be dispensed with because of
existing exceptional circumstances.[8] Finally, even if a motion for reconsideration has been filed and denied, the remedy under Rule 65
is still unavailable absent any showing of the grounds provided for in Section 1 thereof.[9] For obvious reasons, the petition at bar does
not, and could not have , alleged any of such grounds.
As to the second set of petitioners, the instant petition is obviously one for DECLARATORY RELIEF, i.e., for a declaration that the
Ordinances in question are a nullity ... for being unconstitutional.[10] As such, their petition must likewise fail, as this Court is not
possessed of original jurisdiction over petitions for declaratory relief even if only questions of law are involved,[11] it being settled that the
Court merely exercises appellate jurisdiction over such petitions.[12]
II
Even granting arguendo that the first set of petitioners have a cause of action ripe for the extraordinary writ of certiorari, there is here a
clear disregard of the hierarchy of courts, and no special and important reason or exceptional or compelling circumstance has been
adduced why direct recourse to us should be allowed. While we have concurrent jurisdiction with Regional Trial courts and with the
Court of Appeals to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction, such concurrence
gives petitioners no unrestricted freedom of choice of court forum, so we held in People v. Cuaresma:[13]
This concurrence of jurisdiction is not to be taken as according to parties seeking any of the writs an absolute unrestrained freedom
of choice of the court to which application therefor will be directed. There is after all hierarchy of courts. That hierarchy is determinative
of the venue of appeals, and should also serve as a general determinant of the appropriate forum for petitions for the extraordinary
writs. A becoming regard for that judicial hierarchy most certainly indicates that petitions for the issuance of extraordinary writs against
first level (inferior) courts should be filed with the Regional Trial Court, and those against the latter, with the Court of Appeals. A direct
invocation of the Supreme Courts original jurisdiction to issue these writs should be allowed only when there are special and important
reasons therefor, clearly and specifically set out in the petition. This is established policy. It is a policy necessary to prevent inordinate
demands upon the Courts time and attention which are better devoted to those matters within its exclusive jurisdiction, and to prevent
further over-crowding of the Courts docket.
The Court feels the need to reaffirm that policy at this time, and to enjoin strict adherence thereto in the light of what it perceives to be a
growing tendency on the part of litigants and lawyers to have their applications for the so-called extraordinary writs, and sometimes
even their appeals, passed upon and adjudicated directly and immediately by the highest tribunal of the land.

In Santiago v. Vasquez,[14] this Court forcefully expressed that the propensity of litigants and lawyers to disregard the hierarchy of courts
must be put to a halt, not only because of the imposition upon the precious time of this Court, but also because of the inevitable and
resultant delay, intended or otherwise, in the adjudication of the case which often has to be remanded or referred to the lower court, the
proper forum under the rules of procedure, or as better equipped to resolve the issues since this Court is not a trier of facts. We
reiterated the judicial policy that this Court will not entertain direct resort to it unless the redress desired cannot be obtained in the
appropriate courts or where exceptional and compelling circumstances justify availment of a remedy within and calling for the exercise
of [its] primary jurisdiction.
III
Notwithstanding the foregoing procedural obstacles against the first set of petitioners, we opt to resolve this case on its merits
considering that the lifetime of the challenged Ordinances is about to end. Ordinance No. 15-92 of the City of Puerto Princesa is
effective only up to 1 January 1998, while Ordinance No. 2 of the Province of Palawan, enacted on 19 February 1993, is effective for
only five (5) years. Besides, these Ordinances were undoubtedly enacted in the exercise of powers under the new LGC relative to the
protection and preservation of the environment and are thus novel and of paramount importance. No further delay then may be allowed
in the resolution of the issues raised.
It is of course settled that laws (including ordinances enacted by local government units) enjoy the presumption of constitutionality.[15] To
overthrow this presumption, there must be a clear and unequivocal breach of the Constitution, not merely a doubtful or argumentative
contradiction. In short, the conflict with the Constitution must be shown beyond reasonable doubt.[16] Where doubt exists, even if well
founded, there can be no finding of unconstitutionality. To doubt is to sustain.[17]
After a scrunity of the challenged Ordinances and the provisions of the Constitution petitioners claim to have been violated, we find
petitioners contentions baseless and so hold that the former do not suffer from any infirmity, both under the Constitution and applicable
laws.
Petitioners specifically point to Section 2, Article XII and Sections 2 and 7, Article XIII of the Constitution as having been transgressed
by the Ordinances.
The pertinent portion of Section 2 of Article XII reads:
SEC. 2.

xxx

The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea, and exclusive economic zone, and reserve
its use and enjoyment exclusively to Filipino citizens.
The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as cooperative fish farming,
with priority to subsistence fishermen and fishworkers in rivers, lakes, bays, and lagoons.
Sections 2 and 7 of Article XIII provide:
Sec. 2. The promotion of social justice shall include the commitment to create economic opportunities based on freedom of initiative
and self-reliance.
xxx
SEC. 7. The State shall protect the rights of subsistence fishermen, especially of local communities, to the preferential use of the
communal marine and fishing resources, both inland and offshore. It shall provide support to such fishermen through appropriate
technology and research, adequate financial, production, and marketing assistance, and other services. The State shall also protect,
develop, and conserve such resources. The protection shall extend to offshore fishing grounds of subsistence fishermen against
foreign intrusion. Fishworkers shall receive a just share from their labor in the utilization of marine and fishing resources
.
There is absolutely no showing that any of the petitioners qualifies as a subsistence or marginal fisherman. In their petition, petitioner
Airline Shippers Association of Palawan is described as a private association composed of Marine Merchants; petitioners Robert Lim
and Virginia Lim, as merchants; while the rest of the petitioners claim to be fishermen, without any qualification, however, as to their

status.
Since the Constitution does not specifically provide a definition of the terms subsistence or marginal fishermen,[18] they should be
construed in their general and ordinary sense. A marginal fisherman is an individual engaged in fishing whose margin of return or
reward in his harvest of fish as measured by existing price levels is barely sufficient to yield a profit or cover the cost of gathering the
fish,[19] while a subsistence fisherman is one whose catch yields but the irreducible minimum for his livelihood.[20] Section 131(p) of the
LGC (R.A. No. 7160) defines a marginal farmer or fisherman as an individual engaged in subsistence farming or fishing which shall be
limited to the sale, barter or exchange of agricultural or marine products produced by himself and his immediate family. It bears
repeating that nothing in the record supports a finding that any petitioner falls within these definitions.
Besides, Section 2 of Article XII aims primarily not to bestow any right to subsistence fishermen, but to lay stress on the duty of the
State to protect the nations marine wealth. What the provision merely recognizes is that the State may allow, by law, cooperative fish
farming, with priority to subsistence fishermen and fishworkers in rivers, lakes, bays, and lagoons. Our survey of the statute books
reveals that the only provision of law which speaks of the preferential right of marginal fishermen is Section 149 of the LGC of 1991
which pertinently provides:
SEC. 149. Fishery Rentals, Fees and Charges. -- x x x
(b) The sangguniang bayan may:
(1) Grant fishery privileges to erect fish corrals, oyster, mussels or other aquatic beds or bangus fry areas, within a definite zone of the
municipal waters, as determined by it: Provided, however, That duly registered organizations and cooperatives of marginal fishermen
shall have preferential right to such fishery privileges ....
In a Joint Administrative Order No. 3, dated 25 April 1996, the Secretary of the Department of Agriculture and the Secretary of the
Department of Interior and Local Government prescribed the guidelines on the preferential treatment of small fisherfolk relative to the
fishery right mentioned in Section 149. This case, however, does not involve such fishery right.
Anent Section 7 of Article XIII, it speaks not only of the use of communal marine and fishing resources, but of their protection,
development, and conservation. As hereafter shown, the ordinances in question are meant precisely to protect and conserve our
marine resources to the end that their enjoyment by the people may be guaranteed not only for the present generation, but also for the
generations to come.
The so-called preferential right of subsistence or marginal fishermen to the use of marine resources is not at all absolute. In
accordance with the Regalian Doctrine, marine resources belong to the State, and, pursuant to the first paragraph of Section 2, Article
XII of the Constitution, their exploration, development and utilization ... shall be under the full control and supervision of the State.
Moreover, their mandated protection, development, and conservation as necessarily recognized by the framers of the Constitution,
imply certain restrictions on whatever right of enjoyment there may be in favor of anyone. Thus, as to the curtailment of the preferential
treatment of marginal fisherman, the following exchange between Commissioner Francisco Rodrigo and Commissioner Jose F.S.
Bengzon, Jr., took place at the plenary session of the Constitutional Commission:
MR. RODRIGO:
Let us discuss the implementation of this because I would not raise the hopes of our people, and afterwards fail in the implementation.
How will this be implemented? Will there be a licensing or giving of permits so that government officials will know that one is really a
marginal fisherman? Or if policeman say that a person is not a marginal fisherman, he can show his permit, to prove that indeed he is
one.
MR. BENGZON:
Certainly, there will be some mode of licensing insofar as this is concerned and this particular question could be tackled when we
discuss the Article on Local Governments -- whether we will leave to the local governments or to Congress on how these things will be
implemented. But certainly, I think our Congressmen and our local officials will not be bereft of ideas on how to implement this
mandate.

xxx
MR. RODRIGO:
So, once one is licensed as a marginal fisherman, he can go anywhere in the Philippines and fish in any fishing grounds.
MR. BENGZON:
Subject to whatever rules and regulations and local laws that may be passed, may be existing or will be passed.[21] (underscoring
supplied for emphasis).
What must likewise be borne in mind is the state policy enshrined in the Constitution regarding the duty of the State to protect and
advance the right of the people to a balanced and healthful ecology in accord with the rhythm and harmony of nature.[22] On this score,
in Oposa v. Factoran,[23] this Court declared:
While the right to balanced and healthful ecology is to be found under the Declaration of Principles the State Policies and not under the
Bill of Rights, it does not follow that it is less important than any of the civil and political rights enumerated in the latter. Such a right
belongs to a different category of rights altogether for it concerns nothing less than self-preservation and self-perpetuation - aptly and
fittingly stressed by the petitioners - the advancement of which may even be said to predate all governments and constitutions. As a
matter of fact, these basic rights need not even be written in the Constitution for they are assumed to exist from the inception of
humankind. If they are now explicitly mentioned in the fundamental charter, it is because of the well-founded fear of its framers that
unless the rights to a balanced and healthful ecology and to health are mandated as state policies by the Constitution itself, thereby
highlighting their continuing importance and imposing upon the state a solemn obligation to preserve the first and protect and advance
the second , the day would not be too far when all else would be lost not only for the present generation, but also for those to come generations which stand to inherit nothing but parched earth incapable of sustaining life.
The right to a balanced and healthful ecology carries with it a correlative duty to refrain from impairing the environment ...
The LGC provisions invoked by private respondents merely seek to give flesh and blood to the right of the people to a balanced and
healthful ecology. In fact, the General Welfare Clause, expressly mentions this right:
SEC. 16. General Welfare.-- Every local government unit shall exercise the powers expressly granted, those necessarily implied
therefrom, as well as powers necessary, appropriate, or incidental for its efficient and effective governance, and those which are
essential to the promotion of the general welfare. Within their respective territorial jurisdictions, local government units shall ensure and
support, among other things, the preservation and enrichment of culture, promote health and safety, enhance the right of the people to
a balanced ecology, encourage and support the development of appropriate and self-reliant scientific and technological capabilities,
improve public morals, enhance economic prosperity and social justice, promote full employment among their residents, maintain
peace and order, and preserve the comfort and convenience of their inhabitants. (underscoring supplied).
Moreover, Section 5(c) of the LGC explicitly mandates that the general welfare provisions of the LGC shall be liberally interpreted to
give more powers to the local government units in accelerating economic development and upgrading the quality of life for the people
of the community.
The LGC vests municipalities with the power to grant fishery privileges in municipal waters and to impose rentals, fees or charges
therefor; to penalize, by appropriate ordinances, the use of explosives, noxious or poisonous substances, electricity, muro-ami, and
other deleterious methods of fishing; and to prosecute any violation of the provisions of applicable fishery laws.[24] Further, the
sangguniang bayan, the sangguniang panlungsod and the sangguniang panlalawigan are directed to enact ordinances for the general
welfare of the municipality and its inhabitants, which shall include, inter alia, ordinances that [p]rotect the environment and impose
appropriate penalties for acts which endanger the environment such as dynamite fishing and other forms of destructive fishing ... and
such other activities which result in pollution, acceleration of eutrophication of rivers and lakes or of ecological imbalance.[25]
Finally, the centerpiece of LGC is the system of decentralization[26] as expressly mandated by the Constitution.[27] Indispensable thereto
is devolution and the LGC expressly provides that [a]ny provision on a power of a local government unit shall be liberally interpreted in

its favor, and in case of doubt, any question thereon shall be resolved in favor of devolution of powers and of the lower local
government unit. Any fair and reasonable doubt as to the existence of the power shall be interpreted in favor of the local government
unit concerned,[28] Devolution refers to the act by which the National Government confers power and authority upon the various local
government units to perform specific functions and responsibilities.[29]
One of the devolved powers enumerated in the section of the LGC on devolution is the enforcement of fishery laws in municipal waters
including the conservation of mangroves.[30] This necessarily includes enactment of ordinances to effectively carry out such fishery laws
within the municipal waters.
The term municipal waters, in turn, include not only streams, lakes, and tidal waters within the municipality, not being the subject of
private ownership and not comprised within the national parks, public forest, timber lands, forest reserves, or fishery reserves, but also
marine waters included between two lines drawn perpendicularly to the general coastline from points where the boundary lines of the
municipality or city touch the sea at low tide and a third line parallel with the general coastline and fifteen kilometers from it.[31] Under
P.D. No. 704, the marine waters included in municipal waters is limited to three nautical miles from the general coastline using the
above perpendicular lines and a third parallel line.
These fishery laws which local government units may enforce under Section 17(b), (2), (i) in municipal waters include: (1) P.D. No.
704; (2) P.D. No. 1015 which, inter alia, authorizes the establishment of a closed season in any Philippine water if necessary for
conservation or ecological purposes; (3) P.D. No. 1219 which provides for the exploration, exploitation, utilization, and conservation of
coral resources; (4) R.A. No. 5474, as amended by B.P. Blg. 58, which makes it unlawful for any person, association, or corporation to
catch or cause to be caught, sell, offer to sell, purchase, or have in possession any of the fish specie called gobiidae or ipon during
closed season; and (5) R.A. No. 6451 which prohibits and punishes electrofishing, as well as various issuances of the BFAR.
To those specifically devolved insofar as the control and regulation of fishing in municipal waters and the protection of its marine
environment are concerned, must be added the following:
1. Issuance of permits to construct fish cages within municipal waters;
2. Issuance of permits to gather aquarium fishes within municipal waters;
3. Issuance of permits to gather kapis shells within municipal waters;
4. Issuance of permits to gather/culture shelled mollusks within municipal waters;
5. Issuance of licenses to establish seaweed farms within municipal waters;
6. Issuance of licenses to establish culture pearls within municipal waters;
7. Issuance of auxiliary invoice to transport fish and fishery products; and
8. Establishment of closed season in municipal waters.
These functions are covered in the Memorandum of Agreement of 5 April 1994 between the Department of Agriculture and the
Department of Interior and Local Government.
In light then of the principles of decentralization and devolution enshrined in the LGC and the powers granted to local government units
under Section 16 (the General Welfare Clause), and under Sections 149, 447 (a) (1) (vi), 458 (a) (1) (vi) and 468 (a) (1) (vi), which
unquestionably involve the exercise of police power, the validity of the questioned Ordinances cannot be doubted.
Parenthetically, we wish to add that these Ordinances find full support under R.A. No. 7611, otherwise known as the Strategic
Environmental Plan (SEP) for Palawan Act, approved on 19 July 1992. This statute adopts a comprehensive framework for the
sustainable development of Palawan compatible with protecting and enhancing the natural resources and endangered environment of
the province, which shall serve to guide the local government of Palawan and the government agencies concerned in the formulation
and implementation of plans, programs and projects affecting said province.[32]
At this time then, it would be appropriate to determine the relation between the assailed Ordinances and the aforesaid powers of the

Sangguniang Panlungsod of the City of Puerto Princesa and the Sangguniang Panlalawigan of the Province of Palawan to protect the
environment. To begin, we ascertain the purpose of the Ordinances as set forth in the statement of purposes or declaration of policies
quoted earlier.
It is clear to the Court that both Ordinances have two principal objectives or purposes: (1) to establish a closed season for the species
of fish or aquatic animals covered therein for a period of five years, and (2) to protect the corals of the marine waters of the City of
Puerto Princesa and the Province of Palawan from further destruction due to illegal fishing activities.
The accomplishment of the first objective is well within the devolved power to enforce fishery laws in municipal waters, such as P.D. No.
1015, which allows the establishment of closed seasons. The devolution of such power has been expressly confirmed in the
Memorandum of Agreement of 5 April 1994 between the Department of Agriculture and the Department of Interior and Local
Government.
The realization of the second objective falls within both the general welfare clause of the LGC and the express mandate thereunder to
cities and provinces to protect the environment and impose appropriate penalties for acts which endanger the environment.[33]
The destruction of the coral reefs results in serious, if not irreparable, ecological imbalance, for coral reefs are among the natures lifesupport systems.[34] They collect, retain, and recycle nutrients for adjacent nearshore areas such as mangroves, seagrass beds, and
reef flats; provide food for marine plants and animals; and serve as a protective shelter for aquatic organisms.[35] It is said that
[e]cologically, the reefs are to the oceans what forests are to continents: they are shelter and breeding grounds for fish and plant
species that will disappear without them.[36]
The prohibition against catching live fish stems, in part, from the modern phenomenon of live-fish trade which entails the catching of socalled exotic tropical species of fish not only for aquarium use in the West, but also for the market for live banquet fish [which] is
virtually insatiable in ever more affluent Asia.[37] These exotic species are coral-dwellers, and fishermen catch them by diving in shallow
water with corraline habitats and squirting sodium cyanide poison at passing fish directly or onto coral crevices; once affected the fish
are immobilized [merely stunned] and then scooped by hand.[38] The diver then surfaces and dumps his catch into a submerged net
attached to the skiff . Twenty minutes later, the fish can swim normally. Back on shore, they are placed in holding pens, and within a few
weeks, they expel the cyanide from their system and are ready to be hauled. Then they are placed in saltwater tanks or packaged in
plastic bags filled with seawater for shipment by air freight to major markets for live food fish.[39] While the fish are meant to survive, the
opposite holds true for their former home as [a]fter the fisherman squirts the cyanide, the first thing to perish is the reef algae, on which
fish feed. Days later, the living coral starts to expire. Soon the reef loses its function as habitat for the fish, which eat both the algae and
invertebrates that cling to the coral. The reef becomes an underwater graveyard, its skeletal remains brittle, bleached of all color and
vulnerable to erosion from the pounding of the waves.[40] It has been found that cyanide fishing kills most hard and soft corals within
three months of repeated application.[41]
The nexus then between the activities barred by Ordinance No. 15-92 of the City of Puerto Princesa and the prohibited acts provided in
Ordinance No. 2, Series of 1993 of the Province of Palawan, on one hand, and the use of sodium cyanide, on the other, is painfully
obvious. In sum, the public purpose and reasonableness of the Ordinances may not then be controverted.
As to Office Order No. 23, Series of 1993, issued by Acting City Mayor Amado L. Lucero of the City of Puerto Princesa, we find nothing
therein violative of any constitutional or statutory provision. The Order refers to the implementation of the challenged ordinance and is
not the Mayors Permit.
The dissenting opinion of Mr. Justice Josue N. Bellosillo relies upon the lack of authority on the part of the Sangguniang Panlungsod of
Puerto Princesa to enact Ordinance No. 15, Series of 1992, on the theory that the subject thereof is within the jurisdiction and
responsibility of the Bureau of Fisheries and Aquatic Resources (BFAR) under P.D. No. 704, otherwise known as the Fisheries Decree
of 1975; and that, in any event, the Ordinance is unenforceable for lack of approval by the Secretary of the Department of Natural
Resources (DNR), likewise in accordance with P.D. No. 704.
The majority is unable to accommodate this view. The jurisdiction and responsibility of the BFAR under P. D. no. 704, over the
management, conservation, development, protection, utilization and disposition of all fishery and aquatic resources of the country is not
all-encompassing. First, Section 4 thereof excludes from such jurisdiction and responsibility municipal waters, which shall be under the
municipal or city government concerned, except insofar as fishpens and seaweed culture in municipal in municipal centers are
concerned. This section provides, however, that all municipal or city ordinances and resolutions affecting fishing and fisheries and any
disposition thereunder shall be submitted to the Secretary of the Department of Natural Resources for appropriate action and shall

have full force and effect only upon his approval.[42]

Second, it must at once be pointed out that the BFAR is no longer under the Department of Natural Resources (now Department of
Environment and Natural Resources). Executive Order No. 967 of 30 June 1984 transferred the BFAR from the control and supervision
of the Minister (formerly Secretary) of Natural Resources to the Ministry of Agriculture and Food (MAF) and converted it into a mere
staff agency thereof, integrating its functions with the regional offices of the MAF.
In Executive Order No. 116 of 30 January 1987, which reorganized the MAF, the BFAR was retained as an attached agency of the
MAF. And under the Administrative Code of 1987,[43] the BFAR is placed under the Title concerning the Department of Agriculture.[44]
Therefore, it is incorrect to say that the challenged Ordinance of the City of Puerto Princesa is invalid or unenforceable because it was
not approved by the Secretary of the DENR. If at all, the approval that should be sought would be that of the Secretary of the
Department of Agriculture (not DENR) of municipal ordinances affecting fishing and fisheries in municipal waters has been dispensed
with in view of the following reasons:
(1)
Section 534 (Repealing Clause) of the LGC expressly repeals or amends Section 16 and 29 of P.D. No. 704[45] insofar that
they are inconsistent with the provisions of the LGC.
(2)
As discussed earlier, under the general welfare clause of the LGC, local government units have the power, inter alia, to
enact ordinances to enhance the right of the people to a balanced ecology. It likewise specifically vests municipalities with the power to
grant fishery privileges in municipal waters, and impose rentals, fees or charges therefor; to penalize, by appropriate ordinances, the
use of explosives, noxious or poisonous substances, electricity, muro-ami, and other deleterious methods of fishing; and to prosecute
other methods of fishing; and to prosecute any violation of the provisions of applicable fishing laws.[46] Finally, it imposes upon the
sangguniang bayan, the sangguniang panlungsod, and the sangguniang panlalawigan the duty to enact ordinances to [p]rotect the
environment and impose appropriate penalties for acts which endanger the environment such as dynamite fishing and other forms of
destructive fishing and such other activities which result in pollution, acceleration of eutrophication of rivers and lakes or of ecological
imbalance.[47]
In closing, we commend the Sangguniang Panlungsod of the City of Puerto Princesa and Sangguniang Panlalawigan of the Province of
Palawan for exercising the requisite political will to enact urgently needed legislation to protect and enhance the marine environment,
thereby sharing in the herculean task of arresting the tide of ecological destruction. We hope that other local government units shall
now be roused from their lethargy and adopt a more vigilant stand in the battle against the decimation of our legacy to future
generations. At this time, the repercussions of any further delay in their response may prove disastrous, if not, irreversible.
WHEREFORE, the instant petition is DISMISSED for lack of merit and the temporary restraining order issued on 11 November 1993 is
LIFTED.
No pronouncement as to costs.
SO ORDERED.
Narvasa, C.J., Padilla, Vitug, Panganiban, and Torres, Jr., JJ., concur.
Romero, Melo, Puno, and Francisco, JJ., joined the ponencias of Justices Davide and Mendoza. Bellosillo, J., see dissenting opinion.
Kapunan and Hermosisima, Jr., JJ., join Justice Bellosillo in his dissenting opinion.
Mendoza, see concurring opinion.
Regalado, J., on official leave.

230 Phil. 590

EN BANC
[ G.R. No. 73002, December 29, 1986 ]
THE DIRECTOR OF LANDS, PETITIONER, VS. INTERMEDIATE APPELLATE COURT AND ACME PLYWOOD & VENEER CO. INC.,
RESPONDENTS.
DECISION
NARVASA, J.:
The Director of Lands has brought this appeal by certiorari from a judgment of the Intermediate Appellate Court affirming a decision of
the Court of First Instance of Isabela, which ordered registration in favor of Acme Plywood & Veneer Co., Inc. of five parcels of land
measuring 481, 390 square meters, more or less, acquired by it from Mariano and Acer Infiel, members of the Dumagat tribe.
The registration proceedings were for confirmation of title under Section 48 of Commonwealth Act No. 141 (The Public Land Act), as
amended; and the appealed judgment sums up the findings of the trial court in said proceedings in this wise:
1. That Acme Plywood & Veneer Co. Inc., represented by Mr. Rodolfo Nazario is a corporation duly organized in accordance with
the laws of the Republic of the Philippines and registered with the Securities and Exchange Commission on December 23,
1959;
2. That Acme Plywood & Veneer Co. Inc., represented by Mr. Rodolfo Nazario can acquire real properties pursuant to the
provisions of the Articles of Incorporation particularly on the provision of its secondary purposes (paragraph (9), Exhibit 'M-1');
3. That the land subject of the Land Registration proceeding was ancestrally acquired by Acme Plywood & Veneer Co., Inc., on
October 29, 1962, from Mariano Infiel and Acer Infiel, both members of the Dumagat tribe and as such are cultural minorities;
4. That the constitution of the Republic of the Philippines of 1935 is applicable as the sale took place on October 29, 1962;
5. That the possession of the Infiels over the land relinquished or sold to Acme Plywood Veneer Co., Inc., dates back before the
Philippines was discovered by Magellan as the ancestors of the Infiels have possessed and occupied the land from generation
to generation until the same came into the possession of Mariano Infiel and Acer Infiel;
6. That the possession of the applicant Acme Plywood & Veneer Co., Inc., is continuous, adverse and public from 1962 to the
present and tacking the possession of the Infiels who were granted from whom the applicant bought said land on October 29,
1962, hence the possession is already considered from time immemorial;
7. That the land sought to be registered is a private land pursuant to the provisions of Republic Act No. 3872 granting absolute
ownership to members of the non-Christian Tribes on land occupied by them or their ancestral lands, whether with the
alienable or disposable public land or within the public domain;
8. That applicant Acme Plywood & Veneer Co. Inc., has introduced more than Forty-Five Million (P45,000,000.00) Pesos worth
of improvements, said improvements were seen by the Court during its ocular investigation of the land sought to be registered
on September 18, 1982;
9. That the ownership and possession of the land sought to be registered by the applicant was duly recognized by the
government when the Municipal Officials of Maconacon, Isabela, have negotiated for the donation of the townsite from Acme
Plywood & Veneer Co., Inc., and this negotiation came to reality when the Board of Directors of the Acme Plywood & Veneer
Co., Inc., had donated a part of the land bought by the Company from the Infiels for the townsite of Maconacon, Isabela (Exh.
'N') on November 15, 1979, and which donation was accepted by the Municipal Government of Maconacon, Isabela (Exh. 'N1'), during their special session on November 22, 1979."
The Director of Lands takes no issue with any of these findings except as to the applicability of the 1935 Constitution to the matter at
hand. Concerning this, he asserts that, the registration proceedings having been commenced only on July 17, 1981, or long after the

1973 Constitution had gone into effect, the latter is the correctly applicable law; and since section 11 of its Article XIV prohibits private
corporations or associations from holding alienable lands of the public domain, except by lease not to exceed 1,000 hectares (a
prohibition not found in the 1935 Constitution which was in force in 1962 when Acme purchased the lands in question from the Infiels),
it was reversible error to decree registration in favor of Acme.
Section 48, paragraphs (b) and (c), of Commonwealth Act No. 141, as amended, reads:
"SEC. 48. The following described citizens of the Philippines, occupying lands of the public domain or claiming to own any such lands
or an interest therein, but whose titles have not been perfected or completed, may apply to the Court of First Instance of the province
where the land is located for confirmation of their claims, and the issuance of a certificate of title therefor, under the Land Registration
Act, to wit:
xxx

xxx

xxx

(b) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious
possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition or ownership, for at least
thirty years immediately preceding the filing of the application for confirmation of title except when prevented by war or force majeure.
These shall be conclusively presumed to nave performed all the conditions essential to a Government grant and shall be entitled to a
certificate of title under the provisions of this chapter.
(c) Members of the National Cultural minorities who by themselves or through their predecessors-in-interest have been in open,
continuous, exclusive and notorious possession and occupation of lands of the public domain suitable to agriculture, whether
disposable or not, under a bona fide claim of ownership for at least 30 years shall be entitled to the rights granted in subsection (b)
hereof."
The Petition for Review does not dispute -- indeed, in view of the quoted findings of the trial court which were cited and affirmed by the
Intermediate Appellate Court, it can no longer controvert before this Court -- the fact that Mariano and Acer Infiel, from wham Acme
purchased the lands in question on October 29, 1962, are members of the national cultural minorities who had, by themselves and
through their progenitors, possessed and occupied those lands since time immemorial, or for more than the required 30-year period
and were, by reason thereof, entitled to exercise the right granted in Section 48 of the Public Land Act to have their title judicially
confirmed. Nor is there any pretension that Acme, as the successor-in-interest of the Infiels, is disqualified to acquire and register
ownership of said lands under any provision of the 1973 Constitution other than Section 11 of its Article XIV already referred to.
Given the foregoing, the question before this Court is whether or not the title that the Infiels had transferred to Acme in 1962 could be
confirmed in favor of the latter in proceedings instituted by it in 1981 when the 1973 Constitution was already in effect, having in mind
the prohibition therein against private corporations holding lands of the public domain except in lease not exceeding 1,000 hectares.
The question turns upon a determination of the character of the lands at the time of institution of the registration proceedings in 1981.
If they were then still part of the public domain, it must be answered in the negative. If, on the other hand, they were then already
private lands, the constitutional prohibition against their acquisition by private corporations or associations obviously does not apply.
In this regard, attention has been invited to Manila Electric Company vs. Castro-Bartolome, et al,[1] where a similar set of facts
prevailed. In that case, Manila Electric Company, a domestic corporation more than 60% of the capital stock of which is Filipino-owned,
had purchased in 1947 two lots in Tanay, Rizal from the Piquing spouses. The lots had been possessed by the vendors and, before
them, by their predecessor-in-interest, Olimpia Ramos, since prior to the outbreak of the Pacific War in 1941. On December 1, 1976,
Meralco applied to the Court of First Instance of Rizal, Makati Branch, for confirmation of title to said lots. The court, assuming that the
lots were public land, dismissed the application on the ground that Meralco, a juridical person, was not qualified to apply for registration
under Section 48(b) of the Public Land Act which allows only Filipino citizens or natural persons to apply for judicial confirmation of
imperfect titles to public land. Meralco appealed, and a majority of this Court upheld the dismissal. It was held that:
"x x x, the said land is still public land. It would cease to be public land only upon the issuance of the certificate of title to any Filipino
citizen claiming it under section 48(b). Because it is still public land and the Meralco, as a juridical person, is disqualified to apply for its
registration under section 48(b), Meralco's application cannot be given due course or has to be dismissed.
xxx

xxx

xxx

"Finally, it may be observed that the constitutional prohibition makes no distinction between (on the one hand) alienable agricultural
public lands as to which no occupant has an imperfect title and (on the other hand) alienable lands of the public domain as to which an
occupant has an imperfect title subject to judicial confirmation.
Since section 11 of Article XIV does not distinguish, we should not make any distinction or qualification. The prohibition applies to
alienable public lands as to which a Torrens title may be secured under section 48(b). The proceeding under section 48(b)
'presupposes that the land is public' (Mindanao vs. Director of Lands, L-19535, July 30, 1967, 20 SCRA 641, 644)."
The present Chief Justice entered a vigorous dissent, tracing the line of cases beginning with Carino in 1909[2] thru Susi in 1925[3] down
to Herico in 1980[4], which developed, affirmed and reaffirmed the doctrine that open, exclusive and undisputed possession of alienable
public land for the period prescribed by law creates the legal fiction whereby the land, upon completion of the requisite period ipso jure
and without the need of judicial or other sanction, ceases to be public land and becomes private property. That said dissent expressed
what is the better -- and, indeed, the correct, view -- becomes evident from a consideration of some of the principal rulings cited therein.
The main theme was given birth, so to speak, in Carino, involving the Decree/Regulations of June 25, 1880 for adjustment of royal
lands wrongfully occupied by private individuals in the Philippine Islands. It was ruled that:
"It is true that the language of articles 4 and 5[5] attributes title to those 'who may prove' possession for the necessary time and we do
not overlook the argument that this means may prove in registration proceedings. It may be that an English conveyancer would have
recommended an application under the foregoing decree, but certainly it was not calculated to convey to the mind of an Igorot chief the
notion that ancient family possessions were in danger, if he had read every word of it. The words 'may prove' (acrediten), as well or
better, in view of the other provisions, might be taken to mean when called upon to do so in any litigation. There are indications that
registration was expected from all, but none sufficient to show that, for want of it, ownership actually gained would be lost. The effect of
the proof, wherever made, was not to confer title, but simply to establish it, as already conferred by the decree, if not by earlier law. x x
x."
That ruling assumed a more doctrinal character because expressed in more categorical language, in Susi:
"x x x. In favor of Valentin Susi, there is, moreover, the presumption juris et de jure established in paragraph (b) of section 45 of Act No.
2874, amending Act No. 926, that all the necessary requirements for a grant by the Government were complied with, for he has been in
actual and physical possession, personally and through his predecessors, of an agricultural land of the public domain openly,
continuously, exclusively and publicly since July 26, 1984, with a right to a certificate of title to said land under the provisions of Chapter
VIII of said Act. So that when Angela Razon applied for the grant in her favor, Valentin Susi had already acquired, by operation of law
not only a right to a grant, but a grant of the Government, for it is not necessary that a certificate of title should be issued in order that
said grant may be sanctioned the courts, an application therefor is sufficient, under provisions of section 47 of Act No. 2874. If by a
legal fiction, Valentin Susi had acquired the land in question by a grant of the State, it had already ceased to be of the public domain
and had become private property, at least by presumption, of Valentin Susi, beyond the control of the Director of Lands. Consequently,
in selling the land in question of Angela Razon, the Director of Lands disposed of a land over which he had no longer any title or
control, and the sale thus made was void and of no effect, and Angela Razon did not thereby acquire any right.[6]
Succeeding cases, of which only sane need be mentioned, like Lacaste vs. Director of Lands[7], Mesina vs. Vda. de Sonza[8], Manarpac
vs. Cabanatuan[9], Miguel vs. Court of Appeals[10] and Herico vs. Dar, supra, by invoking and affirming the Susi doctrine have firmly
rooted it in jurisprudence.
Herico, in particular, appears to be squarely affirmative:[11]
"x x x. Secondly, under the provisions of Republic Act No. 1942, which the respondent Court held to be inapplicable to the petitioner's
case, with the latter's proven occupation and cultivation for more than 30 years since 1914, by himself and by his predecessors-ininterest, title over the land has vested on petitioner so as to segregate the land from the mass of public land. Thereafter, it is no longer
disposable under the Public Land Act as by free patent. x x x.
xxx

xxx

xxx

As interpreted in several cases, when the conditions as specified in the foregoing provision are complied with, the possessor is deemed
to have acquired, by operation of law, a right to a grant, a government grant, without the necessity of a certificate of title being issued.
The land, therefore, ceases to be of the public domain and beyond the authority of the Director of Lands to dispose of. The application
for confirmation is mere formality, the lack of which does not affect the legal sufficiency of the title as would be evidenced by the patent
and the Torrens title to be issued upon the strength of said patent."[12]

Nothing can more clearly demonstrate the logical inevitability of considering possession of public land which is of the character and
duration prescribed by statute as the equivalent of an express grant from the State than the dictum of the statute itself[13] that the
possessor(s) "x x x shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be
entitled to a certificate of title x x x." No proof being admissible to overcome a conclusive presumption, confirmation proceedings would,
in truth be little more than a formality, at the most limited to ascertaining whether the possession claimed is of the required character
and length of time; and registration thereunder would not confer title, but simply recognize a title already vested. The proceedings
would not originally convert the land from public to private land, but only confirm such a conversion already affected by operation of law
from the moment the required period of possession became complete. As was so well put in Carino, "x x x (T) here are indications that
registration was expected from all, but none sufficient to show that, for want of it, ownership actually gained would be lost. The effect of
the proof, wherever made, was not to confer title, but simply to establish it, as already conferred by the decree, if not by earlier law."
If it is accepted -- as it must be -- that the land was already private land to which the Infiels had a legally sufficient and transferable title
on October 29, 1962 when Acme acquired it from said owners, it must also be conceded that Acme had a perfect right to make such
acquisition, there being nothing in the 1935 Constitution then in force (or, for that matter, in the 1973 Constitution which came into effect
later) prohibiting corporations from acquiring and owning private lands.
Even on the proposition that the land remained technically "public" land, despite immemorial possession of the Infiels and their
ancestors, until title in their favor was actually confirmed in appropriate proceedings under the Public Land Act, there can be no serious
question of Acme's right to acquire the land at the time it did, there also being nothing in the 1935 Constitution that might be construed
to prohibit corporations from purchasing or acquiring interests in public land to which the vendor had already acquired that type of socalled "incomplete" or "imperfect" title. The only limitation then extant was that corporations could not acquire, hold or lease public
agricultural lands in excess of 1,024 hectares. The purely accidental circumstance that confirmation proceedings were brought under
the aegis of the 1973 Constitution which forbids corporations from owning lands of the public domain cannot defeat a right already
vested before that law came into effect, or invalidate transactions then perfectly valid and proper. This Court has already held, in
analogous circumstances, that the Constitution cannot impair vested rights.
"We hold that the said constitutional prohibition[14] has no retroactive application to the sales application of Bian Development Co., Inc.
because it had already acquired a vested right to the land applied for at the time the 1973 Constitution took effect.
That Vested right has to be respected. It could not be abrogated by the new Constitution, Section 2, Article XIII of the 1935 Constitution
allows private corporations to purchase public agricultural lands not exceeding one thousand and twenty-four hectares. Petitioner'
prohibition action is barred by the doctrine of vested rights in constitutional law.
xxx

xxx

xxx

The due process clause prohibits the annihilation of vested rights. 'A state may not impair vested rights by legislative enactment, by the
enactment or by the subsequent repeal of a municipal ordinance, or by a change in the constitution of the State, except in a legitimate
exercise of the police power' (16 C.J.S. 1177-78).
xxx
xxx
xxx
In the instant case, it is incontestable that prior to the effectivity of the 1973 Constitution the right of the corporation to purchase the
land in question had become fixed and established and was no longer open to doubt or controversy.
Its compliance with the requirements of the Public Land Law for the issuance of a patent had the effect of segregating the said land
from the public domain. The corporation's right to obtain a patent for the land is protected by law. It cannot be deprived of that right
without due process (Director of Lands vs. CA, 123 Phil. 919)."[15]
The fact, therefore, that the confirmation proceedings were instituted by Acme in its own name must be regarded as simply another
accidental circumstance, productive of a defect hardly more than procedural and in nowise affecting the substance and merits of the
right of ownership sought to be confirmed in said proceedings, there being no doubt of Acme's entitlement to the land. As it is
unquestionable that in the light of the undispute facts, the Infiels, under either the 1935 or the 1973 Constitution, could have had title in
themselves confirmed and registered, only a rigid subservience to the letter of the law would deny the same benefit to their lawful
successor-in-interest by valid conveyance which violates no constitutional mandate.

The Court, in the light of the foregoing, is of the view, and so holds, that the majority ruling in Meralco must be reconsidered and no
longer deemed to be binding precedent. The correct rule, as enunciated in the line of cases already referred to, is that alienable public
land held by a possessor, personally or through his predecessors-in-interest, openly, continuously and exclusively for the prescribed
statutory period (30 years under The Public Land Act, as amended) is converted to private property by the mere lapse or completion of
said period, ipso jure. Following that rule and on the basis of the undisputed facts, the land subject of this appeal was already private
property at the time it was acquired from the Infiels by Acme. Acme thereby acquired a registrable title, there being at the tine no
prohibition against said corporation's holding or owning private land. The objection that, as a juridical person, Acme is not qualified to
apply for judicial confirmation of title under section 48(b) of the Public Land Act is technical, rather than substantial and, again, finds its
answer in the dissent in Meralco:
"6. To uphold respondent judge's denial of Meralco's application on the technicality that the Public Land Act allows only citizens of the
Philippines who are natural persons to apply for confirmation of theft title would be impractical and would just give rise to multiplicity of
court actions. Assuming that there was a technical error in not having filed the application for registration in the name of the Piguing
spouses as the original owners and vendors, still it is conceded that there is no prohibition against their sale of the land to the applicant
Meralco and neither is there any prohibition against the application being refiled with retroactive effect in the name of the original
owners and vendors (as such natural persons) with the end result of their application being granted, because of their indisputable
acquisition of ownership by operation of law and the conclusive presumption therein provided in their favor. It should not be necessary
to go through all the rituals at the great cost of refiling of all such applications in their names and adding to the overcrowded court
dockets when the Court can after all these years dispose of it here and now. (See Francisco vs. City of Davao)
The ends of justice would best be served, therefore, by considering the applications for confirmation as amended to conform to the
evidence, i.e. as filed in the names of the original persons who as natural persons are duly qualified to apply for formal confirmation of
the title that they had acquired by conclusive presumption and mandate of the Public Land Act and who thereafter duly sold to the
herein corporations (both admittedly Filipino corporations duly qualified to hold and own private lands) and granting the applications for
confirmation of title to the private lands so acquired and sold or exchanged."
There is also nothing to prevent Acme from reconveying the lands to the Infiels and the latter from themselves applying for confirmation
of title and, after issuance of the certificate/s of title in their names, deeding the lands back to Acme. But this would be merely indulging
in empty charades, whereas the same result is more efficaciously and speedily obtained, with no prejudice to anyone, by a liberal
application of the rule on amendment to conform to the evidence suggested in the dissent in Meralco.
While this opinion seemingly reverses an earlier ruling of comparatively recent vintage, in a real sense, it breaks no precedent, but only
reaffirms and re-establishes, as it were, doctrines the soundness of which has passed the test of searching examination and inquiry in
many past cases. Indeed, it is worth noting that the majority opinion, as well as the concurring opinions of Chief Justice Fernando and
Justice Abad Santos, in Meralco rested chiefly on the proposition that the petitioner therein, a juridical person, was disqualified from
applying for confirmation of an imperfect title to public land under Section 48(b) of the Public Land Act. Reference to the 1973
Constitution and its Article XIV, Section 11, was only tangential, limited to a brief paragraph in the main opinion, and may, in that
context, be considered as essentially obiter. Meralco, in short, decided no constitutional question.
WHEREFORE, there being no reversible error in the appealed judgment of the Intermediate Appellate Court, the same is hereby
affirmed, without costs in this instance.
SO ORDERED.
Feria, Yap, Fernan, Alampay, Cruz, Paras, and Feliciano, JJ., concur.
Teehankee, C.J., filed a concurring opinion.
Melencio-Herrera J., see dissent.
Gutierrez, Jr., J., reiterates his concurrence in Meralco v. Castro-Bartolome, and dissents here.

193 Phil. 251

SECOND DIVISION
[ G.R. Nos. L-49634-36, July 25, 1981 ]
BENJAMIN V. GUIANG AND NATIVIDAD H. GUIANG; AURELIO B. HIQUIANA AND PASTORA O. HIQUIANA, PETITIONERS, VS.
FILOMENO C. KINTANAR AND CORAZON B. KINTANAR; CORA ANN B. KINTANAR, CORA LOU B. KINTANAR, FIL ROGER B.
KINTANAR, PRIVATE RESPONDENTS, AND HON. JUDGE SERGIO APOSTOL, QUEZON CITY COURT OF FIRST INSTANCE,
BRANCH XVI, QUEZON CITY, RESPONDENT.
DECISION
BARREDO, J.:
Petition filed on January 15, 1979 for certiorari and mandamus seeking the setting aside of the decision and the two orders subsequent
thereto of respondent judge dated August 20, 1975 and November 14, 1978 and December 27, 1978, respectively, as acts committed
in grave abuse of discretion, the compromise agreement on which said decision was based being allegedly in contravention of the
Constitution and the Public Land Act, hence the execution thereof under the two questioned subsequent orders had no legal basis.
The exact nature of the petition and the relevant antecedents may perhaps be stated more comprehensively by quoting from the
petition itself (omitting the annexes mentioned therein) the following:
"2.1. This is a petition for certiorari, assailing as grave abuse of discretion, tantamount to a jurisdictional error, the order of the
respondent Judge in refusing to nullify a compromise agreement that violates the Public Land Act (Com. Act 141) and the 1973
Constitution, and in ordering the execution of judgment based thereon, rendered in three related cases between the petitioners and
private respondents.
3.0 Antecedents
"3.1. On December 5, 1974, three related complaints, successively docketed were instituted before the CFI of Quezon City, as follows:
a) Spouses Benjamin V. Guiang and Natividad Hiquiana-Guiang, Plaintiffs, vs. Filomeno C. Kintanar, defendant, Civil
Case No. Q-19572;
b) Spouses Benjamin V. Guiang and Natividad Hiquiana-Guiang, Plaintiffs, vs. Spouses Filomeno C. Kintanar and
Corazon B. Kintanar; their children: Cora Ann, Cora Lou and Fil Roger, all surnamed Kintanar, defendants, Civil
Case No. Q-19573;
c) Spouses Aurelio and Pastora Hiquiana and spouses Benjamin and Natividad Guiang, Plaintiffs, vs. Filomeno C.
Kintanar, Defendant, Civil Case No. Q-19574;
"In the first complaint (Civil Case No. Q-19572), plaintiffs sought certain sums of money and an accounting from defendant in his
management of the former's 216 hectares of coconut lands in San Roque, Sta. Maria, Davao del Sur.
"In the second and third complaints (Civil Case Nos. Q-19573 and Q-19574), plaintiffs sought the rescission (with damages) of the
sales of their lands in favor of defendants due to the failure of the latter to pay the installments on the agreed price.
"These three complaints are reproduced together with attachments as Annexes 'A', 'B' and 'C' hereof.
"3. 2. On August 20, 1975, the parties in these three cases, consolidated in the sala of respondent Judge, jointly moved for a decision
based on a 'Compromise Agreement' substantially stipulating as follows:
(a) The Guiangs and the Hiquianas, upon signing of the compromise shall execute a deed of absolute sale in favor of
the Kintanars, covering two parcels of land (Lots B-3 and B-4) of OCT No. 12281, Register of Deeds of Davao,
covering an area of 48 hectares.
(b) The Kintanars shall pay the Guiangs and the Hiquianas P100,000.00 within 90 days from the execution of the
deed of absolute sale above mentioned and if the Kintanars fail to pay that sum within that 90-day period, they

shall forfeit all their rights, interests and claims to Lots B-1 and B-2, OCT No. 12281, and Lot A-2 and A-3, OCT
No. P-16465, Register of Deeds of Davao.
(c) Upon payment by the Kintanars of P100,000.00, the Guiangs and the Hiquianas shall execute a deed of absolute
sale over Lots Nos. B-1 and B-2, OCT No. 12281, consisting of 48 hectares, and over Lots A-2 and A-3, OCT
No. 16465, consisting of 50 hectares.
(d) The Kintanars shall pay the Guiangs and the Hiquianas P70,000.00 within 60 days from date of the execution of
the deed of absolute sale mentioned in the immediately preceding paragraph, and the sum of P50,000.00 within
30 days from the payment of P70,000.00. If the Kintanars do not pay both amounts in their respective due
dates, the Kintanars forfeit all their rights, interests and claims over Lots B-1 and B-2, OCT No. 12281 and Lot A2, OCT P-16465, and shall reconvey the three parcels so forfeited.
(e) The Kintanars agree to annotate at the back of the titles covering Lots B-1 and B-2 and Lots A-2 and A-3, this
compromise agreement as a lien or encumbrance.
"(f) The Agreement shall supersede all other agreements, contracts to sell and other documents pertaining to the lots
in question.
"3.3. On the same day, the respondent Judge promulgated a brief decision approving the compromise agreement which was made
an integral part thereof. The covering decision is attached as Annex 'D', while the joint motion for decision based on compromise
agreement is attached as Annex 'E' hereof.
"3.4. Sometime on August 17, 1978, private respondents (defendants Kintanars below) filed a petition (Annex 'F') for execution of the
judgment by compromise at the same time praying that petitioners be declared in contempt of court. Alleging payment to petitioners
(the Guiangs and Hiquianas) of the total sum of P240,000.00 pursuant to the compromise agreement, respondents complained about
the failure of the petitioners to execute in their favor, the deeds of conveyance to Lots Nos. B-1 and B-2 of OCT 12281 and Lots Nos. A2 and A-3 of OCT No. 16465, Register of Deeds of Davao.
"3.5. On September 25, 1978, petitioners opposed respondents' petition for contempt and execution and filed a detailed and lengthy
opposition (Annex 'G'), embodying a counter-motion 'To Declare the Compromise Agreement Void as to Sale'. In essence, petitioners
contend that the compromise decreed the sale to the Kintanars of six lots with a combined area of 146 hectares originally covered by
sales patents acquired through purchase by petitioners from the government, consequently violating the maximum limit of 24 hectares
that an individual may acquire by purchase under Section 11 of Article XIV of the 1973 Constitution, taken in relation to the Public Land
Act (Com. Act 141). At the time of the execution of the compromise agreement, petitioners were not aware that private respondents
were already holders of 29 hectares of public land acquired before the effectivity of the new Constitution in 1973. At any rate, the total
area that the compromise agreement ceded in favor of respondents were grossly excessive of the legal limits above mentioned. If
construed as a sale, the compromise was a nullity, but taken as a lease, since private respondents had already taken possession of the
lands and benefitted immensely from their produce, the compromise was perfectly valid and legal because the 1973 Constitution allows
an individual to lease 500 hectares of alienable public lands. Viewing the compromise as a lease would make the amounts paid by
respondents to petitioners, rentals or reasonable damages for the use and occupancy of the lands.
"At the same time, petitioners sought for a post-judgment hearing to ventilate factual issues arising from their opposition and countermotion.
"3.6. On November 14, 1978, the respondent Judge issued an order (Annex 'H'): (a) denying the petitioners' counter-motion to declare
the compromise agreement void as to sale; (b) ordered the issuance of a writ of execution and (c) denying respondents' petition for
contempt.
"3.7. On November 24, 1978, petitioners filed a Motion for Reconsideration (attached as Annex 'I') of the Order of November 14, 1978,
insofar as that portion where the respondent Judge refused to nullify the compromise agreement as a sale.
"3.8. During the hearing of this motion on December 5, 1978, the parties agreed to submit a supplemental memorandum of authorities
to buttress their respective positions. On December 20, 1978, petitioners submitted their memorandum of authorities which is attached
hereto as Annex 'J'.
"3.9. Respondents did not submit any memorandum, or in any event, petitioners did not receive a copy of such memorandum. On
December 27, 1978, respondent Judge denied for lack of merit, petitioners' Motion for Reconsideration. (Annex 'K')." (Pp. 2-6, Petition,
pp. 5-9, Record.)

On February 2, 1979, We required respondents to comment on the petition, issuing at the same time a restraining order against the
implementation of the impugned order of execution. Although filed ten (10) days beyond the period given by the Court, We
nevertheless accepted respondents' comment, considering that the main issue raised by petitioners is a novel one, in the sense that it
is predicated on the theory that a judgment by compromise, which becomes final and executory upon approval by the court, may still be
set aside, three (3) years later and after it had been partially complied with by both parties, upon the ground that the agreement, it is
contended, violates the Constitution and the Public Land Act, hence contrary to public policy of the Philippines. Petitioners maintain the
affirmative, contending that when the purpose of setting aside a judicial compromise is to pursue and implement a fundamental state
policy embodied in no less than the Constitution, the ordinary remedies for relief and periods therefor do not apply.
On the other hand, private respondents posit in their belated comment that:
"Private Respondents, by counsel, respectfully submit the following comment:
1.0 On the Petition
1.1. In line with the decision of this court in the case of ROMULA MABALE, et al., Petitioners vs. Hon. SIMPLICIO M. APALISOK, et
al., Respondents, (G.R. No. L-46942, Feb. 6, 1979) petitioners should have seasonably moved for the setting aside of the compromise
and the judgment based upon it. In that case this court said:
'To be entitled to appeal from judgment approving a compromise, a party must move not only to set aside the judgment, but also to
annul or set (aside) the compromise itself on the ground of fraud, mistake or duress vitiating his consent to the compromise .... to set it
aside under Rule 38 of the Rules of Court, the petition for relief must be filed within six months from the date judgment was entered . . .
' (supra)
1.2. The judgment based on compromise in these three cases was entered on 20 August 1975, on the same date that the compromise
agreement was signed and submitted, so that petitioners should be presumed to have knowledge about it on said date also.
Petitioners had, therefore, up to 20 February 19 76 within which to file their petition for relief.
1.3. On 22 September 1975, or just about 32 days after the judgment on compromise was entered, petitioner Guiang wrote a 'four
page letter' to the Land Registration Commissioner, already questioning the legality of the sales under the compromise agreement on
exactly the rationale he advances now.
1.4. The Commissioner of LRC replied to petitioner Guiang on 29 September 1975 (seven days later) confirming and agreeing in so
many words with the latter's belief that Section 122 of CA 141 was being violated by the implementation of the compromise agreement.
"1.5. From the foregoing, it is clear that petitioners had more than ample time within which to seek relief from the lower court's judgment
on compromise. They deliberately neglected to do this. Instead, leading the private respondents on to complying with the compromise,
petitioners received the payments of the private respondents in the following amounts:
P 100,000.00 on 19 November 1975
70,000.00 on 23 March 1976
50,000.00 on 21 April 1976
1.6. Petitioner Guiang, having thus acquired the wherewithal, thereafter traveled extensively abroad, returning home sometime in
September of October of 1977. In any case, upon his arrival, he wrote respondent Atty. Filomeno Kintanar a letter dated October 9,
1977 informing the latter that he, petitioner Guiang, and his family will never sign the deeds of sale for the remaining lots (B-1, B-2, A-2
and A-3); that the transfer of lots B-3 and B-4 were void, and inferentially threatening Kintar with criminal prosecution for a statement in
an affidavit accompanying the transfer of Lots B-3 and B-4. Atty. Guiang further demanded the return of Lots B-3 and B-4 without
offering to return one centavo of the payments he received.
1.7. Even then the petitioners raised the question of legality of the compromise agreement and the judgment in earnest only when the
private respondents were constrained to move for court intervention by way of an order of execution on 18 August 1978.
1.8. What all the foregoing citation of events lead to is that under the doctrine laid down in the case aforecited, petitioners have by their
studied neglect, foreclosed entitlement to appeal by certiorari, there having been all along 'plain, speedy and adequate remedy in the
ordinary course of law' (Sec. 1 Rule 65, Rules of Court)." (Pp. 169-171, Record.)

As background for the resolution of the above conflicting claims of the parties. We may quote hereunder from the petition what appear
to be the specific relevant facts bearing on the question of whether or not there is indeed any public policy violated in the compromise
agreement in issue as would justify its nullification and setting aside, notwithstanding the time that has elapsed before the supposed
unconstitutionality thereof was raised, particularly in the light of Section 3 of Rule 38 of the Rules of Court on Petitions for Relief, which
fixes the period for possible setting aside of a judgment at only sixty (60) days from the time the party concerned learns of the judgment
and not later than six months or 180 days after it has become final and executory, and besides, the fact that said judicial compromise
had already been partially complied with by the parties, petitioners having actually executed and delivered to respondents the
corresponding deeds of sale covering two of the contested lots (Lots B-3 and B-4 covered by OCT 12881), such that what is pending
only for the complete consummation of the agreement is the execution by petitioners, the Guiangs and Hiquianas, of the deeds of sale
over four more lots covered by said agreement. According to the petition (omitting the attachments mentioned therein), and there is no
serious denial thereof in private respondents' comments:
"Pertinent Factual Milieu Re-Stated
(a) History of Petitioner s' Lands 1. The six parcels of land totalling 146 hectares were originally part of the public domain. They were leased by the Philippine
Government in favor of Gaudencio C. Hiquiana, deceased predecessor in interest of the petitioners. The lease was covered by Lease
Application No. 2439 (E-244), covering about 350 hectares of land situated in Davao del Sur, for 25 years pursuant to Act 2874.
2. Upon the death of Gaudencio C. Hiquiana, his wife, Pascuala Vda. de Hiquiana, obtained an approval for the renewal of the lease.
A certified copy of the lease issued by then Director Jose P. Dans of the Bureau of Lands was among the attachments in petitioners'
Counter-Motion (Annex 'G') in the court below.
3. Pascuala Vda. de Hiquiana her land surveyed and subdivided into four lots, to wit: Lots A, B, C and D, with the corresponding subdivision plan Psd-34219 approved by the Director of Lands on February 21, 1952.
4. Later, the widow and her children filed sales applications with the Bureau of Lands to purchase these subdivided lots: (a) the sales
application of the widow for Lot C was recorded as No. V-15066; (b) the sales application by Natividad Hiquiana Guiang for Lot B was
recorded as No. V-15067; (c) Aurelio Hiquiana for Lot A, as Application No. 26001; and (d) Julia Hiquiana for Lot D.
"5. On April 29, 1959, Sales Patent No. 2521 was issued to Natividad Hiquiana Guiang for an area of 110 hectares, 4 acres and 14
centares, embraced by Original Certificate of Title No. P-12281 dated June 12, 1959. This torrens title was among the attachments of
petitioners' counter-motion (Annex 'G').
6. On March 10, 1966, Sales Patent No. 3180 was issued to Aurelio V. Hiquiana, covered by Original Certificate of Title No. P-16465
dated April 22, 1964.
7. Natividad H. Guiang subsequently subdivided her Lot B into five (5) lots, which came to be known as Lots B-1, B-2, B-3 and B-4,
all with 24 hectares each, or a total of 96 hectares, and Lot B-5, with an area of 14.0413, or a grand total of 110.0413 hectares.
8. Aurelio V. Hiquiana, who got Lot A, also subdivided the same lot into three (3) lots, which came to be known as Lots A-1 (60.6182
hectares), Lot A-2 (25 hectares) and Lot A-3 (25 hectares) making a grand total of 110.6182 hectares covered by Subdivision Plan Psd13824.
9. The six lots covered by the compromise agreement between the parties refer to the 4 out of the 5 lots into which original Lot B was
subdivided by Natividad Hiquiana Guiang, and 2 out of the 3 lots of the original Lot A subdivided by Aurelio Hiquiana. The first four lots
have an area of 96 hectares (24 hectares each) while the two lots have an aggregate area of 50 hectares (25 hectares each). Thus the
total area of the 6 lots subject of the compromise agreement was 146 hectares of originally public lands.
(b) Actions Taken by Petitioners In conformity with the Compromise Agreement, the petitioners immediately executed a deed of sale over Lots B-3 and B-4, in favor of
the private respondents (see attachment A of Annex 'G'). Notwithstanding completion of the staggered payments for the other lots,
petitioners could not bring themselves to execute the deeds for their conveyance because by then, they were seized by serious
misgivings concerning the legality of the compromise agreement.
"What triggered the quest for legal opinions by the petitioners, was the discovery that at the time of the compromise agreement, private
respondents did not disclose that they had already acquired 29 hectares of alienable public lands.
On September 22, 1975, a four-page letter was addressed by petitioner Guiang to the Land Registration Commissioner (see
attachment F of Annex 'G') concerning the legality of a transfer of lands originally acquired through sales patent, in excess of the

maximum of 24 hectares imposed by the New Constitution. In reply, the Commissioner of the Land Registration Commission stated
that the document of transfer was already an accomplished fact and bears the imprimatur of the Court, and that since private
respondents (the Kintanars) had executed an affidavit--which incidentally was false and which became the basis of a criminal charge
for perjury before the Fiscal's Office of Davao del Sur--the Commissioner was constrained to give due course to the registration of the
sale (Attachment A of Annex 'G').
On October 9, 1977, petitioner Guiang wrote a letter to respondent Kintanar (see Attachment H of Annex 'G') explaining his reasons
why he could not execute a deed of conveyance of the remaining four lots subject of the compromise agreement. Petitioner proposed
reconveyance and certain repayments in lieu of the compromise agreement to avoid the harmful effects of escheat. But Kintanar
ignored the deadline set by Guiang for acceptance of the counterproposals.
To pressure Kintanar, Guiang filed a criminal case for forgery and violation of the Constitution before the Fiscal's Office of Davao del
Sur. Unfortunately, the Fiscal dismissed the charge on the ground that the lands so transferred were already private agricultural lands,
and there is no limit under the law for the acquisition by purchase of these lands. (See other attachment of Annex 'G').
On July 12, 1978, the Legal Division of the Bureau of Lands, replying to petitioner Guiang, gave the following pertinent opinions:
a. 'x x x After a public land has been titled under the provisions of the Public Land Act (Commonwealth Act No. 141,
as amended, the same, for all legal intents and purposes, becomes a private agricultural land subject, however, to
the restrictions contained in Section 29, 118, 119, 121 and 122 of the said Act.'
b. 'x x x Simply stated, an individual cannot acquire either by sale, transfer, assignment or lease, lands originally
acquired under the free patent, homestead, or individual sale provisions of Commonwealth Act No. 141 if the total
area of such acquisition added to his present landholdings exceeds one hundred forty-four hectares. x x x.'
c. 'x x x It must follow as a matter of course that since January 17, 1973 when the New Constitution went into force,
the maximum area of patented or titled land that an individual can acquire is only such as will not exceed twentyfour (24) hectares including his present landholdings. With these premises, it is our considered opinion that the
maximum area that an individual could acquire under Article 122 of Commonwealth Act No. 141, as amended, has
been amended or reduced to 24 hectares as provided for under Section 11, Article XIV, of the 1973 Constitution.'
(This letter is embodied in Attachments K and K-1 to Annex 'G'.).
Again, on September 20, 1978, the Director of Lands wrote petitioner Guiang, expressing the opinion that husband and wife are
considered as one person for purposes of implementing Sec. 122 of C.A. 141, and the maximum area of 144 hectares which can be
acquired by an individual under the same provision of the Public Land Act, has been reduced to only 24 hectares by virtue of the New
Constitution. The letter of Director Casanova appears as Attachment H to Annex 'G' of this Petition." (Pp. 10-14 of Petition)
In the light of the foregoing premises, the legal and constitutional issues We have to resolve are the following:
1. Does Section II, Article XIV of the 1973 Constitution of the Philippines, reading:
"Sec. 11. The National Assembly, taking into account conservation, ecological, and developmental requirements of the natural
resources, shall determine by law the size of lands of the public domain which may be developed, held or acquired by, or leased to, any
qualified individual, corporation, or association, and the conditions therefor. No Private corporation or association may hold alienable
lands of the public domain except by lease not to exceed one thousand hectares in area; nor may any citizen hold such lands by lease
in excess of five hundred hectares or acquire by purchase or homestead in excess of twenty-four hectares. No private corporation or
association may hold by lease, concession, license, or permit, timber or forest lands and other timber or forest resources in excess of
one hundred thousand hectares; however, such area may be increased by the National Assembly upon recommendation of the
National Economic and Development Authority."
constitute an amendment of Section 122 of Commonwealth Act 141, the Public Land Act providing that:
"Except in cases of hereditary succession, no land or any portion hereof originally acquired under the free patent, homestead, or
individual sale provisions of this Act, or any permanent improvement thereon be leased to such individual, when the area of such land,
added to that of his own, shall exceed one hundred and forty-four hectares, any transfer, assignment, or lease made in violation hereof
shall be null and void."
in the sense that after the Constitution took effect on January 17, 1973, any transfer or assignment of lands, already validly in the
hands of private individuals and having areas allowed by said provision, (not in excess of 144 hectares) but acquired by them under

free patent, homestead, or individual sale provisions of the Act, the area that may be transferred or assigned such holder to another
person can no longer exceed twenty-four (24) hectares?
2. Assuming the affirmative of the foregoing proposition, but considering, on the other hand, that the parties had entered into the
agreement in good faith as the means of settling amicably the three juridical suits (enumerated in the petition) among them,
and that the approval of the court thereof had under the rules already long become final, as in fact, it had already been
partially executed in 1975, is it still legally possible to have the same declared a nullity and be set aside as prayed for in an
opposition filed in 1978 to a motion for its execution?
3. It is a conceded fact that when they entered into the compromise agreement in dispute, private respondents, the Kintanar
spouses, were already the owners and had already the title in their names of a lot of 29 hectares acquired under the Public
Land Act; now, what is the effect of such fact upon the validity of the compromise agreement, considering the prohibition
contained in the same Section 122 against transfer or assignment to persons already owning areas of lands, which if added
to what is to be transferred or assigned to them would exceed the limit provided therein?
I
After mature deliberation and consideration of pertinent principles of statutory and constitutional construction together with what
appears to be the obvious intent and objective of the legal and constitutional provisions relevant to the above issue, We encounter no
difficulty at all in holding that, as contended by petitioners, Section 122 of the Public Land Act has been amended by no less than
Section 11, Article XIV of the 1973 Constitution of the Philippines by reducing correspondingly the areas of the disposable public lands
mentioned therein.
In their comment as well as in their memorandum, however, private respondent insists (1) that there is no "causative link", as they put
it, between the limitation of areas in the Constitution and the limitation of areas in the Public Land Act. They argue that whereas under
the 1935 Constitution, the pertinent provision was that:
"Sec. 2. No private corporation or association may acquire, lease or hold public agricultural lands in excess of one thousand and
twenty four hectares, nor may an individual acquire such lands by purchase in excess of one hundred and forty four hectares or by
lease in excess of one thousand and twenty four hectares or by homestead in excess of twenty four hectares." (Sec. 2, Article XIII of
the 1935 Constitution)
the limit to leasable lands was 1,024 hectares, Section 122 of the Public Land Act set the limit to only 144 hectares and (2) that the
limitation of purchasable areas under the Act is also 144 hectares was a mere unintended coincidence.
Clearly, such contention suffers from the flaw known in logic as non-sequitur. There was nothing wrong for the legislature to provide for
a limitation, as to leasable lands, less than that fixed in the Constitution. In fact, the cited constitutional provision itself opens with the
statement that "(t)he National Assembly, taking into account conservation, ecological, and developmental requirements of the natural
resources, shall determine by law the size of lands of the public domain which may be developed, held or acquired by, or leased to, any
qualified individual, corporation, or association, and the conditions therefor." The so-called "causative link" would indeed not have
existed, had the Congress exceeded what the Charter allowed.
The argument about unintended "coincidence" in the limit of purchasable areas is too speculative, even puerile, to require any
refutation. What to Us is clear and obvious is that when the Constitution fixes a limit of the area of public lands that can be "acquired"
by purchase by an individual, it follows as a matter of logic that such is also the maximum area of land originating from the public
domain that can be transferred to him. True, lands once acquired from the government under the Act do become private property, as
private respondent argues, but for reasons of public policy and interest implicit in Section 122 itself, such private ownership is subject to
the limitations stated therein. Proof of the strictness of the policy is that the prohibition or injunction is automatically embodied in the
Torrens Title issued to the purchaser. All such titles pertinently read in part thus:
"ORIGINAL CERTIFICATE OF TITLE

"TO HAVE AND TO HOLD the said tract of land, with the appurtenances thereunto of right belonging unto the said _________ and to
his heir and heirs and assigns forever, subject to the provisions of Sections 121, 122 and 124 of Commonwealth Act No. 141 as
amended. (Underlinings supplied for emphasis)
"TRANSFER CERTIFICATE OF TITLE
"IT IS HEREBY CERTIFIED that certain land situated in the __________, more particularly bounded and described as follows:
is registered in accordance with the provisions of Section 122 of the Land Registration Act in the name of:
subject to the provisions of the said Land Registration Act and the Public Land Act, as well as to those of the Mining Laws, if the land is
mineral, and subject further to such conditions contained in the original title and may be subsisting. (Underlinings supplied for
emphasis)" (Pp. 277-278, Record.)
It is Our considered opinion, and We so hold, consistently with the view of the Legal Division of the Bureau of Lands cited by petitioners
in their petition (p. 14) that after the ratification of the Philippine Constitution of 1973 on January 17, 1973, the maximum area of land
acquired from the disposable public domain that can be transferred or assigned to another party by the original patentee, purchaser or
homesteader became 24 hectares (instead of the 144 hectares under the 1935 Constitution), thereby reducing correspondingly the
144-hectare limitation set in Section 122 to only 24 hectares. We hereby adopt as Our own the subsequent opinion of the Director of
Lands quoted not only in the petition, as already stated, but also in petitioners' "Motion Ex-Parte for Earliest Decision of the AboveEntitled Case" dated October 7, 1980:
"The first query is whether public lands which have already been titled or patented under the homestead sales or individual sale or free
patent provision of Public Land Act are to be considered 'private agricultural lands.' After a public land has been titled under the
provisions of the Public Land Act (Commonwealth Act No. 141, as amended) the same for all legal intents and purposes, becomes a
private agricultural land subject, however, to the restrictions contained in Section 29, 118, 119, 121 and 122 of the said Act.
"Your second query states whether Article 122 of Commonwealth Act No. 141 as amended covers a situation wherein parcels of public
lands acquired by an individual, which after collation exceed 144 hectares which have already long been patented under homestead,
individual sale or free patent provisions thereof could be owned or possessed by him legally. Our reply to the above is in the
affirmative. The pertinent provision of Section 122 of the Public Land Act provides:
'Except in cases of hereditary succession, no land or any portion thereof originally acquired under the free patent, homestead, or
individual sale provisions of this act, or any permanent improvement on such land shall be transferred or assigned to any individual, nor
shall such land or any permanent improvement thereon be leased to such individual, when the area of said land, added to that of his
own, shall exceed one hundred and forty-four hectares. Any transfer, assignment or lease in violation hereof shall be null and void.'
"The aforequoted provision constitutes one limitation on the transfer or lease of lands titled under the provisions of the Public Land Act.
Simply stated, an individual cannot acquire either by sale, transfer, assignment or lease, lands originally acquired under the free patent,
homestead, or individual sale provisions of Commonwealth Act No. 141 if the total area of such acquisition added to his present
landholdings exceed one hundred forty-four hectares. To construe the provision otherwise would render nugatory the rationale or
philosophy which underlined such a restriction which is to prevent the concentration of large tracts of lands in the hands of a single
individual. There is only one recognized exception to this and that is when the transfer or assignment is by means of hereditary
succession in which event the area limitation contained in Section 122 will not apply.
"As regards your third question on whether the maximum area that an individual could acquire under Section 122 of Commonwealth
Act No. 141, as amended has been amended from 144 to 24 hectares, our reply thereto is in the affirmative.
"It will be stated as a preliminary premise that the basis of the 144 hectare limit provided for in Section 122 of the Public Land Act is the
area stated in Section 22 of the same Act which is also one hundred forty-four hectares. The area limits set forth in these two sections
of the act are based on the constitutional limit contained in the 1935 Philippine Constitution. Since the New (1973) Constitution in its
Section 4, Article XIV has chosen to reduce the original area that an individual can purchase from one hundred forty-four (144) to
twenty four (24) hectares, it must follow as a matter of course that since January 17, 1973, when the New Constitution went into full
force, the maximum area of patented or titled land that an individual can acquire is only such as-will not exceed twenty-four (24)
hectares including his present landholdings. With these premises, it is our considered opinion that the maximum area that an individual
could acquire under Article 122 of Commonwealth Act No. 141, as amended, has been amended or reduced to 24 hectares as provided
for under Section 11, Article XIV of the 19 73 Constitution." (Annex K of Annex G of the petition.)
II

Having the foregoing conclusion in view, may the judicial compromise in question in the instant cases be declared null and void or at
least reduced as to the area therein referred to to only 24 hectares, considering the peculiar factual milieu extant in the record?
This question is not as simple as it seems. It involves both adjective and substantive points that have to be carefully weighed and
scrutinized in order to arrive at a legal and just conclusion.
-AWith respect to its remedial or procedural law aspect, it is beyond dispute that the order approving the compromise agreement of the
parties herein became immediately final and executory upon its promulgation on August 20, 1975, so much so that deeds of sale
covering two lots (Lots B-3 and B-4 of OCT No. 12281 of the Registry of Deeds of Davao) were executed and delivered by the Guiangs
to private respondents the next day, August 21, 1975. Neither a motion for reconsideration of said order nor a petition for relief
therefrom was filed within their respective due periods fixed by the Rules. According to the petition itself, on the dates agreed upon,
private respondents paid petitioners as each installment fell due, the total sum of P240,000.00. (This figure is not admitted by private
respondents.)
It was only on August 17, 1978 that, as far as the trial court was concerned, the rumblings of a grave controversy between the parties
began to be heard, for on said date, private respondents filed with said court, the following:
"PETITION TO DECLARE PARTY IN CONTEMPT AND FOR EXECUTION
DEFENDANTS, by undersigned counsel, respectfully allege:
1. That the parties hereto entered into a compromise agreement entitled 'JOINT MOTION FOR A DECISION BASED ON A
COMPROMISE' on August 20, 1975, which was approved and made the basis for a decision of the court terminating these cases.
2. That in compliance with their undertakings delineated in paragraphs 2 and 4 of aforecited compromise agreement, defendants
have faithfully paid the plaintiffs the total amount of Two Hundred and Forty Thousand Pesos (P240,000.00) well within the agreed
limiting dates, which payments represented full and complete satisfaction of the amounts due the plaintiffs under the agreement.
3. That despite compliance by the defendants of their part of the agreement, plaintiffs have failed, and despite repeated demands,
have refused and up to this date continue to fail and refuse to execute the deeds of conveyance to Lots Nos. B-1 and B-2 of O.C.T. No.
12281 and Lots Nos. A-2 and A-3 of O.C.T. No. 16465, which actions they promised and undertook to do under paragraph 3 of the
compromise agreement.
4. That the payments made by the defendant to plaintiffs were duly and timely reported to this Honorable Court.
5. That the approval of the Court of the compromise agreement had the effect of converting the actions agreed upon therein into
specific orders of the court that they be so executed.
"6. That under Sec. 10 of the rules, the plaintiffs having refused to comply with the order of the court, the court may direct either that
the conveyance be done by some other person at the cost of the disobedient party or enter judgment divesting title from the plaintiffs
and vesting same with the defendants.
WHEREFORE, it is most respectfully prayed that:
1. Plaintiffs after being afforded a chance to be heard by himself or counsel be declared in contempt of this Honorable Court,
imposing upon said defendant such penalty as this court may deem just and proper.
2. That plaintiffs be divested of title to Lots Nos. B-1 and B-2 and Lots Nos. A-2 and A-3, vesting said titles with defendants as follows:
B-1 to CORA-ANN B. KINTANAR
B-2 to CORA-LOU B. KINTANAR
A-2 to FILOMENO C. KINTANAR
A-3 to FIL-ROGER B. KINTANAR
Quezon City, 17 August 1978.
(Sgd.) PATERNO P. TRINIDAD
Counsel for the Defendants

64 12th Ave., Cubao, Q. C."

(Annex F, pp. 62-64, Record.)
To this petition, petitioners filed an 18-page opposition which, at the cost of extending this opinion, We will quote, for the sake of a
deeper insight into the respective positions of the parties vis-a-vis the issues We are resolving:
"OPPOSITION
(To Defendants' Petition To Declare
Party In Contempt And For Execution)
WITH MOTION TO DECLARE COMPROMISE
AGREEMENT VOID AS TO SALE
"COME NOW plaintiffs in the three (3) above-captioned civil cases, thru their undersigned counsels, and answering defendants'
PETITION TO DECLARE PARTY IN CONTEMPT AND FOR EXECUTION dated 17 August 1978, most respectfully interpose the
instant Opposition DENYING or ADMITTING the material allegations thereof as follows:
I
"Plaintiffs ADMIT the allegations found in paragraphs 1 and 2 of the petition regarding the fact of presentation by the parties hereto of a
so-called Compromise Agreement between the parties hereto and its subsequent approval by this Honorable Court and also in so far
as the same alleges payment to plaintiffs by defendant-vendees Filomeno C. Kintanar and Corazon B. Kintanar of the amounts
provided therein. Plaintiffs, however, DENY, for reasons found elsewhere in this pleading, the rest of the allegations thereof insofar as
they impute upon plaintiffs the obligation to execute a deed of conveyance over the six (6) parcels of land subject matter of the three (3)
above-entitled cases, or insofar as they insinuate that such payments represent consideration for the sale of such land. The reason for
this is plainthat any such sale would be prohibited under the provisions of Commonwealth Act No. 141, known otherwise as the Public
Land Act, in correlation with the 1973 Constitution, which prohibit the acquisition by any citizen of the Philippines of any lands of the
public domain in excess of twenty four (24) hectares.
II
"Plaintiffs DENY paragraph 3 of the petition of defendants insofar as the same allege 'compliance' only on the part of defendants of
their alleged obligations under the so-called Compromise Agreement and failure and refusal on the part of plaintiffs to execute certain
'actions they promised and undertook to do' as indicating a lack of candor if not a gross misrepresentation of facts before this
Honorable Court. The fact is that as early as August 21, 1975, or the day following the August 20, 1975 date of the Compromise
Agreement and Decision of this Court approving the same, plaintiffs-spouses Benjamin V. Guiang and Natividad H. Guiang, in
compliance with and obedience to such Decision, immediately executed a Deed of Absolute Sale in favor of defendants-spouses
Filomeno C. Kintanar and Corazon B. Kintanar over Lots 'B-3' and 'B-4' (covered by Sales Patent No. 2521 and Original Certificate of
Title No. 12281 of the Register of Deeds of Davao in the name of plaintiffs-spouses Benajmin V. Guiang and Natividad H. Guiang), with
the result that the latter-mentioned office caused cancellation of the certificate /s of title in the names of said plaintiff-spouses and
entered two (2) new certificates of title in the names of defendant-spouses.
"Xerox copy of the Deed of Absolute Sale of plaintiffs-spouses as vendors dated August 21, 1975 which also bear the signature of
defendant Filomeno C. Kintanar as Vendee is hereto attached, marked Annex 'A', and made an integral part of this Opposition.
"Much as it is plaintiffs' sincere desire to comply with the remainder of what is incumbent upon them as provided in the aforementioned
Compromise Agreement, the same cannot, however, be done with impunity since, as will be fully discussed elsewhere in this pleading,
such an act is prohibited by the law and the Constitution and therefore legally impossible of accomplishment.

III

"Plaintiffs DENY the allegations of paragraph 4 of the petition for lack of knowledge sufficient to form a belief as to the truth thereof at
the time of preparation of this pleading.

IV
"Plaintiffs CONCEDE in principle the legal conclusion expressed in paragraph 5 of the petition but DENY its applicability to the cases at
bar for reasons already outlined elsewhere in this pleading.

V
"Plaintiffs hypothetically ADMIT the legal conclusion expressed in paragraph 6 of the petition, but DENY such allegations therein insofar
as they insinuate plaintiffs contumaciously refused to comply with 'the order of the Court'. As plaintiffs shall endeavor to explain herein,
ever since their execution of the Deed of Sale, Annex 'A', plaintiffs have been actually taking tedious, painful and time-consuming
efforts and steps if only to determine once and for all whether they are really bound to execute the deeds and acts provided for in the
Compromise Agreement. As things have turned out, plaintiffs have now become more than ever convinced that such acts as are
proposed by defendants-spouses run counter to public policy, thus prompting plaintiffs to exercise restraint in the matter. If this be
interpreted as a refusal to comply with the remainder of what is allegedly incumbent upon them, such refusal is, however, justified, for
to direct plaintiffs to do otherwise would be to command them to violate the fundamental law of the land, something that neither the
plaintiffs nor this Court cannot be privy to.
FACTUAL BACKGROUND OF THE 6 LOTS
SUBJECT - MATTER OF THE COMPROMISE
AGREEMENT
"For the purposes of obtaining a fuller and more comprehensive understanding of the plaintiffs' stand as outlined in the pleading at bar,
plaintiffs have deemed it essential and relevant to trace and bring forth to the attention of the Honorable Court the origins of the six (6)
lots subject-matter of the compromise agreement presented in the three (3) above-captioned civil cases.
"The said six (6) lots originally formed part of that larger parcel of land which became the subject-matter of an earlier contract of lease
executed and granted by the Government of the Philippine Islands as Lessor, in favor of GAUDENCIO C. HIQUIANA (now deceased),
as Lessee, under Lease Application No. 2439 (E-244), covering a parcel of land situated in Malita (now Sta. Maria) Davao del Sur, with
an area of 350.6569 hectares for a period of 25 years from January 21, 1927 (or until January 20, 1952) under the provisions of Act No.
2874.
"After the Lessee died sometime in the year 1942, and upon petition of PASCUALA V. VDA. DE HIQUIANA as surviving wife of
GAUDENCIO C. HIQUIANA, the contract of lease affecting said 350-hectare parcel of land was extended by means of an Order of
Reconstitution and Renewal of Lease Contract dated February 21, 1950 for another period of 25 years from and including January 20,
1952, said application and extension granted being recorded under the name of PASCUALA V. VDA. DE HIQUIANA as Lessee.
Certified copy of the aforementioned Order of Reconstitution and Renewal of Lease Contract issued by then Director of Lands Jose P.
Dans is hereto attached, marked Annex 'B', and made an integral part of this pleading.
"By authority of the Office of the Bureau of Lands secured, and as per Lessee's request, the area covered under the above-mentioned
lease application was subdivided into four (4) lots, known as Lots 'A', 'B', 'C' and 'D', with the corresponding subdivision plan prepared,
identified as Psd-34219, approved by the Director of Lands on February 21, 1952.
"On January 26, 1951, the Lessee requested the segregation of Lots 'A', 'B' and 'D' of said subdivision plan Psd-34219 requesting that
she (Lessee) be allowed to purchase Lot 'C' thereof, that her daughter NATIVIDAD H. GUIANG be allowed to purchase Lot 'B', that her
son AURELIO HIQUIANA be allowed to purchase Lot 'A' and that Lot 'D' be allocated to JULIA HIQUIANA.
"After due investigation conducted by the Bureau of Lands, on March 31, 1953 the Sales Application of PASCUALA V. VDA. DE
HIQUIANA for Lot 'C' of the 350-hectare land covered under Psd-34219 was accepted and recorded as Sales Application No. V-15066.
The Sales Application filed by NATIVIDAD H. GUIANG for Lot 'B' was likewise accepted and recorded as Sales Application No. V-

15067. AURELIO V. HIQUIANA and JULIA HIQUIANA were likewise given opportunity to file their corresponding Sales Application
covering Lots 'A' and 'D', respectively.
"All the foregoing appear in an Order issued by then Director of Lands Zoilo Castrillo dated March 31, 1953, certified copy of which is
hereto attached, marked Annex 'C', and made an integral part of this pleading.
"Subsequently, and pursuant to such Order, AURELIO V. HIQUIANA duly filed Sales Application on Lot 'A' corresponding to him, which
became known and recorded as Sales Application No. 26001.
"On April 29, 1959, NATIVIDAD H. GUIANG was issued Sales Patent No. 2521 on her Sales Application No. V-15067 covering an area
of 110 hectares 4 acres and 14 centares by authority of the President of the Philippines, pursuant to which Original Certificate of Title
No. P-12281 dated June 12, 1959 was issued by the Register of Deeds for the Province of Davao. Xerox copy of said Certificate of
Title is attached, marked Annex 'D', and made integral part of this Opposition with Motion.
"On March 10, 1964, AURELIO V. HIQUIANA was also issued Sales Patent No. 3180 on his Sales Application No. V-26001 by authority
of the President of the Philippines, pursuant to which Original Certificate of Title No. P-16465 dated April 22, 1964 was issued by the
Register of Deeds for the Province of Davao. Xerox copy of said certificate of title is hereto attached, marked Annex 'E' and made an
integral part of this Opposition and Motion.
"NATIVIDAD H. GUIANG then duly requested for subdivision of her land Lot 'B' (Sales Patent No. 2521 and O. C. T. No. P-12281) into
five (5) lots, which came to be known as Lots 'B-1', 'B-2', 'B-3' and 'B-4' with 24 hectares each, or an aggregate area of 96 hectares and
Lot 'B-5' with an area of 14,0413 hectares, or a total area of 110.0413 hectares, under Subdivision Plan (LRC) Psd-137751, approved
by the Commissioner of Land Registration on March 26, 1971.
"AURELIO V. HIQUIANA who was awarded Lot 'A' of Psd-34219 (Sales Patent No. 3180 and O.C.T. No. P-16465) also effected
subdivision the same into three (3) lots, known respectively as Lots 'A-1' with an area of 60.6182 hectares, Lot 'A-2' with an area of 25
hectares, and Lot 'A-3' with an area of 25 hectares, or a total area of 110.6182 hectares, covered under Subdivision Plan (LRC) Psd138284 approved by the Commissioner of Land Registration on April 5, 1971.
"In fine, the four (4) lots (out of the 5 lots awarded to NATIVIDAD H. GUIANG under Sales Patent No. 2521) known as Lots 'B-1', 'B-2',
'B-3' and 'B-4' have areas of 24 hectares each, or an aggragate area of 96 hectares, while the two (2) lots involved in the cases at bar
(out of the 3 lots awarded to AURELIO V. HIQUIANA under Sales Patent No. 3180) known as Lots 'A-2' and 'A-3' have areas of 25
hectares each, or an aggregate area of 50 hectares. The total area of the six (6) lots which have become subject-matter of the
compromise agreement, the decision approving the same, and presently, plaintiffs' pleading at bar, is therefore 146 hectares of land
originally of the public domain, or public agricultural lands, acquired by the afore-named plaintiffs by purchase from the Government of
the Philippine Islands.
COMPROMISE AGREEMENT VOID AND
PLAINTIFFS' EARNEST EFFORTS EXERTED
IN DETERMINING THEIR RIGHTS AND
OBLIGATIONS THEREUNDER CITED
"Vis-a-vis the petition seeking to declare and hold plaintiffs liable for contempt of this Honorable Court, plaintiffs have deemed it wise to
incorporate in this pleading a brief statement of the several tedious, time-consuming and earnest steps taken by them in sustained
efforts to seek once and for all clarification of the law on the matter with the end in view of complying with whatever obligations they
may have assumed under the compromise agreement, to wit:
"1. On September 22, 1975 and October 14, 1975, or around a month after plaintiffs-spouses signed the Deed of Absolute Sale, Annex
'A' of this pleading, the Guiang & Alejo Law Offices as counsel of plaintiffs in the above-entitled cases, having serious doubts as to the
legality and propriety of the Deed of Sale, Annex 'A' of this pleading, became prompted to address two (2) letters to the Commissioner
of Land Registration, Manila, therein making the following query:
'Whether your Davao Office can refuse to accept for registration a Deed of Sale which by express provision of the document will be
violative of Section 122 as amended by Commonwealth Act 615 and further amended by section 11 of Article 14 of the new
Constitution.'
Copy of said letter of query of plaintiffs' counsel is hereto attached, marked as Annexes 'F' and 'F-1', and made integral parts of this
pleading.

"2. In a communication addressed to plaintiffs' counsel dated October 17, 1977, Commissioner Gregorio Bilog, Jr. of the Land
Registration Commission, replying to the above-mentioned query, stated among other things, the following:
'The Register of Deeds should comply with the law. However, the matter of registration of the deed of sale in question which was
executed in compliance with the decision of the Court of First Instance of Quezon City, including the issuance of the corresponding
transfer certificates of title being a fait accompli, this Commission feels it not proper to render an opinion. Moreover, according to your
earlier letter the deed of sale was registered 'upon presentation of an affidavit of ownership by Atty. Filomeno Kintanar that he and his
wife are holders of land not more than that allowed by the Constitution' which gives the impression that the document is registrable.'
Copy of said reply letter of the LRC Commissioner is hereto attached, marked as Annex 'C', and made an integral part of this pleading.
"3. On October 9, 1977, plaintiff Benjamin V. Guiang addressed a letter to defendant Filomeno C. Kintanar, received by the latter on
October 11, 1977; wherein plaintiff endeavored to explain in detail the reasons why, despite earnest efforts exerted on his part with the
end in view of implementing the Compromise Agreement and Decision of this Honorable Court aforementioned, plaintiffs could not
bring themselves to sign the draft of a Deed of Sale presented by defendants to plaintiffs thru the latter's counsel over the remaining
four (4) lots subject-matter of the cases at bar. In such letter, plaintiff instead proposed another amicable settlement more in
accordance with the provisions of the law and the Constitution, therein giving defendants up to November 30, 1977 within which to
signify their stand or otherwise express their views. Salient points taken up in said letter:
(a) That the proposed Deed of Sale is not in accordance with the Compromise Agreement approved by the Court
since the said Compromise Agreement has for its vendee for the remaining 4 lots the Spouses Filomeno C.
Kintanar and Corazon B. Kintanar, whereas the proposed Deed of Sale has for its vendees Fil-Roger (over Lot
'B-2') Cora-Ann (over Lot 'A-2') and Cora Lou (over Lot 'A-3') all surnamed Kintanar;
(b) That the proposed Deed of Sale, once signed by plaintiffs to convey Lot 'B-1' (containing 24 hectares) in favor of
Corazon B. Kintanar, will constitute a direct violation or infringement of the 24-hectare maximum limit or area of
public land that the law provides any citizen of the Philippines could acquire under the 1973 Constitution of the
Philippines, considering that by the time of effectivity of said Constitution, Corazon B. Kintanar was the
registered owner of 29.07751 hectares originally acquired by homestead under the Public Land Act;
(c) That on account of the foregoing considerations, plaintiffs therefore proposed another amicable settlement of the
case more in accord with the new Constitution and the law;
(d) That defendant Filomeno C. Kintanar was requested to state his position on plaintiffs' said proposal by or on
November 30, 1977, to avoid further Court or administrative actions.
Copies of the aforementioned letter of plaintiff dated October 9, 1977 and the proposed Deed of Absolute Sale are hereto attached,
marked respectively as Annexes 'H' and 'H-1' and made integral parts of this pleading.
"4. Owing to failure on the part of defendant Filomeno C. Kintanar as addressee to issue any reply or statement to the proposals of
plaintiff Benjamin V. Guiang contained in his letter Annex 'H', the latter became constrained to file a criminal complaint with the Office of
the Provincial Fiscal of Davao del Sur charging defendant Filomeno C. Kintanar as respondent with violation of the Constitution and the
Revised Penal Code; copies of said complaint together with its supporting affidavits of complainant's witnesses are hereto attached,
marked respectively as Annexes 'I', 'I-1', 'I-2' and 'I-3', and made integral parts of this pleading;
"5. On July 5, 1978, Special Counsel Pacifico A. Villaluz as Investigating Fiscal issued an Order summoning both complainant
Benjamin V. Guiang and respondent Filomeno C. Kintanar to appear at his office at Digos, Davao del Sur, on August 3, 1978, at 3:00
p.m., for clarificatory questions on the facts and circumstances of the above-mentioned criminal complaint in relation to Section 122 of
Commonwealth Act 141; copy of the aforesaid Order of Special Counsel Villaluz is hereto attached, marked as Annex 'J', and made
integral part of this Opposition;
"6. On July 12, 1978, the Legal Division, Bureau of Lands, in response to a letter containing a legal query posed by plaintiff Benjamin
V. Guiang, issued an opinion on the following points by means of the instant pleading presented before this Honorable Court, pertinent
portions quoted for purposes of emphasis as follows:

a. 'x x x After a public land has been titled under the provisions of the Public Land Act (Commonwealth Act No. 141,
as amended, the same, for all legal intents and purposes, becomes a private agricultural land subject, however, to
the restrictions contained in Section 29, 118, 119, 121 and 122 of the said Act.'
b. 'x x x Simply stated, an individual cannot acquire either by sale, transfer, assignment or lease, lands originally
acquired under the free patent, homestead, or individual sale provisions of Commonwealth Act No. 141 if the total
area of such acquisition added to his present landholdings exceeds one hundred forty-four hectares. x x x.'
c. 'x x x It must follow as a matter of course that since January 17, 1973 when the New Constitution went into full
force, the maximum area of patented or titled land that an individual can acquire is only such as will not exceed
twenty-four (24) hectares including his present landholdings. With these premises, it is our considered opinion that
the maximum area that an individual could acquire under Article 122 of Commonwealth Act No. 141, as amended,
has been amended or reduced to 24 hectares as provided for under Section 11, Article XIV, of the 1973
Constitution.'
Copies of the letter of plaintiff Guiang dated July 10, 1978 and the Opinion rendered by the Legal Department, Bureau of Lands, dated
July 12, 1978 are attached, marked respectively as Annexes 'K' and 'K-1' and made integral parts of this pleading;
"7. On the scheduled August 3, 1978 hearing date, complainant and respondent both appeared before Investigating Fiscal Villaluz and
in such hearing the following facts and points were clarified, established and/or admitted by the parties therein, to wit:
a. That respondent Filomeno C. Kintanar, in addition to the 29 hectares acquired by him through homestead patent, is
in actual possession of an additional 146 hectares of land originally acquired under Sales Patent from the
government under the provisions of the Public Land Act;
b. That of this mentioned 146 hectares of land, 2 lots with an area of 24 hectares each, or a total of 48 hectares, were
already transferred and registered with the office of the Register of Deeds of Davao del Sur in the name of
respondent Filomeno C. Kintanar by virtue of a Deed of Sale;
c. That respondent Kintanar admitted having executed an affidavit on September 1, 1975 in which respondent stated,
among other things, the following:
'That, both my wife and I don't possess lands more than what the constitution or the law authorizes.'
d. That said affidavit was actually presented sometime in September 1975 by respondent Kintanar with the Register
of Deeds of Davao del Sur in compliance with registration requirements of that office preparatory to effecting
registration of such Deed of Sale, cancelling the subsisting certificate of title in the names of complainant and his
spouse as Vendors, and effecting transfer of title to his name (respondent) as Vendee;
e. That complainant duly furnished the Investigating Fiscal and respondent Kintanar with the Opinion rendered by the
Legal Division, Bureau of Lands, dated July 12, 1978, copy already attached and marked Annex 'K' of this
pleading, pertinent portion quoted as follows:
'As regards your third question on whether the maximum area that an individual could acquire under section 122 of Commonwealth Act
No. 141, as amended, has been amended from 144 to 24 hectares our reply is in the affirmative x x x.'
Copy of the aforementioned affidavit executed by respondent Kintanar bearing date of September 1, 1975 is hereto attached, marked
as Annex 'L' and made an integral part of this Opposition.
"8. Upon another letter query addressed by plaintiff Benjamin V. Guiang to the Chief, Legal Department, Bureau of Lands, copy
furnished the Land Management Division of that Bureau anent the issue of whether in the interpretation of section 122 of
Commonwealth Act No. 141 as amended by section 11, Article XIV of the 1973 Constitution, husband and wife are to be considered as
one person or single citizen, the Chief, Legal Division, Bureau of Lands, replied, among others, in this wise:

'For the purpose of ascertaining the maximum acreage of twenty-four (24) hectares of patented lands originally covered by a sales
patent under section 122 of Commonwealth Act 141, as amended by the 1973 Constitution that any Filipino citizen could acquire or
possess including his present landholdings, husband and wife are to be considered as a single citizen.'
"Xerox copies of said plaintiff's letter query dated September 14, 1978 and the reply letter of the Chief, Legal Division, Bureau of Lands
dated September 19, 1978 are hereto attached, marked respectively as Annexes 'M' and 'M-1' and made integral parts of this pleading;
"9. On two (2) substantial issues covered in the foregoing cited opinions issued by the Legal Division, Bureau of Lands, a
communication incorporating the latest statement of official policy of that Bureau has evolved in the form of a recent letter addressed to
plaintiff Guiang, substantial portions quoted as follows:
"ON WHETHER HUSBAND AND WIFE ARE TO BE CONSIDERED AS ONLY ONE PERSON FOR PURPOSE OF IMPLEMENTING
SEC. 122 OF C.A. 141:
'In reply to your letter dated September 14, 1978 requesting information regarding the interpretation, is based on the legal principle that
a legally married couple is considered as only one person and property acquired by them during their marriage belongs to the conjugal
partnership.'
"ON THE MAXIMUM AREA OF PUBLIC LANDS THAT CAN BE ACQUIRED BY A CITIZEN OF THE PHILIPPINES:
'It is also the policy of this Office that the maximum area that can be acquired by an individual under the same Section has been
accordingly reduced from 144 to 24 hectares in line with the provision of the New Constitution reducing the area that can be purchased
by an individual to only 24 hectares.'
"Copy of such communication issued by Director of Lands Ramon N. Casanova dated September 20, 1978 is attached, marked Annex
'N' and made integral part of this pleading.
DISCUSSION AND ARGUMENT
"Commonwealth Act No. 141, known as Public Land Act, provides:
'Sec. 122. - Except in cases of hereditary succession, no land or any portion thereof originally acquired under the free patent,
homestead, or individual sale provisions of this act, or any permanent improvement on such land shall be transferred or assigned to
any individual, nor shall such land or any permanent improvement thereon be leased to such individual when the area of said land,
added to that of his own, shall exceed one hundred and forty?four hectares. Any transfer, assignment or lease in violation hereof shall
be null and void.' (Underscoring ours.)
"The 1973 Constitution of the Philippines provides in its ARTICLE XIV the following, to wit:
'Sec. 11. The National Assembly, taking into account conservation, ecological, and developmental requirements of the natural
resources, shall determine by law the size of lands of the public domain which may be developed, held or acquired by, or leased to, any
individual, corporation, or association, and the conditions therefor. No private corporation or association may hold alienable lands of
the public domain except by lease not to exceed one thousand hectares in area; nor may any citizen hold such lands by lease in
excess of five hundred hectares or acquire by purchase or homestead in excess of twenty-four hectares. No private corporation or
association may hold by lease, concession, license, or permit timber or forest lands and other timber or forest resources in excess of
one hundred thousand hectares; however, such area may be increased by the National Assembly upon recommendation of the
National Economic and Development Authority.' (Underscoring ours.)
CONVEYANCE VIOLATIVE OF CONSTITUTIONAL
PROHIBITION
Relief sought by means of
petition at bar contrary to
terms of compromise

agreement________

"A perusal of the Compromise Agreement entered into between the parties and approved by the Court in its Decision will show that the
supposed vendees of the six (6) lots subject thereof are none other than the spouses Filomeno C. Kintanar and Corazon B. Kintanar;
yet in their proposed Deed of Sale, reiterated once more in another way thru their petition at bar, defendants demand from plaintiffs
under pain of contempt the execution in their favor of the necessary deed of conveyance over the remaining four (4) lots, known as
Lots 'B-1' and 'B-2' covered by Sales Patent 2521 and O.C.T. No. 12281, and Lots 'A-2' and 'A-3' covered by Sales Patent 3180 and
O.C.T. No. 16465. This is plain from a comparison of the proposed vendees specified by defendants in their petition at bar with those
mentioned in their proposed Deed of Sale, Annex 'H-1', thus:

"Petition At Bar
Lot 'B-1' to Corazon B. Kintanar Lot 'B-1' to Corazon B. Kintanar
Lot 'B-2' to Corazon B. Kintanar Lot 'B-2' to Fil-Roger Kintanar
Lot 'A-2' to Filomeno C. Kintanar Lot 'A-2' to Cora-Ann B. Kintanar
Lot 'A-3' to Fil-Roger B. Kintanar Lot 'A-3' to Cora-Lou B. Kintanar
"As to the execution of a Deed of Sale by plaintiff favor of defendant Filomeno C. Kintanar over Lot 'A-2' with an area of 25 hectares,
plaintiffs respectfully submit that this just cannot be legally done for such would be violative of the aforestated Section 122 of
Commonwealth Act No. 141, as amended, in correlation with the provisions of Section 11, Article XIV, 1973 Constitution of the
Philippines, which took effect January 17, 1973. The maximum area of public land that under the Constitution could be acquired, either
by sale, transfer or assignment after such date by any citizen of the Philippines, including said defendant, is 24 hectares, including all
his present landholdings.
"Same is true with respect to any conveyance proposed to be made in the proposed Deed of Sale in favor of defendant Corazon B.
Kintanar over Lot 'B-1' with an area of 24 hectares which, as earlier contended, will likewise be null and void for being violative of
Section 11, Article XIV of the 1973 Constitution, amending Section 122 of C.A. No. 141. And with more reason since, as admitted by
defendant Kintanar as respondent before the Davao Special Counsel, upon the effective date of the 1973 Constitution he and his wife
were already themselves holders of 29 hectares of land of the public domain originally granted to them thru a homestead patent. And
following the Opinions or statements respectively rendered by the Chief, Legal Division, as well as the Director of the Bureau of Lands,
Annexes 'M-1' and 'N', defendants-spouses are, for purposes of the Public Land Act, to be considered as a 'single citizen' or as 'only
one person', such that they are both barred from acquiring by sale or homestead even a single square meter more of public land.
"And it is plain from paragraphs 2, 4 and 5 of the Compromise Agreement that the Spouses Kintanar as defendants are the only
intended vendees of Lots 'B-1', 'B-2', 'A-2' and 'A-3'. Likewise plain it is that defendants Cora-Ann, Cora-Lou, and Fil-Roger, all
surnamed Kintanar, as equally interested parties to the petition at bar, by having also affixed their respective signatures to the
Compromise Agreement, have expressly waived whatever rights they may have over any of the 6 lots subject-matter of the three (3)
cases at bar. Such express waiver is found in par. 6 of said compromise agreement, pertinent portion quoted as follows:
'6. That this Compromise Agreement hereby supersedes all other agreements, contracts to sell and other
documents pertaining to the lots in question.'
"Compromise Agreement Void
Insofar as same provides for
sale to defendants-spouses
Kintanar________

"As stated earlier, the Compromise Agreement provides for a sale by plaintiffs to defendants-spouses Kintanar of six (6) lots which have
a total area of 146 hectares of lands covered by Sales Patents originally acquired by individual purchase by plaintiffs from the
government before the effectivity of the 1973 Constitution.
"Following the mandate of Sec. 122 of C.A. 141 which provides that 'Any transfer, assignment or lease in violation hereof shall be null
and void', it inevitably follows that the compromise agreement, insofar as it requires the doing of a prohibited act, such as a sale in

favor of certain disqualified persons, is null and void. And any decision approving the same must likewise, and necessarily so, be,
considered null, following the pronouncement of the Supreme Court in one case:
'A void judgment or order is in legal effect no judgment or order.' (Paredes v. Moya, 61 SCRA 526).
Thus it is plain that execution may not issue based upon a void compromise agreement, even if the same bears approval by the court,
on account of want of jurisdiction.
"Due to the foregoing reasons, plaintiff-spouses Aurelio V. Hiquiana and Pastora O. Hiquiana similarly contend and submit that they,
too, cannot be compelled to execute the Deed of Sale demanded of them by defendants by means of the petition at bar.

"Plaintiffs under the circumstances not liable for contempt

"Assuming as contended by counsel for defendants in their petition at bar, without, however, conceding as true, that plaintiffs have
unjustly disobeyed the decision of this Honorable Court commanding the execution of certain deeds of conveyance of real property in
favor of defendants-movants as provided in the compromise agreement, yet plaintiffs submit that such act or omission on their part
should not necessarily render them liable for contempt. Defendants-movants have not shown in any manner whatever that plaintiffs
and only plaintiffs can perform the acts being insisted upon, to the exclusion of all others. Our Supreme Court has had occasion to
explain when a disobedient party is not liable for contempt in those cases where the court itself may direct that the specific act or acts
subject of the order be done by some designated person, thus:
'Section 9, Rule 39, in connection with Section 7 of Rule 71, provides that if a person is required by a judgment or order of the court to
perform any other act than payment of money or sale or delivery of real or personal property, and said person disobeys said judgment
or order while it is yet in his power to perform it, he may be punished for contempt and imprisonment until he performs said order. The
provision is applicable only to specific acts which the party or person must personally do, because his personal qualification and
circumstances have been taken into consideration in accordance with the provision of Article 1161 of the Civil Code. But if a judgment
directs a party to execute a conveyance of land or to deliver deeds or other documents or to perform specific acts which may be
performed by some other persons or in some other ways provided for by law with the same effect as in the present case, section 10 not
section 9 of Rule 39 applies; and under the provision of said section 10 the court may direct the act to be done at the cost of the
disobedient party by some other person appointed or designated by the court and the act when so done shall have the effect as if done
by the party himself.' (Underscoring ours.)
"COMPROMISE AGREEMENT THOUGH VOID
AS A SALE MAY YET BE UPHELD AS A LEASE
"As the parties are well aware, the subject-matter of the Compromise Agreement and decision in the three (3) above-captioned civil
cases concerns certain titled or patented lands of the public domain originally acquired from the government which have a total area of
146 hectares. It appearing that defendants-spouses were already holders of some 29 hectares of public land acquired before the
effective date of the 1973 Philippine Constitution, they are, however, barred or inhibited from acquiring by sale, transfer or assignment
even one single square meter of the 146 hectares of land subject of the compromise agreement in the above-entitled cases. In view of
this state of affairs, plaintiffs venture to ask: In view of their having already received the amount of P220,000.00 from defendants
pursuant to a void compromise agreement, how could the ends of law and justice be served, in all fairness to the defendants? It is
respectfully submitted that the only lawful, constitutional and logical way to give effect to the obligations and situation generated by the
compromise agreement is this: to consider or treat the same as a lease contract or agreement, with the amounts paid by defendants
treated as lease rentals or advances to plaintiffs under a continuing lease.
"In this connection it may be recalled that plaintiffs-spouses and defendants-spouses Filomeno C. Kintanar and Corazon B. Kintanar
originally had in mind the possession by the latter of the six (6) lots subject matter of the compromise agreement in concept of lease.
These are indicated or shown by the following:

"a. On December 4, 1972 plaintiffs Spouses Guiang and defendant Corazon B. Kintanar, acting for her children Cora-Ann, Cora-Lou,
Fil-Roger and herself, with the marital consent of her husband Filomeno C. Kintanar, also defendant in the above-entitled cases,
executed an Agreement Of Purchase And Sale over Lots 'B-1', 'B-2', 'B-3' and 'B-4' in question with the following resolutory provision:
'5. That failure of the vendees to pay the second and third installments as they fail due, shall cause the cancellation of
this agreement x x x and whatever improvements introduced by the vendees on said lots shall be considered rental
and liquidated damages:' (Underscoring ours.)
(Please see Annex 'A' of the Complaint in Civil Case No. Q-19573)
"On January 30, 1973, plaintiffs-spouses Aurelio V. Hiquiana and Pastora O. Hiquiana and defendant Filomeno C. Kintanar also
executed an Agreement of Purchase and Sale over Lots 'A-2' and 'A-3' which, among others, contained the following conditions:
'3. That the BUYER shall take possession of the property as a LESSOR until the entire purchase price is paid, for said
property is leased by Atty. & Mrs. Benjamin V. Guiang up to December 31, 1973 from the SELLERS.
"5. That in case the Buyer shall fail to pay two consecutive installments due, all rights and interests of the said Buyer in
and to the above-mentioned property shall ipso facto, cease and terminate and all payments made by him prior to
said default be deemed forfeited and waived in favor of the SELLERS in settlement of rents and liquidated
damages.' (Underscoring ours.)
"(Please see copy of said Agreement Of Purchase and Sale already attached as Annex 'A' of the Complaint in Civil Case No. Q-19574).
"Plaintiffs filed the above-captioned Civil Cases Nos. Q-19573 and Q-19574 against defendants for the enforcement of the abovementioned resolutory conditions or penal provisions of the above-mentioned Agreements of Purchase and Sale by the terms of which
said agreements were deemed cancelled, with all installments paid to plaintiffs considered payments of rentals and damages,
defendants having failed to pay the specified installments as they fell due.
"As to what will be the reasonable rentals of the said six (6) lots subject matter of said cases and the compromise agreement, plaintiffs
respectfully submitted that this be fixed at the stipulated seventy percent (70%) of the gross produce or income of the lands, minus
payments already advanced to plaintiffs, considering the intention of the parties as indicated in their management contract dated
February 15, 1973 which concerns lands adjoining the six (6) lots herein. (Please see copy of Management Contract, copy attached as
Annex 'A' to the Complaint in Civil Case No. Q-19572).
"The payments made to plaintiffs in concept of the purchase price under the compromise agreement by defendants Filomeno C.
Kintanar and Corazon B. Kintanar in the total amount of P220,000.00 can and may be treated instead as payment of reasonable
rentals for the use and occupancy by defendants of the six (6) lots subject matter of said agreement, together with all previous amounts
paid since February 15, 1973, considering that defendants have since such date admittedly been and continue to remain in exclusive
possession thereof up to this very day. Of course, this would be understood as subject to the reservation on the part of plaintiffs of the
right to demand an accounting of the produce handled by defendants during such period.
Preliminary Hearing Essential
"In view of the foregoing situation, this Honorable Court may, serve the ends of justice by directing the holding of a preliminary hearing
to ascertain whether or not the compromise agreement is void, or whether the same subsist to bind the contracting parties insofar as
concerns a lease of the lots covered by it. This course of action is suggested in view of the pronouncement of the Honorable Supreme
Court in Iboleon v. Sison, 50 Phil. 281, where it held:
'A Judge of Court, which sets aside a judgment rendered upon the consent of parties and based on a compromise entered into by
them, which was converted into such judgment, cannot modify nor reverse it without the consent of said parties, or without first having
declared in an incidental preliminary hearing, that such compromise is vitiated by any of the grounds for nullity enumerated in Art. 1817
of the Civil Code.' (Underscoring ours.)
"Section 11, Article XIV of the 1973 Constitution aforecited allows a citizen of the Philippines to acquire by lease up to five hundred
(500) hectares of lands of the public domain. Following the opinions rendered by the Legal Department, Bureau of Lands, Annexes 'K1' and 'M', by Implication Section 122 of C.A. No. 141 is deemed amended by the New Constitution in the sense that the new maximum
limit as to the area of lands of the public domain that could be acquired under lease by an individual has been increased from the
original limit of 144 hectares to 500 hectares as of the present.
PRAYER

"WHEREFORE, in view of all the foregoing considerations, plaintiffs in the three (3) above-captioned civil cases most respectfully pray
of this Honorable Court that:
''1. The petition of defendants, insofar as it seeks to have plaintiffs as respondents declared in contempt of court or divested of title
over Lots 'B-1', 'B-2', 'A-2' and 'A-3' be DENIED for lack of merit;
"2. Plaintiffs be declared as being relieved and freed from the duty and responsibility of executing any deed of sale in favor of
defendants under the compromise agreement and decision of this Honorable Court both dated August 20, 1975;
"3. The Deed of Absolute Sale, Annex 'A' of this pleading, be declared null and void;
"4. Defendants-spouses Filomeno C. Kintanar and Corazon B. Kintanar be ordered to execute, immediately and without unnecessary
delay, a Deed of Re-conveyance over the two (2) lots subject-matter thereof, known as Lots 'B-3' and 'B-4', in favor of plaintiffs-spouses
Benjamin V. Guiang and Natividad H. Guiang;
"IN THE ALTERNATIVE, plaintiffs as respondents most respectfully pray that a preliminary hearing be conducted for the purpose of
determining whether the compromise agreement dated August 20, 1973 as affirmed by the decision of this Honorable Court of same
date is valid and enforceable either as a sale, or as a lease, or void ab initio and thereafter, the corresponding order or decision be
rendered conformably with law and justice.
"Such other reliefs and remedies as may be considered just, equitable, proper and constitutional in the premises are likewise prayed
for.
Quezon City
Quezon City, Philippines, September 23, 1978.
GUIANG & PRIMICIAS LAW OFFICES
43 Detroit St., Quezon City
By:
(Sgd.) BENJAMIN V. GUIANG
and
(Sgd.) JUAN A.B. PRIMICIAS
Attorneys for the Plaintiffs"
(Annex G, pp. 65-82, Record)
Considering the foregoing quoted respective pleadings of the parties, what comes out as the basic question We are called upon to
resolve is whether or not the compromise agreement in dispute was void ab initio. And We do not hesitate to say that the answer to
that question is definitely in the affirmative or YES.
Earlier, in resolving the first issue between the parties, as formulated by Us, We came to the inevitable conclusion that Section 122 of
the Public Land Act has been amended by the 1973 Constitution by reducing the area of land acquired under the Act that could be
transferred by any purchaser, patentee or homesteader to only 24 hectares instead of the 144 hectares allowed under the 1935
Constitution. Now, the compromise agreement, executed on August 20, 1975 and here in dispute, provides for the transfer of a total of
146 hectares. It inevitably follows then that said compromise agreement contravenes not only a statute but the fundamental law of the
land. Adding to its being contrary to law, which undoubtedly is also covered by the public policy expressed in the Constitution, is the
fact that private respondents, the Kintanars, already owned at the time of the agreement a lot of 29 hectares which they had acquired
also from the government pursuant to the Public Land Act. Such being the situation, it is incontestable that under Paragraph (1) of
Article 1409 of the Civil Code said agreement is "inexistent and void from the beginning" since its "object or purpose is contrary to law - - or public policy".
It is of no consequence, pursuant to the same article, that petitioners, the Guiang spouses, executed on August 21, 1975, apparently in
ratification of the impugned agreement, the deeds of sale covering the two lots already referred to and that petitioners actually received
in part or in whole the money consideration stipulated therein, for according to the same Article 1409, contracts contemplated therein,
as the one We are dealing with, "cannot be ratified nor the defense of its illegality be waived." Neither is it material, much less decisive,
that petitioners had not earlier judicially moved to have the same annulled or set aside. Under Article 1410 of the Civil Code, "(t)he
action or defense for declaration of the inexistence of a contract does not prescribe."
In this connection, that is, as to the apparent delay in petitioners' invocation of the inexistence or nullity of the agreement oft referred to
above, it is but meet to mention here, as somewhat of an added equitable consideration in favor of petitioners, that as related in their
opposition quoted above, they realized or at least began to have apprehensions about the validity of what they had done practically
before the ink with which they signed the agreement had dried. This is conceded, albeit not in so many words, by private respondents

in their memorandum (p. 14). Indeed, in an effort to have his misgivings verified, as early as September 22, 1975, petitioner Benjamin
Guiang wrote the Commissioner of Land Registration relative thereto. Unfortunately for petitioners, in cavalier fashion, the
Commissioner merely considered that the registration of the two deeds of sale covering Lots B-3 and B-4, OCT 12281 was already a
fait accompli and like Pontius Pilate simply washed his hands off the matter.[1] Not contented with such official indifference to a matter of
constitutional importance, petitioners sought redress from the Office of the President and the Department (now Ministry) of Justice and
lastly, the Director of Lands, who as already related earlier gave the opinion favorable to petitioners, which We have earlier quoted
herein approvingly. Petitioners even went to the extent of filing a charge of perjury against respondents on account of their obviously
false affidavit submitted to the Register of Deeds denying in effect the indisputable fact that they were already then the owners of more
than 24 hectares of land acquired under the Public Land Act. Such criminal prosecution is still pending review in the Ministry of Justice.
Notable, if not admirable, indeed, was the continuous, consistent and unrelenting effort of petitioners to rectify a constitutional misstep
they had taken in rather hastily entering into the questioned compromise. That it may be said that they might have thought at the time
that it was a fair bargain does not in law minimize the undeniable invalidity and contravention of public policy involved in their act. To
be sure, We can believe that a judgment herein favorable to petitioners may result in material benefits to them, but such probable
contingency is merely incidental and should not blur Our eyes in any degree to the matter of constitutional policy We are sworn to
pursue and implement.
-BAt this point, inasmuch as private respondents have taken the judicial initiative to try to enforce the agreement in dispute, or, in the
words of petitioners "jumped the gun on them" by filing a motion for execution, of necessity, We have to go into the application in these
instant cases of the provisions, principles and jurisprudence regarding the doctrine We might briefly refer to as that of "in pari delicto".
To start with, petitioners invoke not only Article 1416 of the Civil Code but also the ruling of this Court in the leading case of Philippine
Banking Corporation vs. Lui She, 21 SCRA 52 in support of their contention that the rule of in pari delicto is inapplicable to these cases,
and, therefore, they may recover the above-mentioned two lots, Lots B-3 and B-4, OCT 12281. Article 1416 provides:
"ART. 1416. When the agreement is not illegal per se but is merely prohibited, and the prohibition by the law is designed for the
protection of the plaintiff, he may, if public policy is thereby enhanced, recover what he has paid or delivered."
This article, it is imperative to note, allows recovery of what has been paid or delivered pursuant to an inexistent contract only when the
agreement "(1) is not illegal per se but merely prohibited; (2) the prohibition is for the protection of the plaintiffs and (3) if public policy is
enhanced thereby." Substantially, We may say, without the need of quoting therefrom, the foregoing postulation is what was applied by
Us in the Philippine Banking case.
Referring to the situation now before Us, there can be no doubt that upholding the petitioners would enhance the public policy
expressed in the Constitution of limiting transfers of property acquired from the government to only 24 hectares as well as that implicit
in the provision of the Public Land Act prohibiting any citizen from acquiring by purchase or homestead disposable public lands in
excess of twenty-four (24) hectares. It may also be said that these limitations or prohibitions are intended for the protection of the
actual landholder or transferor or vendor-to-be because it safeguards him, for one thing, against being more or less induced under
certain circumstances to part with his holding thru importunings or other insiduous devices or schemes and, for another thing, he is
enabled to work with peace of mind on his land and utilize the same for the purposes for which he had acquired it.
In regard to the requirement that the agreement must not be illegal per se, it might be contended that Our holding that the compromise
under consideration is contrary to public policy removes the recovery of the two delivered lots and the further non-enforcement of the
impugned orders of the trial court from the application of Article 1416. We hold it is not so. Any act in violation of the limitations and
prohibitions herein involved is malum prohibitum, not malum in se. An act or contract that is illegal per se is one that by universally
recognized standards is inherently or by its very nature bad, improper, immoral or contrary to good conscience. On the other hand,
what is contrary to public policy may not be necessarily universally so, for public policy, like public interest, whether expressed in a
Constitution or in any statute or official declaration of the duly constituted authorities or evinced from the situation or circumstances of
the time concerned, is something dictated by the conditions obtaining within each country or nation. Indeed, in respect to the very
matter under discussion, namely, the limitation and control of the disposition of lands of the public domain, every government in the
world can have its own distinct policy suitable and peculiar to its internal interest, including the history mores, customs and traditions of

the people thereof. For instance, the provisions of our Constitution and our laws covering such matter and the others relative to the
conservation of our natural resources exclusively for us, Filipinos, are easily distinguishable from those of the Constitutions and laws of
the United States, Russia, England, Singapore, Malaysia, etc., etc. Thus, the juridical concept of what is illegal per se cannot be
necessarily equated with what is contrary to public policy in all instances. In the cases at bar, the disputed compromise agreement is
contrary to the public policy embodied in our Constitution and the Public Land Act as amended by the former since January 17, 1973,
but it is not illegal per se. Such may not be the case in other countries.
Consequently, nothing objectionable, juridically speaking, lies in the way to having the prayer of petitioners granted. Since they are not,
in terms of the in pari delicto doctrine and under the facts of these cases, the once trying to enforce an agreement contrary to the public
policy of our Charter and our laws, such circumstance that they are the ones resisting the invocation of said doctrine is what makes
their posture more legally tenable. As already stated earlier, under Article 1410 of the Civil Code, "the action or defense for the
declaration of inexistence of a contract does not prescribe" just as under Article 1409, "(n)either can the right to set up such defense of
illegality be waived." From which it is clearly implicit that one against whom the doctrine is invoked may deny its application whether he
be plaintiff or defendant, or the movant or oppositor. Here, private respondents are the movants for enforcement. We hold that as
oppositors to such motion, petitioners are in the right in putting up the defense that the agreement and orders sought to be enforced
are contrary to public policy and that the said agreement is not illegal per se, hence, Article 1416 affords relief to them.
-C
Having arrived at the foregoing conclusions, it follows necessarily that the fact that private respondents cannot deny that on August 20,
1975, they were already the holders of a torrens title over 29 hectares of land acquired by them by virtue of the Public Land Act from
disposable lands of the public domain, is a total bar to the enforcement of the orders they are seeking, and this is the reason why We
cannot just reduce the 146 hectares under litigation to only 24 hectares, which would have been legally possible, if private respondents'
situation were otherwise. But able counsel for private respondents would try to save their case by inviting our attention to the fact that
the original contracts of conveyance between the parties were entered into prior to January 17, 1973. No matter. Those contracts are
not the ones involved here. What is here in question is the compromise agreement of August 20, 1975 which precisely and pointedly
provides that "the Agreement shall supersede all other agreements, contracts to sell and other documents pertaining to the lots in
question," for which reason the only parties-in-interest to the instant proceeding have become exclusively herein petitioners and
respondents and none others, particularly, the children of the Kintanars, notwithstanding their having been parties in Civil Case No. Q19573 of the trial court, as original purchasers.

-DPetitioners suggest that to avoid entire invalidity of the questioned agreement, it be construed merely as a lease. We are loath to follow
the suggestion for the simple reason that it is juridically doubtful how a contract worded in the clearest tenor as one of transfer or
conveyance of the title or ownership of the property concerned itself could be construed as merely a lease thereof. We believe and so
hold that it would be simplest and best to let the natural consequence of the constitutional invalidity, which We here declare, of the
compromise agreement and of the decision based thereon as well as the subsequent orders of execution of such decision be allowed
to follow its natural course. By this is meant that: (1) the private respondents, the Kintanar spouses shall reconvey to petitioners, the
Guiang spouses, the two lots, Lots B-3 and B-4 previously covered by OCT 12281 without any compensation but solely by virtue of this
judgment; (2) the petitioners shall retain the remaining lots, Lots B-1 and B-2 covered also by OCT 12281 and Lots A-2 and A-3
covered by OCT 16465, without any obligation to convey the same to private respondents, or, to put it the other way, private
respondents may not compel the petitioners or any of them, judicially or otherwise to convey to them (private respondents) much less
to any of the latter's children any of the lots or lands aforementioned; and (3) instead of considering whatever private respondents have
paid not only under the contracts hereby invalidated but also under the original transaction between the parties, the same should be
deemed as damages due petitioners for their inability to have possession of the lands herein involved up to the time the judgment
herein is complied with, at the rate of Fifty Thousand (P50,000.00) Pesos a year from August 20, 1975.
In this connection, the petition alleges that only P240,000.00 have been paid by private respondents, albeit a higher figure is vaguely
alleged in the later pleadings of petitioners, and petitioners estimate the rentals, if We should accept the theory of lease proposed by

them, to be P736,000.00 up to the present. We are not inclined to accept those figures. We are more impressed by the allegation on
page 3 of private respondents' memorandum that they have fully paid the P220,000.00 consideration stipulated in the compromise in
addition to P136,000.00 they had already previously paid under the contracts that became the subject of the three cases that were
precisely attempted to be compromised on August 20, 1975. We are also inclined to accept as more reasonable the P50,000.00
estimate made by private respondents of the net yearly yield of the lands in dispute.
With the foregoing view We have taken of these cases now before Us, We see no need to resolve the other issues discussed by the
parties in their memoranda and motions.
WHEREFORE, judgment is hereby rendered granting the herein petition and declaring the rights of the parties to be as they are stated
above in the paragraph preceding the penultimate one of the above opinion. Costs against private respondents. It is so ordered.
Concepcion, Jr., Fernandez, and De Castro, JJ., concur.
Abad Santos, J., separate opinion concurring in the result.
Aquino, J., did not take part.

400 Phil. 904

EN BANC
[ G.R. No. 135385, December 06, 2000 ]
ISAGANI CRUZ AND CESAR EUROPA, PETITIONERS, VS. SECRETARY OF ENVIRONMENT AND NATURAL RESOURCES,
SECRETARY OF BUDGET AND MANAGEMENT AND CHAIRMAN AND COMMISSIONERS OF THE NATIONAL COMMISSION ON
INDIGENOUS PEOPLES, RESPONDENTS.
HON. JUAN M .FLAVIER, HON. PONCIANO BENNAGEN, BAYANI ASCARRAGA, EDTAMI MANSAYANGAN, BASILIO WANDAG,
EVELYN DUNUAN, YAOM TUGAS, ALFREMO CARPIANO, LIBERATO A. GABIN, MATERNIDAD M. COLAS, NARCISA M.
DALUPINES, BAI KIRAM-CONNIE SATURNO, BAE MLOMO-BEATRIZ T. ABASALA, DATU BALITUNGTUNG-ANTONIO D.
LUMANDONG, DATU MANTUMUKAW TEOFISTO SABASALES, DATU EDUAARDO BANDA, DATU JOEL UNAD, DATU RAMON
BAYAAN, TIMUAY JOSE ANOY, TIMUAY MACARIO D. SALACAO, TIMUAY EDWIN B. ENDING, DATU SAHAMPONG MALANAW VI,
DATU BEN PENDAO CABIGON, BAI NANAPNAY-LIZA SAWAY, BAY INAY DAYA-MELINDA S. REYMUNDO, BAI TINANGHAGA
HELINITA T. PANGAN, DATU MAKAPUKAW ADOLINO L. SAWAY, DATU MAUDAYAW-CRISPEN SAWAY, VICKY MAKAY, LOURDES
D. AMOS, GILBERT P. HOGGANG, TERESA GASPAR, MANUEL S. ONALAN, MIA GRACE L. GIRON, ROSEMARIE G. PE, BENITO
CARINO, JOSEPH JUDE CARANTES, LYNETTE CARANTES-VIVAL, LANGLEY SEGUNDO, SATUR S. BUGNAY, CARLING
DOMULOT, ANDRES MENDIOGRIN, LEOPOLDO ABUGAN, VIRGILIO CAYETANO, CONCHITA G. DESCAGA, LEVY ESTEVES,
ODETTE G. ESTEVEZ, RODOLFO C. AGUILAR, MAURO VALONES, PEPE H. ATONG, OFELIA T. DAVI, PERFECTO B. GUINOSAO,
WALTER N. TIMOL, MANUEL T. SELEN, OSCAR DALUNHAY, RICO O. SULATAN, RAFFY MALINDA, ALFREDO ABILLANOS,
JESSIE ANDILAB, MIRLANDO H. MANGKULINTAS, SAMIE SATURNO, ROMEO A. LINDAHAY, ROEL S. MANSANG-CAGAN,
PAQUITO S. LIESES, FILIPE G. SAWAY, HERMINIA S. SAWAY, JULIUS S. SAWAY, LEONARDA SAWAY, JIMMY UGYUB,
SALVADOR TIONGSON, VENANCIO APANG, MADION MALID, SUKIM MALID, NENENG MALID, MANGKATADONG AUGUSTO
DIANO, JOSEPHINE M. ALBESO, MORENO MALID, MARIO MANGCAL, FELAY DIAMILING, SALOME P. SARZA, FELIPE P.
BAGON, SAMMY SALNUNGAN, ANTONIO D. EMBA, NORMA MAPANSAGONOS, ROMEO SALIGA, SR., JERSON P. GERADA,
RENATO T. BAGON, JR., SARING MASALONG, SOLEDAD M. GERARDA, ELIZABETH L. MENDI, MORANTE S. TIWAN, DANILO M.
MALUDAO, MINORS MARICEL MALID, REPRESENTED BY HER FATHER CORNELIO MALID, MARCELINO M. LADRA,
REPRESENTED BY HER FATHER MONICO D. LADRA, JENNYLYN MALID, REPRESENTED BY HER FATHER TONY MALID, ARIEL
M. EVANGELISTA, REPRESENTED BY HER MOTHER LINAY BALBUENA, EDWARD M. EMUY, SR., SUSAN BOLANIO, OND, PULA
BATO B'LAAN TRIBAL FARMER'S ASSOCIATION, INTER-PEOPLE'S EXCHANGE, INC. AND GREEN FORUM-WESTERN VISAYAS,
INTERVENORS.
COMMISSION ON HUMAN RIGHTS, INTERVENOR.
IKALAHAN INDIGENOUS PEOPLE AND HARIBON FOUNDATION FOR THE CONSERVATION OF NATURAL RESOURCES, INC.,
INTERVENOR.
RESOLUTION
PER CURIAM:
Petitioners Isagani Cruz and Cesar Europa brought this suit for prohibition and mandamus as citizens and taxpayers, assailing the
constitutionality of certain provisions of Republic Act No. 8371 (R.A. 8371), otherwise known as the Indigenous Peoples Rights Act of
1997 (IPRA), and its Implementing Rules and Regulations (Implementing Rules).

In its resolution of September 29, 1998, the Court required respondents to comment.[1] In compliance, respondents Chairperson and
Commissioners of the National Commission on Indigenous Peoples (NCIP), the government agency created under the IPRA to
implement its provisions, filed on October 13, 1998 their Comment to the Petition, in which they defend the constitutionality of the IPRA
and pray that the petition be dismissed for lack of merit.
On October 19, 1998, respondents Secretary of the Department of Environment and Natural Resources (DENR) and Secretary of the
Department of Budget and Management (DBM) filed through the Solicitor General a consolidated Comment. The Solicitor General is of
the view that the IPRA is partly unconstitutional on the ground that it grants ownership over natural resources to indigenous peoples

and prays that the petition be granted in part.

On November 10, 1998, a group of intervenors, composed of Sen. Juan Flavier, one of the authors of the IPRA, Mr. Ponciano
Bennagen, a member of the 1986 Constitutional Commission, and the leaders and members of 112 groups of indigenous peoples
(Flavier, et. al), filed their Motion for Leave to Intervene. They join the NCIP in defending the constitutionality of IPRA and praying for
the dismissal of the petition.
On March 22, 1999, the Commission on Human Rights (CHR) likewise filed a Motion to Intervene and/or to Appear as Amicus Curiae.
The CHR asserts that IPRA is an expression of the principle of parens patriae and that the State has the responsibility to protect and
guarantee the rights of those who are at a serious disadvantage like indigenous peoples. For this reason it prays that the petition be
dismissed.
On March 23, 1999, another group, composed of the Ikalahan Indigenous People and the Haribon Foundation for the Conservation of
Natural Resources, Inc. (Haribon, et al.), filed a motion to Intervene with attached Comment-in-Intervention. They agree with the NCIP
and Flavier, et al. that IPRA is consistent with the Constitution and pray that the petition for prohibition and mandamus be dismissed.
The motions for intervention of the aforesaid groups and organizations were granted.
Oral arguments were heard on April 13, 1999. Thereafter, the parties and intervenors filed their respective memoranda in which they
reiterate the arguments adduced in their earlier pleadings and during the hearing.
Petitioners assail the constitutionality of the following provisions of the IPRA and its Implementing Rules on the ground that they
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:
"(1)

Section 3(a) which defines the extent and coverage of ancestral domains, and Section 3(b) which, in turn, defines
ancestral lands;

"(2)

Section 5, in relation to section 3(a), which provides that ancestral domains including inalienable public lands, bodies of
water, mineral and other resources found within ancestral domains are private but community property of the indigenous
peoples;

"(3)

Section 6 in relation to section 3(a) and 3(b) which defines the composition of ancestral domains and ancestral lands;

"(4)

Section 7 which recognizes and enumerates the rights of the indigenous peoples over the ancestral domains;

"(5)

Section 8 which recognizes and enumerates the rights of the indigenous peoples over the ancestral lands;

"(6)

Section 57 which provides for priority rights of the indigenous peoples in the harvesting, extraction, development or
exploration of minerals and other natural resources within the areas claimed to be their ancestral domains, and the right
to enter into agreements with nonindigenous peoples for the development and utilization of natural resources therein for a
period not exceeding 25 years, renewable for not more than 25 years; and

"(7)

Section 58 which gives the indigenous peoples the responsibility to maintain, develop, protect and conserve the ancestral
domains and portions thereof which are found to be necessary for critical watersheds, mangroves, wildlife sanctuaries,
wilderness, protected areas, forest cover or reforestation."[2]

Petitioners also content that, by providing for an all-encompassing definition of "ancestral domains" and "ancestral lands" which might

even include private lands found within said areas, Sections 3(a) and 3(b) violate the rights of private landowners.[3]
In addition, petitioners question the provisions of the IPRA defining the powers and jurisdiction of the NCIP and making customary law
applicable to the settlement of disputes involving ancestral domains and ancestral lands on the ground that these provisions violate the
due process clause of the Constitution.[4] These provisions are:
"(1)

Sections 51 to 53 and 59 which detail the process of delineation and recognition of ancestral domains and which vest on
the NCIP the sole authority to delineate ancestral domains and ancestral lands;

"(2)

Section 52[i] which provides that upon certification by the NCIP that a particular area is an ancestral domain and upon
notification to the following officials, namely, the Secretary of Environment and Natural Resources, Secretary of Interior
and Local Governments, Secretary of Justice and Commissioner of the National Development Corporation, the
jurisdiction of said officials over said area terminates;

"(3)

Section 63 which provides the customary law, traditions and practices of indigenous peoples shall be applied first with
respect to property rights, claims of ownership, hereditary succession and settlement of land disputes, and that any doubt
or ambiguity in the interpretation thereof shall be resolved in favor of the indigenous peoples;

"(4)

Section 65 which states that customary laws and practices shall be used to resolve disputes involving indigenous
peoples; and

"(5)

Section 66 which vests on the NCIP the jurisdiction over all claims and disputes involving rights of the indigenous
peoples."[5]

Finally, petitioners assail the validity of Rule VII, Part II, Section 1 of the NCIP Administrative Order No. 1, series of 1998, which
provides that "the administrative relationship of the NCIP to the Office of the President is characterized as a lateral but autonomous
relationship for purposes of policy and program coordination." They contend that said Rule infringes upon the President's power of
control over executive departments under Section 17, Article VII of the Constitution.[6]
Petitioners pray for the following:
"(1)

A declaration that Sections 3, 5, 6, 7, 8, 52[I], 57, 58, 59, 63, 65 and 66 and other related provisions of R.A. 8371 are
unconstitutional and invalid;

"(2)

The issuance of a writ of prohibition directing the Chairperson and Commissioners of the NCIP to cease and desist from
implementing the assailed provisions of R.A. 8371 and its Implementing Rules;

"(3)

The issuance of a writ of prohibition directing the Secretary of the Department of Environment and Natural Resources to
cease and desist from implementing Department of Environment and Natural Resources Circular No. 2, series of 1998;

"(4)

The issuance of a writ of prohibition directing the Secretary of Budget and Management to cease and desist from
disbursing public funds for the implementation of the assailed provisions of R.A. 8371; and

"(5)

The issuance of a writ of mandamus commanding the Secretary of Environment and Natural Resources to comply with
his duty of carrying out the State's constitutional mandate to control and supervise the exploration, development,
utilization and conservation of Philippine natural resources."[7]

After due deliberation on the petition, the members of the Court voted as follows:
Seven (7) voted to dismiss the petition. Justice Kapunan filed an opinion, which the Chief Justice and Justices Bellosillo, Quisumbing,
and Santiago join, sustaining the validity of the challenged provisions of R.A. 8371. Justice Puno also filed a separate opinion
sustaining all challenged provisions of the law with the exception of Section 1, Part II, Rule III of NCIP Administrative Order No. 1,
series of 1998, the Rules and Regulations Implementing the IPRA, and Section 57 of the IPRA which he contends should be
interpreted as dealing with the large-scale exploitation of natural resources and should be read in conjunction with Section 2, Article XII
of the 1987 Constitution. On the other hand, Justice Mendoza voted to dismiss the petition solely on the ground that it does not raise a
justiciable controversy and petitioners do not have standing to question the constitutionality of R.A. 8371.
Seven (7) other members of the Court voted to grant the petition. Justice Panganiban filed a separate opinion expressing the view that
Sections 3 (a)(b), 5, 6, 7 (a)(b), 8, and related provisions of R.A. 8371 are unconstitutional. He reserves judgment on the
constitutionality of Sections 58, 59, 65, and 66 of the law, which he believes must await the filing of specific cases by those whose
rights may have been violated by the IPRA. Justice Vitug also filed a separate opinion expressing the view that Sections 3(a), 7, and
57 of R.A. 8371 are unconstitutional. Justices Melo, Pardo, Buena, Gonzaga-Reyes, and De Leon join in the separate opinions of
Justices Panganiban and Vitug.
As the votes were equally divided (7 to 7) and the necessary majority was not obtained, the case was redeliberated upon. However,
after redeliberation, the voting remained the same. Accordingly, pursuant to Rule 56, Section 7 of the Rules of Civil Procedure, the
petition is DISMISSED.
Attached hereto and made integral parts thereof are the separate opinions of Justices Puno, Vitug, Kapunan, Mendoza, and
Panganiban.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Melo, Quisumbing, Pardo, Buena, Gonzaga-Reyes, Ynares-Santiago, and De Leon, Jr., JJ., concur.
Puno, Vitug, Kapunan, Mendoza and Panganiban JJ., see separate opinion

271 Phil. 89
FIRST DIVISION
[ G.R. No. 74833, January 21, 1991]
THOMAS C. CHEESMAN, PETITIONER, VS. INTERMEDIATE APPELLATE COURT AND ESTELITA PADILLA, RESPONDENTS.
DECISION
NARVASA, J.:
This appeal concerns the attempt by an American citizen (petitioner Thomas Cheesman) to annul -- for lack of consent on his part -- the
sale by his Filipino wife (Criselda) of a residential lot and building to Estelita Padilla, also a Filipino.
Thomas Cheesman and Criselda P. Cheesman were married on December 4, 1970 but have been separated since February 15, 1981.
[1]
On June 4, 1974, a "Deed of Sale and Transfer of Possessory Rights" was executed by Armando Altares conveying a parcel of
unregistered land and the house thereon (at No. 7 Neptune Street, Gordon Heights, Olongapo City) in favor of "Criselda P. Cheesman,
of legal age, Filipino citizen, married to Thomas Cheesman, and residing at Lot No. 1, Blk. 8, Filtration Road, Sta. Rita, Olongapo City
**."[2] Thomas Cheesman, although aware of the deed, did not object to the transfer being made only to his wife.[3]
Thereafter -- and again with the knowledge of Thomas Cheesman and also without any protest by him -- tax declarations for the
property purchased were issued in the name only of Criselda Cheesman; and Criselda assumed exclusive management and
administration of said property, leasing it to tenants.[4] On July 1, 1981, Criselda Cheesman sold the property to Estelita M. Padilla,
without the knowledge or consent of Thomas Cheesman.[5] The deed described Criselda as being ". . . . of legal age, married to an
American citizen,**."[6]
Thirty days later, or on July 31, 1981, Thomas Cheesman brought suit in the Court of First Instance at Olongapo City against his wife,
Criselda, and Estelita Padilla, praying for the annulment of the sale on the ground that the transaction had been executed without his
knowledge and consent.[7] An answer was filed in the names of both defendants, alleging that (1) the property sold was paraphernal,
having been purchased by Criselda with funds exclusively belonging to her ("her own separate money"); (2) Thomas Cheesman, being
an American, was disqualified to have any interest or right of ownership in the land; and (3) Estelita Padilla was a buyer in good faith.[8]
During the pre-trial conference, the parties agreed upon certain facts which were subsequently set out in a pre-trial Order dated
October 22, 1981,[9] as follows:
1. Both parties recognize the existence of the Deed of Sale over the residential house located at No. 7 Granada St., Gordon
Heights, Olongapo City, which was acquired from Armando Altares on June 4, 1974 and sold by defendant Criselda Cheesman to
Estelita Padilla on July 12, 1981; and
2. That the transaction regarding the transfer of their property took place during the existence of their marriage as the couple were
married on December 4, 1970 and the questioned property was acquired sometime on June 4, 1974.
The action resulted in a judgment dated June 24, 1982,[10] declaring void ab initio the sale executed by Criselda Cheesman in favor of
Estelita M. Padilla, and ordering the delivery of the property to Thomas Cheesman as administrator of the conjugal partnership
property, and the payment to him of P5,000.00 as attorney's fees and expenses of litigation.[11]
The judgment was however set aside as regards Estelita Padilla on a petition for relief filed by the latter, grounded on "fraud, mistake
and/or excusable negligence" which had seriously impaired her right to present her case adequately.[12] "After the petition for relief
from judgment was given due course," according to petitioner, "a new judge presided over the case."[13]
Estelita Padilla filed a supplemental pleading on December 20, 1982 as her own answer to the complaint, and a motion for summary
judgment on May 17, 1983. Although there was initial opposition by Thomas Cheesman to the motion, the parties ultimately agreed on

the rendition by the court of a summary judgment after entering into a stipulation of facts, at the hearing of the motion on June 21,
1983, the stipulation being of the following tenor:[14]
"(1) that the property in question was bought during the existence of the marriage between the plaintiff and the defendant Criselda P.
Cheesman;
(2) that the property bought during the marriage was registered in the name of Criselda Cheesman and that the Deed of Sale and
Transfer of Possessory Rights executed by the former owner-vendor Armando Altares in favor of Criselda Cheesman made no mention
of the plaintiff;
(3) that the property, subject of the proceedings, was sold by defendant Criselda Cheesman in favor of the other defendant Estelita
M. Padilla, without the written consent of the plaintiff."
Obviously upon the theory that no genuine issue existed any longer and there was hence no need of a trial, the parties having in fact
submitted, as also stipulated, their respective memoranda each praying for a favorable verdict, the Trial Court[15] rendered a
Summary Judgment dated August 3, 1982 declaring "the sale executed by ** Criselda Cheesman in favor of ** Estelita Padilla to be
valid," dismissing Thomas Cheesman's complaint and ordering him "to immediately turn over the possession of the house and lot
subject of ** (the) case to ** Estelita Padilla **."[16]
The Trial Court found that 1) the evidence on record satisfactorily overcame the disputable presumption in Article 160 of the Civil Code -- that all property of the
marriage belongs to the conjugal partnership "unless it be proved that it pertains exclusively to the husband or to the wife" -- and that
the immovable in question was in truth Criselda's paraphernal property;
2) that moreover, said legal presumption in Article 160 could not apply "inasmuch as the husband-plaintiff is an American citizen and
therefore disqualified under the Constitution to acquire and own real properties;" and
3) that the exercise by Criselda of exclusive acts of dominion with the knowledge of her husband "had led ** Estelita Padilla to
believe that the properties were the exclusive properties of Criselda Cheesman and on the faith of such a belief she bought the
properties from her and for value," and therefore, Thomas Cheesman was, under Article 1473 of the Civil Code, estopped to impugn
the transfer to Estelita Padilla.
Thomas Cheesman appealed to the Intermediate Appellate Court. There he assailed the Trial Court acts (1) of granting Estelita
Padilla's petition for relief, and its resolution of matters not subject of said petition; (2) of declaring valid the sale to Estelita Padilla
despite the lack of consent thereto by him, and the presumption of the conjugal character of the property in question pursuant to Article
160 of the Civil Code; (3) of disregarding the judgment of June 24, 1982 which, not having been set aside as against Criselda
Cheesman, continued to be binding on her; and (4) of making findings of fact not supported by evidence. All of these contentions were
found to be without merit by the Appellate Tribunal which, on January 7, 1986, promulgated a decision (erroneously denominated,
"Report")[17] affirming the "Summary Judgment complained of," "having found no reversible error" therein.
Once more, Thomas Cheesman availed of the remedy of appeal, this time to this Court. Here, he argues that it was reversible error for
the Intermediate Appellate Court 1) to find that the presumption that the property in question is conjugal in accordance with Article 160 had been satisfactorily overcome
by Estelita Padilla;[18]
2) to rule that Estelita Padilla was a purchaser of said property in good faith, it appearing:
a) that the deed by which the property was conveyed to Criselda Cheesman described her as "married to Thomas C. Cheesman," as
well as the deed by which the property was later conveyed to Estelita Padilla by Criselda Cheesman also described her as "married to
an American citizen," and both said descriptions had thus "placed Estelita on knowledge of the conjugal nature of the property;" and

b) that furthermore, Estelita had admitted to stating in the deed by which she acquired the property a price much lower than that
actually paid "in order to avoid payment of more obligation to the government;"[19]
3) to decline to declare that the evidence did not warrant the grant of Estelita Padillas petition for relief on the ground of "fraud, mistake
and/or excusable negligence;"[20]
4) to hold that Thomas Cheesman had waived his objection to Estelita's petition for relief by failing to appeal from the order granting
the same;
5) to accord to Estelita Padilla a relief other than that she had specifically prayed for in her petition for relief, i.e., "the restoration of the
purchase price which Estelita allegedly paid to Criselda;"[21] and
6) to fail to declare that Thomas Cheesman's citizenship is not a bar to his action to recover the lot and house for the conjugal
partnership.[22]
Such conclusions as that (1) fraud, mistake or excusable negligence existed in the premises justifying relief to Estelita Padilla under
Rule 38 of the Rules of Court, or (2) that Criselda Cheesman had used money she had brought into her marriage to Thomas
Cheesman to purchase the lot and house in question, or (3) that Estelita Padilla believed in good faith that Criselda Cheesman was the
exclusive owner of the property that she (Estelita) intended to and did in fact buy -- derived from the evidence adduced by the parties,
the facts set out in the pleadings or otherwise appearing on record -- are conclusions or findings of fact. As distinguished from a
question of law -- which exists "when the doubt or difference arises as to what the law is on a certain state of facts" -- "there is a
question of fact when the doubt or difference arises as to the truth or the falsehood of alleged facts;"[23] or when the "query
necessarily invites calibration of the whole evidence considering mainly the credibility of witnesses, existence and relevancy of specific
surrounding circumstances, their relation; to each other and to the whole and the probabilities of the situation."[24]
Now, it is axiomatic that only questions of law, distinctly set forth, may be raised in a petition for the review on certiorari of a decision of
the Court of Appeals presented to this Court.[25] As everyone knows or ought to know, the appellate jurisdiction of this Court is limited
to reviewing errors of law, accepting as conclusive the factual findings of the lower court upon its own assessment of the evidence.[26]
The creation of the Court of Appeals was precisely intended to take away from the Supreme Court the work of examining the evidence,
and confine its task to the determination of questions which do not call for the reading and study of transcripts containing the testimony
of witnesses.[27] The rule of conclusiveness of the factual findings or conclusions of the Court of Appeals is, to be sure, subject to
certain exceptions,[28] none of which however obtains in the case at bar.
It is noteworthy that both the Trial Court and the Intermediate Appellate Court reached the same conclusions on the three (3) factual
matters above set forth, after assessment of the evidence and determination of the probative value thereof. Both Courts found that the
facts on record adequately proved fraud, mistake or excusable negligence by which Estelita Padilla's rights had been substantially
impaired; that the funds used by Criselda Cheesman was money she had earned and saved prior to her marriage to Thomas
Cheesman, and that Estelita Padilla did believe in good faith that Criselda Cheesman was the sole owner of the property in question.
Consequently, these determinations of fact will not be here disturbed, this Court having been cited to no reason for doing so.
These considerations dispose of the first three (3) points that petitioner Cheesman seeks to make in this appeal. They also make
unnecessary an extended discussion of the other issues raised by him. As to them, it should suffice to restate certain fundamental
propositions.
An order of a Court of First Instance (now Regional Trial Court) granting a petition for relief under Rule 38 is interlocutory and is not
appealable. Hence, the failure of the party who opposed the petition to appeal from said order, or his participation in the proceedings
subsequently had, cannot be construed as a waiver of his objection to the petition for relief so as to preclude his raising the same
question on an appeal from the judgment on the merits of the main case. Such a party need not repeat his objections to the petition for
relief, or perform any act thereafter (e.g., take formal exception) in order to preserve his right to question the same eventually, on
appeal, it being sufficient for this purpose that he has made of record "the action which he desires the court to take or his objection to
the action of the court and his grounds therefor."[29]

Again, the prayer in a petition for relief from judgment under Rule 38 is not necessarily the same prayer in the petitioner's complaint,
answer or other basic pleading. This should be obvious. Equally obvious is that once a petition for relief is granted and the judgment
subject thereof set aside, and further proceedings are thereafter had, the Court in its judgment on the merits may properly grant the
relief sought in the petitioner's basic pleadings, although different from that stated in his petition for relief.
Finally, the fundamental law prohibits the sale to aliens of residential land. Section 14, Article XIV of the 1973 Constitution ordains that,
"Save in cases of hereditary succession, no private land shall be transferred or conveyed except to individuals, corporations, or
associations qualified to acquire or hold lands of the public domain."[30] Petitioner Thomas Cheesman was, of course, charged with
knowledge of this prohibition. Thus, assuming that it was his intention that the lot in question be purchased by him and his wife, he
acquired no right whatever over the property by virtue of that purchase; and in attempting to acquire a right or interest in land,
vicariously and clandestinely, he knowingly violated the Constitution; the sale as to him was null and void.[31] In any event, he had and
has no capacity or personality to question the subsequent sale of the same property by his wife on the theory that in so doing he is
merely exercising the prerogative of a husband in respect of conjugal property. To sustain such a theory would permit indirect
controversion of the constitutional prohibition. If the property were to be declared conjugal, this would accord to the alien husband a
not insubstantial interest and right over land, as he would then have a decisive vote as to its transfer or disposition. This is a right that
the Constitution does not permit him to have.
As already observed, the finding that his wife had used her own money to purchase the property cannot, and will not, at this stage of
the proceedings be reviewed and overturned. But even if it were a fact that said wife had used conjugal funds to make the acquisition,
the considerations just set out militate, on high constitutional grounds, against his recovering and holding the property so acquired, or
any part thereof. And whether in such an event, he may recover from his wife any share of the money used for the purchase or charge
her with unauthorized disposition or expenditure of conjugal funds is not now inquired into; that would be, in the premises, a purely
academic exercise. An equally decisive consideration is that Estelita Padilla is a purchaser in good faith, both the Trial Court and the
Appellate Court having found that Cheesman's own conduct had led her to believe the property to be exclusive property of the latter's
wife, freely disposable by her without his consent or intervention. An innocent buyer for value, she is entitled to the protection of the
law in her purchase, particularly as against Cheesman, who would assert rights to the property denied him by both letter and spirit of
the Constitution itself.
WHEREFORE, the appealed decision is AFFIRMED, with costs against petitioner.
SO ORDERED.
Cruz, Gancayco, Grio-Aquino, and Medialdea, JJ., concur.

371 Phil. 523

THIRD DIVISION
[ G.R. No. 133047, August 17, 1999]
HEIRS OF LORENZO YAP, NAMELY SALLY SUN YAP, MARGARET YAP-UY AND MANUEL YAP, PETITIONERS, VS. THE
HONORABLE COURT OF APPEALS, RAMON YAP AND BENJAMIN YAP, RESPONDENTS.
DECISION
VITUG, J.:
What in essence petitioners seek is the enforcement of an alleged trust agreement between Lorenzo Yap, now deceased, and his
brothers Ramon and Benjamin, herein co-respondents, covering a piece of land and its improvement. The case and factual settings
found by the Court of Appeals do not appear to deviate significantly from that priorly made by the trial court.
Sometime in February 1966, Ramon Yap purchased a parcel of land situated at 123 (formerly 75) Batanes Street, Galas, Quezon City,
covered by Transfer Certificate of Title No. 82001/T-414, from the spouses Carlos and Josefina Nery. The lot was thereupon registered
in the name of Ramon Yap under Transfer Certificate of Title No. 102132; forthwith, he also declared the property in his name for tax
purposes and paid the real estate taxes due thereon from 1966 to 1992. In 1967, Ramon Yap constructed a two storey 3-door
apartment building for the use of the Yap family. One-fifth (1/5) of the cost of the construction was defrayed by Ramon Yap while the
rest was shouldered by Chua Mia, the mother of Lorenzo, Benjamin and Ramon. Upon its completion, the improvement was declared
for real estate tax purposes in the name of Lorenzo Yap in deference to the wishes of the old woman.
Lorenzo Yap died on 11 July 1970. A few months later, his heirs (herein petitioners) left their family dwelling in Lucena City to reside
permanently in Manila. Ramon Yap allowed petitioners to use one unit of the apartment building.
On 18 March 1992, Ramon Yap sold the land and his share of the 3-door apartment to his brother, his herein co-respondent Benjamin
Yap, for the sum of P337,500.00 pursuant to a Deed of Sale, recorded on even date in the Memorandum of Encumbrances of the title
to said property. Transfer Certificate of Title No. 73002 was in due time issued in the name of Benjamin Yap.
The controversy started when herein petitioners, by a letter of 08 June 1992, advised respondents of the former's claim of ownership
over the property and demanded that respondents execute the proper deed necessary to transfer the title to them. At about the same
time, petitioners filed a case for ejectment against one of the bonafide tenants of the property.
On 29 July 1992, respondents filed an action with the Regional Trial Court ("RTC") of Quezon City, docketed Civil Case No. Q-9212899, for quieting of title against petitioners. In their answer, petitioners averred that sometime in 1966 the spouses Carlos and
Josefina Nery offered to sell the disputed parcel of land to their predecessor-in-interest, Lorenzo Yap, for the sum of P15,000.00. Since
Lorenzo and his wife Sally Yap were at that time Chinese citizens, Lorenzo requested his brother Ramon to allow the use of the latter's
name in the purchase, registration, and declaration for tax purposes of the subject lot to which Ramon Yap consented. It was agreed
that the property would remain registered in the name of Ramon Yap until such time as Lorenzo would have acquired Philippine
citizenship but that, should Lorenzo predecease, the lot would then be transferred to Lorenzo's heirs upon the latter's naturalization.
Petitioners contended that it was Lorenzo who had caused the construction of the 3-door apartment on the property, merely entrusting
the money therefor to Ramon Yap. The death of Lorenzo in 1970 prompted petitioners to move in and occupy the apartment and the
lot, without any objection from Ramon and Benjamin, although the latter were allowed to stay in the premises since they had no other
place to live in. In 1991, petitioners acquired Philippine citizenship and, forthwith, they requested Ramon Yap to have the title to the lot
transferred to their names but to their chagrin they discovered that Ramon had sold the lot to his co-respondent Benjamin.
Assessing the evidence before it, the trial court found for the respondents and adjudged Benjamin Yap to be the true and lawful owner
of the disputed property.
On appeal, the Court of Appeals affirmed the decision of the trial court and debunked the claim of petitioners that Ramon Yap was
merely so used as a dummy by Lorenzo Yap. Giving full weight and credit to the Deed of Sale executed by the Nery spouses in favor of

Ramon Yap, the appellate court stressed that to overcome the presumption of regularity in the execution of a public document, the
evidence to the contrary should be clear and convincing even as it was equally incumbent upon petitioners to show that the subsequent
sale of the property to Benjamin had only been simulated and fictitious. The appellate court, however, deleted the award of attorney's
fees in favor of respondents for, in its view, it was not adequately shown that petitioners had acted in bad faith in pursuing their case.
Petitioners are now before this Court seeking a reversal of the decision of the Court of Appeals and contending that"I
"THE RESPONDENT COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT HOLDS THAT DEFENDANTSAPPELLANTS FATHER, LORENZO YAP, BEING CHINESE CAN NOT ENTER INTO A TRUST AGREEMENT AND THE EXISTENCE
OF A TRUST AGREEMENT CAN NOT BE PROVEN BEING CHINESE.
"II
"THE RESPONDENT COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT HOLDS THAT THE FAILURE TO
SHOW WRITTEN TRUST AGREEMENT RENDERS THE ALLEGED AGREEMENT UNENFORCEABLE BY NOT CONSIDERING THE
SAME AS ONE UNDER IMPLIED TRUST.
"III
"THE RESPONDENT COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT HOLDS THAT PAROL EVIDENCE
AND/OR STATUTE OF FRAUDS APPLIED IN THE CASE AT BAR.
"IV
"THE RESPONDENT COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT HOLDS THAT APPELLANTS HAVE
TO REFUTE THE DEED OF SALE EXECUTED BY THE NERY SPOUSES IN FAVOR OF RAMON YAP BY CLEAR AND
CONVINCING EVIDENCE NOTWITHSTANDING ADMISSION OF THE SAID DEED OF SALE.
"V
"THE RESPONDENT COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT DID NOT CONSIDER THAT IN TRUST
THE TITLE IS IN THE NAME OF THE TRUSTEE AND NOT IN THE NAME OF THE NAKED OWNER.
"VI
"THE RESPONDENT COURT OF APPEALS ERRED WHEN IT HOLDS THAT RAMON YAP CAN NOT BE A DUMMY OF LORENZO
YAP BEING ALIEN AND DISQUALIFIED TO OWN REAL PROPERTY.
"VII
"THE RESPONDENT COURT OF APPEALS ERRED IN NOT DECLARING THE TITLE IN THE NAME OF RAMON YAP VOID
BEING ACQUIRED AS DUMMY.
"VIII
"THAT RESPONDENT COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT RULED THAT BENJAMIN YAP HAS
POSSESSION OF APARTMENT UNIT 123 LIKEWISE OWNERSHIP PERSONAL PROPERTIES THEREIN ON THE BASIS OF THE
INVENTORY OF THE SHERIFF OF THE COURT A QUO BY WAY OF A SUBSEQUENT MANDATORY INJUNCTION WHICH WAS
DENIED."[1]
The Court finds no merit in the appeal.

To begin with, a brief discussion on the trust relation between two parties could be helpful. A trust may either be express or implied.[2]
Express trusts are those which are created by the direct and positive acts of the parties, by some writing or deed, or will, or by words
evincing an intention to create a trust.[3] Implied trusts are those which, without being express, are deducible from the nature of the
transaction as matters of intent or, independently of the particular intention of the parties, as being superinduced on the transaction by
operation of law basically by reason of equity.[4] These species of implied trust are ordinarily subdivided into resulting and constructive
trusts.[5] A resulting trust is one that arises by implication of law and presumed always to have been contemplated by the parties, the
intention as to which can be found in the nature of their transaction although not expressed in a deed or instrument of conveyance.[6]
Resulting trusts are based on the equitable doctrine that it is the more valuable consideration than the legal title that determines the
equitable interest in property.[7] Upon the other hand, a constructive trust is a trust not created by any word or phrase, either expressly
or impliedly, evincing a direct intention to create a trust, but one that arises in order to satisfy the demands of justice. It does not come
about by agreement or intention but in main by operation of law[8] construed against one who, by fraud, duress or abuse of confidence,
obtains or holds the legal right to property which he ought not, in equity and good conscience, to hold.[9]
One basic distinction between an implied trust and an express trust is that while the former may be established by parol evidence, the
latter cannot. Even then, in order to establish an implied trust in real property by parol evidence, the proof should be as fully convincing
as if the acts giving rise to the trust obligation are proven by an authentic document.[10] An implied trust, in fine, cannot be established
upon vague and inconclusive proof.[11]
Unfortunately for petitioners, the issues they submit in the case at bar boil down to the appreciation of the evidence presented. The
Court of Appeals, sustaining the court a quo, has found the evidence submitted by petitioners to be utterly wanting,[12] consisting
mainly of the self-serving testimony of Sally Yap. She herself admitted that the business establishment of her husband Lorenzo was
razed by fire in 1964 that would somehow place to doubt the claim that he indeed had the means to purchase the subject land about
two years later from the Nery spouses. Upon the other hand, Ramon Yap was by then an accountant with apparent means to buy the
property himself. At all events, findings of fact by the Court of Appeals, particularly when consistent with those made by the trial court,
should deserve utmost regard when not devoid of evidentiary support. No cogent reason had been shown by petitioners for the Court
to now hold otherwise.
Not to be dismissed, furthermore, is the long standing and broad doctrine of clean hands that will not allow the creation or the use of a
juridical relation, a trust whether express or implied included, to perpetrate fraud or tolerate bad faith nor to subvert, directly or
indirectly, the law. The trust agreement between Ramon and Lorenzo, if indeed extant, would have been in contravention of, in fact, the
fundamental law. Then Section 5, Article XIII, of the 1935 Constitution has provided that "Save in cases of hereditary succession, no private agricultural land shall be transferred or assigned except to individuals,
corporations, or associations qualified to acquire or hold lands of the public domain in the Philippines."
The mandate has also been adopted in Section 14, Article XIV, of the 1973 Constitution and now reiterated under Section 7, Article XII,
of the 1987 Constitution. A trust or a provision in the terms of a trust would be invalid if the enforcement of the trust or provision is
against the law even though its performance does not involve the commission of a criminal or tortuous act. It likewise must follow that
what the parties are not allowed to do expressly is one that they also may not do impliedly as, for instance, in the guise of a resulting
trust.[13]
The foregoing disquisition renders unnecessary the resolution of the incidental issues raised in the petition.
WHEREFORE, the instant petition is DENIED, and the decision of the respondent Court of Appeals of 08 January 1998 in C.A.-G.R.
CV No. 46838 is AFFIRMED. Costs against petitioners.
SO ORDERED.
Melo, (Chairman), Panganiban, and Purisima, JJ., concur.
Gonzaga-Reyes, J., no part; member of the Court of Appeals Division that rendered the decision.

199 Phil. 26
FIRST DIVISION
[ G.R. No. L-33048, April 16, 1982 ]
EPIFANIA SARSOSA VDA. DE BARSOBIA AND PACITA W. VALLAR, PETITIONERS, VS. VICTORIANO T. CUENCO,
RESPONDENT.
DECISION
MELENCIO-HERRERA, J.:
Epifania Sarsosa Vda. de Barsobia and Pacita W. Vallar, Defendants-appellees," declaring Victoriano T. Cuenco (now the respondent)
as the absolute owner of the coconut land in question.
Sought to be reviewed herein is the judgment, dated August 18, 1970, of the Court of Appeals,[1] rendered in CA-G.R. No. 41318-R,
entitled "Victoriano T. Cuenco, Plaintiff-appellant, versus
The lot in controversy is a one-half portion (on the northern side) of two adjoining parcels of coconut land located at Barrio
Mancapagao, Sagay, Camiguin, Misamis Oriental (now Camiguin province), with an area of 29,150 square meters, more or less.[2]
The entire land was owned previously by a certain Leocadia Balisado, who had sold it to the spouses Patricio Barsobia (now deceased)
and Epifania Sarsosa, one of the petitioners herein. They are Filipino citizens.
On September 5, 1936, Epifania Sarsosa, then a widow, sold the land in controversy to a Chinese, Ong King Po, for the sum of
P1,050.00 (Exhibit "B"). Ong King Po took actual possession and enjoyed the fruits thereof.
On August 5, 1961, Ong King Po sold the litigated property to Victoriano T. Cuenco (respondent herein), a naturalized Filipino, for the
sum of P5,000.00 (Exhibit "A"). Respondent immediately took actual possession and harvested the fruits therefrom.
On March 6, 1962, Epifania "usurped" the controverted property, and on July 26, 1962, Epifania (through her only daughter and child,
Emeteria Barsobia), sold a one-half (1/2) portion of the land in question to Pacita W. Vallar, the other petitioner herein (Exhibit "2").
Epifania claimed that it was not her intention to sell the land to Ong King Po and that she signed the document of sale merely to
evidence her indebtedness to the latter in the amount of P1,050.00. Epifania has been in possession ever since except for the portion
sold to the other petitioner Pacita.
On September 19, 1962, respondent filed a Forcible Entry case against Epifania before the Municipal Court of Sagay, Camiguin. The
case was dismissed for lack of jurisdiction since, as the laws then stood, the question of possession could not be properly determined
without first settling that of ownership.
On December 27, 1966, respondent instituted before the Court of First Instance of Misamis Oriental a Complaint for recovery of
possession and ownership of the litigated land, against Epifania and Pacita Vallar (hereinafter referred to simply as petitioners).
In their Answer below, petitioners insisted that they were the owners and possessors of the litigated land; that its sale to Ong King Po, a
Chinese, was inexistent and/or void ab initio; and that the deed of sale between them was only an evidence of Epifania's indebtedness
to Ong King Po.
The trial Court rendered judgment:
"1.

Dismissing the complaint with costs against plaintiff (respondent herein);

"2.

Declaring the two Deeds of Sale, Exhibits A and B, respectively, inexistent and void from the beginning; and

"3. Declaring defendant Pacita W. Vallar as the lawful owner and possessor of the portion of land she bought from Emeteria
Barsobia (pp. 57, 67, Record.)"[3]
On appeal, the Court of Appeals reversed the aforementioned Decision and decreed instead that respondent was the owner of the
litigated property, thus:
"x x x.
In view of all the foregoing considerations, the judgment appealed from is hereby reversed. In lieu thereof, we render judgment:
(a) Declaring the plaintiff-appellant Victoriano T. Cuenco the absolute owner of the land in question, with the right of possession
thereof;
(b)

Ordering the defendants-appellees to restore the possession of said land to the plaintiff;

(c)

Dismissing the defendants' counterclaim;

(d) Condemning the defendants to pay to the plaintiff the sum of P10,000.00 representing the latter's share from the sale of copra
which he failed to receive since March, 1962 when he was deprived of his possession over the land, and which defendants illegally
appropriated it to their own use and benefit, plus legal interest from the filing of the complaint until fully paid; plus P2,000.00
representing expenses and attorney's fees;
(e)

Sentencing the defendants to pay the costs.

SO ORDERED."[4]
Following the denial of their Motion for Reconsideration, petitioners filed the instant Petition for Review on Certiorari with this Court on
January 21, 1971. Petitioners claim that the Court of Appeals erred:
"I.
x x x when it reversed the judgment of the trial court declaring petitioner Pacita W. Vallar as the lawful possessor and owner of
the portion of land she purchased from Emeteria Barsobia, not a party to this case, there being no evidence against her.
"II. x x x when it included petitioner Pacita W. Vallar to pay P10,000.00, with legal interest from the filing of the complaint,
representing respondent's share in the harvest and to pay the costs, there being no evidence against her.
"III. x x x when it condemned petitioners to pay P2,000.00 representing expenses and attorney's fees, there being no factual, legal
and equitable justification.
"IV. x x x in not applying the rule on pari delicto to the facts of the case or the doctrine enunciated x x x in the case of Philippine
Banking Corporation vs. Lui She, L-17587, September 12, 1967, to x x x Petitioner Epifania Sarsosa Vda. de Barsobia.
"V.

x x x in denying, for lack of sufficient merits, petitioners' motion for rehearing or reconsideration of its decision."[5]

As the facts stand, a parcel of coconut land was sold by its Filipino owner, petitioner Epifania, to a Chinese, Ong King Po, and by the
latter to a naturalized Filipino, respondent herein. In the meantime, the Filipino owner had unilaterally repudiated the sale she had
made to the Chinese and had resold the property to another Filipino. The basic issue is: Who is the rightful owner of the property?
There should be no question that the sale of the land in question in 1936 by Epifania to Ong King Po was inexistent and void from the
beginning (Art. 1409 [7], Civil Code) [6] because it was a contract executed against the mandatory provision of the 1935 Constitution,
which is an expression of public policy to conserve lands for the Filipinos. Said provision reads:
"Save in cases of hereditary succession, no private agricultural land shall be transferred or assigned except to individuals,
corporations, or associations, qualified to acquire or hold lands of the public domain."[7]

Had this been a suit between Epifania and Ong King Po, she could have been declared entitled to the litigated land on the basis, as
claimed, of the ruling in Philippine Banking Corporation vs. Lui She,[8] reading:
"x x x For another thing, and this is not only cogent but also important. Article 1416 of the Civil Code provides as an exception to the
rule on pari delicto that when the agreement is not illegal per se but is merely prohibited, and the prohibition by the law is designed for
the protection of the plaintiff, he may, if public policy is thereby enhanced, recover what he has sold or delivered. x x x"
But the factual set-up has changed. The litigated property is now in the hands of a naturalized Filipino. It is no longer owned by a
disqualified vendee. Respondent, as a naturalized citizen, was constitutionally qualified to own the subject property. There would be
no more public policy to be served in allowing petitioner Epifania to recover the land as it is already in the hands of a qualified person.
Applying by analogy the ruling of this Court in Vasquez vs. Giap and Li Seng Giap & Sons:[9]
"x x x if the ban on aliens from acquiring not only agricultural but also urban lands, as construed by this Court in the Krivenko case, is
to preserve the nation's lands for future generations of Filipinos, that aim or purpose would not be thwarted but achieved by making
lawful the acquisition of real estate by aliens who became Filipino citizens by naturalization."
While, strictly speaking, Ong King Po, private respondent's vendor, had no rights of ownership to transmit, it is likewise inescapable that
petitioner Epifania had slept on her rights for 26 years from 1936 to 1962. By her long inaction or inescusable neglect, she should be
held barred from asserting her claim to the litigated property (Sotto vs. Teves, 86 SCRA 157 [1978]).
"Laches has been defined as the failure or neglect, for an unreasonable and unexplained length of time, to do that which by
exercising due diligence could or should have been done earlier; it is negligence or omission to assert a right within a reasonable time,
warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it. (Tijam, et al. vs.
Sibonghanoy, et al., No. L-21450, April 15, 1968, 23 SCRA 29, 35)." (cited in Sotto vs. Teves, 86 SCRA 154 [1978]).
Respondent, therefore, must be declared to be the rightful owner of the property.
The award of actual damages in respondent's favor of P10,000.00, as well as of attorney's fees and expenses of litigation of P2,000.00,
is justified. Respondent was deprived of the possession of his land and the enjoyment of its fruits from March, 1962. The Court of
Appeals fixed respondent's share of the sale of copra at P10,000.00 for eight years at four (4) harvests a year. The accuracy of this
finding has not been disputed.
However, we find merit in the assigned error that petitioner, Pacita Vallar, should not be held also liable for actual damages to
respondent. In the absence of contrary proof, she, too, must be considered as a vendee in good faith of petitioner Epifania.
The award of attorney's fees and litigation expenses in the sum of P2,000.00 in respondent's favor is in order considering that both
petitioners compelled respondent to litigate for the protection of his interests. Moreover, the amount is reasonable.[10]
WHEREFORE, except for that portion holding petitioner, Pacita W. Vallar, also liable for damages of P10,000.00, the appealed
judgment is hereby affirmed.
Costs against petitioners.
SO ORDERED.
Teehankee, Acting C.J., (Chairman), Makasiar, Fernandez, Guerrero, and Plana, JJ., concur.

418 Phil. 793

FIRST DIVISION
[ G.R. No. 128195, October 03, 2001 ]
ELIZABETH LEE AND PACITA YU LEE, HON. JUDGE JOSE D. ALOVERA,* PRESIDING JUDGE, REGIONAL TRIAL COURT,
BRANCH 17, ROXAS CITY, THE REGISTER OF DEEDS OF ROXAS CITY, PETITIONERS, VS. REPUBLIC OF THE PHILIPPINES,
REPRESENTED BY THE DIRECTOR OF LANDS AND THE ADMINISTRATOR, LAND REGISTRATION AUTHORITY AND THE
HON. COURT OF APPEALS,* RESPONDENTS.
DECISION
PARDO, J.:
The case under consideration is a petition for review on certiorari of the decision[1] of the Court of Appeals nullifying that of the
Regional Trial Court, Roxas City, in Reconstitution Case No. R-1928,[2] pertaining to Lot 398, Capiz Cadastre, covered by Original
Certificate of Title No. 3389.
Sometime in March 1936, Rafael, Carmen, Francisco, Jr., Ramon, Lourdes, Mercedes, Concepcion, Mariano, Jose, Loreto, Manuel,
Rizal and Jimmy, all surnamed Dinglasan sold to Lee Liong, a Chinese citizen, a parcel of land with an approximate area of 1,631
square meters, designated as Lot 398 and covered by Original Certificate of Title No. 3389, situated at the corner of Roxas Avenue and
Pavia Street, Roxas City.[3]
However, in 1948, the former owners filed with the Court of First Instance, Capiz an action against the heirs of Lee Liong for annulment
of sale and recovery of land.[4] The plaintiffs assailed the validity of the sale because of the constitutional prohibition against aliens
acquiring ownership of private agricultural land, including residential, commercial or industrial land. Rebuffed in the trial court and the
Court of Appeals, plaintiffs appealed to the Supreme Court. On June 27, 1956, the Supreme Court ruled thus:
"... granting the sale to be null and void and can not give title to the vendee, it does not necessarily follow therefrom that the title
remained in the vendor, who had also violated the constitutional prohibition, or that he (vendor) has the right to recover the title of which
he has divested himself by his act in ignoring the prohibition. In such contingency another principle of law sets in to bar the equally
guilty vendor from recovering the title which he had voluntarily conveyed for a consideration, that of pari delicto."[5]

On July 1, 1968, the same former owners Rafael A. Dinglasan, together with Francisco, Carmen, Ramon, Lourdes, Mercedes,
Concepcion, Mariano, Jose, Loreto, Rizal, Jimmy, and Jesse Dinglasan filed with the Court of First Instance, Capiz an action for
recovery of the same parcel of land.[6] Citing the case of Philippine Banking Corporation v. Lui She,[7] they submitted that the sale to
Lee Liong was null and void for being violative of the Constitution. On September 23, 1968, the heirs of Lee Liong filed with the trial
court a motion to dismiss the case on the ground of res judicata.[8] On October 10, 1968, and November 9, 1968, the trial court denied
the motion.[9] The heirs of Lee Liong elevated the case to the Supreme Court by petition for certiorari. On April 22, 1977, the Supreme
Court annulled the orders of the trial court and directed it to dismiss the case, holding that the suit was barred by res judicata.[10]
On September 7, 1993, Elizabeth Manuel-Lee and Pacita Yu Lee filed with the Regional Trial Court, Roxas City a petition for
reconstitution of title of Lot No. 398 of the Capiz Cadastre, formerly covered by Original Certificate of Title No. 3389 of the Register of
Deeds of Roxas City.[11] Petitioners alleged that they were the widows of the deceased Lee Bing Hoo and Lee Bun Ting, who were the
heirs of Lee Liong, the owner of the lot. Lee Liong died intestate in February 1944. On June 30, 1947, Lee Liong's widow, Ang Chia,
and his two sons, Lee Bun Ting and Lee Bing Ho, executed an extra-judicial settlement of the estate of Lee Liong, adjudicating to
themselves the subject parcel of land.[12] Petitioner Elizabeth Lee acquired her share in Lot No. 398 through an extra-judicial
settlement and donation executed in her favor by her deceased husband Lee Bing Hoo. Petitioner Pacita Yu Lee acquired her share in
the same lot by succession from her deceased husband Lee Bun Ting, as evidenced by a deed of extra-judicial settlement.[13]

Previously, on December 9, 1948, the Register of Deeds, Capiz, Salvador Villaluz, issued a certification that a transfer certificate of title
over the property was issued in the name of Lee Liong.[14] However, the records of the Register of Deeds, Roxas City were burned
during the war. Thus, as heretofore stated, on September 7, 1968, petitioners filed a petition for reconstitution of title.
On June 10, 1994, the Regional Trial Court, Roxas City, Branch 17, ordered the reconstitution of the lost or destroyed certificate of title
in the name of Lee Liong on the basis of an approved plan and technical description.[15] The dispositive portion of the trial court's
decision reads thus:
"WHEREFORE, in reiteration, the Register of Deeds for the City of Roxas is ordered to reconstitute the lost or destroyed certificate
of title in the name of Lee Liong, deceased, of Roxas City, with all the conditions stated in paragraph 2 of this decision. This decision
shall become final after the lapse of thirty (30) days from receipt by the Register of Deeds and by the Commissioner of LRA of a notice
of such judgment without any appeal having been filed by any of such officials.
"SO ORDERED.
"Given at Roxas City, Philippines,
"June 10, 1994.
"JOSE O. ALOVERA
"Judge"[16]

On August 18, 1994, the Clerk of Court, Regional Trial Court, Roxas City, Branch 17 issued an Entry of Judgment.[17]
On January 25, 1995, the Solicitor General filed with the Court of Appeals a petition for annulment of judgment in Reconstitution Case
No. 1928, alleging that the Regional Trial Court, Roxas City had no jurisdiction over the case.[18] The Solicitor General contended that
the petitioners were not the proper parties in the reconstitution of title, since their predecessor-in-interest Lee Liong did not acquire title
to the lot because he was a Chinese citizen and was constitutionally not qualified to own the subject land.
On April 30, 1996, the Court of Appeals promulgated its decision declaring the judgment of reconstitution void.[19]
On May 24, 1996, Elizabeth Manuel-Lee and Pacita Yu Lee filed with the Court of Appeals a motion for reconsideration of the decision.
[20] On February 18, 1997, the Court of Appeals denied the motion.[21]
Hence, this petition.[22]
Petitioners submitted that the Solicitor General was estopped from seeking annulment of the judgment of reconstitution after failing to
object during the reconstitution proceedings before the trial court, despite due notice. Petitioners alleged that the Solicitor General
merely acted on the request of private and politically powerful individuals who wished to capitalize on the prime location of the subject
land.
Petitioners emphasized that the ownership of the land had been settled in two previous cases of the Supreme Court, where the Court
ruled in favor of their predecessor-in-interest, Lee Liong. Petitioners also pointed out that they acquired ownership of the land through
actual possession of the lot and their consistent payment of taxes over the land for more than sixty years.
On the other hand, the Solicitor General submitted that the decision in the reconstitution case was void; otherwise, it would amount to
circumventing the constitutional proscription against aliens acquiring ownership of private or public agricultural lands.
We grant the petition.

The reconstitution of a certificate of title denotes restoration in the original form and condition of a lost or destroyed instrument attesting
the title of a person to a piece of land.[23] The purpose of the reconstitution of title is to have, after observing the procedures prescribed
by law, the title reproduced in exactly the same way it has been when the loss or destruction occurred.[24]
In this case, petitioners sought a reconstitution of title in the name of Lee Liong, alleging that the transfer certificate of title issued to him
was lost or destroyed during World War II. All the documents recorded and issued by the Register of Deeds, Capiz, which include the
transfer certificate of title issued in the name of Lee Liong, were all destroyed during the war. The fact that the original of the transfer
certificate of title was not in the files of the Office of the Register of Deeds did not imply that a transfer certificate of title had not been
issued.[25] In the trial court proceedings, petitioners presented evidence proving the sale of the land from the Dinglasans to Lee Liong
and the latter's subsequent possession of the property in the concept of owner. Thus, the trial court, after examining all the evidence
before it, ordered the reconstitution of title in the name of Lee Liong.
However, there is a question as to whether Lee Liong has the qualification to own land in the Philippines.
The sale of the land in question was consummated sometime in March 1936, during the effectivity of the 1935 Constitution. Under the
1935 Constitution,[26] aliens could not acquire private agricultural lands, save in cases of hereditary succession.[27] Thus, Lee Liong, a
Chinese citizen, was disqualified to acquire the land in question.[28]
The fact that the Court did not annul the sale of the land to an alien did not validate the transaction, for it was still contrary to the
constitutional proscription against aliens acquiring lands of the public or private domain. However, the proper party to assail the illegality
of the transaction was not the parties to the transaction.[29] "In sales of real estate to aliens incapable of holding title thereto by virtue
of the provisions of the Constitution both the vendor and the vendee are deemed to have committed the constitutional violation and
being thus in pari delicto the courts will not afford protection to either party."[30] The proper party to assail the sale is the Solicitor
General. This was what was done in this case when the Solicitor General initiated an action for annulment of judgment of reconstitution
of title. While it took the Republic more than sixty years to assert itself, it is not barred from initiating such action. Prescription never
lies against the State.[31]
Although ownership of the land cannot revert to the original sellers, because of the doctrine of pari delicto, the Solicitor General may
initiate an action for reversion or escheat of the land to the State, subject to other defenses, as hereafter set forth.[32]
In this case, subsequent circumstances militate against escheat proceedings because the land is now in the hands of Filipinos. The
original vendee, Lee Liong, has since died and the land has been inherited by his heirs and subsequently their heirs, petitioners herein.
Petitioners are Filipino citizens, a fact the Solicitor General does not dispute.
The constitutional proscription on alien ownership of lands of the public or private domain was intended to protect lands from falling in
the hands of non-Filipinos. In this case, however, there would be no more public policy violated since the land is in the hands of
Filipinos qualified to acquire and own such land. "If land is invalidly transferred to an alien who subsequently becomes a citizen or
transfers it to a citizen, the flaw in the original transaction is considered cured and the title of the transferee is rendered valid."[33] Thus,
the subsequent transfer of the property to qualified Filipinos may no longer be impugned on the basis of the invalidity of the initial
transfer.[34] The objective of the constitutional provision to keep our lands in Filipino hands has been achieved.
Incidentally, it must be mentioned that reconstitution of the original certificate of title must be based on an owner's duplicate, secondary
evidence thereof, or other valid sources of the title to be reconstituted.[35] In this case, reconstitution was based on the plan and
technical description approved by the Land Registration Authority.[36] This renders the order of reconstitution void for lack of factual
support.[37] A judgment with absolutely nothing to support it is void.[38]
As earlier mentioned, a reconstitution of title is the re-issuance of a new certificate of title lost or destroyed in its original form and
condition.[39] It does not pass upon the ownership of the land covered by the lost or destroyed title.[40] Any change in the ownership of
the property must be the subject of a separate suit.[41] Thus, although petitioners are in possession of the land, a separate proceeding
is necessary to thresh out the issue of ownership of the land.

WHEREFORE, the Court REVERSES and SETS ASIDE the decision of the Court of Appeals in CA-G. R. SP No. 36274. In lieu thereof,
the Court sets aside the order of reconstitution of title in Reconstitution Case No. R-1928, Regional Trial Court, Roxas City, and
dismisses the petition, without prejudice.
No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, and Ynares-Santiago, JJ., concur.
Kapunan, J., on official leave.

214 Phil. 68
FIRST DIVISION
[ G.R. No. L-31956, April 30, 1984 ]
FILOMENA GERONA DE CASTRO, PETITIONER, VS. JOAQUIN TENG QUEEN TAN, TAN TENG BIO, DOLORES TAN, ROSARIO
TAN HUA ING, AND TO O. HIAP, RESPONDENTS.
DECISION
PLANA, J.:
Review on certiorari of the order of the former Court of First Instance of Sorsogon dismissing petitioner's action for annulment of
contract with damages.
In 1938, petitioner Filomena Gerona de Castro sold a 1,258 sq. m. residential lot in Bulan, Sorsogon to Tan Tai, a Chinese. In 1956,
Tan Tai died leaving herein respondents - his widow, To O. Hiap, and children Joaquin Teng Queen Tan, Tan Teng Bio, Dolores Tan and
Rosario Tan Hua Ing.
Before the death of Tan Tai or on August 11, 1956, one of his sons, Joaquin, became a naturalized Filipino. Six years after Tan Tai's
death, or on November 18, 1962, his heirs executed an extra-judicial settlement of estate with sale, whereby the disputed lot in its
entirety was alloted to Joaquin.
On July 15, 1968, petitioner commenced suit against the heirs of Tan Tai for annulment of the sale for alleged violation of the 1935
Constitution prohibiting the sale of land to aliens.
Except for respondent Tan Teng Bio who filed an answer to the complaint, respondents moved to dismiss the complaint on the grounds
of (a) lack of cause of action, the plaintiff being in pari delicto with the vendee, and the land being already owned by a Philippine citizen;
(b) laches; and (c) acquisitive prescription.
Over the opposition of petitioner, the court a quo dismissed the complaint, sustaining the first two grounds invoked by the movants. It is
this order of dismissal that is now the subject of this review.
The assailed order must be sustained.
Independently of the doctrine of pari delicto, the petitioner cannot have the sale annulled and recover the lot she herself has sold. While
the vendee was an alien at the time of the sale, the land has since become the property of respondent Joaquin Teng, a naturalized
Philippine citizen, who is constitutionally qualified to own land.
"...The litigated property is now in the hands of a naturalized Filipino. It is no longer owned by a disqualified vendee. Respondent, as a
naturalized citizen, was constitutionally qualified to own the subject property. There would be no more public policy to be served in
allowing petitioner Epifania to recover the land as it is already in the hands of a qualified person. Applying by analogy the ruling of this
Court in Vasquez vs. Giap and Li Seng Giap & Sons:
'x x x if the ban on aliens from acquiring not only agricultural but also urban lands, as construed by this Court in the Krivenko case, is
to preserve the nation's lands for future generations of Filipinos, that aim or purpose would not be thwarted but achieved by making
lawful the acquisition of real estate by aliens who became Filipino citizens by naturalization.'" (Sarsosa Vda. de Barsobia vs. Cuenco,
113 SCRA 547, at 553.)
Laches also militates against petitioner's cause. She sold the disputed lot in 1938. She instituted the action to annul the sale only on
July 15, 1968. What the Court said in the cited Sarsosa case applies with equal force to the petitioner.

"... it is likewise inescapable that petitioner Epifania had slept on her rights for 26 years from 1936 to 1962. By her long inaction or
inexcusable neglect, she should be held barred from asserting her claim to the litigated property (Sotto vs. Teves, 86 SCRA 157
[1978]).
'Laches has been defined as the failure or neglect, for an unreasonable and unexplained length of time, to do that which by exercising
due diligence could or should have been done earlier; it is negligence or omission to assert a right within a reasonable time, warranting
a presumption that the party entitled to assert it either has abandoned it or declined to assert it. (Tijam, et al. vs. Sibonghanoy, et al.,
No. L-21450, April 15, 1968, 23 SCRA 29, 35).' (cited in Sotto vs. Teves, 86 SCRA 154 [1978]).
"Respondent, therefore, must be declared to be the rightful owner of the property." (p. 553.)
WHEREFORE, the appealed order is affirmed. Costs against petitioner.
SO ORDERED.
Teehankee, (Chairman), Melencio-Herrera, Relova, Gutierrez, Jr., and De la Fuente, JJ., concur.

250 Phil. 174

THIRD DIVISION
[ G.R. No. 75042, November 29, 1988 ]
REPUBLIC OF THE PHILIPPINES, PETITIONER, VS. INTERMEDIATE APPELLATE COURT, ROMAN CATHOLIC BISHOP OF
LUCENA, REPRESENTED BY MSGR. JOSE T. SANCHEZ, AND REGIONAL TRIAL COURT, BRANCH LIII, LUCENA CITY,
RESPONDENTS.
DECISION
BIDIN, J.:
This is an appeal from the 1) decision* of the FIRST CIVIL CASES DIVISION of the then Intermediate Appellate Court dated May 13,
1986, in AC G.R. No. 01410 entitled the ROMAN CATHOLIC BISHOP of Lucena, represented by Msgr. Jose T. Sanchez, applicantappellee vs. Republic of the Philippines, et al., Oppositors-appellants, affirming the decision** of the then Court of FIRST INSTANCE of
Quezon, 9th Judicial District, Branch 1, dated November 4, 1980 in Land Registration Case No. N-1106 entitled the ROMAN
CATHOLIC BISHOP of Lucena, represented by Msgr. Jose T. Sanchez, applicant vs. the Director of Lands and the Director, Bureau of
Forest Development, oppositors, ordering the registration of title to the parcel of land designated, as lots 1, 2 and 3 of plan PSD-65686
and its technical descriptions, and the parcel of land described in plan PSU-112592 and its technical description, together with
whatever improvements existing thereon, in the name of the ROMAN CATHOLIC BISHOP of Lucena and 2) its resolution dated June
19, 1986, denying appellant's "Motion for Reconsideration for lack of merit."
The factual background of the case as found by the Intermediate Appellate Court are as follows:
"On February 2, 1979, the ROMAN CATHOLIC BISHOP of Lucena, represented by Msgr. Jose T. Sanchez, filed an application for
confirmation of title to four (4) parcels of land. Three of said parcels, denominated as Lots 1, 2 and 3, respectively, of plan PSU-65686,
are situated in Barrio Masin, Municipality of Candelaria, Quezon Province. The fourth parcels under Plan PSU-112592 is located in
Barrio Bucal (Taguan), same municipality and province. As basis for the application, the applicant claimed title to the various properties
through either purchase or donation dating as far back as 1928.
The legal requirements of publication and posting were duly complied with, as was the service of copies of notice of initial hearing on
the proper government officials.
In behalf of the Director of Lands and the Director of the Bureau of Forest Development, the Solicitor General filed an Opposition on
April 20, 1979, alleging therein among others, that the applicant did not have an imperfect title or title in fee simple to the parcel of land
being applied for.
At the initial hearing held on November 13, 1979, only the Provincial Fiscal in representation of the Solicitor General appeared to
interpose personal objection to the application. Hence, an Order of General Default against the whole world was issued by the Court a
quo except for the Director of Lands and the Director of the Bureau of Forest Development.
The preliminaries dispensed with, the applicant then introduced its proofs in support of the petition, summed up by the lower court as
follows:
With respect to Lots 1, 2, and 3, plan PSU-65686:
Lots 1, 2 and 3 of plan PSU-65686 respectively containing an area of 18,977, 6,910 and 16,221 square meters, are adjoining lots &
are situated in the Barrio of Masin, Municipality of Candelaria, Province of Quezon (formerly Tayabas) (Exhibits F, F-1, F-2 and F-3).
Said lots were surveyed for the Roman Catholic Church on November 3, 1928 (Exhibit P-5) and the survey plan approved on October
20, 1929 (Exhibit F-6).

Lot 1 was acquired by the Roman Catholic Church thru Rev. Father Raymundo Esquenet by purchase from the spouses Atanacio
Yranso and Maria Coronado on October 20, 1928 (Exhibits G, G-1), portion of Lot 2 also by purchase thru Rev. Father Raymundo
Esquenet from the spouses Benito Maramot and Venancia Descaller on May 22, 1969 (Exhibits M, N-1), while the remaining portion of
Lot 2 and Lot 3 were already owned and possessed by the Roman Catholic Church even prior to the survey of the said three lots in
1928.
Records of burial of the Roman Catholic Church of Candelaria, Quezon showed that even as early as November 1918, Lot 3 has
already been utilized by the Roman Catholic Church as its cemetery in Candelaria, Quezon Exhibit N, N-1 to N-5).
These three lots presently constituted the Roman Catholic Church cemetery in Candelaria, Quezon.
Lots 1, 2 and 3 are declared for taxation purposes in the name of the Roman Catholic Church under Tax Declaration Nos. 22-19-02079, 22-19-02-077 and 22-19-02-082 as 'cemetery site' (Exhibits S, V and T).
With respect to the parcel of land described in plan PSU-112592:
This parcel of land situated in the barrio of Bucal (Taguan), Municipality of Candelaria, Province of Quezon (formerly Tayabas) and
more particularly described in plan PSU-112592 and its technical description with an area of 3,221 square meters (Exhibit 1) was
formerly owned and possessed by the spouses Paulo G. Macasaet and Gabriela V. de Macasaet. Said spouses, on February 26, 1941,
donated this lot to the Roman Catholic Church represented by Reverend Father Raymundo Esquenet (Exhibit J, J-1 to J-4). It was
surveyed for the Roman Catholic Church on Aug. 16, 1940 as church site and the corresponding survey plan approved on Jan. 15,
1941 (Exhibits I-1, I-2, I-3).
Previously erected on this Lot was an old chapel which was demolished and new chapel now stands in its place on the same site.
For his part, the Fiscal in a Manifestation dated July 22, 1980, said the State will not adduce evidence in support of its opposition and
will submit the instant case for decision.
Evaluating the applicant's submitted proofs, the court a quo concluded, on the basis of acquisitive prescription at the very least, that the
former had adequately shown title to the parcels of land being claimed.
"Since the acquisition of these four (4) lots by the applicant, it has been in continuous possession and enjoyment thereof, and such
possession, together with its predecessors-in-interest, covering a period of more than 52 years (at least from the date of the survey in
1928) with respect to lots 1 and 2, about 62 years with respect to lot 3, all of plan PSU-65686; and more than 39 years with respect to
the fourth parcel described in plan PSU-112592 (at least from the date of the survey in 1940) have been open, public, continuous,
peaceful, adverse against the whole world, and in the concept of owner."
Accordingly, the court ordered the registration of the four parcels together with the improvements thereon in the name of the ROMAN
CATHOLIC BISHOP OF LUCENA, INC., a religious corporation sole duly registered and existing under the laws of the Republic of the
Philippines."
Against this decision, the Solicitor General filed a Motion for Reconsideration on the following grounds:
Article XIV, Section 11 of the New Constitution (1973) disqualifies a private corporation from acquiring alienable lands for the
public domain.
In the case at bar the application was filed after the effectivity on the New Constitution on January 17, 1973.
which was denied by the lower court for lack of merit.
Still insisting on the alleged unconstitutionality of the registration (a point which, incidentally, the appellant never raised in the lower
court prior to its Motion for Reconsideration), the Republic elevated this appeal. (Rollo, pp. 25-28)

On May 13, 1986, the First Civil Cases Division of the Intermediate Appellate Court rendered its Decision the dispositive part of which
reads:
"WHEREFORE, finding the judgment a quo to be supported by law and the evidence on record, the same is hereby AFFIRMED. No
pronouncement as to costs.
SO ORDERED." (Rollo, p. 30)
A reconsideration of the aforequoted Decision was sought by Appellant Republic of the Philippines, but for lack of merit, its motion for
reconsideration was denied on June 19, 1986, by Resolution of the First Civil Case Division, Intermediate Appellate Court which
resolution reads in full:
"Considering appellant Republic of the Philippines' "Motion for Reconsideration" filed on June 4, 1986; the Court RESOLVED to DENY
the Motion for Reconsideration for lack of merit, grounds raised therein having all been considered in the decision." (Rollo, p. 31)
Hence, this petition.
The following are the assigned errors raised by the petitioner in its petition:
1. The decision and the resolution in question are contrary to law and decisions of this Honorable Court in Meralco vs. CastroBartolome and Republic, 114 SCRA 799 (prom. June 29, 1982); Republic vs. Judge Villanueva and Iglesia ni Cristo 114 SCRA 875
June 29, 1982); and Republic vs. Judge Gonong and Iglesia ni Cristo, 118 SCRA 729-733 (November 25, 1982); Director of Lands vs.
Hermosa Y. Hermanas, Inc. 141 SCRA 21-25 (Jan. 7, 1986).
2. The lands applied for registration were the subject of a previous registration case where a decree of registration was already
issued.
"3.

Respondent corporation failed to establish the identity of the lands applied for." (Rollo, pp. 14-15)

The issue raised in this case involves the question of whether the Roman Catholic Bishop of Lucena, as a corporation sole is qualified
to apply for confirmation of its title to the four (4) parcels of land subject of this case.
Corollary thereto is the question of whether or not a corporation sole should be treated as an ordinary private corporation, for purposes
of the application of Art. XIV, Sec. 11 of the 1973 Constitution.
Article XIV, Sec. 11 of the 1973 Constitution, in part provides:
"Sec. 11. x x x. No private corporation or association may hold alienable lands of the public domain except by lease not to exceed
one thousand hectares in area; nor may any citizen hold such lands by lease in excess of five hundred hectares x x x ."
Sec. 48 of the Public Land Act, in part, provides:
"Sec. 48. The following described citizens of the Philippines occupying lands of the public domain or claiming to own any such lands
or an interest therein, but whose titles have not been perfected or completed, may apply to the Court of First Instance of the province
where the land is located for confirmation of their claims and the issuance of a certificate of title therefor, under the Land Registration
Act, to wit:
(a)

xxxxxxxxx

(b)
Those who by themselves or through their predecessor-in-interest have been in open, continuous, exclusive, and notorious
possession and occupation of agricultural lands of the public domain under a bona fide claim of acquisition of ownership for at least
thirty years immediately preceding the filing of the application for confirmation of title except when prevented by war or force majeure.

These shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a
certificate of title under the provisions of this chapter.
(c)

x x x x x x x x x."

In its Motion for Reconsideration, petitioner contends that the Roman Catholic Bishop of Lucena (private respondent herein) which is
admittedly a corporation sole is disqualified to own and register its title over the parcels of land involved herein. (Rollo, p. 41)
In its petition it likewise argued that being a juridical entity, private respondent cannot avail of the benefits of Sec. 48(b) of the public
land law which applies to FILIPINO citizens or NATURAL persons. On the other hand, private respondent in its MEMORANDUM
espoused the contrary view.
There is no merit in this petition.
The parties herein do not dispute that since the acquisition of the four (4) lots by the applicant, it has been in continuous possession
and enjoyment thereof, and such possession, together with its predecessors-in-interest, covering a period of more than 52 years (at
least from the date of survey in 1928) with respect to lots 1 and 2, about 62 years with respect to lot 3, all of plan PSU-65686; and more
than 39 years with respect to the fourth parcel described in plan PSU-112592 (at least from the date of the survey in 1940) have been
open, public, continuous, peaceful, adverse against the whole world, and in the concept of owner.
Being disputed before this Court is the matter of the applicability of Art. XIV Sec. 11 of the 1973 Constitution to the case at bar.
Petitioner argues that considering such constitutional prohibition, private respondent is disqualified to own and register its title to the
lots in question. Further, it argues that since the application for registration was filed only on February 2, 1979, long after the 1973
Constitution took effect on January 17, 1973, the application for registration and confirmation of title is ineffectual because at the time it
was filed, private corporation had been declared ineligible to acquire alienable lands of the public domain pursuant to Art. XIV, Sec. 11
of the said Constitution. (Rollo, p. 41)
The questioned posed before this Court has been settled in the case of DIRECTOR OF LANDS vs. Intermediate Appellate Court (146
SCRA 509 [1986]) which reversed the ruling first enunciated in the 1982 case of Manila Electric Co. vs. CASTRO BARTOLOME, (114
SCRA 789 [1982]) imposing the constitutional ban on public land acquisition by private corporations which ruling was declared
emphatically as res judicata on January 7, 1986 in Director of Lands vs. Hermanos y Hermanas de Sta. Cruz de Mayo, Inc., (141 SCRA
21 [1986]). In said case, (Director of Lands v. IAC, supra), this Court stated that a determination of the character of the lands at the time
of institution of the registration proceedings must be made. If they were then still part of the public domain, it must be answered in the
negative.
If, on the other hand, they were already private lands, the constitutional prohibition against their acquisition by private corporation or
association obviously does not apply. In affirming the Decision of the Intermediate Appellate Court in said case, this Court adopted the
vigorous dissent of the then Justice, later Chief Justice Claudio Teehankee, tracing the line of cases beginning with CARINO,[1] in
1909, thru SUSI,[2] in 1925, down to HERICO,[3] in 1980, which developed, affirmed and reaffirmed the doctrine that open, exclusive
and undisputed possession of alienable public land for the period prescribed by law creates the legal fiction whereby the land, upon
completion of the requisite period ipso jure and without the need of judicial or other sanction, ceases to be public land and becomes
private property. (DIRECTOR OF LANDS vs. IAC, supra, p. 518).
Nothing can more clearly demonstrate the logical inevitability of considering possession of public land which is of the character and
duration prescribed by statute as the equivalent of an express grant from state than the dictim of the statute itself;[4] that the possessor
"x x x shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a
certificate of title x x x ." No proof being admissible to overcome a conclusive presumption, confi???? proceedings would, in truth be
little more than a formality, at the most limited to ascertaining whether the possession claimed is of the required character and length of
time, and registration thereunder would not confer title, but simply recognize a title already vested. The proceedings would not
ORIGINALLY convert the land from public to private land, but only confirm such a conversion already effected by operation of law from
the moment the required period of possession became complete. As was so well put in Carino, "x x x There are indications that
registration was expected from all, but none sufficient to show that, for want of it, ownership actually gained would be lost. The effect of

the proof, wherever made, was not to confer title, but simply to establish it, as already conferred by the decree, if not by earlier law.
(DIRECTOR OF LANDS vs. IAC, supra, p. 520).
The open, continuous and exclusive possession of the four lots by private respondent can clearly be gleaned from the following facts
on record: Lot 1 and portion of Lot 2 was acquired by purchase in 1928 and 1929, respectively. The remaining portion of lots 2 and 3
was already owned and possessed by private respondent even prior to the survey of said lots in 1928. In fact, records of burial of the
Roman Catholic Church of Candelaria, Quezon showed that as early as 1919, Lot 3 has already been utilized by the Roman Catholic
Church as its cemetery. That at present, said three lots are utilized as the Roman Catholic Church of Candelaria, Quezon. That said
lots are declared for taxation purposes in the name of the Roman Catholic Church. The fourth parcel of land was acquired by donation
in 1941 and same lot is utilized as church site.
It must be emphasized that the Court is not here saying that a corporation sole should be treated like an ordinary private corporation.
In Roman Catholic Apostolic Administration of Davao, Inc. vs. Land Registration Commission, et al. (L-8451, December 20, 1957, 102
Phil. 596), We articulated:
"In solving the problem thus submitted to our consideration, We can say the following: A corporation sole is a special form of
corporation usually associated with the clergy. Conceived and introduced into the common law by sheer necessity, this legal creation
which was referred to as that unhappy freak of English Law was designed to facilitate the exercise of the functions of ownership
carried on by the clerics for and on behalf of the church which was regarded as the property owner (See 1 Bouvier's Law Dictionary, p.
682-683).
"A corporation sole consists of one person only, and his successors (who will always be one at a time), in some particular station,
who are incorporated by law in order to give them some legal capacities and advantages, particularly that of perpetuity, which in their
natural persons they could not have had. In this sense, the king is a sole corporation; so is a bishop, or deans, distinct from their
several chapters (Reid vs. Barry, 93 Fla. 849, 112 So. 846).
Pertinent to this case is the provision of Sec. 113 Batas Pambansa Blg. 68 which reads as follows:
"Sec. 113. Acquisition and alienation of property. --Any corporation sole may purchase and hold real estate and personal property for
its church, charitable, benevolent or educational purposes, and may receive bequests or gifts for such purposes. Such corporation may
mortgage or sell real property held by it upon obtaining an order for that purpose from the Court of First Instance of the province where
the property is situated; but before the order is issued, proof must be made to the satisfaction of the Court that notice of the application
for leave to mortgage or sell has been given by publication or otherwise in such manner and for such time as said court may have
directed, and that it is to the interest of the corporation that leave to mortgage or sell should be granted. The application for leave to
mortgage or sell must be made by petition, duly verified by the chief archbishop, bishop, priest, minister, rabbi or presiding elder acting
as corporation sole, and may be opposed by any member of the religious denomination, sect or church represented by the corporation
sole: Provided, That in cases where the rules, regulations and discipline of the religious denomination, sect or church religious society
or order concerned represented by such corporation sole regulate the method of acquiring, holding, selling and mortgaging real estate
and personal property, such rules, regulations and discipline shall control and the intervention of the courts shall not be necessary."
There is no doubt that a corporation sole by the nature of its incorporation is vested with the right to purchase and hold real estate and
personal property. It need not therefore be treated as an ordinary private corporation because whether or not it be so treated as such,
the Constitutional provision involved will, nevertheless, be not applicable.
In the light of the facts obtaining in this case and the ruling of this Court in Director of Lands vs. IAC, (supra, 513), the lands subject of
this petition were already private property at the time the application for confirmation of title was filed in 1979. There is therefore no
cogent reason to disturb the findings of the appellate court.
WHEREFORE, the petition is Dismissed for lack of merit and the appealed decision and Resolution of the Intermediate Appellate Court
is hereby AFFIRMED.
SO ORDERED.

Fernan, C.J., Gutierrez, Jr., Feliciano, and Cortes, JJ., concur.

G.R. No. 108998

EN BANC
[ G.R. No. 108998, August 24, 1994 ]
REPUBLIC OF THE PHILIPPINES, PETITIONER, VS. THE COURT OF APPEALS AND SPOUSES MARIO B. LAPIA AND FLOR
DE VEGA, RESPONDENTS.
DECISION
BIDIN, J.:
Can a foreign national apply for registration of title over a parcel of land which he acquired by purchase while still a citizen of the
Philippines, from a vendor who has complied with the requirements for registration under the Public Land Act (CA 141)?
The Republic would have us rule on the negative and asks this Court to nullify the decision of the appellate court which affirmed the
judgment of the court a quo in granting the application of respondent spouses for registration over the lots in question.
On June 17, 1978, respondent spouses bought Lots 347 and 348, Cad. s38-D, as their residence with a total area of 91.77 sq. m.
situated in San Pablo City, from one Cristeta Dazo Belen (Rollo, p. 41). At the time of the purchase, respondent spouses were then
natural-born Filipino citizens.
On February 5, 1987, the spouses filed an application for registration of title of the two (2) parcels of land before the Regional Trial
Court of San Pablo City, Branch XXXI. This time, however, they were no longer Filipino citizens and have opted to embrace Canadian
citizenship through naturalization.
An opposition was filed by the Republic and after the parties have presented their respective evidence, the court a quo rendered a
decision confirming private respondents' title to the lots in question, the dispositive portion of which reads as follows:
"WHEREFORE, in view of the foregoing, this Court hereby approves the said application and confirms the title and possession of
herein applicants over Lots 347 and 348, Ap-04-003755 in the names of spouses Mario B. Lapia and Flor de Vega, all of legal age,
Filipino citizens by birth but now Canadian citizens by naturalization and residing at 14 A. Mabini Street, San Pablo City and/or 2011170-124 Street, Edmonton, Alberta T5M-OK9, Canada.
"Once this Decision becomes final, let the corresponding decree of registration be issued. In the certificate of title to be issued, there
shall be annotated an easement of .265 meters road right-of-way."
"SO ORDERED." (Rollo, p. 25)
On appeal, respondent court affirmed the decision of the trial court based on the following ratiocination:
"In the present case, it is undisputed that both applicants were still Filipino citizens when they bought the land in controversy from its
former owner. For this reason, the prohibition against the acquisition of private lands by aliens could not apply. In justice and equity,
they are the rightful owners of the subject realty considering also that they had paid for it quite a large sum of money. Their purpose in
initiating the instant action is merely to confirm their title over the land, for, as has been passed upon, they had been the owners of the
same since 1978. It ought to be pointed out that registration is not a mode of acquiring ownership. The Torrens System was not
established as a means for the acquisition of title to private land. It is intended merely to confirm and register the title which one may
already have (Municipality of Victorias vs. Court of Appeals, G.R. No. L-31189, March 31, 1987). With particular reference to the main
issue at bar, the High Court has ruled that title and ownership over lands within the meaning and for the purposes of the constitutional
prohibition dates back to the time of their purchase, not later. The fact that the applicants-appellees are not Filipino citizens now cannot
be taken against them for they were not disqualified from acquiring the land in question (Bollozos vs. Yu Tieng Su, G.R. No. L-29442,
November 11, 1987)." (Rollo, pp. 27-28)

Expectedly, respondent court's disposition did not merit petitioner's approval, hence this present recourse, which was belatedly filed.
Ordinarily, this petition would have been denied outright for having been filed out of time had it not been for the constitutional issue
presented therein.
At the outset, petitioner submits that private respondents have not acquired Canadian citizenship through naturalization to justify the
registration thereof in their favor. It maintains that even privately owned unregistered lands are presumed to be public lands under the
principle that lands of whatever classification belong to the State under the Regalian doctrine. Thus, before the issuance of the
certificate of title, the occupant is not in the juridical sense the true owner of the land since it still pertains to the State. Petitioner further
argued that it is only when the court adjudicates the land to the applicant for confirmation of title would the land become privately
owned land, for in the same proceeding, the court may declare it public land, depending on the evidence.
As found by the trial court:
"The evidence thus presented established that applicants, by themselves and their predecessors-in-interest, had been in open,
public, peaceful, continuous, exclusive and notorious possession and occupation of the two adjacent parcels of land applied for
registration of title under a bona-fide claim of ownership long before June 12, 1945. Such being the case, it is conclusively presumed
that all the conditions essential to the confirmation of their title over the two adjacent parcels of land are sought to be registered have
been complied with thereby entitling them to the issuance of the corresponding certificate of title pursuant to the provisions of
Presidential Decree No. 1529, otherwise known as the Property Registration Decree." (Rollo, p. 26)
Respondent court echoed the court a quo's observation, thus:
"The land sought to be registered has been declared to be within the alienable and disposable zone established by the Bureau of
Forest Development (Exhibit P). The investigation conducted by the Bureau of Lands, Natural Resources District (IV-2) reveals that
the disputed realty had been occupied by the applicants whose house of strong materials stands thereon; that it had been declared for
taxation purposes in the name of applicants-spouses since 1979; that they acquired the same by means of a public instrument entitled
Kasulatan ng Bilihang Tuluyan duly executed by the vendor, Cristeta Dazo Belen, on June 17, 1978 (Exhibits I and 'J'); and that
applicants and their predecessors in interest had been in possession of the land for more than 30 years prior to the filing of the
application for registration. But what is of great significance in the instant case is the circumstance that at the time the applicants
purchased the subject lot in 1978, both of them were Filipino citizens such that when they filed their application for registration in 1987,
ownership over the land in dispute had already passed to them." (Rollo, p., 27)
The Republic disagrees with the appellate court's concept of possession and argues:
17. The Court of Appeals found that the land was declared for taxation purposes in the name of respondent spouses only since
1979. However, tax declarations or realty tax payments of property are not conclusive evidence of ownership. (citing cases)
"18. Then again, the appellate court found that 'applicants (respondents) and their predecessors-in-interest had been in possession
of the land for more than 30 years prior to the filing of the application for registration.' This is not, however, the same as saying that
respondents have been in possession 'since June 12, 1945.' (PD No. 1073, amending Sec. 48 [b], CA No. 141; see also Sec. 14, PD
No. 1529). So there is a void in respondents' possession. They fall short of the required possession since June 12, 1945 or prior
thereto. And, even if they needed only to prove thirty (30) years possession prior to the filing of their application (on February 5, 1987),
they would still be short of the required possession if the starting point is 1979 when, according to the Court of Appeals, the land was
declared for taxation purposes in their name." (Rollo, pp. 14-15)
The argument is myopic, to say the least. Following the logic of petitioner, any transferee is thus foreclosed to apply for registration of
title over a parcel of land notwithstanding the fact that the transferor, or his predecessor-in-interest has been in open, notorious and
exclusive possession thereof for thirty (30) years or more. This is not, however, what the law provides.
As petitioner itself argues, Section 48 of the Public Land Act (CA 141) reads:

"Sec. 48. The following-described citizens of the Philippines, occupying lands of the public domain or claiming interest therein, but
whose titles have not been perfected or completed, may apply to the Court of First Instance (now Regional Trial Court) of the province
where the land is located for confirmation of their claims and the issuance of a certificate of title therefor under the Land Registration
Act, to wit:
xxx
(b) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive, and notorious
possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition or ownership, for at least
thirty years immediately preceding the filing of the application for confirmation of title except when prevented by wars or force majeure.
These shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a
certificate of title under the provisions of this chapter." (Underscoring supplied)
As amended by PD 1073:
"Sec. 4. The provisions of Section 48(b) and Section 48(c), Chapter VIII, of the Public Land Act are hereby amended in the sense
that these provisions shall apply only to alienable and disposable lands of the public domain which have been in open, continuous,
exclusive and notorious possession and occupation by the applicant himself or thru his predecessor-in-interest, under a bona fide claim
of acquisition or ownership, since June 12, 1945."
It must be noted that with respect to possession and occupation of the alienable and disposable lands of the public domain, the law
employs the terms "by themselves", "the applicant himself or through his predecessor-in-interest". Thus, it matters not whether the
vendee/applicant has been in possession of the subject property for only a day so long as the period and/or legal requirements for
confirmation of title has been complied with by his predecessor-in-interest, the said period is tacked to his possession. In the case at
bar, respondents' predecessors-in-interest have been in open, continuous, exclusive and notorious possession of the disputed land not
only since June 12, 1945, but even as early as 1937. Petitioner does not deny this except that respondent spouses, in its perception,
were in possession of the land sought to be registered only in 1978 and therefore short of the required length of time. As aforesaid, the
disputed parcels of land were acquired by private respondents through their predecessors-in-interest, who, in turn, have been in open
and continued possession thereof since 1937. Private respondents stepped into the shoes of their predecessors-in-interest and by
virtue thereof, acquired all the legal rights necessary to confirm what could otherwise be deemed as an imperfect title.
At this juncture, petitioner's reliance in Republic v. Villanueva (114 SCRA 875 [1982]) deserves scant consideration. There, it was held
that before the issuance of the certificate of title, the occupant is not in the juridical sense the true owner of the land since it still pertains
to the State.
Suffice it to state that the ruling in Republic v. Villanueva (supra), has already been abandoned in the 1986 case of Director of Lands v.
Intermediate Appellate Court (146 SCRA 509; and reiterated in Director of Lands v. Iglesia ni Cristo, 200 SCRA 606 [1991]) where the
Court, through then Associate Justice, now Chief Justice Narvasa, declared that:
"(The weight of authority is) that open, exclusive and undisputed possession of alienable public land for the period prescribed by law
creates the legal fiction whereby the land, upon completion of the requisite period ipso jure and without the need of judicial or other
sanction, ceases to be public land and becomes private property. x x x
"Herico in particular, appears to be squarely affirmative:
"x x x. Secondly, under the provisions of Republic Act No. 1942, which the respondent Court held to be inapplicable to the petitioner's
case, with the latter's proven occupation and cultivation for more than 30 years since 1914, by himself and by his predecessors-ininterest, title over the land has vested on petitioner so as to segregate the land from the mass of public land. Thereafter, it is no longer
disposable under the Public Land Act as by free patent. x x x
xxx

'As interpreted in several cases, when the conditions as specified in the foregoing provision are complied with, the possessor is
deemed to have acquired, by operation of law, a right to a grant, a government grant, without the necessity of a certificate of title being
issued. The land, therefore, ceases to be of the public domain and beyond the authority of the Director of Lands to dispose of. The
application for confirmation is mere formality, the lack of which does not affect the legal sufficiency of the title as would be evidenced by
the patent and the Torrens title to be issued upon the strength of said patent.'
"Nothing can more clearly demonstrate the logical inevitability of considering possession of public land which is of the character and
duration prescribed by the statute as the equivalent of an express grant from the State than the dictum of the statute itself (Section 48
[b]) that the possessor(s] `x x x shall be conclusively presumed to have performed all the conditions essential to a Government grant
and shall be entitled to a certificate of title x x x. No proof being admissible to overcome a conclusive presumption, confirmation
proceedings would, in truth be little more than a formality, at the most limited to ascertaining whether the possession claims is of the
required character and length of time; and registration thereunder would not confer title, but simply recognize a title already vested. The
proceedings would not originally convert the land from public to private land, but only confirm such a conversion already affected by
operation of law from the moment the required period of possession became complete. As was so well put in Cario, x x x (There are
indications that registration was expected from all, but none sufficient to show that, for want of it, ownership actually gained would be
lost. The effect of the proof, wherever made, was not to confer title, but simply to establish it, as already conferred by the decree, if not
by earlier law.'" (Underscoring supplied)
Subsequent cases have hewed to the above pronouncement such that open, continuous and exclusive possession for at least 30 years
of alienable public land ipso jure converts the same to private property (Director of Lands v. IAC, 214 SCRA 604 [1992]; Pineda v. CA,
183 SCRA 602 [1990]). This means that occupation and cultivation for more than 30 years by an applicant and his predecessors-ininterest, vest title on such applicant so as to segregate the land from the mass of public land (National Power Corporation v. CA, 218
SCRA 41 [1993]).
The Public Land Act requires that the applicant must prove that (a) the land is alienable public land and (b) his possession, in the
concept above stated, must be either since time immemorial or for the period prescribed in the Public Land Act (Director of Lands v.
Buyco, 216 SCRA 78 [1992]). When the conditions set by law are complied with, the possessor of the land, by operation of law,
acquires a right to a grant, a government grant, without the necessity of a certificate of title being issued (National Power Corporation v.
CA, supra). As such, the land ceases to be a part of the public domain and goes beyond the authority of the Director of Lands to
dispose of.
In other words, the Torrens system was not established as a means for the acquisition of title to private land (Municipality of Victorias v.
CA, 149 SCRA 32 [1987]). It merely confirms, but does not confer ownership. As could be gleaned from the evidence adduced, private
respondents were able to establish the nature of possession of their predecessors-in-interest. Evidence was offered to prove that their
predecessors-in-interest had paid taxes on the subject land and introduced improvements thereon (Exhibits "F" to "F9"). A certified true
copy of the affidavit executed by Cristeta Dazo and her sister Simplicia was also formally offered to prove that the subject parcels of
land were inherited by vendor Cristeta Dazo from her father Pedro Dazo with the conformity of her only sister Simplicia (Exhibit "G").
Likewise, a report from the Bureau of Lands was presented in evidence together with a letter from the Bureau of Forest Development,
to prove that the questioned lots were part of the alienable and disposable zone of the government and that no forestry interest was
affected (CA GR No. 28953, Records, p. 33).
In the main, petitioner seeks to defeat respondents' application for registration of title on the ground of foreign nationality. Accordingly,
the ruling in Director of Lands v. Buyco (supra) supports petitioner's thesis.
We disagree.
In Buyco, the applicants therein were likewise foreign nationals but were natural-born Filipino citizens at the time of their supposed
acquisition of the property. But this is where the similarity ends. The applicants in Buyco sought to register a large tract of land under
the provisions of the Land Registration Act, and in the alternative, under the provisions of the Public Land Act. The land registration
court decided in favor of the applicants and was affirmed by the appellate court on appeal. The Director of Lands brought the matter
before us on review and we reversed.
This Court, speaking through Justice Davide, Jr., stated:

"As could be gleaned from the evidence adduced, the private respondents do not rely on fee simple ownership based on a Spanish
grant or possessory information title under Section 19 of the Land Registration Act; the private respondents did not present any proof
that they or their predecessors-in-interest derived title from an old Spanish grant such as (a) the titulo real or royal grant (b) the
'concession especial' or special grant; (c) the 'composicion con el estado' title or adjustment title; (d) the 'titulo de compra or title by
purchase; and (e) the information posesoria' or possessory information title, which could become a 'titulo gratuito' or a gratuitous title
(Director of Forestry v. Muoz, 23 SCRA 1183 [1968]). The primary basis of their claim is possession, by themselves and their
predecessors-in-interest, since time immemorial.
"If indeed private respondents and their predecessors have been in possession since time immemorial, the rulings of both courts
could be upheld for, as this Court stated in Oh Cho v. Director of Lands (75 Phil. 890 [1946]):
'x x x All lands that were not acquired from the Government, either by purchase or by grant, belong to the public domain. An exception
to the rule would be any land that should have been in the possession of an occupant and of his predecessors in interest since time
immemorial, for such possession would justify the presumption that the land had never been part of the public domain or that if had
been a private property even before the Spanish conquest (Cario v. Insular Government, 41 Phil 935 [1909]; 212 U.S. 449; 53 Law.
Ed., 594) The applicant does not come under the exception, for the earliest possession of the lot by his first predecessor in interest
began in 1880.
`x x x alienable public land held by a possessor, personally or through his predecessors-in-interest, openly, continuously and
exclusively for the prescribed statutory period (30 years under the Public Land Act, as amended) is converted to private property by the
mere lapse or completion of said period, ipso jure.' (Director of Lands v. Intermediate Appellate Court, supra)
"it is obvious from the foregoing rule that the applicant must prove that (a) the land is alienable public land and (b) his possession, in
the concept above stated, must be either since time immemorial, as ruled in both Cario and Susi, or for the period prescribed in the
Public Land Act. As to the latter, this Court, in Gutierrez Hermanos v. Court of Appeals (178 SCRA 37 [1989]), adopted the rule
enunciated by the Court of Appeals, per then Associate Justice Hugo R. Gutierrez, Jr., x x x, that an applicant for registration under
Section 48 of the Public Land Act must secure a certification from the Government that the lands which he claims to have possessed as
owner for more than thirty (30) years are alienable and disposable. It is the burden of the applicant to prove its positive averments.
"In the instant case, private respondents offered no evidence at all to prove that the property subject of the application is an alienable
and disposable land. On the contrary, the entire property x x x was pasture land (and therefore inalienable under the then 1973
Constitution).
"x x x (P)rivate respondents' evidence miserably failed to establish their imperfect title to the property in question. Their allegation of
possession since time immemorial, x x x, is patently baseless. x x x When referring to possession, specifically 'immemorial possession,'
it means possession of which no man living has seen the beginning, and the existence of which he has learned form his elders (Susi v.
Razon, supra). Such possession was never present in the case of private respondents. x x x
"x x x, there does not even exist a reasonable basis for the finding that the private respondents and their predecessors-in-interest
possessed the land for more than eighty (80) years, x x x.
xxx
"To this Court's mind, private respondents failed to prove that (their predecessor-in-interest) had possessed the property - allegedly
covered by Tax Declaration No. 15853 and made the subject of both his last will and testament and the project of partition of his estate
among his heirs - in such manner as to remove the same from the public domain under the Cario and Susi doctrines. Thus, (when the
predecessor-in-interest) died on 31 May 1937, he transmitted no right whatsoever, with respect to the said property, to his heirs. This
being the case, his possession cannot be tacked to that of the private respondents for the latter's benefit pursuant to Section 48(b) of
the Public Land Act, the alternative ground relied upon in their application. x x x
xxx

"Considering that the private respondents became American citizens before such filing, it goes without saying that they had acquired
no vested right, consisting of an imperfect title, over the property before they lost their Philippine citizenship." (Underscoring supplied)
Clearly, the applicants in Buyco were denied registration of title not merely because they were American citizens at the time of their
application therefor. Respondents therein failed to prove possession of their predecessor-in-interest since time immemorial or
possession in such a manner that the property has been segregated from public domain; such that at the time of their application, as
American citizens, they have acquired no vested rights over the parcel of land.
In the case at bar, private respondents were undoubtedly natural-born Filipino citizens at the time of the acquisition of the properties
and by virtue thereof, acquired vested rights thereon, tacking in the process, the possession in the concept of owner and the prescribed
period of time held by their predecessors-in-interest under the Public Land Act. In addition, private respondents have constructed a
house of strong materials on the contested property, now occupied by respondent Lapia's mother.
But what should not be missed in the disposition of this case is the fact that the Constitution itself allows private respondents to register
the contested parcels of land in their favor. Sections 7 and 8 of Article XII of the Constitution contain the following pertinent provisions,
to wit:
"Sec. 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals,
corporations, or associations qualified to acquire or hold lands of the public domain."
"Sec. 8. Notwithstanding the provisions of Section 7 of this Article, a natural-born citizen of the Philippines who has lost his Philippine
citizenship may be a transferee of private lands, subject to limitations provided by law." (Underscoring supplied)
Section 8, Article XII of the 1987 Constitution above quoted is similar to Section 15, Article XIV of the then 1973 Constitution which
reads:
"Sec. 15. Notwithstanding the provisions of Section 14 of this Article, a natural-born citizen of the Philippines who has lost his
citizenship may be a transferee of private land, for use by him as his residence, as the Batasang Pambansa may provide."
Pursuant thereto, Batas Pambansa Blg. 185 was passed into law, the relevant provision of which provides:
"Sec. 2. Any natural-born citizen of the Philippines who has lost his Philippine citizenship and who has the legal capacity to enter into
a contract under Philippine laws may be a transferee of a private land up to a maximum area of one thousand square meters, in the
case of urban land, or one hectare in the case of rural land, to be used by him as his residence. In the case of married couples, one of
them may avail of the privilege herein granted; Provided, That if both shall avail of the same, the total area acquired shall not exceed
the maximum herein fixed.
"In case the transferee already owns urban or rural lands for residential purposes, he shall still be entitled to be a transferee of an
additional urban or rural lands for residential purposes which, when added to those already owned by him, shall not exceed the
maximum areas herein authorized."
From the adoption of the 1987 Constitution up to the present, no other law has been passed by the legislature on the same subject.
Thus, what governs the disposition of private lands in favor of a natural-born Filipino citizen who has lost his Philippine citizenship
remains to be BP 185.
Even if private respondents were already Canadian citizens at the time they applied for registration of the properties in question, said
properties as discussed above were already private lands; consequently, there could be no legal impediment for the registration thereof
by respondents in view of what the Constitution ordains. The parcels of land sought to be registered no longer form part of the public
domain. They are already private in character since private respondents' predecessors-in-interest have been in open, continuous and
exclusive possession and occupation thereof under claim of ownership prior to June 12, 1945 or since 1937. The law provides that a
natural-born citizen of the Philippines who has lost his Philippine citizenship may be a transferee of a private land up to a maximum
area of 1,000 sq.m., if urban, or one (1) hectare in case of rural land, to be used by him as his residence (BP 185).

It is undisputed that private respondents, as vendees of a private land, were natural-born citizens of the Philippines. For the purpose of
transfer and/or acquisition of a parcel of residential land, it is not significant whether private respondents are no longer Filipino citizens
at the time they purchased or registered the parcels of land in question. What is important is that private respondents were formerly
natural-born citizens of the Philippines, and as transferees of a private land, they could apply for registration in accordance with the
mandate of Section 8, Article XII of the Constitution. Considering that private respondents were able to prove the requisite period and
character of possession of their predecessors-in-interest over the subject lots, their application for registration of title must perforce be
approved.
The dissenting opinion, however, states that the requirements in BP 185, must also be complied with by private respondents.
Specifically, it refers to Section 6, which provides:
"Sec. 6. In addition to the requirements provided for in other laws for the registration of titles to lands, no private land shall be
transferred under this Act, unless the transferee shall submit to the register of deeds of the province or city where the property is
located a sworn statement showing the date and place of his birth; the names and addresses of his parents, of his spouse and children,
if any; the area, the location and the mode of acquisition of his landholdings in the Philippines, if any; his intention to reside
permanently in the Philippines; the date he lost his Philippine citizenship and the country of which he is presently a citizen; and such
other information as may be required under Section 8 of this Act."
The Court is of the view that the requirements in Sec. 6 of BP 185 do not apply in the instant case since said requirements are primarily
directed to the register of deeds before whom compliance therewith is to be submitted. Nowhere in the provision is it stated, much less
implied, that the requirements must likewise be submitted before the land registration court prior to the approval of an application for
registration of title. An application for registration of title before a land registration court should not be confused with the issuance of a
certificate of title by the register of deeds. It is only when the judgment of the land registration court approving the application for
registration has become final that a decree of registration is issued. And that is the time when the requirements of Sec. 6, BP 185,
before the register of deeds should be complied with by the applicants. This decree of registration is the one that is submitted to the
office of the register of deeds for issuance of the certificate of title in favor of the applicant. Prior to the issuance of the decree of
registration, the register of deeds has no participation in the approval of the application for registration of title as the decree of
registration is yet to be issued.
WHEREFORE, the petition is DISMISSED and the decision appealed from is hereby AFFIRMED.
SO ORDERED.
Narvasa, C.J., Regalado, Romero, Bellosillo, Melo, Quiason, Puno, Vitug, Kapunan, and Mendoza, JJ., concur.
Feliciano, J., see concurring statement.
Padilla and Davide, Jr., JJ., joins J. Cruz in his dissenting opinion.

197 Phil. 647

SECOND DIVISION
[ G.R. No. L-27952, February 15, 1982 ]
TESTATE ESTATE OF JOSE EUGENIO RAMIREZ, MARIA LUISA PALACIOS, ADMINISTRATRIX, PETITIONER-APPELLEE, VS.
MARCELLE D. VDA. DE RAMIREZ, ET AL., OPPOSITORS, JORGE AND ROBERTO RAMIREZ, LEGATEES, OPPOSITORSAPPELLANTS.
DECISION
ABAD SANTOS, J.:
The main issue in this appeal is the manner of partitioning the testate estate of Jose Eugenio Ramirez among the principal
beneficiaries, namely: his widow Marcelle Demoron de Ramirez; his two grandnephews Roberto and Jorge Ramirez; and his
companion Wanda de Wrobleski.
The task is not trouble-free because the widow Marcelle is a French who lives in Paris, while the companion Wanda is an Austrian who
lives in Spain. Moreover, the testator provided for substitutions.
Jose Eugenio Ramirez, a Filipino national, died in Spain on December 11, 1964, with only his widow as compulsory heir. His will was
admitted to probate by the Court of First Instance of Manila, Branch X, on July 27, 1965. Maria Luisa Palacios was appointed
administratrix of the estate. In due time she submitted an inventory of the estate as follows:
"INVENTARIO
Una sexta parte (1/6) pro-indivisa de un terreno, con sus mejoras y edificaciones, situado en la Escolta,
Manila . . . . . . . . . . . . . . . . . . . . . . . . P 500,000.00
Una sexta parte (1/6) pro-indivisa de dos parcelas de terreno situadas en Antipolo,
Rizal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 658.34
Cuatrocientos noventa y un (491) acciones de la 'Central Azucarera de la Carlota' a P17.00 por accion . . . . . . . . . . . . . . . . . . . . . . . .
. . 8,347.00
Diez mil ochocientos seiz (10,806) acciones de la 'Central Luzon Milling Co.', disuelta y en liquidacion, a P0.15 por accion . . . . . .
1,620.90
Cuenta de Ahorros en el Philippine Trust Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 350.73
TOTAL. . . . . . . . . . . . . P 512,976.97
MENOS:
Deuda al Banco de las Islas Filipinas, garantizada con prenda de las acciones de La Carlota . . . . . . . . P 5,000.00
VALOR LIQUIDO . . . . . . P507,976.97"
The testamentary dispositions are as follows:
"A. - En nuda propiedad, a D. Roberto y D. Jorge Ramirez, ambos menores de edad, residentes en Manila, I. F., calle Wright, No.
1818, Malate, hijos de su sobrino D. Jose Ma. Ramirez, con sustitucion vulgar a favor de sus respectivos descendientes, y, en su
defecto, con sustitucion vulgar reciproca entre ambos.

"El precedente legado en nuda propiedad de la participacion indivisa de la finca Santa-Cruz Building, lo ordena el testador a favor
de los legatarios nombrados, en atencion a que dicha propiedad fue creacion del querido padre del otorgante y por ser aquellos
continuadores del apellido Ramirez.
"B.- Y en usufructo a saber: a. - En cuanto a una tercera parte, a favor de la esposa del testador, Da. Marcelle Ramirez, domiciliada en IE PECO, caIle del
General Gallieni, No. 33, Seine, Francia, con sustitucion vulgar u fideicomisaria a favor de Da. Wanda de Wrobleski, de Palma de
Mallorca, Son Rapia, Avenida de los Reyes 13,
b. - Y en cuanto a las dos terceras partes restantes, a favor de la nombrada Da. Wanda de Wrobleski, con sustitucion vulgar y
fideicomisaria, a saber: "En cuanto a la mitad de dichas dos terceras partes, a favor de D. Juan Pablo Jankowski, de Son Rapia, Palma de Mallorca; y en
cuanto a la mitad restante, a favor de su sobrino, D. Horace V. Ramirez, San Luis Building, Florida St. Ermita, Manila, I.F.
"A pesar de las sustituciones fideicomisarias precedentemente ordinadas, las usufructuarias nombradas conjuntamente con los
nudo propietarios, podran en cualquier momento vender a tercero los bienes objeto delegado, sin intervencion alguna de los titulares
fideicomisarios."
On June 23, 1966, the administratrix submitted a project of partition as follows: the property of the deceased is to be divided into two
parts. One part shall go to the widow "en pleno dominio" in satisfaction of her legitime; the other part or "free portion" shall go to Jorge
and Roberto Ramirez "en nuda propriedad." Furthermore, one third (1/3) of the free portion is charged with the widow's usufruct and
the remaining two-third (2/3) with a usufruct in favor of Wanda.
Jorge and Roberto opposed the project of partition on the grounds: (a) that the provisions for vulgar substitution in favor of Wanda de
Wrobleski with respect to the widow's usufruct and in favor of Juan Pablo Jankowski and Horacio V. Ramirez, with respect to Wanda's
usufruct are invalid because the first heirs (Marcelle and Wanda) survived the testator; (b) that the provisions for fideicommissary
substitutions are also invalid because the first heirs are not related to the second heirs or substitutes within the first degree, as provided
in Article 863 of the Civil Code; (c) that the grant of a usufruct over real property in the Philippines in favor of Wanda Wrobleski, who is
an alien, violates Section 5, Article XIII of the Philippine Constitution; and that (d) the proposed partition of the testator's interest in the
Santa Cruz (Escolta) Building between the widow Marcelle, and the appellants, violates the testator's express will to give this property
to them. Nonetheless, the lower court approved the project of partition in its order dated May 3, 1967. It is this order which Jorge and
Roberto have appealed to this Court.
1. The widow's legitime.
The appellant's do not question the legality of giving Marcelle one-half of the estate in full ownership. They admit that the testator's
dispositions impaired his widow's legitime. Indeed, under Art. 900 of the Civil Code "If the only survivor is the widow or widower, she or
he shall be entitled to one-half of the hereditary estate." And since Marcelle alone survived the deceased, she is entitled to one-half of
his estate over which he could impose no burden, encumbrance, condition or substitution of any kind whatsoever. (Art. 904, par. 2, Civil
Code.)
It is the one-third usufruct over the free portion which the appellants question and justifiably so. It appears that the court a quo
approved the usufruct in favor of Marcelle because the testament provides for a usufruct in her favor of one-third of the estate. The
court a quo erred for Marcelle who is entitled to one-half of the estate "en pleno dominio" as her legitime and which is more than what
she is given under the will is not entitled to have any additional share in the estate. To give Marcelle more than her legitime will run
counter to the testator's intention for as stated above his dispositions even impaired her legitime and tended to favor Wanda.
2. The substitutions.

It may be useful to recall that "Substitution is the appointment of another heir so that he may enter into the inheritance in default of the
heir originally instituted." (Art. 857, Civil Code.) And that there are several kinds of substitutions, namely: simple or common, brief or
compendious, reciprocal, and fideicommissary. Art. 858, Civil Code.) According to Tolentino, "Although the Code enumerates four
classes, there are really only two principal classes of substitutions: the simple and the fideicommissary. The others are merely
variations of these two." (III Civil Code, p. 185 [1973].)
The simple or vulgar is that provided in Art. 859 of the Civil Code which reads:
"ART. 859. The testator may designate one or more persons to substitute the heir or heirs instituted in case such heir or heirs should
die before him, or should not wish, or should be incapacitated to accept the inheritance.
"A simple substitution, without a statement of the cases to which it refers, shall comprise the three mentioned in the preceding
paragraph, unless the testator has otherwise provided."
The fideicommissary substitution is described in the Civil Code as follows:
"ART. 863. A fideicommissary substitution by virtue of which the fiduciary or first heir instituted is entrusted with the obligation to
preserve and to transmit to a second heir the whole or part of inheritance, shall be valid and shall take effect, provided such substitution
does not go beyond one degree from the heir originally instituted, and provided further that the fiduciary or first heir and the second heir
are living at time of the death of the testator."
It will be noted that the testator provided for a vulgar substitution in respect of the legacies of Roberto and Jorge Ramirez, the
appellants, thus: "con sustitucion vulgar a favor de sus respectivos descendientes, y, en su defecto, con substitucion vulgar reciproca
entre ambos." The appellants do not question the legality of the substitution so provided.
The appellants question the "sustitucion vulgar y fideicomisaria a favor de Da. Wanda de Wrobleski" in connection with the one-third
usufruct over the estate given to the widow Marcelle. However, this question has become moot because as We have ruled above, the
widow is not entitled to any usufruct.
The appellants also question the "sustitucion vulgar y fideicomisaria" in connection with Wanda's usufruct over two-thirds of the estate
in favor of Juan Pablo Jankowski and Horace V. Ramirez.
They allege that the substitution in its vulgar aspect is void because Wanda survived the testator or stated differently because she did
not predecease the testator. But dying before the testator is not the only case for vulgar substitution for it also includes refusal or
incapacity to accept the inheritance as provided in Art. 859 of the Civil Code, supra. Hence, the vulgar substitution is valid.
As regards the substitution in its fideicommissary aspect, the appellants are correct in their claim that it is void for the following reasons:
(a) The substitutes (Juan Pablo Jankowski and Horace V. Ramirez) are not related to Wanda, the heir originally instituted. Art. 863 of
the Civil Code validates a fideicommissary substitution "provided such substitution does not go beyond one degree from the heir
originally instituted."
What is meant by "one degree" from the first heir is explained by Tolentino as follows:
"Scaevola, Maura, and Traviesas construe 'degree' as designation, substitution, or transmission. The Supreme Court of Spain has
decidedly adopted this construction. From this point of view, there can be only one transmission or substitution, and the substitute need
not be related to the first heir. Manresa, Morell, and Sanchez Roman, however, construe the word 'degree' as generation, and the
present Code has obviously followed this interpretation, by providing that the substitution shall not go beyond one degree 'from the heir
originally instituted.' The Code thus clearly indicates that the second heir must be related to and be one generation from the first heir.
"From this, it follows that the fideicommissary can only be either a child or a parent of the first heir. These are the only relatives who
are one generation or degree from the fiduciary." (Op. cit., pp. 193-194.)

(b) There is no absolute duty imposed on Wanda to transmit the usufruct to the substitutes as required by Arts. 865 and 867 of the Civil
Code. In fact, the appellee admits "that the testator contradicts the establishment of a fideicommissary substitution when he permits the
properties subject of the usufruct to be sold upon mutual agreement of the usufructuaries and the naked owners." (Brief, p. 26.)
3. The usufruct of Wanda.
The appellants claim that the usufruct over real properties of the estate in favor of Wanda is void because it violates the constitutional
prohibition against the acquisition of lands by aliens.
The 1935 Constitution which is controlling provides as follows:
"SEC. 5. Save in cases of hereditary succession, no private agricultural land shall be transferred or assigned except to individuals,
corporations, or associations qualified to acquire or hold lands of the public domain in the Philippines." (Art. XIII.)
The court a quo upheld the validity of the usufruct given to Wanda on the ground that the Constitution covers not only succession by
operation of law but also testamentary succession. We are of the opinion that the Constitutional provision which enables aliens to
acquire private lands does not extend to testamentary succession for otherwise the prohibition will be for naught and meaningless. Any
alien would be able to circumvent the prohibition by paying money to a Philippine landowner in exchange for a devise of a piece of
land.
This opinion notwithstanding, We uphold the usufruct in favor of Wanda because a usufruct, albeit a real right, does not vest title to the
land in the usufructuary and it is the vesting of title to land in favor of aliens which is proscribed by the Constitution.
IN VIEW OF THE FOREGOING, the estate of Jose Eugenio Ramirez is hereby ordered distributed as follows:
One-half (1/2) thereof to his widow as her legitime;
One-half (1/2) thereof which is the free portion to Roberto and Jorge Ramirez in naked ownership and the usufruct to Wanda de
Wrobleski with a simple substitution in favor of Juan Pablo Jankowski and Horace V. Ramirez.
The distribution herein ordered supersedes that of the court a quo. No special pronoucement as to costs.
SO ORDERED.
Barredo (Chairman), Concepcion, Jr., De Castro, Ericta, and Escolin, JJ., concur.
Aquino, J., no part.

266 Phil. 645

SECOND DIVISION
[ G.R. No. L-29663, August 20, 1990 ]
GREGORIO LLANTINO AND BELINDA LLANTINO ASSISTED BY HUSBAND NAPOLEON BARBA, PLAINTIFFS- APPELLANTS,
VS. CO LIONG CHONG ALIAS JUAN MOLINA, DEFENDANT-APPELLEE.
DECISION
PARAS, J.:
This is an appeal perfected before the effectivity of Republic Act 5440, from the decision* of the Court of First Instance of Catanduanes
in Civil Case No. 611, to quiet title with damages, entitled Gregorio Llantino, et al. vs. Cong Liong Chong alias Juan Molina,
dismissing the complaint and declaring that the contract of lease entered into between the plaintiffs and the defendant valid and in
accordance with law.
The facts of the case as summarized by the trial court are as follows:
Plaintiffs (petitioners herein) aver that they are the owners of a commercial-residential land situated in the municipality of Virac,
Catanduanes, described in paragraph 2 of the complaint, which sometime in 1954 they leased to the defendant (private respondent)
who was then a Chinese national and went by the name of Co Liong Chong for a period of thirteen (13) years for the sum of P6,150.00
for the whole period. The defendant was placed in possession of the property but knowing that the period of the lease would end with
the year 1967, petitioners requested private respondent for a conference but the latter did not honor the request and instead he
informed the petitioners that he had already constructed a commercial building on the land worth P50,000.00; that the lease contract
was for a period of sixty (60) years, counted from 1954; and that he is already a Filipino citizen. The claim of Chong came as a surprise
to the Llantinos because they did not remember having agreed to a sixty-year lease agreement as that would virtually make Chong the
owner of the realty which, as a Chinese national, he had no right to own and neither could he have acquired such ownership after
naturalization subsequent to 1954. On December 16, 1967, in order to avoid a court litigation the Llantinos once more invited Chong to
a conference about the matter but again Chong ignored the invitation. (Rollo, p. 48; Appellants Brief, p. 12)
Hence, on January 10, 1968, the Llantinos filed their complaint to quiet title with damages before the Court of First Instance of
Catanduanes (Rollo, p. 12; Record on Appeal, pp. 1-4).
After Chong has filed an answer to the complaint and the Llantinos their reply, (Rollo, p. 12; Record on Appeal, pp. 9-10) the trial court
set the case for pre-trial and trial for April 2, 1968 (Rollo, p. 12; Record on Appeal, pp. 10-11).
At the pre-trial, both parties agreed upon the identity of the land as described in the complaint. It was mutually admitted that the
defendants original name was Co Liong Chong who was then a Chinese national in 1954, when he approached the plaintiffs and
offered to lease the land in question. It was also admitted by the counsel for the defendant that prior to the filing of the case, the
plaintiffs have in fact invited the defendant to a conference about the matter (Rollo, p. 12; Record on Appeal; p. 14).
Chongs counsel produced the carbon original of the contract of lease entered into between Chong and the Llantinos and the existence
of the contract of lease as a public instrument was admitted (Rollo, p. 12; Record on Appeal, pp. 14-15).
It was also admitted that Chong had in fact constructed a building of strong materials on the land worth P40,000.00 (Rollo, p. 12;
Record on Appeal, p. 15); that Chong has become a naturalized Filipino citizen in 1961 and that his name is no longer Co Liong Chong
but Juan Molina (Rollo, p. 12; Record on Appeal, p. 15).
On May 17, 1968, the trial court rendered a Decision the dispositive portion of which reads:
WHEREFORE, in view of the foregoing considerations, the Court finds the contract of lease entered into between the plaintiffs and
the defendant on October 5, 1954, valid and in accordance with law and the complaint is dismissed with costs against the plaintiffs.

The Court, however, feels that there is no sufficient ground to award moral damages or attorneys fees as claimed by the defendant
because the Court is fairly convinced that the institution of the suit sprung from an honest conviction on the part of the plaintiffs that on
account of the period fixed in the contract of lease and the fact that the defendant was a Chinese national at the time of its celebration
constituted valid grounds for annulment.
SO ORDERED. (Rollo, p. 12; Record on Appeal, p. 24).
From this judgment, plaintiffs appealed directly to this Court on a pure question of law (Rollo, p. 12; Record on Appeal, pp. 24-25).
The plaintiffs-appellants filed their brief on May 26, 1969 (Rollo, p. 48). The defendant-appellee filed his corresponding brief on July 22,
1969 (Rollo, p. 59).
The appellants raised the following assignment of errors:
I
THE LOWER COURT ERRED IN DECLARING THE CONTRACT ENTERED INTO BY AND BETWEEN THE APPELLANTS AND
THE DEFENDANTS ON OCTOBER 5, 1954 VALID;
II
THE LOWER COURT ERRED IN REFUSING TO DECLARE THAT CONTRACT NOT A LEASE.
Stripping the case of irrelevant allegations, the pivotal issue in this case is whether or not the contract of lease entered into by and
between the petitioners including Virgilio Llantino now deceased and private respondent on October 5, 1954 for a period of sixty (60)
years is valid.
Petitioners contend that when the contract which is sought to be declared void was entered into by and between the parties, private
respondent was still a Chinese national (Rollo, p. 48; Appellants Brief, p. 2). However, petitioners also stated that they do not dispute
the right of private respondent to hold the landholding in dispute under a contract of lease but they cannot fathom how Congress could
have thought of a lease contract which shall be for an indefinite period and yet say that the period to be valid should not exceed 99
years (Rollo, p. 48; Appellants Brief, p. 4; Article 1643 of the New Civil Code of the Philippines).
On the other hand, private respondent argued that even though he was still an alien when he entered into the contract of lease (on
October 5, 1954), he was not prohibited by law to do so. In fact, prior to his becoming a naturalized Filipino citizen in 1961, the
appellants did not question his right to enter into that contract so that the parties are in pari delicto. He constructed a building on the
property worth P40,000.00 and prays that he be awarded P30,000.00 for moral damages and P2,000.00 for Attorneys fees. (Rollo, p.
48; Appellants Brief, p. 2).
The position of private respondent is well taken.
The lower court correctly ruled that the defendant-appellee Chong had at the time of the execution of the contract, the right to hold by
lease the property involved in the case although at the time of the execution of the contract, he was still a Chinese national (Rollo, p.
59; Appellees Brief, pp. 10-11).
In the present case, it has been established that there is only one contract and there is no option to buy the leased property in favor of
Chong. There is nothing in the record, either in the lease contract or in the complaint itself, to indicate any scheme to circumvent the
constitutional prohibition. On the contrary, the Llantinos themselves admit openly that right from the start and before entering into the
contract, the Chong had merely asked them for a lease of the premises to which they agreed. Admittedly under the terms of the
contract there is nothing to prevent the Llantinos from disposing of their title to the land to any qualified party but subject to the rights of
the lessee Chong. Neither is there under the terms of the said contract to indicate that the ownership of the Llantinos of the leased
premises has been virtually transferred to the lessee (Rollo, p. 59; Appellees Brief, p. 14).

Under the circumstances, a lease to an alien for a reasonable period is valid. So is an option giving an alien the right to buy real
property on condition that he is granted Philippine citizenship. Aliens are not completely excluded by the Constitution from use of lands
for residential purposes. Since their residence in the Philippines is temporary, they may be granted temporary rights such as a lease
contract which is not forbidden by the Constitution. Should they desire to remain here forever and share our fortune and misfortune,
Filipino citizenship is not impossible to acquire (Philippine Banking Corporation vs. Lui She, 21 SCRA 52 (1967); citing Krivenko vs.
Register of Deeds, 79 Phil. 461 (1947)).
The only instance where a contract of lease may be considered invalid, is, if there are circumstances attendant to its execution, which
are used as a scheme to circumvent the constitutional prohibition.
If an alien is given not only a lease of, but also an option to buy, a piece of land, by virtue of which the Filipino owner cannot sell or
otherwise dispose of his property, this to last for 50 years, then it becomes clear that the arrangement is a virtual transfer of ownership
whereby the owner divests himself in stages not only of the right to enjoy the land (jus possidendi, jus utendi, jus fruendi, and jus
abutendi)-- rights, the sum of which make up ownership. It is just as if today the possession is transferred, tomorrow the use, the next
day the disposition, and so on, until ultimately all the rights of which ownership is made up are consolidated in an alien (Philippine
Banking Corporation vs. Lui She, 21 SCRA 52 (1967).
Coming back to the case at bar, even assuming, arguendo, that the subject contract is prohibited, the same can no longer be
questioned presently upon the acquisition by the private respondent of Filipino citizenship. It was held that sale of a residential land to
an alien which is now in the hands of a naturalized Filipino citizen is valid (De Castro vs. Tan, 129 SCRA 85 (1984).
A contract is the law between the contracting parties, and when there is nothing in it which is contrary to law, morals, good customs,
public policy or public order, the validity of the contract must be sustained (Marimperio Compania Naviera, S.A. vs. Court of Appeals,
156 SCRA 358 (1987).
The issue of the nature of the contract in the case at bar was never raised in the basic pleadings or in the pre-trial (Rollo, p. 59;
Appellees Brief, p. 22).
It is too late to raise an issue on appeal in the Supreme Court when it has not been raised in the lower court (Espadera vs. Court of
Appeals, 165 SCRA 364 (1988).
Moreover, contracts which are not ambiguous are to be interpreted according to their literal meaning and should not be interpreted
beyond their obvious intendment (Plastic Town Center Corporation vs. NLRC, 172 SCRA 580 (1989); Herrera vs. Petrophil Corp., 146
SCRA 385 (1986).
PREMISES CONSIDERED, the decision appealed is hereby AFFIRMED with costs against the plaintiffs-appelants.
SO ORDERED.
Melencio-Herrera, (Chairman), Padilla, and Regalado, JJ., concur.
Sarmiento, J., on leave.

268 Phil. 784

EN BANC
[ G.R. No. 88404, October 18, 1990 ]
PHILIPPINE LONG DISTANCE TELEPHONE CO.
[PLDT], PETITIONER, VS. THE NATIONAL TELECOMMUNICATIONS COMMISSION AND CELLCOM, INC., (EXPRESS
TELECOMMUNICATIONS CO., INC. [ETCI]), RESPONDENTS.
DECISION
MELENCIO-HERRERA, J.:
Petitioner Philippine Long Distance Telephone Company (PLDT) assails, by way of Certiorari and Prohibition under Rule 65, two (2)
Orders of public respondent National Telecommunications Commission (NTC), namely, the Order of 12 December, 1988 granting
private respondent Express Telecommunications Co., Inc. (ETCI) provisional authority to install, operate and maintain a Cellular Mobile
Telephone System in Metro-Manila (Phase A) in accordance with specified conditions, and the Order, dated 8 May 1988, denying
reconsideration.
On 22 June 1958, Rep. Act No. 2090, was enacted, otherwise known as "An Act Granting Felix Alberto and Company, Incorporated, a
Franchise to Establish Radio Stations for Domestic and Transoceanic Telecommunications." Felix Alberto & Co., Inc. (FACI) was the
original corporate name, which was changed to ETCI with the amendment of the Articles of Incorporation in 1964. Much later,
"CELLCOM, Inc." was the name sought to be adopted before the Securities and Exchange Commission, but this was withdrawn and
abandoned.
On 13 May 1987, alleging urgent public need, ETCI filed an application with public respondent NTC (docketed as NTC Case No. 87-39)
for the issuance of a Certificate of Public Convenience and Necessity (CPCN) to construct, install, establish, operate and maintain a
Cellular Mobile Telephone System and an Alpha Numeric Paging System in Metro Manila and in the Southern Luzon regions, with a
prayer for provisional authority to operate Phase A of its proposal within Metro Manila.
PLDT filed an Opposition with a Motion to Dismiss, based primarily on the following grounds: (1) ETCI is not capacitated or qualified
under its legislative franchise to operate a system-wide telephone or network of telephone service such as the one proposed in its
application; 2) ETCI lacks the facilities needed and indispensable to the successful operation of the proposed cellular mobile telephone
system; (3) PLDT has itself a pending application with NTC, Case No. 86-86, to install and operate a Cellular Mobile Telephone System
for domestic and international service not only in Manila but also in the provinces and that under the "prior operator" or "protection of
investment" doctrine, PLDT has the priority or preference in the operation of such service; and (4) the provisional authority, if granted,
will result in needless, uneconomical and harmful duplication, among others.
In an Order, dated 12 November 1987, NTC overruled PLDT's Opposition and declared that Rep. Act No. 2090 (1958) should be
liberally construed as to include among the services under said franchise the operation of a cellular mobile telephone service.
In the same Order, ETCI was required to submit the certificate of registration of its Articles of Incorporation with the Securities and
Exchange Commission, the present capital and ownership structure of the company and such other evidence, oral or documentary, as
may be necessary to prove its legal, financial and technical capabilities as well as the economic justifications to warrant the setting up
of cellular mobile telephone and paging systems. The continuance of the hearings was also directed.
After evaluating the reconsideration sought by PLDT, the NTC, in October 1988, maintained its ruling that liberally construed,
applicant's franchise carries with it the privilege to operate and maintain a cellular mobile telephone service.
On 12 December 1988, NTC issued the first challenged Order. Opining that "public interest, convenience and necessity further
demand a second cellular mobile telephone service provider and finds PRIMA FACIE evidence showing applicant's legal, financial and
technical capabilities to provide a cellular mobile service using the AMPS system," NTC granted ETCI provisional authority to install,
operate and maintain a cellular mobile telephone system initially in Metro Manila, Phase A only, subject to the terms and conditions set

forth in the same Order. One of the conditions prescribed (Condition No. 5) was that, within ninety (90) days from date of the
acceptance by ETCI of the terms and conditions of the provisional authority, ETCI and PLDT "shall enter into an interconnection
agreement for the provision of adequate interconnection facilities between applicant's cellular mobile telephone switch and the public
switched telephone network and shall jointly submit such interconnection agreement to the Commission for approval."
In a "Motion to Set Aside the Order" granting provisional authority, PLDT alleged essentially that the interconnection ordered was in
violation of due process and that the grant of provisional authority was jurisdictionally and procedurally infirm. On 8 May 1989, NTC
denied reconsideration and set the date for continuation of the hearings on the main proceedings. This is the second questioned
Order.
PLDT urges us now to annul the NTC Orders of 12 December 1988 and 8 May 1989 and to order ETCI to desist from, suspend,
and/or discontinue any and all acts intended for its implementation.
On 15 June 1989, we resolved to dismiss the petition for its failure to comply fully with the requirements of Circular No. 1-88. Upon
satisfactory showing, however, that there was, in fact, such compliance, we reconsidered the order, reinstated the Petition, and required
the respondents NTC and ETCI to submit their respective Comments.
On 27 February 1990, we issued a Temporary Restraining Order enjoining NTC to "Cease and Desist from all or any of its on-going
proceedings and ETCI from continuing any and all acts intended or related to or which will amount to the implementation/execution of
its provisional authority." This was upon PLDT's urgent manifestation that it had been served an NTC Order, dated 14 February 1990,
directing immediate compliance with its Order of 12 December 1988, "otherwise the Commission shall be constrained to take the
necessary measures and bring to bear upon PLDT the full sanctions provided by law."
We required PLDT to post a bond of P5M. It has complied, with the statement that it was "post(ing) the same on its agreement and/or
consent to have the same forfeited in favor of Private Respondent ETCl/CELLCOM should the instant Petition be dismissed for lack of
merit." ETCI took exception to the sufficiency of the bond considering its initial investment of approximately P225M, but accepted the
forfeiture proferred.
ETCI moved to have the TRO lifted, which we denied on 6 March 1990. We stated, however, that the inaugural ceremony ETCI had
scheduled for that day could proceed, as the same was not covered by the TRO.
PLDT relies on the following grounds for the issuance of the Writs prayed for:
"1. Respondent NTC's subject order effectively licensed and/or authorized a corporate entity without any franchise to operate a
public utility, legislative or otherwise, to establish and operate a telecommunications system.
"2. The same order validated stock transactions of a public service enterprise contrary to and/or in direct violation of Section 20(h)
of the Public Service Act.
"3. Respondent NTC adjudicated in the same order a controverted matter that was not heard at all in the proceedings under which
it was promulgated."
As correctly pointed out by respondents, this being a special civil action for Certiorari and Prohibition, we only need determine if NTC
acted without jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction in granting provisional authority to
ETCI under the NTC questioned Orders of 12 December 1988 and 8 May 1989.
The case was set for oral argument on 21 August 1990 with the parties directed to address, but not limited to, the following issues: (1)
the status and coverage of Rep. Act No. 2090 as a franchise; (2) the transfer of shares of stock of a corporation holding a CPCN; and
(3) the principle and procedure of interconnection. The parties were thereafter required to submit their respective Memoranda, with
which they have complied.
We find no grave abuse of discretion on the part of NTC, upon the following considerations:

1. NTC Jurisdiction
There can be no question that the NTC is the regulatory agency of the national government with jurisdiction over all
telecommunications entities. It is legally clothed with authority and given ample discretion to grant a provisional permit or authority. In
fact, NTC may, on its own initiative, grant such relief even in the absence of a motion from an applicant.
"Sec. 3. Provisional Relief. - Upon the filing of an application, complaint or petition or at any stage thereafter, the Board may grant
on motion of the pleaders or on its own initiative, the relief prayed for, based on the pleading, together with the affidavits and supporting
documents attached thereto, without prejudice to a final decision after completion of the hearing which shall be called within thirty (30)
days from grant of authority asked for." (Rule 15, Rules of Practice and Procedure Before the Board of Communications (now NTC).
What the NTC granted was such a provisional authority, with a definite expiry period of eighteen (18) months unless sooner renewed,
and which may be revoked, amended or revised by the NTC. It is also limited to Metro Manila only. What is more, the main
proceedings are clearly to continue as stated in the NTC Order of 8 May 1989.
The provisional authority was issued after due hearing, reception of evidence and evaluation thereof, with the hearings attended by
various oppositors, including PLDT. It was granted only after a prima facie showing that ETCI has the necessary legal, financial and
technical capabilities and that public interest, convenience and necessity so demanded.
PLDT argues, however, that a provisional authority is nothing short of a Certificate of Public Convenience and Necessity (CPCN) and
that it is merely a "distinction without a difference." That is not so. Basic differences do exist, which need not be elaborated on. What
should be borne in mind is that provisional authority would be meaningless if the grantee were not allowed to operate. Moreover, it is
clear from the very Order of 12 December 1988 itself that its scope is limited only to the first phase, out of four, of the proposed
nationwide telephone system. The installation and operation of an alfa numeric paging system was not authorized. The provisional
authority is not exclusive. Its lifetime is limited and may be revoked by the NTC at any time in accordance with law. The initial
expenditure of P130M more or less, is rendered necessary even under a provisional authority to enable ETCI to prove its capability.
And as pointed out by the Solicitor General, on behalf of the NTC, if what had been granted were a CPCN, it would constitute a final
order or award reviewable only by ordinary appeal to the Court of Appeals pursuant to Section 9(3) of BP Blg 129, and not by Certiorari
before this Court.
The final outcome of the application rests within the exclusive prerogative of the NTC. Whether or not a CPCN would eventually issue
would depend on the evidence to be presented during the hearings still to be conducted, and only after a full evaluation of the proof
thus presented.
2. The Coverage of ETCI's Franchise
Rep. Act No. 2090 grants ETCI (formerly FACI) "the right and privilege of constructing installing, establishing and operating in the entire
Philippines radio stations for reception and transmission of messages on radio stations in the foreign and domestic public fixed point-topoint and public base, aeronautical and land mobile stations, x x x with the corresponding relay stations for the reception and
transmission of wireless messages on radiotelegraphy and/or radiotelephony x x x." PLDT maintains that the scope of the franchise is
limited to "radio stations" and excludes telephone services such as the establishment of the proposed Cellular Mobile Telephone
System (CMTS). However, in its Order of 12 November 1987, the NTC construed the technical term "radiotelephony" liberally as to
include the operation of a cellular mobile telephone system. It said:
"In resolving the said issue, the Commission takes into consideration the different definitions of the term "radiotelephony." As defined
by the New International Webster Dictionary the term "radiotelephony" is defined as a telephony carried on by aid of radiowaves
without connecting wires. The International Telecommunications Union (ITU) defines a "radiotelephone call" as a "telephone call,
originating in or intended on all or part of its route over the radio communications channels of the mobile service or of the mobile
satellite service." From the above definitions, while under Republic Act 2090 a system-wide telephone or network of telephone service
by means of connecting wires may not have been contemplated, it can be construed liberally that the operation of a cellular mobile
telephone service which carries messages, either voice or record, with the aid of radiowaves or a part of its route carried over radio
communication channels, is one included among the services under said franchise for which a certificate of public convenience and
necessity may be applied for."

The foregoing is the construction given by an administrative agency possessed of the necessary special knowledge, expertise and
experience and deserves great weight and respect (Asturias Sugar Central, Inc. v. Commissioner of Customs, et al., L-19337,
September 30, 1969, 29 SCRA 617). It can only be set aside on proof of gross abuse of discretion, fraud, or error of law (Tupas Local
Chapter No. 979 v. NLRC, et al., L-60532-33, November 5, 1985, 139 SCRA 478). We discern none of those considerations sufficient
to warrant judicial intervention.
3. The Status of ETCI's Franchise
PLDT alleges that the ETCI franchise had lapsed into non-existence for failure of the franchise holder to begin and complete
construction of the radio system authorized under the franchise as explicitly required in Section 4 of its franchise, Rep. Act No. 2090.[1]
PDLT also invokes Pres. Decree No. 36, enacted on 2 November 1972, which legislates the mandatory cancellation or invalidation of
all franchises for the operation of communications services, which have not been availed of or used by the party or parties in whose
name they were issued.
However, whether or not ETCI, and before it FACI, in contravention of its franchise, started the first of its radio telecommunication
stations within two (2) years from the grant of its franchise and completed the construction within ten (10) years from said date; and
whether or not its franchise had remained unused from the time of its issuance, are questions of fact beyond the province of this Court,
besides the well-settled procedural consideration that factual issues are not proper subjects of a special civil action for Certiorari
(Central Bank of the Philippines vs. Court of Appeals, G. R. No. 41859, 8 March 1989, 171 SCRA 49; Ygay vs. Escareal, G. R. No.
44189, 8 February 1985, 135 SCRA 78; Filipino Merchant's Insurance Co., Inc. vs. Intermediate Appellate Court, G. R. No. 71640, 27
June 1988, 162 SCRA 669). Moreover, neither Section 4, Rep. Act No. 2090 nor Pres. Decree No. 36 should be construed as selfexecuting in working a forfeiture. Franchise holders should be given an opportunity to be heard, particularly so, where as in this case,
ETCI does not admit any breach, in consonance with the rudiments of fair play. Thus, the factual situation of this case differs from that
in Angeles Ry Co. vs. City of Los Angeles (92 Pacific Reporter 490) cited by PLDT, where the grantee therein admitted its failure to
complete the conditions of its franchise and yet insisted on a decree of forfeiture.
More importantly, PLDTs allegation partakes of a collateral attack on a franchise (Rep. Act No. 2090), which is not allowed. A franchise
is a property right and cannot be revoked or forfeited without due process of law. The determination of the right to the exercise of a
franchise, or whether the right to enjoy such privilege has been forfeited by non-user, is more properly the subject of the prerogative
writ of quo warranto, the right to assert which, as a rule, belongs to the State "upon complaint or otherwise" (Sections 1, 2 and 3, Rule
66, Rules of Court),[2] the reason being that the abuse of a franchise is a public wrong and not a private injury. A forfeiture of a
franchise will have to be declared in a direct proceeding for the purpose brought by the State because a franchise is granted by law
and its unlawful exercise is primarily a concern of Government.
"A ... franchise is granted by law, and its unlawful exercise is the concern primarily of the Government. Hence, the latter as a
rule is the party called upon to bring the action for such unlawful exercise of ... franchise." (IV-B V. FRANCISCO, 298 [1963 ed.],
citing Cruz vs. Ramos, 84 Phil. 226).
4. ETCI's Stock Transactions.
ETCI admits that in 1964, the Albertos, as original owners of more than 40% of the outstanding capital stock sold their holdings to the
Orbes. In 1968, the Albertos re-acquired the shares they had sold to the Orbes. In 1987, the Albertos sold more than 40% of their
shares to Horacio Yalung. Thereafter, the present stockholders acquired their ETCI shares. Moreover, in 1964, ETCI had increased its
capital stock from P40,000.00 to P360,000.00; and in 1987, from P360,000.00 to P40M.
PLDT contends that the transfers in 1987 of the shares of stock to the new stockholders amount to a transfer of ETCI's franchise, which
needs Congressional approval pursuant to Rep. Act No. 2090, and since such approval had not been obtained, ETCIs franchise had
been invalidated. The provision relied on reads, in part, as follows:
SECTION 10. The grantee shall not lease, transfer, grant the usufruct of, sell or assign this franchise nor the rights and privileges
acquired thereunder to any person, firm, company, corporation or other commercial or legal entity nor merge with any other person,
company or corporation organized for the same purpose, without the approval of the Congress of the Philippines first had. x x x."

It should be noted, however, that the foregoing provision is directed to the "grantee" of the franchise, which is the corporation itself, and
refers to a sale, lease, or assignment of that franchise. It does not include the transfer or sale of shares of stock of a corporation by the
latter's stockholders.
The sale of shares of stock of a public utility is governed by another law, i.e., Section 20(h) of the Public Service Act (Commonwealth
Act No. 146). Pursuant thereto, the Public Service Commission (now the NTC) is the government agency vested with the authority to
approve the transfer of more than 40% of the subscribed capital stock of a telecommunications company to a single transferee, thus:
SEC. 20. Acts requiring the approval of the Commission. Subject to established limitations and exceptions and saving provisions to
the contrary, it shall be unlawful for any public service or for the owner, lessee or operator thereof, without the approval and
authorization of the Commission previously had
x

(h) To sell or register in its books the transfer or sale of shares of its capital stock, if the result of that sale in itself or in connection
with another previous sale, shall be to vest in the transferee more than forty per centum of the subscribed capital, of said public service.
Any transfer made in violation of this provision shall be void and of no effect and shall not be registered in the books of the public
service corporation. Nothing herein contained shall be construed to prevent the holding of shares lawfully acquired. (As amended by
Com. Act No. 454)."
In other words, transfers of shares of a public utility corporation need only NTC approval, not Congressional authorization. What
transpired in ETCI were a series of transfers of shares starting in 1964 until 1987. The approval of the NTC may be deemed to have
been met when it authorized the issuance of the provisional authority to ETCI. There was full disclosure before the NTC of the
transfers. In fact, the NTC Order of 12 November 1987 required ETCI to submit its "present capital and ownership structure." Further,
ETCI even filed a Motion before the NTC, dated 8 December 1987, or more than a year prior to the grant of provisional authority,
seeking approval of the increase in its capital stock from P360,000.00 to P40M, and the stock transfers made by its stockholders.
A distinction should be made between shares of stock, which are owned by stockholders, the sale of which requires only NTC approval,
and the franchise itself which is owned by the corporation as the grantee thereof, the sale or transfer of which requires Congressional
sanction. Since stockholders own the shares of stock, they may dispose of the same as they see fit. They may not, however, transfer
or assign the property of a corporation, like its franchise. In other words, even if the original stockholders had transferred their shares
to another group of shareholders, the franchise granted to the corporation subsists as long as the corporation, as an entity, continues to
exist. The franchise is not thereby invalidated by the transfer of the shares. A corporation has a personality separate and distinct from
that of each stockholder. It has the right of continuity or perpetual succession (Corporation Code, Sec. 2).
To all appearances, the stock transfers were not just for the purpose of acquiring the ETCI franchise, considering that, as heretofore
stated, a series of transfers was involved from 1964 to 1987. And, contrary to PLDTs assertion, the franchise was not the only
property of ETCI of meaningful value. The "zero" book value of ETCI assets, as reflected in its balance sheet, was plausibly explained
as due to the accumulated depreciation over the years entered for accounting purposes and was not reflective of the actual value that
those assets would command in the market.
But again, whether ETCI has offended against a provision of its franchise, or has subjected it to misuse or abuse, may more properly
be inquired into in quo warranto proceedings instituted by the State. It is the condition of every franchise that it is subject to
amendment, alteration, or repeal when the common good so requires (1987 Constitution, Article XII, Section 11).
5. The NTC Interconnection Order
In the provisional authority granted by NTC to ETCI, one of the conditions imposed was that the latter and PLDT were to enter into an
interconnection agreement to be jointly submitted to NTC for approval.
PLDT vehemently opposes interconnection with its own public switched telephone network. It contends: that while PLDT welcomes
interconnections in the furtherance of public interest, only parties who can establish that they have valid and subsisting legislative

franchises are entitled to apply for a CPCN or provisional authority, absent which, NTC has no jurisdiction to grant them the CPCN or
interconnection with PLDT; that the 73 telephone systems operating all over the Philippines have a viability and feasibility independent
of any interconnection with PLDT; that "the NTC is not empowered to compel such a private raid on PLDT's legitimate income arising
out of its gigantic investment;" that "it is not public interest, but purely a private and selfish interest which will be served by an
interconnection under ETCI's terms;" and that "to compel PLDT to interconnect merely to give viability to a prospective competitor,
which cannot stand on its own feet, cannot be justified in the name of a non-existent public need" (PLDT Memorandum, pp. 48 and 50).
PLDT cannot justifiably refuse to interconnect.
Rep. Act No. 6849, or the Municipal Telephone Act of 1989, approved on 8 February 1990, mandates interconnection providing as it
does that all domestic telecommunications carriers or utilities x x x shall be interconnected to the public switch telephone network.
Such regulation of the use and ownership of telecommunications systems is in the exercise of the plenary police power of the State for
the promotion of the general welfare. The 1987 Constitution recognizes the existence of that power when it provides:
"SEC. 6. The use of property bears a social function, and all economic agents shall contribute to the common good. Individuals and
private groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own, establish, and
operate economic enterprises, subject to the duty of the State to promote distributive justice and to intervene when the common good
so demands" (Article XII).
The interconnection which has been required of PLDT is a form of "intervention" with property rights dictated by the objective of
government to promote the rapid expansion of telecommunications services in all areas of the Philippines, x x x to maximize the use of
telecommunications facilities available, x x x in recognition of the vital role of communications in nation building x x x and to ensure that
all users of the public telecommunications service have access to all other users of the service wherever they may be within the
Philippines at an acceptable standard of service and at reasonable cost (DOTC Circular No. 90-248). Undoubtedly, the encompassing
objective is the common good. The NTC, as the regulatory agency of the State, merely exercised its delegated authority to regulate the
use of telecommunications networks when it decreed interconnection.
The importance and emphasis given to interconnection dates back to Ministry Circular No. 82-81, dated 6 December 1982, providing:
"Sec. 1. That the government encourages the provision and operation of public mobile telephone service within local sub-base
stations, particularly, in the highly commercialized areas;
"Sec. 5. That, in the event the authority to operate said service be granted to other applicants, other than the franchise holder, the
franchise operator shall be under obligation to enter into an agreement with the domestic telephone network, under an interconnection
agreement;"
Department of Transportation and Communication (DOTC) Circular No. 87-188, issued in 1987, also decrees:
"12. All public communications carriers shall interconnect their facilities pursuant to comparatively efficient interconnection (CEI) as
defined by the NTC in the interest of economic efficiency."
The sharing of revenue was an additional feature considered in DOTC Circular No. 90-248, dated 14 June 1990, laying down the
"Policy on Interconnection and Revenue Sharing by Public Communications Carriers," thus:
"WHEREAS, it is the objective of government to promote the rapid expansion of telecommunications services in all areas of the
Philippines;
"WHEREAS, there is a need to maximize the use of telecommunications facilities available and encourage investment in
telecommunications infrastructure by suitably qualified service providers;
"WHEREAS, in recognition of the vital role of communications in nation building, there is a need to ensure that all users of the public
telecommunications service have access to all other users of the service wherever they may be within the Philippines at an acceptable
standard of service and at reasonable cost.

"WHEREFORE, x x x the following Department policies on interconnection and revenue sharing are hereby promulgated:
1. All facilities offering public telecommunication services shall be interconnected into the nationwide telecommunications network/s.
xxx

xxx

xxx

4. The interconnection of networks shall be effected in a fair and non-discriminatory manner and within the shortest timeframe
practicable.
5. The precise points of interface between service operators shall be as defined by the NTC, and the apportionment of costs and
division of revenues resulting from interconnection of telecommunications networks shall be as approved and/or prescribed by the
NTC.
xxx

xxx

x x x

Since then, the NTC, on 12 July 1990, issued Memorandum Circular No. 7-13-90 prescribing the "Rules and Regulations Governing
the Interconnection of Local Telephone Exchanges and Public Calling Offices with the Nationwide Telecommunications Network/s, the
Sharing of Revenue Derived Therefrom, and for Other Purposes."
The NTC order to interconnect allows the parties themselves to discuss and agree upon the specific terms and conditions of the
interconnection agreement instead of the NTC itself laying down the standards of interconnection which it can very well impose. Thus it
is that PLDT cannot justifiably claim denial of due process. It has been heard. It will continue to be heard in the main proceedings. It
will surely be heard in the negotiations concerning the interconnection agreement.
As disclosed during the hearing, the interconnection sought by ETCI is by no means a "parasitic dependence" on PLDT. The ETCI
system can operate on its own even without interconnection, but it will be limited to its own subscribers. What interconnection seeks to
accomplish is to enable the system to reach out to the greatest number of people possible in line with governmental policies laid down.
Cellular phones can access PLDT units and vice versa in as wide an area as attainable. With the broader reach, public interest and
convenience will be better served. To be sure, ETCI could provide no mean competition (although PLDT maintains that it has nothing
to fear from the "innocuous interconnection"), and eat into PLDT's own toll revenue ("cream PLDT revenue," in its own words), but all
for the eventual benefit of all that the system can reach.
6. Ultimate Considerations.
The decisive considerations are public need, public interest, and the common good. Those were the overriding factors which motivated
NTC in granting provisional authority to ETCI. Article II, Section 24 of the 1987 Constitution, recognizes the vital role of communication
and information in nation building. It is likewise a State policy to provide the environment for the emergence of communications
structures suitable to the balanced flow of information into, out of, and across the country (Article XVI, Section 10, ibid.). A modern and
dependable communications network rendering efficient and reasonably priced services is also indispensable for accelerated economic
recovery and development. To these public and national interests, public utility companies must bow and yield.
Despite the fact that there is a virtual monopoly of the telephone system in the country at present, service is sadly inadequate.
Customer demands are hardly met, whether fixed or mobile. There is a unanimous cry to hasten the development of a modern,
efficient, satisfactory and continuous telecommunications service not only in Metro Manila but throughout the archipelago. The need
therefor was dramatically emphasized by the destructive earthquake of 16 July 1990. It may be that users of the cellular mobile
telephone would initially be limited to a few and to highly commercialized areas. However, it is a step in the right direction towards the
enhancement of the telecommunications infrastructure, the expansion of telecommunications services in, hopefully, all areas of the
country, with chances of complete disruption of communications minimized. It will thus impact on the total development of the country's
telecommunications systems and redound to the benefit of even those who may not be able to subscribe to ETCI.
Free competition in the industry may also provide the answer to a much-desired improvement in the quality and delivery of this type of
public utility, to improved technology, fast and handy mobile service, and reduced user dissatisfaction. After all, neither PLDT nor any

other public utility has a constitutional right to a monopoly position in view of the Constitutional proscription that no franchise certificate
or authorization shall be exclusive in character or shall last longer than fifty (50) years (ibid., Section 11; Article XIV, Section 5, 1973
Constitution; Article XIV, Section 8, 1935 Constitution). Additionally, the State is empowered to decide whether public interest demands
that monopolies be regulated or prohibited (1987 Constitution, Article XII, Section 19).
WHEREFORE, finding no grave abuse of discretion, tantamount to lack of or excess of jurisdiction, on the part of the National
Telecommunications Commission in issuing its challenged Orders of 12 December 1988 and 8 May 1989 in NTC Case No. 87-39, this
Petition is DISMISSED for lack of merit. The Temporary Restraining Order heretofore issued is LIFTED. The bond issued as a
condition for the issuance of said restraining Order is declared forfeited in favor of private respondent Express Telecommunications
Co., Inc.
Costs against petitioner.
SO ORDERED.
Paras, Feliciano, Padilla, Sarmiento, Cortes, Grino-Aquino, and Regalado, JJ., concur.
Fernan, C.J. and Narvasa, J., join J. Gutierrez, Jr., and J. Cruz in their separate dissenting opinion.
Gancayco, Bidin, and Medialdea, JJ., join J. Gutierrez, Jr., in his dissenting opinion.

347 Phil. 1
EN BANC
[ G.R. No. 124360, December 03, 1997 ]
FRANCISCO S. TATAD, PETITIONER, VS. THE SECRETARY OF THE DEPARTMENT OF ENERGY AND THE SECRETARY OF
THE DEPARTMENT OF FINANCE, RESPONDENTS.
[ G.R. No. 127867 ]
EDCEL C. LAGMAN, JOKER P. ARROYO, ENRIQUE GARCIA, WIGBERTO TAADA, FLAG HUMAN RIGHTS FOUNDATION, INC.,
FREEDOM FROM DEBT COALITION (FDC), SANLAKAS, PETITIONERS, VS. HON. RUBEN TORRES IN HIS CAPACITY AS THE
EXECUTIVE SECRETARY, HON. FRANCISCO VIRAY, IN HIS CAPACITY AS THE SECRETARY OF ENERGY, CALTEX
PHILIPPINES, INC., PETRON CORPORATION, AND PILIPINAS SHELL CORPORATION, RESPONDENTS.
EASTERN PETROLEUM CORP., SEAOIL PETROLEUM CORP., SUBIC BAY DISTRIBUTION, INC., TWA, INC., AND DUBPHIL
GAS, MOVANTS-IN-INTERVENTION.
RESOLUTION
PUNO, J.:
For resolution are: (1) the motion for reconsideration filed by the public respondents; and (2) the partial motions for reconsideration filed
by petitioner Enrique T. Garcia and the intervenors.[1]
In their Motion for Reconsideration, the public respondents contend:
I
"Executive Order No. 392 is not a misapplication of Republic Act No. 8180;
II
Sections 5(b), 6 and 9(b) of Republic Act No. 8180 do not contravene Section 19, Article XII of the Constitution; and
III
Sections 5(b), 6 and 9(b) of R.A. No. 8180 do not permeate the essence of the said law; hence their nullity will not vitiate the other
parts thereof."
In their motion for Reconsideration, the intervenors argue:
"2.1.1
The total nullification of Republic Act No. 8180 restores the disproportionate advantage of the three big oil firms Caltex, Shell and
Petron over the small oil firms;
2.1.2
The total nullification of Republic Act. No. 8180 "disarms" the new entrants and seriously cripples their capacity to compete and
grow; and
2.1.3
Ultimately the total nullification of Republic Act No. 8180 removes substantial, albeit imperfect, barriers to monopolistic practices and
unfair competition and trade practices harmful not only to movant-intervernors but also to the public in general."

In his Partial Motion for Reconsideration,[2] petitioner Garcia prays that only the provisions of R.A. No. 8180 on the 4% tariff differential,
predatory pricing and minimum inventory be declared unconstitutional. He cites the "pernicious effects" of a total declaration of
unconstitutionality of R.A. No. 8180. He avers that "it is very problematic xxx if Congress can fasttrack an entirely new law."
We find no merit in the motions for reconsideration and partial motion for reconsideration.
We shall first resolve public respondents' motion for reconsideration. They insist that there was no misapplication of Republic Act. No.
8180 when the Executive considered the depletion of the OPSF in advancing the date of full deregulation of the downstream oil
industry. They urge that the consideration of this factor did not violate the rule that exercise of delegated power must be done strictly in
accord with the standard provided in the law. They contend that the rule prohibits the Executive from subtracting but not from adding to
the standard set by Congress. This hair splitting is a sterile attempt to make a distinction when there is no difference. The choice and
crafting of the standard to guide the exercise of delegated power is part of the lawmaking process and lies within the exclusive
jurisdiction of Congress. The standard cannot be altered in any way by the Executive for the Executive cannot modify the will of the
Legislature. To be sure, public respondents do not cite any authority to support its strange thesis for there is none in our jurisprudence.
The public respondents next recycle their arguments that Sections 5(b), 6 and 9(b) of R.A. No. 8180 do not contravene Section 19,
Article XII of the Constitution.[3] They reiterate that the 4% tariff differential would encourage the construction of new refineries which
will benefit the country for they use Filipino labor and goods. We have rejected this submission for a reality check will reveal that this
4% tariff differential gives a decisive edge to the existing oil companies even as it constitutes a substantial barrier to the entry of
prospective players. We do not agree with the public respondents that there is no empirical evidence to support this ruling. In the recent
hearing of the Senate Committee on Energy chaired by Senator Freddie Webb, it was established that the 4% tariff differential on crude
oil and refined petroleum importation gives a 20-centavo per liter advantage to three big oil companies over the new players. It was
also found that said tariff differential serves as a protective shield for the big oil companies.[4] Nor do we approve public respondents'
submission that the entry of new players after deregulation is proof that the 4% tariff differential is not a heavy disincentive. Acting as
the mouthpiece of the new players, public respondents even lament that "unfortunately, the opportunity to get the answer right from the
'horses' mouth' eluded this Honorable Court since none of the new players supposedly adversely affected by the assailed provisions
came forward to voice their position."[5] They need not continue their lamentation. The new players represented by Eastern Petroleum,
Seaoil Petroleum Corporation, Subic Bay Distribution, Inc., TWA Inc., and DubPhil Gas have intervened in the cases at bar and have
spoken for themselves. In their motion for intervention, they made it crystal clear that it is not their intention "xxx to seek the reversal of
the Court's nullification of the 4% differential in Section 5(b) nor of the inventory requirement of Section 6, nor of the prohibition of
predatory pricing in Section 9(b)."[6] They stressed that they only protest the restoration of the 10% oil tariff differential under the Tariff
Code.[7] The horse's mouth therefore authoritatively tells us that the new players themselves consider the 4% tariff differential in R.A.
No. 8180 as oppressive and should be nullified.
To give their argument a new spin, public respondents try to justify the 4% tariff differential on the ground that there is a substantial
difference between a refiner and an importer just as there is difference between raw material and finished product. Obviously, the effort
is made to demonstrate that the unequal tariff does not violate the equal protection clause of the Constitution. The effort only proves
that the public respondents are still looking at the issue of tariff differential from wrong end of the telescope. Our Decision did not hold
that the 4% tariff differential infringed the equal protection clause of the Constitution even as this was contended by petitioner Tatad.[8]
Rather, we held that said tariff differential substantially occluded the entry point of prospective players in the downstream oil industry.
We further held that its inevitable result is to exclude fair and effective competition and to enhance the monopolists' ability to tamper
with the mechanism of a free market. This consideration is basic in anti-trust suits and cannot be eroded by belaboring the inapplicable
principle in taxation that different things can be taxed differently.
The public respondents tenaciously defend the validity of the minimum inventory requirement. They aver that the requirement will not
prejudice new players "xxx during their first year of operation because they do not have yet annual sales from which the required
minimum inventory may be determined. Compliance with such requirement on their second and succeeding years of operation will not
be difficult because the putting up of storage facilities in proportion to the volume of their business becomes an ordinary and necessary
business undertaking just as the case of importers of finished products in other industries."[9] The contention is an old one although it is
purveyed with a new lipstick. The contention cannot convince for as well articulated by petitioner Garcia, "the prohibitive cost of the
required minimum inventory will not be any less burdensome on the second, third, fourth, etc. years of operations. Unlike most products
which can be imported and stored with facility, oil imports require ocean receiving, storage facilities. Ocean receiving terminals are
already very expensive, and to require new players to put up more than they need is to compound and aggravate their costs, and

consequently their great disadvantage vis-a-vis the Big 3."[10] Again, the argument on whether the minimum inventory requirement
seriously hurts the new players is best settled by hearing the new players themselves. In their motion for intervention, they implicitly
confirmed that the high cost of meeting the inventory requirement has an inhibiting effect in their operation and hence, they support the
ruling of this Court striking it down as unconstitutional.
Public respondents still maintain that the provision on predatory pricing does not offend the Constitution. Again, their argument is not
fresh though embellished with citations of cases in the United States sustaining the validity of sales-below-costs statutes.[11] A quick
look at these American cases will show that they are inapplicable. R.A. No. 8180 has a different cast. As discussed, its provisions on
tariff differential and minimum inventory erected high barriers to the entry of prospective players even as they raised their new rivals'
costs, thus creating the clear danger that the deregulated market in the downstream oil industry will not operate under an atmosphere
of free and fair competition. It is certain that lack of real competition will allow the present oil oligopolists to dictate prices,[12] and can
entice them to engage in predatory pricing to eliminate rivals. The fact that R.A. No. 8180 prohibits predatory pricing will not dissolve
this clear danger. In truth, its definition of predatory pricing is too loose to be real deterrent. Thus, one of the law's principal authors,
Congressman Dante O. Tinga filed H.B. No. 10057 where he acknowledged in its explanatory note that "the definition of predatory
pricing xxx needs to be tightened up particularly with respect to the definitive benchmark price and the specific anti-competitive intent.
The definition in the bill at hand which was taken from the Areeda-Turner test in the United States on predatory pricing resolves the
questions." Following the more effective Areeda-Turner test, Congressman Tinga has proposed to redefine predatory pricing, viz.:
"Predatory pricing means selling or offering to sell any oil product at a price below the average variable cost for the purpose of
destroying competition, eliminating a competitor or discouraging a competitor from entering the market."[13] In light of its loose
characterization in R.A. 8180 and the law's anti-competitive provisions, we held that the provision on predatory pricing is constitutionally
infirmed for it can be wielded more successfully by the oil oligopolists. Its cumulative effect is to add to the arsenal of power of the
dominant oil companies. For as structured, it has no more than the strength of a spider web it can catch the weak but cannot catch
the strong; it can stop the small oil players but cannot stop the big oil players from engaging in predatory pricing.
Public respondents insist on their thesis that the cases at bar actually assail the wisdom of R.A. No. 8180 and that this Court should
refrain from examining the wisdom of legislations. They contend that R.A. No. 8180 involves an economic policy which this Court
cannot review for lack of power and competence. To start with, no school of scholars can claim any infallibility. Historians with undefiled
learning have chronicled[14] over the years the disgrace of many economists and the fall of one economic dogma after another. Be that
as it may, the Court is aware that the principle of separation of powers prohibits the judiciary from interferring with the policy setting
function of the legislature.[15] For this reason we italicized in our Decision that the Court did not review the wisdom of R.A. No. 8180
but its compatibility with the Constitution; the Court did not annul the Economic policy of deregulation but vitiated its aspects which
offended the constitutional mandate on fair competition. It is beyond debate that the power of Congress to enact laws does not include
the right to pass unconstitutional laws. In fine, the Court did not usurp the power of Congress to enact laws but merely discharged its
bounden duty to check the constitutionality of laws when challenged in appropriate cases. Our Decision annulling R.A. No. 8180 is
justified by the principle of check and balance.
We hold that the power and obligation of this Court to pass upon the constitutionality of laws cannot be defeated by the fact that the
challenged law carries serious economic implications. This Court has struck down laws abridging the political and civil rights of our
people even if it has to offend the other more powerful branches of government. There is no reason why the Court cannot strike down
R.A. No. 8180 that violates the economic rights of our people even if it has to bridle the liberty of big business within reasonable
bounds. In Alalayan vs. National Power Corporation[16] the Court, speaking thru Mr. Chief Justice Enrique M. Fernando, held:
"2. Nor is petitioner anymore successful in his plea for the nullification of the challenged provision on the ground of his being
deprived of the liberty to contract without due process of law.
It is to be admitted of course that property rights find shelter in specific constitutional provisions, one of which is the due process
clause. It is equally certain that our fundamental law framed at a time of "surging unrest and dissatisfaction," when there was a fear
expressed in many quarters that a constitutional democracy, in view of its commitment to the claims of property, would not be able to
cope effectively with the problems of poverty and misery that unfortunately afflict so many of our people, is not susceptible to the
indictment that the government therein established is impotent to take the necessary remedial measures. The framers saw to that. The
welfare state concept is not alien to the philosophy of our Constitution. It is implicit in quite a few of its provisions. It suffices to mention
two.

There is the clause on the promotion of social justice to ensure the well-being and economic security of all the people, as well as the
pledge of protection to labor with the specific authority to regulate the relations between landowners and tenants and between labor
and capital. This particularized reference to the rights of working men whether in industry and agriculture certainly cannot preclude
attention to and concern for the rights of consumers, who are the objects of solicitude in the legislation now complained of. The police
power as an attribute to promote the common weal would be diluted considerably of its reach and effectiveness if on the mere plea that
the liberty to contract would be restricted, the statute complained of may be characterized as a denial of due process. The right to
property cannot be pressed to such an unreasonable extreme.
It is understandable though why business enterprises, not unnaturally evincing lack of enthusiasm for police power legislation that
affect them adversely and restrict their profits could predicate alleged violation of their rights on the due process clause, which as
interpreted by them is a bar to regulatory measures. Invariably, the response from this Court, from the time the Constitution was
enacted, has been far from sympathetic. Thus, during the Commonwealth, we sustained legislations providing for collective bargaining,
security of tenure, minimum wages, compulsory arbitration, and tenancy regulation. Neither did the objections as to the validity of
measures regulating the issuance of securities and public services prevail."
The Constitution gave this Court the authority to strike down all laws that violate the Constitution.[17] It did not exempt from the reach of
this authority laws with economic dimension. A 20-20 vision will show that the grant by the Constitution to this Court of this all important
power of review is written without any fine print.
The next issue is whether the Court should only declare as unconstitutional the provisions of R.A. No. 8180 on 4% tariff differential,
minimum inventory and predatory pricing.
Positing the affirmative view, petitioner Garcia proffered the following arguments:
"5. Begging the kind indulgence and benign patience of the Court, we humbly submit that the unconstitutionality of the
aforementioned provisions of R.A. No. 8180 implies that the other provisions are constitutional. Thus, said constitutional provisions of
R.A. No. 8180 may and can very well be spared.
5.1 With the striking down of 'ultimately full deregulation,' we will simply go back to the transition period under R.A. 8180 which will
continue until Congress enacts an amendatory law for the start of full oil deregulation in due time, when free market forces are already
in place. In turn, the monthly automatic price control mechanism based on Singapore Posted Prices (SPP) will be revived. The energy
Regulatory Board (ERB), which still exists, would re-acquire jurisdiction and would easily compute the monthly price ceiling, based on
SPP, of each and every petroleum fuel product, effective upon finality of this Court's favorable resolution on this motion for partial
reconsideration.
5.2 Best of all, the oil deregulation can continue uninterrupted without the three other assailed provisions, namely, the 4% tariff
differential, predatory pricing and minimum inventory.
6. We further humbly submit that a favorable resolution on this motion for partial reconsideration would be consistent with public
interest.
6.1 In consequence, new players that have already come in can uninterruptedly continue their operations more competitively and
bullishly with an even playing field.
6.2 Further, an even playing field will attract many more new players to come in in a much shorter time.
6.3 Correspondingly, Congress does not anymore have to pass a new deregulation law, thus it can immediately concentrate on
just amending R.A. No. 8180 to abolish the OPSF, on the government's assumption that it is necessary to do so. Parenthetically, it is
neither correct nor fair for high government officials to criticize and blame the Honorable Court on the OPSF, considering that said
OPSF is not inherent in nor necessary to the transition period and may be removed at any time.
6.4 In as much as R.A. No. 8180 would continue to be in place (sans its unconstitutional provision), only the Comprehensive Tax
Reform Package (CTRP) would be needed for the country to exit from IMF by December 1997.

7. The Court, in declaring the entire R.A. No. 8180 unconstitutional, was evidently expecting that Congress "can fasttrack the writing
of a new law on oil deregulation in accord with the Constitution" (Decision, p. 38). However, it is very problematic, to say the least, if
Congress can fasttrack an entirely new law.
7.1 There is already limited time for Congress to pass such a new law before it adjourns for the 1998 elections.
7.2 At the very least, whether or not Congress will be able to fasttrack the enactment of a new oil deregulation law consistent with
the Honorable Court's ruling, would depend on many unforseeable and uncontrollable factors. Already, several statements from
legislators, senators and congressmen alike, say that the new law can wait because of other pending legislative matters, etc. Given the
"realities" of politics, especially with the 1998 presidential polls six months away, it is not far-fetched that the general welfare could be
sacrificed to gain political mileage, thus further unduly delaying the enactment of a new oil deregulation law.
8. Furthermore, if the entire R.A. No. 8180 remains nullified as unconstitutional, the following pernicious effects will happen:
8.1 Until the new oil deregulation law is enacted, we would have to go back to the old law. This means full regulation, i.e., higher
tariff differential of 10%, higher petroleum product price ceilings based on transfer prices of imported crude oil, and restrictions on the
importation of refined petroleum products that would be allowed only if there are shortages, etc.
8.2 In consequence of the above, the existing new players, would have to totally stop their operations.
8.3 The existing new players would find themselves in a bind on how to fulfill their contractual obligations, especially on their
delivery commitments of petroleum fuel products. They will be in some sort of "limbo" upon the nullification of the entire R.A. No. 8180.
8.4 The investments that existing new players have already made would become idle and unproductive. All their planned
additional investments would be put on hold.
8.5 Needless to say, all this would translate into tremendous losses for them.
8.6 And obviously, prospective new players cannot and will not come in.
8.7 On top of everything, public interest will suffer. Firstly, the oil deregulation program will be delayed. Secondly, the prices of
petroleum products will be higher because of price ceilings based on transfer prices of imported crude.
9. When it passed R.A. No. 8180, Congress provided a safeguard against the possibility that any of its provisions could be declared
unconstitutional, thus the separability clause thereof, which the Court noted (Decision, p. 29). We humbly submit that this is another
reason to grant this motion for partial reconsideration.
In his Supplement to Urgent Motion for Partial Reconsideration, petitioner Garcia amplified his contentions.
In a similar refrain, the public respondents contend that the "unmistakable intention of Congress" is to make each and every provision
of R.A. No. 8180 "independent and separable from one another." To bolster this proposition, they cite the separability clause of the law
and the pending bills in Congress proposing to repeal said offensive provisions but not the entire law itself. They also recite the
"inevitable consequences of the declaration of unconstitutionality of R.A. No. 8180" as follows:
"1.
There will be bigger price adjustments in petroleum products due to (a) the reimposition of the higher tariff rates for imported crude
oil and imported refined petroleum products [10%-20%], (b) the uncertainty regarding R.A. 8184, or the "Oil Tariff Law," which simplified
tax administration by lowering the tax rates for socially-sensitive products such as LPG, diesel, fuel oil and kerosene, and increasing
tax rates of gasoline products which are used mostly by consumers who belong to the upper income group, and (c) the issue of wiping
out the deficit of P2.6 billion and creating a subsidy fund in the Oil Price Stabilization Fund;
2.

Importers, traders, and industrial end-users like the National Power Corporation will be constrained to source their oil requirement
only from existing oil companies because of the higher tariff on imported refined petroleum products and restrictions on such
importation that would be allowed only if there are shortages;
3.
Government control and regulation of all the activities of the oil industry will discourage prospective investors and drive away the
existing new players;
4.
All expansion and investment programs of the oil companies and new players will be shelved indefinitely;
5.
Petitions for price adjustment should be filed and approved by the ERB."
Joining the chorus, the intervenors contend that:
"2.1.1 The total nullification of Republic Act No. 8180 restores the disproportionate advantage of the three big oil firms Caltex,
Shell and Petron over the small oil firms;
2.1.2 The total nullification of Republic Act No. 8180 "disarms" the new entrants and seriously cripples their capacity to compete and
grow; and
2.1.3 Ultimately, the total nullification of Republic Act No. 8180 removes substantial, albeit imperfect, barriers to monopolistic
practices and unfair competition and trade practices harmful not only to movant-intervenors but also to the public in general."
The intervenors further aver that under a regime of regulation, (1) the big oil firms can block oil importation by small oil firms; (2) the big
oil firms can block the expansion and growth of the small oil firms. They likewise submit that the provisions on tariff differential,
minimum inventory, predatory pricing are separable from the body of R.A. No. 8180 because of its separability clause. They also allege
that their separability is further shown by the pending bills in the Congress which only seek the partial repeal of R.A. No. 8180.
We shall first resolve petitioner Garcia's linchpin contention that the full deregulation decreed by R.A. No. 8180 to start at the end of
March 1997 is unconstitutional. For prescinding from this premise, petitioner suggests that "we simply go back to the transition period
under R.A. No. 8180. Under the transition period, price control will be revived through the automatic pricing mechanism based on
Singapore Posted Prices. The Energy Regulatory Board xxx would play a limited and ministerial role of computing the monthly price
ceiling of each and every petroleum fuel product, using the automatic pricing formula. While the OPSF would return, this coverage
would be limited to monthly price increases in excess of P0.50 per liter."
We are not impressed by petitioner Garcia's submission. Petitioner has no basis in condemning as unconstitutional per se the date
fixed by Congress for the beginning of the full deregulation of the downstream oil industry. Our Decision merely faulted the Executive
for factoring the depletion of OPSF in advancing the date of full deregulation to February 1997. Nonetheless, the error of the Executive
is now a non-issue for the full deregulation set by Congress itself at the end of March 1997 has already come to pass. March 1997 is
not an arbitrary date. By that date, the transition period has ended and it was expected that the people would have adjusted to the role
of market forces in shaping the prices of petroleum and its products. The choice of March 1997 as the date of full deregulation is a
judgement of Congress and its judgment call cannot be impugned by this Court.
We come to the submission that the provisions on 4% tariff differential, minimum inventory and predatory pricing are separable from the
body of R.A. No. 8180, and hence, should alone be declared as unconstitutional. In taking this position, the movants rely heavily on the
separability provision of R.A. No. 8180. We cannot affirm the movants for to determine whether or not a particular provision is
separable, the courts should consider the intent of the legislature. It is true that most of the time, such intent is expressed in a
separability clause stating that the invalidity or unconstitutionality of any provision or section of the law will not affect the validity or
constitutionality of the remainder. Nonetheless, the separability clause only creates a presumption that the act is severable. It is merely
an aid in statutory construction. It is not inexorable command.[18] A separability clause does not clothe the valid parts with immunity
from the invalidating effect the law gives to the inseparable blending of the bad with the good. The separability clause cannot also be

applied if it will produce an absurd result.[19] In sum, if the separation of the statute will defeat the intent of the legislature, separation
will not take place despite the inclusion of a separability clause in the law.[20]
In the case of Republic Act No. 8180, the unconstitutionality of the provisions on tariff differential, minimum inventory and predatory
pricing cannot but result in the unconstitutionality of the entire law despite its separability clause. These provisions cannot be struck
down alone for they were the ones intended to carry out the policy of the law embodied in Section 2 thereof which reads:
Sec. 2. Declaration of Policy. It shall be the policy of the State to deregulate the downstream oil industry to foster a truly
competitive market which can better achieve the social policy objectives of fair prices and adequate, continuous supply of
environmentally-clean and high-quality petroleum products.
They actually set the stage for the regime of deregulation where government will no longer intervene in fixing the price of oil and the
operations of oil companies. It is conceded that the success of deregulation lies in a truly competitive market and there can be no
competitive market without the easy entry and exit of competitors. No less than President Fidel V. Ramos recognized this matrix when
he declared that the need is to "x x x recast our laws on trust, monopolies, oligopolies, cartels and combinations injurious to public
welfare to restore competition where it has disappeared and to preserve it where it still exists. In a word, we need to perpetuate
competition as a system to regulate the economy and achieve global product quality."[21]
We held in our Decision that the provisions on 4% tariff differential, minimum inventory and predatory pricing are anti-competition, and
they are the key provisions of R.A. No. 8180. Without these provisions in place, Congress could not have deregulated the downstream
oil industry. Consider the 4% tariff differential on crude oil and refined petroleum. Before R.A. No. 8180,[22] there was a ten-point
difference between the tariff imposed on crude oil and that on refined petroleum. Section 5(b) of R.A. No. 8180 lowered the difference
to four by imposing a 3% tariff on crude oil and a 7% tariff on refined petroleum. We ruled, however, that this reduced tariff differential is
unconstitutional for it still posed a substantial barrier to the entry of new players and enhanced the monopolistic power of the three
existing oil companies. The ruling that the 4% differential is unconstitutional will unfortunately revive the 10% tariff differential of the
Tariff and Customs Code. The high 10% tariff differential will certainly give a bigger edge to the three existing oil companies, will form
an insuperable barrier to prospective players, and will drive out of business the new players. Thus, there can be no question that
Congress will not allow deregulation if the tariff is 10% on crude oil and 20% on refined petroleum. To decree the partial
unconstitutionality of R.A. No. 8180 will bring about an absurdity a fully deregulated downstream oil industry where government is
impotent to regulate run away prices, where the oil oligopolists can engage in cartelization without competition, where prospective
players cannot come in, and where new players will close shop.
We also reject the argument that the bills pending in Congress merely seek to remedy the partial defects of R.A. No. 8180, and that this
is proof that R.A. No. 8180 can be declared unconstitutional minus its offensive provisions. We referred to the pending bills in Congress
in our Decision only to show that Congress itself is aware of the various defects of the law and not to prove the inseparability of the
offending provisions from the body of R.A. No. 8180. To be sure, movants even overlooked the fact that resolutions have been filed in
both Houses of Congress calling for a total review of R.A. No. 8180.
The movants warn that our Decision will throw us back to the undesirable regime of regulation. They emphasize its pernicious
consequences the revival of the 10% tariff differential which will wipe out the new players, the return of the OPSF which is too
burdensome to government, the unsatisfactory scheme of price regulation by the ERB, etc. To stress again, it is not the will of the Court
to return even temporarily to the regime of regulation. If we return to the regime of regulation, it is because it is the inevitable
consequence of the enactment by Congress of an unconstitutional law, R.A. No. 8180. It is settled jurispudence that the declaration of
a law as unconstitutional revives the laws that it has repealed. Stated otherwise, an unconstitutional law returns us to the status quo
ante and this return is beyond the power of the Court to stay. Under our scheme of government, however, the remedy to prevent the
revival of an unwanted status quo ante lies with Congress. Congress can block the revival of the status quo ante or stop its continuation
by immediately enacting the necessary remedial legislation. We emphasize that in the cases at bar, the Court did not condemn the
economic policy of deregulation as unconstitutional. It merely held that as crafted, the law runs counter to the constitutional provision
calling for fair competition.[23] Thus, there is no impediment in re-enacting R.A. No. 8180 minus its provisions which are anticompetition. The Court agrees that our return to the regime of regulation has pernicious consequences and it specially symphatizes
with the intervenors. Be that as it may, the Court is powerless to prevent this return just as it is powerless to repeal the 10% tariff
differential of the Tariff Code. It is Congress that can give all these remedies.[24]

Petitioner Garcia, however, injects a non-legal argument in his motion for partial reconsideration. He avers that "given the 'realities' of
politics, especially with the 1998 presidential polls six months away, it is not far-fetched that the general welfare could be sacrificed to
gain political mileage, thus further unduly delaying the enactment of a new oil deregulation law." The short answer to petitioner Garcia's
argument is that when the Court reviews the constitutionality of a law, it does not deal with the realities of politics nor does it delve into
the mysticism of politics. The Court has no partisan political theology for as an institution it is at best apolitical, and at worse, politically
agnostic. In any event, it should not take a long time for Congress to enact a new oil deregulation law given its interest for the welfare of
our people. Petitioner Garcia himself has been quoted as saying that "x x x with the Court's decision, it would now be easy for
Congress to craft a new law, considering that lawmakers will be guided by the Court's points."[25] Even before our Decision, bills
amending the offensive provisions of R.A. No. 8180 have already been filed in the Congress and under consideration by its
committees. Speaker Jose de Venecia has assured after a meeting of the Legislative-Executive Advisory Council (LEDAC) that: "I
suppose before Christmas, we should be able to pass a new oil deregulation law.[26] The Chief Executive himself has urged the
immediate passage of a new and better oil deregulation law.[27]
Finally, public respondents raise the scarecrow argument that our Decision will drive away foreign investors. In response to this official
repertoire, suffice to state that our Decision precisely levels the playing field for foreign investors as against the three dominant oil
oligopolist. No less than the influential Philippine Chamber of Commerce and Industry whose motive is beyond question, stated thru its
Acting President Jaime Ladao that "x x x this Decision, in fact tells us that we are for honest-to-goodness competition." Our Decision
should be a confidence-booster to foreign investors for it assures them of an effective judicial remedy against an unconstitutional law.
There is need to attract foreign investment but the policy has never been foreign investment at any cost. We cannot trade-in the
Constitution for foreign investment. It is not economic heresy to hold that that trade-in is not a fair exchange.
To recapitulate, our Decision declared R.A. No. 8180 unconstitutional for three reasons: (1) it gave more power to an already powerful
oil oligopoly; (2) it blocked the entry of effective competitors; and (3) it will sire an even more powerful oligopoly whose unchecked
power will prejudice the interest of the consumers and comprise the general welfare.
A weak and developing country like the Philippines cannot risk downstream oil industry controlled by foreign oligopoly that can run riot.
Oil is our most socially sensitive commodity and for it to be under the control of a foreign oligopoly without effective competitors is a
clear and present danger. A foreign oil oligopoly can undermine the security of the nation; it can exploit the economy if greed becomes
it creed; it will have the power to drive the Filipino to a prayerful pose. Under a deregulated regime, the people's only hope to check the
overwhelming power of the foreign oil oligopoly lies on a market where there is fair competition. With prescience, the Constitution
mandates the regulation of monopolies and interdicts unfair competition. Thus, the Constitution provides a shield to the economic rights
of our people, especially the poor. It is the unyielding duty of this Court to uphold the supremacy of the Constitution not with a mere
wishbone but with a backbone that should neither bend nor break.
IN VIEW WHEREOF, the Motions for Reconsideration of the public respondents and of the intervenors as well as the Partial Motion for
Reconsideration of petitioner Enrique Garcia are DENIED for lack of merit.
SO ORDERED.
Regalado, Davide, Jr., Romero, Bellosillo, Vitug, Mendoza, and Panganiban, JJ., concur.
Narvasa, C.J., took no part. On official leave when the case was deliberated.
Martinez, J., No part. Not yet a member of the Court when the case was deliberated.
Melo and Francisco, JJ., maintain their dissent.
Kapunan, J., has separate concurring and dissenting opinion.