Cruz vs Secretary of DENR

Natural Resources and Environmental Law; Constitutional Law; IPRA; Regalian Doctrine

GR. No. 135385, Dec. 6, 2000

FACTS:

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

ISSUE:

Do the provisions of IPRA contravene the Constitution?

HELD:

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

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

Natural Resources and Environmental Laws: Regalian Doctrine

GR No. 167707; Oct 8, 2008

FACTS:

This petition is for a review on certiorari of the decision of the Court of Appeals (CA) affirming that of the
Regional Trial Court (RTC) in Kalibo Aklan, which granted the petition for declaratory relief filed by
respondents-claimants Mayor Jose Yap et al, and ordered the survey of Boracay for titling purposes.

On Nov. 10, 1978, President Marcos issued Proclamation No. 1801 declaring Boracay Island as a tourist
zone and marine reserve. Claiming that Proc. No. 1801 precluded them from filing an application for a
judicial confirmation of imperfect title or survey of land for titling purposes, respondents-claimants filed
a petition for declaratory relief with the RTC in Kalibo, Aklan.

The Republic, through the Office of the Solicitor General (OSG) opposed the petition countering that
Boracay Island was an unclassified land of the public domain. It formed part of the mass of lands
classified as public forest, which was not available for disposition pursuant to section 3(a) of PD No.
705 or the Revised Forestry Code.

ISSUE:

Whether unclassified lands of the public domain are automatically deemed agricultural land, therefore
making these lands alienable.

HELD:

No. To prove that the land subject of an application for registration is alienable, the applicant must
establish the existence of a positive act of the government such as a presidential proclamation or an
executive order, an administrative action, investigative reports of the Bureau of Lands investigators, and
a legislative act or statute.

A positive act declaring land as alienable and disposable is required. In keeping with the presumption of
state ownership, the Court has time and again emphasized that there must be a positive act of the
government, such as an official proclamation, declassifying inalienable public land into disposable land
for agricultural or other purposes.

The Regalian Doctrine dictates that all lands of the public domain belong to the State, that the State is
the source of any asserted right to ownership of land and charged with the conservation of such
patrimony.
All lands not otherwise appearing to be clearly within private ownership are presumed to belong to the
State. Thus, all lands that have not been acquired from the government, either by purchase or by grant,
belong to the State as part of the inalienable public domain.

MATEO CARINO, Plff. in Err., v. INSULAR GOVERNMENT OF THE PHILIPPINE ISLANDS.

Mr. Justice Holmes delivered the opinion of the court:

This was an application to the Philippine court of land registration for the registration of certain land.
The application was granted by the court on March 4, 1904. An appeal was taken to the court of first
instance of the province of Benguet, on behalf of the government of the Philippines, and also on behalf
of the United States, those governments having taken possession of the property for public and military
purposes. The court of first instance found the facts and dismissed the application upon grounds of law.
This judgment was affirmed by the supreme court (7 Philippine, 132), and the case then was brought
here by writ of error.

The material facts found are very few. The applicant and plaintiff in error is an Igorot of the province of
Benguet, where the land lies. For more than fifty years before the treaty of Paris, April 11, 1899 30 Stat.
at L. 1754, as far back as the findings go, the plaintiff and his ancestors had held the land as owners. His
grandfather had lived upon it, and had maintained fences sufficient for the holding of cattle, according
to the custom of the country, some of the fences, it seems, having been of much earlier date. His father
had cultivated parts and had used parts for pasturing cattle, and he had used it for pasture in his turn.
They all had been recognized as owners by the Igorots, and he had inherited or received the land from
his father, in accordance with Igorot custom. No document of title, however, had issued from the
Spanish Crown, and although, in 1893-1894, and again in 1896-1897, he made application for one under
the royal decrees then in force, nothing seems to have come of it, unless, perhaps, information that
lands in Benguet could not be conceded until those to be occupied for a sanatorium, etc., had been
designated,a purpose that has been carried out by the Philippine government and the United States.
In 1901 the plaintiff filed a petition, alleging ownership, under the mortgage law, and the lands were
registered to him, that process, however, establishing only a possessory title, it is said.

Before we deal with the merits, we must dispose of a technical point. The government has spent some
energy in maintaining that this case should have been brought up by appeal, and not by writ of error.
We are of opinion, however, that the mode adopted was right. The proceeding for registration is likened
to bills in equity to quiet title, but it is different in principle. It is a proceeding in rem under a statute of
the type of the Torrens act, such as was discussed in Tyler v. Registration Ct. Judges, 175 Mass. 71, 51
L.R.A. 433, 55 N. E. 812. It is nearer to law than to equity, and is an assertion of legal title; but we think it
unnecessary to put it into either pigeon hole. A writ of error is the general method of bringing cases to
this court, an appeal the exception, confined to equity in the main. There is no reason for not applying
the general rule to this case. Ormsby v. Webb, 134 U. S. 47, 65, 33 L. ed. 805, 812, 10 Sup. Ct. Rep. 478;
Campbell v. Porter, 162 U. S. 478, 40 L. ed. 1044, 16 Sup. Ct. Rep. 871; Metropolitan R. Co. v. District of
Columbia (Metropolitan R. Co. v. Macfarland) 195 U. S. 322, 49 L. ed. 219, 25 Sup. Ct. Rep. 28.
Another preliminary matter may as well be disposed of here. It is suggested that, even if the applicant
have title, he cannot have it registered, because the Philippine Commission's act No. 926, of 1903,
excepts the province of Benguet among others from its operation. But that act deals with the acquisition
of new titles by homestead entries, purchase, etc., and the perfecting of titles begun under the Spanish
law. The applicant's claim is that he now owns the land, and is entitled to registration under the
Philippine Commission's act No. 496, of 1902, which established a court for that purpose with
jurisdiction 'throughout the Philippine archipelago,' 2, and authorized in general terms applications to
be made by persons claiming to own the legal estate in fee simple, as the applicant does. He is entitled
to registration if his claim of ownership can be maintained.

We come, then, to the question on which the case was decided below,namely, whether the plaintiff
owns the land. The position of the government, shortly stated, is that Spain assumed, asserted, and had
title to all the land in the Philippines except so far as it saw fit to permit private titles to be acquired;
that there was no prescription against the Crown, and that, if there was, a decree of June 25, 1880,
required registration within a limited time to make the title good; that the plaintiff's land was not
registered, and therefore became, if it was not always, public land; that the United States succeeded to
the title of Spain, and so that the plaintiff has no rights that the Philippine government is bound to
respect.

If we suppose for the moment that the government's contention is so far correct that the Crown of
Spain in form asserted a title to this land at the date of the treaty of Paris, to which the United States
succeeded, it is not to be assumed without argument that the plaintiff's case is at an end. It is true that
Spain, in its earlier decrees, embodied the universal feudal theory that all lands were held from the
Crown, and perhaps the general attitude of conquering nations toward people not recognized as
entitled to the treatment accorded to those in the same zone of civilization with themselves. It is true,
also, that, in legal theory, sovereignty is absolute, and that, as against foreign nations, the United States
may assert, as Spain asserted, absolute power. But it does not follow that, as against the inhabitants of
the Philippines, the United States asserts that Spain had such power. When theory is left on one side,
sovereignty is a question of strength, and may vary in degree. How far a new sovereign shall insist upon
the theoretical relation of the subjects to the head in the past, and how far it shall recognize actual facts,
are matters for it to decide.

The province of Benguet was inhabited by a tribe that the Solicitor General, in his argument,
characterized as a savage tribe that never was brought under the civil or military government of the
Spanish Crown. It seems probable, if not certain, that the Spanish officials would not have granted to
anyone in that province the registration to which formerly the plaintiff was entitled by the Spanish laws,
and which would have made his title beyond question good. Whatever may have been the technical
position of Spain, it does not follow that, in the view of the United States, he had lost all rights and was a
mere trespasser when the present government seized his land. The argument to that effect seems to
amount to a denial of native titles throughout an important part of the island of Luzon, at least, for the
want of ceremonies which the Spaniards would not have permitted and had not the power to enforce.
The acquisition of the Philippines was not like the settlement of the white race in the United States.
Whatever consideration may have been shown to the North American Indians, the dominant purpose of
the whites in America was to occupy the land. It is obvious that, however stated, the reason for our
taking over the Philippines was different. No one, we suppose, would deny that, so far as consistent with
paramount necessities, our first object in the internal administration of the islands is to do justice to the
natives, not to exploit their country for private gain. By the organic act of July 1, 1902, chap. 1369, 12,
32 Stat. at L. 691, all the property and rights acquired there by the United States are to be administered
'for the benefit of the inhabitants thereof.' It is reasonable to suppose that the attitude thus assumed by
the United States with regard to what was unquestionably its own is also its attitude in deciding what it
will claim for its own. The same statute made a bill of rights, embodying the safeguards of the
Constitution, and, like the Constitution, extends those safeguards to all. It provides that 'no law shall be
enacted in said islands which shall deprive any person of life, liberty, or property without due process of
law, or deny to any person therein the equal protection of the laws.' 5. In the light of the declaration
that we have quoted from 12, it is hard to believe that the United States was ready to declare in the
next breath that 'any person' did not embrace the inhabitants of Benguet, or that it meant by 'property'
only that which had become such by ceremonies of which presumably a large part of the inhabitants
never had heard, and that it proposed to treat as public land what they, by native custom and by long
association,one of the profoundest factors in human thought, regarded as their own.

It is true that, by 14, the government of the Philippines is empowered to enact rules and prescribe
terms for perfecting titles to public lands where some, but not all, Spanish conditions had been fulfilled,
and to issue patents to natives for not more than 16 hectares of public lands actually occupied by the
native or his ancestors before August 13, 1898. But this section perhaps might be satisfied if confined to
cases where the occupation was of land admitted to be public land, and had not continued for such a
length of time and under such circumstances as to give rise to the understanding that the occupants
were owners at that date. We hesitate to suppose that it was intended to declare every native who had
not a paper title a trespasser, and to set the claims of all the wilder tribes afloat. It is true again that
there is excepted from the provision that we have quoted as to the administration of the property and
rights acquired by the United States, such land and property as shall be designated by the President for
military or other reservations, as this land since has been. But there still remains the question what
property and rights the United States asserted itself to have acquired.

Whatever the law upon these points may be, and we mean to go no further than the necessities of
decision demand, every presumption is and ought to be against the government in a case like the
present. It might, perhaps, be proper and sufficient to say that when, as far back as testimony or
memory goes, the land has been held by individuals under a claim of private ownership, it will be
presumed to have been held in the same way from before the Spanish conquest, and never to have
been public land. Certainly in a case like this, if there is doubt or ambiguity in the Spanish law, we ought
to give the applicant the benefit of the doubt. Whether justice to the natives and the import of the
organic act ought not to carry us beyond a subtle examination of ancient texts, or perhaps even beyond
the attitude of Spanish law, humane though it was, it is unnecessary to decide. If, in a tacit way, it was
assumed that the wild tribes of the Philippines were to be dealt with as the power and inclination of the
conqueror might dictate, Congress has not yet sanctioned the same course as the proper one 'for the
benefit of the inhabitants thereof.'

If the applicant's case is to be tried by the law of Spain, we do not discover such clear proof that it was
bad by that law as to satisfy us that he does not own the land. To begin with, the older decrees and laws
cited by the counsel for the plaintiff in error seem to indicate pretty clearly that the natives were
recognized as owning some lands, irrespective of any royal grant. In other words, Spain did not assume
to convert all the native inhabitants of the Philippines into trespassers or even into tenants at will. For
instance, Book 4, title 12, Law 14 of the Recopilacion de Leyes de las Indias, cited for a contrary
conclusion in Valenton v. Murciano, 3 Philippine, 537, while it commands viceroys and others, when it
seems proper, to call for the exhibition of grants, directs them to confirm those who hold by good grants
or justa prescripcion. It is true that it begins by the characteristic assertion of feudal overlordship and
the origin of all titles in the King or his predecessors. That was theory and discourse. The fact was that
titles were admitted to exist that owed nothing to the powers of Spain beyond this recognition in their
books.

Prescription is mentioned again in the royal cedula of October 15, 1754, cited in 3 Philippine, 546:
'Where such possessors shall not be able to produce title deeds, it shall be sufficient if they shall show
that ancient possession, as a valid title by prescription.' It may be that this means possession from
before 1700; but, at all events, the principle is admitted. As prescription, even against Crown lands, was
recognized by the laws of Spain, we see no sufficient reason for hesitating to admit that it was
recognized in the Philippines in regard to lands over which Spain had only a paper sovereignty.

The question comes, however, on the decree of June 25, 1880, for the adjustment of royal lands
wrongfully occupied by private individuals in the Philippine Islands. This begins with the usual theoretic
assertion that, for private ownership, there must have been a grant by competent authority; but
instantly descends to fact by providing that, for all legal effects, those who have been in possession for
certain times shall be deemed owners. For cultivated land, twenty years, uninterrupted, is enough. For
uncultivated, thirty. Art. 5. So that, when this decree went into effect, the applicant's father was owner
of the land by the very terms of the decree. But, it is said, the object of this law was to require the
adjustment or registration proceedings that it described, and in that way to require every one to get a
document of title or lose his land. That purpose may have been entertained, but it does not appear
clearly to have been applicable to all. The regulations purport to have been made 'for the adjustment of
royal lands wrongfully occupied by private individuals.' (We follow the translation in the government's
brief.) It does not appear that this land ever was royal land or wrongfully occupied. In Article 6 it is
provided that 'interested parties not included within the two preceding articles the articles recognizing
prescription of twenty and thirty years may legalize their possession, and thereby acquire the full
ownership of the said lands, by means of adjustment proceedings, to be conducted in the following
manner.' This seems, by its very terms, not to apply to those declared already to be owners by lapse of
time. Article 8 provides for the case of parties not asking an adjustment of the lands of which they are
unlawfully enjoying the possession, within one year, and threatens that the treasury 'will reassert the
ownership of the state over the lands,' and will sell at auction such part as it does not reserve. The
applicant's possession was not unlawful, and no attempt at any such proceedings against him or his
father ever was made. Finally, it should be noted that the natural construction of the decree is
confirmed by the report of the council of state. That report puts forward as a reason for the regulations
that, in view of the condition of almost all property in the Philippines, it is important to fix its status by
general rules, on the principle that the lapse of a fixed period legalizes completely all possession;
recommends in two articles twenty and thirty years, as adopted in the decree; and then suggests that
interested parties not included in those articles may legalize their possession and acquire ownership by
adjustment at a certain price.

It is true that the language of arts. 4 and 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. The royal decree of February 13, 1894, declaring forfeited titles that were capable of
adjustment under the decree of 1880, for which adjustment had not been sought, should not be
construed as a confiscation, but as the withdrawal of a privilege. As a matter of fact, the applicant never
was disturbed. This same decree is quoted by the court of land registration for another recognition of
the common-law prescription of thirty years as still running against alienable Crown land.

It will be perceived that the rights of the applicant under the Spanish law present a problem not without
difficulties for courts of a different legal tradition. We have deemed it proper on that account to notice
the possible effect of the change of sovereignty and the act of Congress establishing the fundamental
principles now to be observed. Upon a consideration of the whole case we are of opinion that law and
justice require that the applicant should be granted what he seeks, and should not be deprived of what,
by the practice and belief of those among whom he lived, was his property, through a refined
interpretation of an almost forgotten law of Spain.

Judgment reversed.

G.R. No. 170757: November 28, 2011

PACIFICO M. VALIAO, for himself and in behalf of his co-heirs LODOVICO, RICARDO, BIENVENIDO, all
Surnamed VALIAO and NEMESIO M. GRANDEA, Petitioners, v.

REPUBLIC OF THE PHILIPPINES, MACARIO ZAFRA, and MANUEL YUSAY, Respondents.

FACTS:

On August 11, 1987, petitioners filed with the RTC an application for registration of a parcel of land
situated in Barrio Galicia, Municipality of Ilog, Negros Occidental.

On June 20, 1988, private oppositors filed their Motion to Dismiss the application on the following
grounds: (1) the land applied for has not been declared alienable and disposable; (2) res judicata has set
in to bar the application for registration; and (3) the application has no factual or legal basis.

On August 24, 1988, the Republic of the Philippines (Republic), through the Office of the Solicitor
General (OSG), opposed the application for registration.

On July 3, 1989, the RTC denied private oppositors' Motion to Dismiss. Trial thereafter ensued.

In support of their application for registration, petitioners alleged that they acquired the subject
property in 1947, upon the death of their uncle Basilio who purchased the land from a
certain Fermin Payogao, pursuant to a Deed of Sale dated May 19, 1916 entirely handwritten in Spanish
language. Basilio possessed the land in question from May 19, 1916 until his death in
1947. Basilio's possession was open, continuous, peaceful, adverse, notorious, uninterrupted and in the
concept of an owner. Upon Basilio's death, the applicants as co-heirs possessed the said land until 1966,
whenoppositor Zafra unlawfully and violently dispossessed them of their property, which compelled
them to file complaints of Grave Coercion and Qualified Theft against Zafra.

The RTC, in its Decision dated December 15, 1995, granted petitioners' application for registration of the
subject property.

Aggrieved by the Decision, the private oppositors and the Republic, through Assistant
Prosecutor Josue A. Gatin, filed an appeal with the CA, which reversed the trial court's findings in its
Decision dated June 23, 2005.

Petitioners filed a motion for reconsideration, which was denied by the CA. Hence, the present petition.

ISSUE: Whether the piece of land in question is alienable and disposable land of the public domain.

HELD: Petition denied.

Under Rule 45, the principle is well-established that this Court is not a trier of facts and that only
questions of law may be raised. This rule, however, is subject to certain exceptions. One of these is
when the findings of the appellate court are contrary to those of the trial court. Due to the divergence
of the findings of the CA and the RTC, the Court will now re-examine the facts and evidence adduced
before the lower courts.

Under Section 14 (1) of Presidential Decree No. (PD) 1529, otherwise known as the Property Registration
Decree, petitioners need to prove that: (1) the land forms part of the alienable and disposable land of
the public domain; and (2) they, by themselves or through their predecessors-in-interest, have been in
open, continuous, exclusive, and notorious possession and occupation of the subject land under a bona
fide claim of ownership from June 12, 1945 or earlier.

No such evidence was offered by the petitioners to show that the land in question has been classified as
alienable and disposable land of the public domain. In the absence of incontrovertible evidence to prove
that the subject property is already classified as alienable and disposable, we must consider the same as
still inalienable public domain. Verily, the rules on the confirmation of imperfect title do not apply unless
and until the land subject thereof is released in an official proclamation to that effect so that it may form
part of the disposable agricultural lands of the public domain.

Francisco Chavez vs Public Estates Authority (July 2002)

The Public Estates Authority (PEA) is the central implementing agency tasked to undertake reclamation
projects nationwide. It took over the leasing and selling functions of the DENR (Department of
Environmental and Natural Resources) insofar as reclaimed or about to be reclaimed foreshore lands are
concerned.

PEA sought the transfer to the Amari Coastal Bay and Development Corporation, a private corporation,
of the ownership of 77.34 hectares of the Freedom Islands. PEA also sought to have 290.156 hectares of
submerged areas of Manila Bay to Amari.

ISSUE: Whether or not the transfer is valid.

HELD: No. To allow vast areas of reclaimed lands of the public domain to be transferred to Amari as
private lands will sanction a gross violation of the constitutional ban on private corporations from
acquiring any kind of alienable land of the public domain.

The Supreme Court affirmed that the 157.84 hectares of reclaimed lands comprising the Freedom
Islands, now covered by certificates of title in the name of PEA, are alienable lands of the public domain.
The 592.15 hectares of submerged areas of Manila Bay remain inalienable natural resources of the
public domain. The transfer (as embodied in a joint venture agreement) to AMARI, a private
corporation, ownership of 77.34 hectares of the Freedom Islands, is void for being contrary to Section 3,
Article XII of the 1987 Constitution which prohibits private corporations from acquiring any kind of
alienable land of the public domain. Furthermore, since the Amended JVA also seeks to transfer to
Amari ownership of 290.156 hectares of still submerged areas of Manila Bay, such transfer is void for
being contrary to Section 2, Article XII of the 1987 Constitution which prohibits the alienation of natural
resources other than agricultural lands of the public domain.

G.R. No. 191109 July 18, 2012

REPUBLIC OF THE PHILIPPINES, represented by the PHILIPPINE RECLAMATION AUTHORITY

(PRA), Petitioner,
vs.
CITY OF PARANAQUE, Respondent.

DECISION

MENDOZA, J.:

This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, on pure
questions of law, assailing the January 8, 2010 Order1 of the Regional Trial Court, Branch 195, Parafiaque
City (RTC), which ruled that petitioner Philippine Reclamation Authority (PRA) is a government-owned
and controlled corporation (GOCC), a taxable entity, and, therefore, . not exempt from payment of real
property taxes. The pertinent portion of the said order reads:

In view of the finding of this court that petitioner is not exempt from payment of real property taxes,
respondent Paraaque City Treasurer Liberato M. Carabeo did not act xxx without or in excess of
jurisdiction, or with grave abuse of discretion amounting to lack or in excess of jurisdiction in issuing the
warrants of levy on the subject properties.

WHEREFORE, the instant petition is dismissed. The Motion for Leave to File and Admit Attached
Supplemental Petition is denied and the supplemental petition attached thereto is not admitted.

The Public Estates Authority (PEA) is a government corporation created by virtue of Presidential Decree
(P.D.) No. 1084 (Creating the Public Estates Authority, Defining its Powers and Functions, Providing
Funds Therefor and For Other Purposes) which took effect on February 4,

1977 to provide a coordinated, economical and efficient reclamation of lands, and the administration
and operation of lands belonging to, managed and/or operated by, the government with the object of
maximizing their utilization and hastening their development consistent with public interest.

On February 14, 1979, by virtue of Executive Order (E.O.) No. 525 issued by then President Ferdinand
Marcos, PEA was designated as the agency primarily responsible for integrating, directing and
coordinating all reclamation projects for and on behalf of the National Government.
On October 26, 2004, then President Gloria Macapagal-Arroyo issued E.O. No. 380 transforming PEA
into PRA, which shall perform all the powers and functions of the PEA relating to reclamation activities.

By virtue of its mandate, PRA reclaimed several portions of the foreshore and offshore areas of Manila
Bay, including those located in Paraaque City, and was issued Original Certificates of Title (OCT Nos.
180, 202, 206, 207, 289, 557, and 559) and Transfer Certificates of Title (TCT Nos. 104628, 7312, 7309,
7311, 9685, and 9686) over the reclaimed lands.

On February 19, 2003, then Paraaque City Treasurer Liberato M. Carabeo (Carabeo) issued Warrants of
Levy on PRAs reclaimed properties (Central Business Park and Barangay San Dionisio) located in
Paraaque City based on the assessment for delinquent real property taxes made by then Paraaque
City Assessor Soledad Medina Cue for tax years 2001 and 2002.

On March 26, 2003, PRA filed a petition for prohibition with prayer for temporary restraining order
(TRO) and/or writ of preliminary injunction against Carabeo before the RTC.

On April 3, 2003, after due hearing, the RTC issued an order denying PRAs petition for the issuance of a
temporary restraining order.

On April 4, 2003, PRA sent a letter to Carabeo requesting the latter not to proceed with the public
auction of the subject reclaimed properties on April 7, 2003. In response, Carabeo sent a letter stating
that the public auction could not be deferred because the RTC had already denied PRAs TRO
application.

On April 25, 2003, the RTC denied PRAs prayer for the issuance of a writ of preliminary injunction for
being moot and academic considering that the auction sale of the subject properties on April 7, 2003
had already been consummated.

On August 3, 2009, after an exchange of several pleadings and the failure of both parties to arrive at a
compromise agreement, PRA filed a Motion for Leave to File and Admit Attached Supplemental Petition
which sought to declare as null and void the assessment for real property taxes, the levy based on the
said assessment, the public auction sale conducted on April 7, 2003, and the Certificates of Sale issued
pursuant to the auction sale.

On January 8, 2010, the RTC rendered its decision dismissing PRAs petition. In ruling that PRA was not
exempt from payment of real property taxes, the RTC reasoned out that it was a GOCC under Section 3
of P.D. No. 1084. It was organized as a stock corporation because it had an authorized capital stock
divided into no par value shares. In fact, PRA admitted its corporate personality and that said properties
were registered in its name as shown by the certificates of title. Therefore, as a GOCC, local tax
exemption is withdrawn by virtue of Section 193 of Republic Act (R.A.) No. 7160 Local Government Code
(LGC) which was the prevailing law in 2001 and 2002 with respect to real property taxation. The RTC also
ruled that the tax exemption claimed by PRA under E.O. No. 654 had already been expressly repealed by
R.A. No. 7160 and that PRA failed to comply with the procedural requirements in Section 206 thereof.
Not in conformity, PRA filed this petition for certiorari assailing the January 8, 2010 RTC Order based on
the following GROUNDS

THE TRIAL COURT GRAVELY ERRED IN FINDING THAT PETITIONER IS LIABLE TO PAY REAL PROPERTY TAX
ON THE SUBJECT RECLAIMED LANDS CONSIDERING

THAT PETITIONER IS AN INCORPORATED INSTRUMENTALITY OF THE NATIONAL GOVERNMENT AND IS,

THEREFORE, EXEMPT FROM PAYMENT OF REAL PROPERTY TAX UNDER SECTIONS 234(A) AND 133(O) OF
REPUBLIC ACT 7160 OR THE LOCAL GOVERNMENT CODE VIS--VIS MANILA INTERNATIONAL AIRPORT
AUTHORITY V. COURT OF APPEALS.

II

THE TRIAL COURT GRAVELY ERRED IN FAILING TO CONSIDER THAT RECLAIMED LANDS ARE PART OF THE
PUBLIC DOMAIN AND, HENCE, EXEMPT FROM REAL PROPERTY TAX.

PRA asserts that it is not a GOCC under Section 2(13) of the Introductory Provisions of the
Administrative Code. Neither is it a GOCC under Section 16, Article XII of the 1987 Constitution because
it is not required to meet the test of economic viability. Instead, PRA is a government instrumentality
vested with corporate powers and performing an essential public service pursuant to Section 2(10) of
the Introductory Provisions of the Administrative Code. Although it has a capital stock divided into
shares, it is not authorized to distribute dividends and allotment of surplus and profits to its
stockholders. Therefore, it may not be classified as a stock corporation because it lacks the second
requisite of a stock corporation which is the distribution of dividends and allotment of surplus and
profits to the stockholders.

It insists that it may not be classified as a non-stock corporation because it has no members and it is not
organized for charitable, religious, educational, professional, cultural, recreational, fraternal, literary,
scientific, social, civil service, or similar purposes, like trade, industry, agriculture and like chambers as
provided in Section 88 of the Corporation Code.

Moreover, PRA points out that it was not created to compete in the market place as there was no
competing reclamation company operated by the private sector. Also, while PRA is vested with
corporate powers under P.D. No. 1084, such circumstance does not make it a corporation but merely an
incorporated instrumentality and that the mere fact that an incorporated instrumentality of the
National Government holds title to real property does not make said instrumentality a GOCC. Section
48, Chapter 12, Book I of the Administrative Code of 1987 recognizes a scenario where a piece of land
owned by the Republic is titled in the name of a department, agency or instrumentality.

Thus, PRA insists that, as an incorporated instrumentality of the National Government, it is exempt from
payment of real property tax except when the beneficial use of the real property is granted to a taxable
person. PRA claims that based on Section 133(o) of the LGC, local governments cannot tax the national
government which delegate to local governments the power to tax.
It explains that reclaimed lands are part of the public domain, owned by the State, thus, exempt from
the payment of real estate taxes. Reclaimed lands retain their inherent potential as areas for public use
or public service. While the subject reclaimed lands are still in its hands, these lands remain public lands
and form part of the public domain. Hence, the assessment of real property taxes made on said lands, as
well as the levy thereon, and the public sale thereof on April 7, 2003, including the issuance of the
certificates of sale in favor of the respondent Paraaque City, are invalid and of no force and effect.

On the other hand, the City of Paraaque (respondent) argues that PRA since its creation consistently
represented itself to be a GOCC. PRAs very own charter (P.D. No. 1084) declared it to be a GOCC and
that it has entered into several thousands of contracts where it represented itself to be a GOCC. In fact,
PRA admitted in its original and amended petitions and pre-trial brief filed with the RTC of Paraaque
City that it was a GOCC.

Respondent further argues that PRA is a stock corporation with an authorized capital stock divided into
3 million no par value shares, out of which 2 million shares have been subscribed and fully paid up.
Section 193 of the LGC of 1991 has withdrawn tax exemption privileges granted to or presently enjoyed
by all persons, whether natural or juridical, including GOCCs.

Hence, since PRA is a GOCC, it is not exempt from the payment of real property tax.

THE COURTS RULING

The Court finds merit in the petition.

Section 2(13) of the Introductory Provisions of the Administrative Code of 1987 defines a GOCC as
follows:

SEC. 2. General Terms Defined. x x x x

(13) Government-owned or controlled corporation refers to any agency organized as a stock or non-
stock corporation, vested with functions relating to public needs whether governmental or proprietary
in nature, and owned by the Government directly or through its instrumentalities either wholly, or,
where applicable as in the case of stock corporations, to the extent of at least fifty-one

(51) percent of its capital stock: x x x.

On the other hand, Section 2(10) of the Introductory Provisions of the Administrative Code defines a
government "instrumentality" as follows:

SEC. 2. General Terms Defined. x x x x

(10) Instrumentality refers to any agency of the National Government, not integrated within the
department framework, vested with special functions or jurisdiction by law, endowed with some if not
all corporate powers, administering special funds, and enjoying operational autonomy, usually through a
charter. x x x
From the above definitions, it is clear that a GOCC must be "organized as a stock or non-stock
corporation" while an instrumentality is vested by law with corporate powers. Likewise, when the law
makes a government instrumentality operationally autonomous, the instrumentality remains part of the
National Government machinery although not integrated with the department framework.

When the law vests in a government instrumentality corporate powers, the instrumentality does not
necessarily become a corporation. Unless the government instrumentality is organized as a stock or non-
stock corporation, it remains a government instrumentality exercising not only governmental but also
corporate powers.

Many government instrumentalities are vested with corporate powers but they do not become stock or
non-stock corporations, which is a necessary condition before an agency or instrumentality is deemed a
GOCC. Examples are the Mactan International Airport Authority, the Philippine Ports Authority, the
University of the Philippines, and Bangko Sentral ng Pilipinas. All these government instrumentalities
exercise corporate powers but they are not organized as stock or non-stock corporations as required by
Section 2(13) of the Introductory Provisions of the Administrative Code. These government
instrumentalities are sometimes loosely called government corporate entities. They are not, however,
GOCCs in the strict sense as understood under the Administrative Code, which is the governing law
defining the legal relationship and status of government entities.2

Correlatively, Section 3 of the Corporation Code defines a stock corporation as one whose "capital stock
is divided into shares and x x x authorized to distribute to the holders of such shares dividends x x x."
Section 87 thereof defines a non-stock corporation as "one where no part of its income is distributable
as dividends to its members, trustees or officers." Further, Section 88 provides that non-stock
corporations are "organized for charitable, religious, educational, professional, cultural, recreational,
fraternal, literary, scientific, social, civil service, or similar purposes, like trade, industry, agriculture and
like chambers."

Two requisites must concur before one may be classified as a stock corporation, namely: (1) that it has
capital stock divided into shares; and (2) that it is authorized to distribute dividends and allotments of
surplus and profits to its stockholders. If only one requisite is present, it cannot be properly classified as
a stock corporation. As for non-stock corporations, they must have members and must not distribute
any part of their income to said members.3

In the case at bench, PRA is not a GOCC because it is neither a stock nor a non-stock corporation. It
cannot be considered as a stock corporation because although it has a capital stock divided into no par
value shares as provided in Section 74 of P.D. No. 1084, it is not authorized to distribute dividends,
surplus allotments or profits to stockholders. There is no provision whatsoever in P.D. No. 1084 or in any
of the subsequent executive issuances pertaining to PRA, particularly, E.O. No. 525,5 E.O. No. 6546 and
EO No. 7987 that authorizes PRA to distribute dividends, surplus allotments or profits to its stockholders.

PRA cannot be considered a non-stock corporation either because it does not have members. A non-
stock corporation must have members.8 Moreover, it was not organized for any of the purposes
mentioned in Section 88 of the Corporation Code. Specifically, it was created to manage all government
reclamation projects.

Furthermore, there is another reason why the PRA cannot be classified as a GOCC. Section 16, Article XII
of the 1987 Constitution provides as follows:

Section 16. The Congress shall not, except by general law, provide for the formation, organization, or
regulation of private corporations. Government-owned or controlled corporations may be created or
established by special charters in the interest of the common good and subject to the test of economic
viability.

The fundamental provision above authorizes Congress to create GOCCs through special charters on two
conditions: 1) the GOCC must be established for the common good; and 2) the GOCC must meet the test
of economic viability. In this case, PRA may have passed the first condition of common good but failed
the second one - economic viability. Undoubtedly, the purpose behind the creation of PRA was not for
economic or commercial activities. Neither was it created to compete in the market place considering
that there were no other competing reclamation companies being operated by the private sector. As
mentioned earlier, PRA was created essentially to perform a public service considering that it was
primarily responsible for a coordinated, economical and efficient reclamation, administration and
operation of lands belonging to the government with the object of maximizing their utilization and
hastening their development consistent with the public interest. Sections 2 and 4 of P.D. No. 1084 reads,
as follows:

Section 2. Declaration of policy. It is the declared policy of the State to provide for a coordinated,
economical and efficient reclamation of lands, and the administration and operation of lands belonging
to, managed and/or operated by the government, with the object of maximizing their utilization and
hastening their development consistent with the public interest.

Section 4. Purposes. The Authority is hereby created for the following purposes:

(a) To reclaim land, including foreshore and submerged areas, by dredging, filling or other means, or to
acquire reclaimed land;

(b) To develop, improve, acquire, administer, deal in, subdivide, dispose, lease and sell any and all kinds
of lands, buildings, estates and other forms of real property, owned, managed, controlled and/or
operated by the government.

(c) To provide for, operate or administer such services as may be necessary for the efficient, economical
and beneficial utilization of the above properties.

The twin requirement of common good and economic viability was lengthily discussed in the case of
Manila International Airport Authority v. Court of Appeals,9 the pertinent portion of which reads:

Third, the government-owned or controlled corporations created through special charters are those that
meet the two conditions prescribed in Section 16, Article XII of the Constitution.
The first condition is that the government-owned or controlled corporation must be established for the
common good. The second condition is that the government-owned or controlled corporation must
meet the test of economic viability. Section 16, Article XII of the 1987 Constitution provides:

SEC. 16. The Congress shall not, except by general law, provide for the formation, organization, or
regulation of private corporations. Government-owned or controlled corporations may be created or
established by special charters in the interest of the common good and subject to the test of economic
viability.

The Constitution expressly authorizes the legislature to create "government-owned or controlled

corporations" through special charters only if these entities are required to meet the twin conditions of
common good and economic viability. In other words, Congress has no power to create government-
owned or controlled corporations with special charters unless they are made to comply with the two
conditions of common good and economic viability. The test of economic viability applies only to
government-owned or controlled corporations that perform economic or commercial activities and
need to compete in the market place. Being essentially economic vehicles of the State for the common
good meaning for economic development purposes these government-owned or controlled
corporations with special charters are usually organized as stock corporations just like ordinary private
corporations.

In contrast, government instrumentalities vested with corporate powers and performing governmental
or public functions need not meet the test of economic viability. These instrumentalities perform
essential public services for the common good, services that every modern State must provide its
citizens. These instrumentalities need not be economically viable since the government may even
subsidize their entire operations. These instrumentalities are not the "government-owned or controlled
corporations" referred to in Section 16, Article XII of the 1987 Constitution.

Thus, the Constitution imposes no limitation when the legislature creates government instrumentalities
vested with corporate powers but performing essential governmental or public functions. Congress has
plenary authority to create government instrumentalities vested with corporate powers provided these
instrumentalities perform essential government functions or public services. However, when the
legislature creates through special charters corporations that perform economic or commercial
activities, such entities known as "government-owned or controlled corporations" must meet the
test of economic viability because they compete in the market place.

This is the situation of the Land Bank of the Philippines and the Development Bank of the Philippines
and similar government-owned or controlled corporations, which derive their incometo meet operating
expenses solely from commercial transactions in competition with the private sector. The intent of the
Constitution is to prevent the creation of government-owned or controlled corporations that cannot
survive on their own in the market place and thus merely drain the public coffers.

Commissioner Blas F. Ople, proponent of the test of economic viability, explained to the Constitutional
Commission the purpose of this test, as follows:
MR. OPLE: Madam President, the reason for this concern is really that when the government creates a
corporation, there is a sense in which this corporation becomes exempt from the test of economic
performance. We know what happened in the past. If a government corporation loses, then it makes its
claim upon the taxpayers' money through new equity infusions from the government and what is always
invoked is the common good. That is the reason why this year, out of a budget of P115 billion for the
entire government, about P28 billion of this will go into equity infusions to support a few government
financial institutions. And this is all taxpayers' money which could have been relocated to agrarian
reform, to social services like health and education, to augment the salaries of grossly underpaid public
employees. And yet this is all going down the drain.

Therefore, when we insert the phrase "ECONOMIC VIABILITY" together with the "common good," this
becomes a restraint on future enthusiasts for state capitalism to excuse themselves from the
responsibility of meeting the market test so that they become viable. And so, Madam President, I
reiterate, for the committee's consideration and I am glad that I am joined in this proposal by
Commissioner Foz, the insertion of the standard of "ECONOMIC VIABILITY OR THE ECONOMIC TEST,"
together with the common good.1wphi1

Father Joaquin G. Bernas, a leading member of the Constitutional Commission, explains in his textbook
The 1987 Constitution of the Republic of the Philippines: A Commentary:

The second sentence was added by the 1986 Constitutional Commission. The significant addition,
however, is the phrase "in the interest of the common good and subject to the test of economic
viability." The addition includes the ideas that they must show capacity to function efficiently in business
and that they should not go into activities which the private sector can do better. Moreover, economic
viability is more than financial viability but also includes capability to make profit and generate benefits
not quantifiable in financial terms.

Clearly, the test of economic viability does not apply to government entities vested with corporate
powers and performing essential public services. The State is obligated to render essential public
services regardless of the economic viability of providing such service. The non-economic viability of
rendering such essential public service does not excuse the State from withholding such essential
services from the public.

However, government-owned or controlled corporations with special charters, organized essentially for
economic or commercial objectives, must meet the test of economic viability. These are the
government-owned or controlled corporations that are usually organized under their special charters as
stock corporations, like the Land Bank of the Philippines and the Development Bank of the Philippines.
These are the government-owned or controlled corporations, along with government-owned or
controlled corporations organized under the Corporation Code, that fall under the definition of
"government-owned or controlled corporations" in Section 2(10) of the Administrative Code. [Emphases
supplied]

This Court is convinced that PRA is not a GOCC either under Section 2(3) of the Introductory Provisions
of the Administrative Code or under Section 16, Article XII of the 1987 Constitution. The facts, the
evidence on record and jurisprudence on the issue support the position that PRA was not organized
either as a stock or a non-stock corporation. Neither was it created by Congress to operate commercially
and compete in the private market. Instead, PRA is a government instrumentality vested with corporate
powers and performing an essential public service pursuant to Section 2(10) of the Introductory
Provisions of the Administrative Code. Being an incorporated government instrumentality, it is exempt
from payment of real property tax.

Clearly, respondent has no valid or legal basis in taxing the subject reclaimed lands managed by PRA. On
the other hand, Section 234(a) of the LGC, in relation to its Section 133(o), exempts PRA from paying
realty taxes and protects it from the taxing powers of local government units.

Sections 234(a) and 133(o) of the LGC provide, as follows:

SEC. 234. Exemptions from Real Property Tax The following are exempted from payment of the real
property tax:

(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except
when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person.

xxxx

SEC. 133. Common Limitations on the Taxing Powers of Local Government Units. Unless otherwise
provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays
shall not extend to the levy of the following:

xxxx

(o) Taxes, fees or charges of any kinds on the National Government, its agencies and instrumentalities,
and local government units. [Emphasis supplied]

It is clear from Section 234 that real property owned by the Republic of the Philippines (the Republic) is
exempt from real property tax unless the beneficial use thereof has been granted to a taxable person. In
this case, there is no proof that PRA granted the beneficial use of the subject reclaimed lands to a
taxable entity. There is no showing on record either that PRA leased the subject reclaimed properties to
a private taxable entity.

This exemption should be read in relation to Section 133(o) of the same Code, which prohibits local
governments from imposing "taxes, fees or charges of any kind on the National Government, its
agencies and instrumentalities x x x." The Administrative Code allows real property owned by the
Republic to be titled in the name of agencies or instrumentalities of the national government. Such real
properties remain owned by the Republic and continue to be exempt from real estate tax.

Indeed, the Republic grants the beneficial use of its real property to an agency or instrumentality of the
national government. This happens when the title of the real property is transferred to an agency or
instrumentality even as the Republic remains the owner of the real property. Such arrangement does
not result in the loss of the tax exemption, unless "the beneficial use thereof has been granted, for
consideration or otherwise, to a taxable person."10

The rationale behind Section 133(o) has also been explained in the case of the Manila International
Airport Authority,11 to wit:

Section 133(o) recognizes the basic principle that local governments cannot tax the national
government, which historically merely delegated to local governments the power to tax. While the 1987
Constitution now includes taxation as one of the powers of local governments, local governments may
only exercise such power "subject to such guidelines and limitations as the Congress may provide."

When local governments invoke the power to tax on national government instrumentalities, such power
is construed strictly against local governments. The rule is that a tax is never presumed and there must
be clear language in the law imposing the tax. Any doubt whether a person, article or activity is taxable
is resolved against taxation. This rule applies with greater force when local governments seek to tax
national government instrumentalities.

Another rule is that a tax exemption is strictly construed against the taxpayer claiming the exemption.
However, when Congress grants an exemption to a national government instrumentality from local
taxation, such exemption is construed liberally in favor of the national government instrumentality. As
this Court declared in Maceda v. Macaraig, Jr.:

The reason for the rule does not apply in the case of exemptions running to the benefit of the
government itself or its agencies. In such case the practical effect of an exemption is merely to reduce
the amount of money that has to be handled by government in the course of its operations. For these
reasons, provisions granting exemptions to government agencies may be construed liberally, in favor of
non tax-liability of such agencies.

There is, moreover, no point in national and local governments taxing each other, unless a sound and
compelling policy requires such transfer of public funds from one government pocket to another.

There is also no reason for local governments to tax national government instrumentalities for rendering
essential public services to inhabitants of local governments. The only exception is when the legislature
clearly intended to tax government instrumentalities for the delivery of essential public services for
sound and compelling policy considerations. There must be express language in the law empowering
local governments to tax national government instrumentalities. Any doubt whether such power exists
is resolved against local governments.

Thus, Section 133 of the Local Government Code states that "unless otherwise provided" in the Code,
local governments cannot tax national government instrumentalities. As this Court held in Basco v.
Philippine Amusements and Gaming Corporation:

The states have no power by taxation or otherwise, to retard, impede, burden or in any manner control
the operation of constitutional laws enacted by Congress to carry into execution the powers vested in
the federal government. (MC Culloch v. Maryland, 4 Wheat 316, 4 L Ed. 579)
This doctrine emanates from the "supremacy" of the National Government over local governments.

"Justice Holmes, speaking for the Supreme Court, made reference to the entire absence of power on the
part of the States to touch, in that way (taxation) at least, the instrumentalities of the United States
(Johnson v. Maryland, 254 US 51) and it can be agreed that no state or political subdivision can regulate
a federal instrumentality in such a way as to prevent it from consummating its federal responsibilities, or
even to seriously burden it in the accomplishment of them." (Antieau, Modern Constitutional Law, Vol.
2, p. 140, emphasis supplied)

Otherwise, mere creatures of the State can defeat National policies thru extermination of what local
authorities may perceive to be undesirable activities or enterprise using the power to tax as "a tool for
regulation." (U.S. v. Sanchez, 340 US 42)

The power to tax which was called by Justice Marshall as the "power to destroy" (McCulloch v.
Maryland, supra) cannot be allowed to defeat an instrumentality or creation of the very entity which has
the inherent power to wield it. [Emphases supplied]

The Court agrees with PRA that the subject reclaimed lands are still part of the public domain, owned by
the State and, therefore, exempt from payment of real estate taxes.

Section 2, Article XII of the 1987 Constitution reads in part, as follows:

Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all
forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural
resources are owned by the State. With the exception of agricultural lands, all other natural resources
shall not be alienated. The exploration, development, and utilization of natural resources shall be under
the full control and supervision of the State. The State may directly undertake such activities, or it may
enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or
corporations or associations at least 60 per centum of whose capital is owned by such citizens. Such
agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-
five years, and under such terms and conditions as may provided by law. In cases of water rights for
irrigation, water supply, fisheries, or industrial uses other than the development of waterpower,
beneficial use may be the measure and limit of the grant.

Similarly, Article 420 of the Civil Code enumerates properties belonging to the State:

Art. 420. The following things are property of public dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed
by the State, banks, shores, roadsteads, and others of similar character;

(2) Those which belong to the State, without being for public use, and are intended for some public
service or for the development of the national wealth. [Emphases supplied]
Here, the subject lands are reclaimed lands, specifically portions of the foreshore and offshore areas of
Manila Bay. As such, these lands remain public lands and form part of the public domain. In the case of
Chavez v. Public Estates Authority and AMARI Coastal Development Corporation,12 the Court held that
foreshore and submerged areas irrefutably belonged to the public domain and were inalienable unless
reclaimed, classified as alienable lands open to disposition and further declared no longer needed for
public service. The fact that alienable lands of the public domain were transferred to the PEA (now PRA)
and issued land patents or certificates of title in PEAs name did not automatically make such lands
private. This Court also held therein that reclaimed lands retained their inherent potential as areas for
public use or public service.

As the central implementing agency tasked to undertake reclamation projects nationwide, with
authority to sell reclaimed lands, PEA took the place of DENR as the government agency charged with
leasing or selling reclaimed lands of the public domain. The reclaimed lands being leased or sold by PEA
are not private lands, in the same manner that DENR, when it disposes of other alienable lands, does not
dispose of private lands but alienable lands of the public domain. Only when qualified private parties
acquire these lands will the lands become private lands. In the hands of the government agency tasked
and authorized to dispose of alienable of disposable lands of the public domain, these lands are still
public, not private lands.

Furthermore, PEA's charter expressly states that PEA "shall hold lands of the public domain" as well as
"any and all kinds of lands." PEA can hold both lands of the public domain and private lands. Thus, the
mere fact that alienable lands of the public domain like the Freedom Islands are transferred to PEA and
issued land patents or certificates of title in PEA's name does not automatically make such lands
private.13

Likewise, it is worthy to mention Section 14, Chapter 4, Title I, Book III of the Administrative Code of
1987, thus:

SEC 14. Power to Reserve Lands of the Public and Private Dominion of the Government.-

(1)The President shall have the power to reserve for settlement or public use, and for specific public
purposes, any of the lands of the public domain, the use of which is not otherwise directed by law. The
reserved land shall thereafter remain subject to the specific public purpose indicated until otherwise
provided by law or proclamation.

Reclaimed lands such as the subject lands in issue are reserved lands for public use. They are properties
of public dominion. The ownership of such lands remains with the State unless they are withdrawn by
law or presidential proclamation from public use.

Under Section 2, Article XII of the 1987 Constitution, the foreshore and submerged areas of Manila Bay
are part of the "lands of the public domain, waters x x x and other natural resources" and consequently
"owned by the State." As such, foreshore and submerged areas "shall not be alienated," unless they are
classified as "agricultural lands" of the public domain. The mere reclamation of these areas by PEA does
not convert these inalienable natural resources of the State into alienable or disposable lands of the
public domain. There must be a law or presidential proclamation officially classifying these reclaimed
lands as alienable or disposable and open to disposition or concession. Moreover, these reclaimed lands
cannot be classified as alienable or disposable if the law has reserved them for some public or quasi-
public use.

As the Court has repeatedly ruled, properties of public dominion are not subject to execution or
foreclosure sale.14 Thus, the assessment, levy and foreclosure made on the subject reclaimed lands by
respondent, as well as the issuances of certificates of title in favor of respondent, are without basis.

WHEREFORE, the petition is GRANTED. The January 8, 2010 Order of the Regional Trial Court, Branch
195, Paraaque City, is REVERSED and SET ASIDE. All reclaimed properties owned by the Philippine
Reclamation Authority are hereby declared EXEMPT from real estate taxes. All real estate tax
assessments, including the final notices of real estate tax delinquencies, issued by the City of Paraaque
on the subject reclaimed properties; the assailed auction sale, dated April 7, 2003; and the Certificates
of Sale subsequently issued by the Paraaque City Treasurer in favor of the City of Paraaque, are all
declared VOID.

SO ORDERED.

City of Baguio vs Atty. Brain Masweng 2009

TINGA, J.:

Petitioners, the City Government of Baguio City, represented by its Mayor, Reinaldo Bautista, Jr., the
Anti-Squatting Committee, represented by Atty. Melchor Carlos R. Rabanes; the City Buildings and
Architecture Office, represented by Oscar Flores; and the Public Order and Safety Office, represented by
Emmanuel Reyes and later substituted by Gregorio Deligero, assail the Decision[1] of the Court of
Appeals in CA G.R. SP No. 96895, dated April 16, 2007, and its Resolution[2] dated September 11, 2007,
which affirmed the injunctive writ issued by the National Commission on Indigenous Peoples (NCIP)
against the demolition orders of petitioners.

The following undisputed facts are culled from the assailed Decision:

The case stemmed from the three (3) Demolition Orders issued by the City Mayor of Baguio City, Braulio
D. Yaranon, ordering the demolition of the illegal structures constructed by Lazaro Bawas, Alexander
Ampaguey, Sr. and a certain Mr. Basatan on a portion of the Busol Watershed Reservation located at
Aurora Hill, Baguio City, without the required building permits and in violation of Section 69 of
Presidential Decree No. 705, as amended, Presidential Decree No. 1096 and Republic Act No. 7279.

Pursuant thereto, the corresponding demolition advices dated September 19, 2006 were issued
informing the occupants thereon of the intended demolition of the erected structures on October 17 to
20, 2006. Consequently, Elvin Gumangan, Narciso Basatan and Lazaro Bawas (hereinafter private
respondents) filed a petition for injunction with prayer for the issuance of a temporary restraining order
and/or writ of preliminary injunction against the Office of the City Mayor of Baguio City through its
Acting City Mayor, Reynaldo Bautista, the City Building and Architecture Office, the Anti-Squatting Task
Force, and the Public Order and Safety Division, among others, (collectively called petitioners) before
the National Commission on Indigenous Peoples, Cordillera Administrative Region (NCIP-CAR), Regional
Hearing Office, La Trinidad, Benguet, docketed as Case No. 31-CAR-06.

In their petition, private respondents basically claimed that the lands where their residential houses
stand are their ancestral lands which they have been occupying and possessing openly and continuously
since time immemorial; that their ownership thereof have been expressly recognized in Proclamation
No. 15 dated April 27, 1922 and recommended by the Department of Environment and Natural
Resources (DENR) for exclusion from the coverage of the Busol Forest Reserve. They, thus, contended
that the demolition of their residential houses is a violation of their right of possession and ownership of
ancestral lands accorded by the Constitution and the law, perforce, must be restrained.

On October 16 and 19, 2006, Regional Hearing Officer Atty. Brain S. Masweng of the NCIP issued the two
(2) assailed temporary restraining orders (TRO) directing the petitioners and all persons acting for and in
their behalf to refrain from enforcing Demolition Advice dated September 18, 2006; Demolition Order
dated September 19, 2006; Demolition Order No. 25, Series of 2004; Demolition Order No. 33, Series of
2005; and Demolition Order No. 28, Series of 2004, for a total period of twenty (20) days.

Subsequently, the NCIP issued the other assailed Resolution dated November 10, 2006 granting the
private respondents application for preliminary injunction subject to the posting of an injunctive bond
each in the amount of P10,000.00.[3]

Acting on the petition for certiorari filed by petitioners,[4] the Court of Appeals upheld the jurisdiction of
the NCIP over the action filed by private respondents and affirmed the temporary restraining orders
dated October 16[5] and 19, 2006,[6] and the Resolution dated November 10, 2006,[7] granting the
application for a writ of preliminary injunction, issued by the NCIP. The appellate court also ruled
that Baguio City is not exempt from the coverage of Republic Act No. 8371, otherwise known as the
Indigenous Peoples Rights Act of 1997 (IPRA).

Petitioners assert that the NCIP has no jurisdiction to hear and decide main actions for injunction such
as the one filed by private respondents. They claim that the NCIP has the authority to issue temporary
restraining orders and writs of preliminary injunction only as auxiliary remedies to cases pending before
it.

Further, the IPRA provides that Baguio City shall be governed by its Charter. Thus, private respondents
cannot claim their alleged ancestral lands under the provisions of the IPRA.

Petitioners contend that private respondents are not entitled to the protection of an injunctive writ
because they encroached upon the Busol Forest Reservation and built structures thereon without the
requisite permit. Moreover, this Court, in Heirs of Gumangan v. Court of Appeals,[8] had already declared
that the Busol Forest Reservation is inalienable and possession thereof, no matter how long, cannot
convert the same into private property. Even assuming that private respondents have a pending
application for ancestral land claim, their right is at best contingent and cannot come under the
protective mantle of injunction.

Petitioners also claim that the Busol Forest Reservation is exempt from ancestral claims as it is needed
for public welfare. It is allegedly one of the few remaining forests in Baguio City and is the citys main
watershed.

Finally, petitioners contend that the demolition orders were issued pursuant to the police power of the
local government.

In their Comment[9] dated March 1, 2007, private respondents defend the jurisdiction of the NCIP to
take cognizance of and decide main actions for injunction arguing that the IPRA does not state that the
NCIP may only issue such writs of injunction as auxiliary remedies. Private respondents also contend
that the IPRA does not exempt Baguio Cityfrom its coverage nor does it state that there are no ancestral
lands in Baguio City.
As members of the Ibaloi Indigenous Community native to Baguio City, private respondents are treated
as squatters despite the fact that they hold native title to their ancestral land. The IPRA allegedly now
recognizes ancestral lands held by native title as never to have been public lands.

Private respondents aver that the Busol Forest Reservation is subject to ancestral land claims. In fact,
Proclamation No. 15[10] dated April 27, 1922, which declared the area a forest reserve, allegedly did not
nullify the vested rights of private respondents over their ancestral lands and even identified the
claimants of the particular portions within the forest reserve. This claim of ownership is an exception to
the governments contention that the whole area is a forest reservation.

Lastly, private respondents assert that the power of the city mayor to order the demolition of certain
structures is not absolute. Regard should be taken of the fact that private respondents cannot be issued
building permits precisely because they do not have paper titles over their ancestral lands, a
requirement for the issuance of a building permit under the National Building Code.

Petitioners Reply to Comment[11] dated June 11, 2008 merely reiterates their previous arguments.

We shall first dispose of the elemental issue of the NCIPs jurisdiction.

The NCIP is the primary government agency responsible for the formulation and implementation of
policies, plans and programs to protect and promote the rights and well-being of indigenous cultural
communities/indigenous peoples (ICCs/IPs) and the recognition of their ancestral domains as well as
their rights thereto.[12] In order to fully effectuate its mandate, the NCIP is vested with jurisdiction over
all claims and disputes involving the rights of ICCs/IPs. The only condition precedent to the NCIPs
assumption of jurisdiction over such disputes is that the parties thereto shall have exhausted all
remedies provided under their customary laws and have obtained a certification from the Council of
Elders/Leaders who participated in the attempt to settle the dispute that the same has not been
resolved.[13]

In addition, NCIP Administrative Circular No. 1-03 dated April 9, 2003, known as the Rules on Pleadings,
Practice and Procedure Before the NCIP, reiterates the jurisdiction of the NCIP over claims and disputes
involving ancestral lands and enumerates the actions that may be brought before the commission. Sec.
5, Rule III thereof provides:

Sec. 5. Jurisdiction of the NCIP.The NCIP through its Regional Hearing Offices shall exercise jurisdiction
over all claims and disputes involving rights of ICCs/IPs and all cases pertaining to the implementation,
enforcement, and interpretation of R.A. 8371, including but not limited to the following:

(1) Original and Exclusive Jurisdiction of the Regional Hearing Office (RHO):

a. Cases involving disputes and controversies over ancestral lands/domains of ICCs/IPs;

b. Cases involving violations of the requirement of free and prior and informed consent of ICCs/IPs;

c. Actions for enforcement of decisions of ICCs/IPs involving violations of customary laws or

desecration of ceremonial sites, sacred places, or rituals;

d. Actions for redemption/reconveyance under Section 8(b) of R.A. 8371; and

e. Such other cases analogous to the foregoing.

(2) Original Jurisdiction of the Regional Hearing Officer:

a. Cases affecting property rights, claims of ownership, hereditary succession, and settlement of land
disputes, between and among ICCs/IPs that have not been settled under customary laws; and

b. Actions for damages arising out of any violation of Republic Act No. 8371.

(3) Exclusive and Original Jurisdiction of the Commission:

a. Petition for cancellation of Certificate of Ancestral Domain Titles/Certificate of Ancestral Land Titles
(CADTs/CALTs) alleged to have been fraudulently acquired by, and issued to, any person or community
as provided for under Section 54 of R.A. 8371. Provided that such action is filed within one (1) year from
the date of registration.
In order to determine whether the NCIP has jurisdiction over the dispute in accordance with the
foregoing provisions, it is necessary to resolve, on the basis of the allegations in their petition, whether
private respondents are members of ICCs/IPs. In their petition[14] filed before the NCIP, private
respondents, members of the Ibaloi tribe who first settled in Baguio City, were asserting ownership of
portions of the Busol Forest Reservation which they claim to be their ancestral lands. Correctly
denominated as a petition for injunction as it sought to prevent the enforcement of the demolition
orders issued by the City Mayor, the petition traced private respondents ancestry to Molintas and
Gumangan and asserted their possession, occupation and utilization of their ancestral lands. The
petition also alleged that private respondents claim over these lands had been recognized by
Proclamation No. 15 which mentions the names of Molintas and Gumangan as having claims over
portions of the Busol Forest Reservation.[15]

Clearly then, the allegations in the petition, which axiomatically determine the nature of the action and
the jurisdiction of a particular tribunal,[16] squarely qualify it as a dispute(s) or controversy(s) over
ancestral lands/domains of ICCs/IPs within the original and exclusive jurisdiction of the NCIP-RHO.

The IPRA, furthermore, endows the NCIP with the power to issue temporary restraining orders and writs
of injunction. Sec. 69 thereof states:

Sec. 69. Quasi-Judicial Powers of the NCIP.The NCIP shall have the power and authority:

a) To promulgate rules and regulations governing the hearing and disposition of cases filed before it
as well as those pertaining to its internal functions and such rules and regulations as may be necessary
to carry out the purposes of this Act;

b) To administer oaths, summon the parties to a controversy, issue subpoenas requiring the
attendance and testimony of witnesses or the production of such books, papers, contracts, records,
agreements, and other document of similar nature as may be material to a just determination of the
matter under investigation or hearing conducted in pursuance of this Act;

c) To hold any person in contempt, directly or indirectly, and impose appropriate penalties therefor;
and
d) To enjoin any or all acts involving or arising from any case pending before it which, if not restrained
forthwith, may cause grave or irreparable damage to any of the parties to the case or seriously affect
social or economic activity. [Emphasis supplied]

NCIP Administrative Circular No. 1-03 echoes the above-quoted provision in Sec. 82, Rule XV, which
provides:

Sec. 82. Preliminary Injunction and Temporary Restraining Order.A writ of preliminary injunction or
restraining order may be granted by the Commission pursuant to the provisions of Sections 59 and 69 of
R.A. [No.] 8371 when it is established, on the basis of sworn allegations in a petition, that the acts
complained of involving or arising from any case, if not restrained forthwith, may cause grave or
irreparable damage or injury to any of the parties, or seriously affect social or economic activity. This
power may also be exercised by RHOs in cases pending before them in order to preserve the rights of
the parties.

As can be gleaned from the foregoing provisions, the NCIP may issue temporary restraining orders and
writs of injunction without any prohibition against the issuance of the writ when the main action is for
injunction. The power to issue temporary restraining orders or writs of injunction allows parties to a
dispute over which the NCIP has jurisdiction to seek relief against any action which may cause them
grave or irreparable damage or injury. In this case, the Regional Hearing Officer issued the injunctive
writ because its jurisdiction was called upon to protect and preserve the rights of private respondents
who are undoubtedly members of ICCs/IPs.

Parenthetically, in order to reinforce the powers of the NCIP, the IPRA even provides that no restraining
order or preliminary injunction may be issued by any inferior court against the NCIP in any
case, dispute or controversy arising from or necessary to the

interpretation of the IPRA and other laws relating to ICCs/IPs and ancestral domains.[17]

Petitioners argue that Baguio City is exempt from the provisions of the IPRA, and necessarily the
jurisdiction of the NCIP, by virtue of Sec. 78 thereof, which states:

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

The foregoing provision indeed states that Baguio City is governed by its own charter. Its exemption
from the IPRA, however, cannot ipso facto be deduced because the law concedes the validity of prior
land rights recognized or acquired through any process before its effectivity. The IPRA demands that the
citys charter respect the validity of these recognized land rights and titles.

The crucial question to be asked then is whether private respondents ancestral land claim was indeed
recognized by Proclamation No. 15, in which case, their right thereto may be protected by an injunctive
writ. After all, before a writ of preliminary injunction may be issued, petitioners must show that there
exists a right to be protected and that the acts against which injunction is directed are violative of said
right.[18]

Proclamation No. 15, however, does not appear to be a definitive recognition of private respondents
ancestral land claim. The proclamation merely identifies the Molintas and Gumangan families, the
predecessors-in-interest of private respondents, as claimants of a portion of the Busol Forest
Reservation but does not acknowledge vested rights over the same. In fact, Proclamation No. 15
explicitly withdraws the Busol Forest Reservation from sale or settlement. It provides:

Pursuant to the provisions of section eighteen hundred and twenty-six of Act Numbered Twenty-seven
Hundred and eleven[,] I hereby establish the Busol Forest Reservation to be administered by the Bureau
of Forestry for the purpose of conserving and protecting water and timber, the protection of the water
supply being of primary importance and all other uses of the forest are to be subordinated to that
purpose. I therefore withdraw from sale or settlement the following described parcels of the public
domain situated in the Township of La Trinidad, City of Baguio, Mountain Province, Island of Luzon, to
wit:

The fact remains, too, that the Busol Forest Reservation was declared by the Court as inalienable in Heirs
of Gumangan v. Court of Appeals.[19] The declaration of the Busol Forest Reservation as such precludes
its conversion into private property. Relatedly, the courts are not endowed with jurisdictional
competence to adjudicate forest lands.

All told, although the NCIP has the authority to issue temporary restraining orders and writs of
injunction, we are not convinced that private respondents are entitled to the relief granted by the
Commission.

WHEREFORE, the instant petition is GRANTED. The Decision of the Court of Appeals in CA G.R. SP No.
96895 dated April 16, 2007 and its Resolution dated September 11, 2007 are
REVERSED and SET ASIDE. Case No. 31-CAR-06 entitled, Elvin Gumangan, Narciso Basatan and Lazaro
Bawas v. Office of the City Mayor of Baguio City, et al. is DISMISSED. No pronouncement as to costs.

SO ORDERED.

G.R. No. 180882 February 27, 2013

THE BAGUIO REGREENING MOVEMENT, INC., represented by ATTY. ERDOLFO V. BALAJADIA;

ENVIRONMENT MANAGEMENT CITY AND PARKS OFFICE, represented by its Officer-in Charge, Cordelia
C. Lacsamana; and THE BUSOL FOREST RESERVATION TASK FORCE, represented by its Team Leader,
Victor Dictag, Petitioners,
vs.
ATTY. BRAIN MASWENG, in his capacity as Regional Hearing Officer, NCIP-CAR; ELIZABETH MAT-AN,
for herself and as representative of the heirs of Rafael; JUDITH MARANES, for herself and as
representative of the heirs of Molintas; HELEN LUBOS, for herself and as representative of the heirs of
Kalomis; MAGDALENA GUMANGAN QUE, for herself and as representative of the heirs of Gumangan;
Spouses ALEXANDER AMPAGUEY and LUCIA AMPAGUEY; and Spouses CARMEN PANA YO and
MELANIO PANAYO, Respondents.

DECISION

LEONARDO-DE CASTRO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Revised Rule on Civil Procedure assailing
the Decision1 of the Court of Appeals dated April 30, 2007 in CA-G.R. SP No. 78570 insofar as it affirmed
the issuances of National Commission on Indigenous Peoples (NCIP) Hearing Officer Brain Masweng, and
the Resolution of the same court dated December 11, 2007 denying petitioners Motion for Partial
Reconsideration.

Herein private respondents Elizabeth Mat-an, Judith Maranes, Helen Lubos, Magdalena Gumangan Que,
spouses Alexander and Lucia Ampaguey, and spouses Melanio and Carmen Panayo, claiming that their
parents inherited from their ancestors several parcels of land in what is now known as the Busol
Watershed Reservation, filed before the NCIP a Petition for Injunction, with an application for a
Temporary Restraining Order (TRO), and thereafter a Writ of Preliminary Injunction seeking to enjoin the
Baguio District Engineers Office, the Office of the City Architect and Parks Superintendent, and
petitioners The Baguio Regreening Movement, Inc. and the Busol Task Force from fencing the Busol
Watershed Reservation.

In their Petition before the NCIP, private respondents claim that they are members of the Ibaloi and
Kankanaey tribes of Baguio City. Their ancestors ownership of the properties now known as the Busol
Watershed Reservation was allegedly expressly recognized in Proclamation No. 15 issued by Governor
General Leonard Wood. As owners of said properties, their ancestors paid the realty taxes thereon. The
fencing project of petitioners would allegedly impede their access to and from their residences,
farmlands and water sources, and dispossess them of their yard where tribal rituals and ceremonies are
usually held.

On October 21, 2002, NCIP Regional Hearing Officer Brain S. Masweng issued a TRO, the dispositive
portion of which reads:

WHEREFORE, finding the petition in order and that grave injustice may result should the acts
complained of be not immediately restrained, a Temporary Restraining Order is hereby issued pursuant
to Section 69 (d) of R.A. 8371, ordering the respondents namely, the Baguio District Engineers Office,
represented by Engineer Nestor M. Nicolas, the Project Contractor, Mr. Pel-ey, the Baguio Regreening
Movement Inc., represented by Atty. Erdolfo V. Balajadia, the Busol Task Force, represented by its Team
Leader, Moises G. Anipew, the Baguio City Architect and Parks Superintendent Office, represented by
Arch. Ignacio Estipona, and all persons acting for and their behalf (sic) of the respondents, their agents
and/or persons whomever acting for and their behalf (sic), to refrain, stop, cease and desist from
fencing and/or constructing fences around and between the areas and premises of petitioners, ancestral
land claims, specifically identified in Proclamation No. 15 as Lot "A" with an area of 143,190 square
meters, included within the boundary lines, Lot "B" 77,855 square meters, included within the boundary
lines, Lot "C" 121,115 square meters, included within the boundary lines, Lot "D" 33,839 square meters,
included within the boundary lines, Lot "E" 87,903 square meters, included within the boundary lines,
Lot "F" 39,487 square meters, included within the boundary lines, Lot "G" 11,620 square meters,
included within the boundary lines, Lot "H" 17,453 square meters, included within the boundary lines,
Lot "J" 40,000 square meters, included within the boundary lines, all described and embraced under
Proclamation No. 15, the land embraced and described under the approved plan No. 12064 of the then
Director of Lands, containing an area of 186, square meters surveyed for Gumangan, the land covered
by LRC PSD 52910, containing an area of 77,849 square meters as surveyed for Emily Kalomis, that land
covered by survey plan 11935 Amd, containing an area of 263153 square meters as surveyed for
Molintas, and that land covered by AP-7489, containing an area of 155084 as surveyed for the heirs of
Rafael.

This Restraining Order shall be effective for a period of twenty (20) days from receipt hereof.

Meantime, the respondents are further ordered to show cause on November 5, 2002 (Tuesday) at 2:00
oclock in the afternoon, why petitioners prayer for the issuance of a writ of preliminary injunction
should not be granted.2

On November 6, 2002, Atty. Masweng denied petitioners motion to dissolve the TRO, explaining that a
TRO may be issued motu proprio where the matter is of extreme urgency and the applicant will suffer
grave injustice and irreparable injury. He further stated that petitioners failed to comply with the
procedure laid down in Section 6, Rule 58 of the Rules of Court.

On November 12, 2002, Atty. Masweng issued an Order, the dispositive portion of which states:

WHEREFORE, a writ of preliminary injunction is hereby issued against the respondents, their agents, or
persons acting for and in their behalves (sic), ordering them to refrain, cease and desist from
implementing their fencing project during the pendancy (sic) of the aboveentitled case in any portion of
petitioners ancestral land claims within the Busol Watershed Reservation. The lands being identified
under Proclamation No. 15 as lot*s+ A, B, C, D, E, F, G, H, and J, including the lands covered by
Petitioners approved survey plans as follows: that land identified and plotted under Survey Plan No. B.L.
FILE No. II-11836, September, 1916 surveyed for Gumangan; that land covered by PSD-52910, May,
1921, surveyed for Emily Kalomis; that land covered by survey plan II-11935 Amd, 1916, surveyed for
Molintas; and that land covered by Survey Plan No. AP 7489, March 1916, surveyed for the heirs of
Rafael.

The writ of preliminary injunction shall be effective and shall be enforced only upon petitioners
compliance with the required injunctive bond of Twenty Thousand Pesos (P20,000.00) each in
compliance with Section 3, R.A. 8975.3

Atty. Masweng ruled that the NCIP has jurisdiction over all claims and disputes involving rights of
Indigenous Cultural Communities (ICCs) and Indigenous Peoples (IPs) and, in the exercise of its
jurisdiction, may issue injunctive writs. According to Atty. Masweng, the allegations in the verified
petition show that private respondents invoked the provisions of Republic Act No. 8371, otherwise
known as the Indigenous Peoples Rights Act of 1997 (IPRA), when they sought to enjoin petitioners from
fencing their ancestral lands within the Busol Watershed Reservation. Petitioners fencing project
violated Section 58 of the IPRA, which requires the prior written consent of the affected ICCs/IPs. The
NCIP therefore has authority to hear the petition filed by private respondents and to issue the injunctive
writ. As regards petitioners contention that the issuance of the TRO violated Presidential Decree No.
1818, Atty. Masweng applied the Decision of this Court in Malaga v. Penachos, Jr.,4 and held that:

Respondents project of fencing the Busol Watershed is not in the exercise of administrative discretion
involving a very technical matter. This is so since the implementation of the fencing project would
traverse along lands occupied by people who claim that they have a legal right over their lands. The
fence would actually cut across, divide, or segregate lands occupied by people. The effect of it would
fence in and fence out property claims. In this case, petitioners invoke their constitutional rights to be
protected against deprivation of property without due process of law and of taking private property
without just compensation. Such situations involve pure question of law.5

As regards the invocation of res judicata by petitioners, Atty. Masweng held that they failed to present
copies of the Decisions supposedly rendered by the Regional Trial Court and the Supreme Court.

On November 29, 2002, petitioners filed a Motion for Reconsideration of the above Order. On June 20,
2003, Atty. Masweng denied said Motion on the ground that the same was filed out of time.

Petitioners filed before the Court of Appeals a Petition for Certiorari, alleging grave abuse of discretion
on the part of Atty. Masweng in issuing the TRO and the writ of preliminary injunction.

On April 30, 2007, the Court of Appeals rendered its Decision dismissing petitioners Petition
for Certiorari. The dispositive portion of the Decision is as follows:

WHEREFORE, premises considered, the instant petition is DISMISSED and the assailed orders of public
respondent AFFIRMED. Nevertheless, private respondents are hereby enjoined from (i) introducing
constructions at the Busol Watershed and Forest Reservation and (ii) engaging in activities that degrade
the resources therein until viable measures or programs for the maintenance, preservation and
development of said reservation are adopted pursuant to Sec. 58 of Rep. Act No. 8371.6

The Court of Appeals ruled that since the petition before the NCIP involves the protection of private
respondents rights to their ancestral domains in accordance with Section 7(b), (c) and (g)7 of the IPRA,
the NCIP clearly has jurisdiction over the dispute pursuant to Section 66. The Court of Appeals also
upheld the conclusion of Atty. Masweng that the NCIP can issue injunctive writs as a principal relief
against acts adversely affecting or infringing on the rights of ICCs or IPs, because "(t)o rule otherwise
would render NCIP inutile in preventing acts committed in violation of the IPRA."8

As regards petitioners allegations that government reservations such as the subject Busol Watershed
cannot be the subject of ancestral domain claims, the Court of Appeals pointed out that Section 589 of
the IPRA in fact mandates the full participation of ICCs/IPs in the maintenance, management, and
development of ancestral domains or portions thereof that are necessary for critical watersheds. The
IPRA, thus, gives the ICCs/IPs responsibility to maintain, develop, protect, and conserve such areas with
the full and effective assistance of government agencies.10

Despite ruling in favor of private respondents, the Court of Appeals nevertheless found merit in
petitioners own application for injunction and observed that certain activities by private respondents
without regard for environmental considerations could result in irreparable damage to the watershed
and the ecosystem. Thus, the Court of Appeals enjoined private respondents from introducing
constructions at the Busol Watershed and from engaging in activities that degrade its resources, until
viable measures or programs for the maintenance, preservation and development of said reservation
are adopted pursuant to the aforementioned Section 58 of the IPRA.

Hence, the present Petition for Review wherein petitioners assert the following grounds:

1. THE COURT OF APPEALS GRAVELY AND PATENTLY ERRED IN SUSTAINING THE NCIPS ISSUANCE OF A
TEMPORARY RESTRAINING ORDER AND WRIT OF PRELIMINARY INJUNCTION DESPITE CLEAR AND
PATENT VIOLATION OF P.D. 1818, SUPREME COURT CIRCULAR NO. 68-94 AND SUPREME COURT
ADMINISTRATIVE CIRCULAR NO. 11-2000;

2. THE COURT OF APPEALS GRAVELY AND PATENTLY ERRED IN AFFIRMING THE ACT OF THE NCIP IN
ISSUING A 20-DAYS TEMPORARY RESTRAINING ORDER EX PARTE SANS THE MANDATORY NOTICE AND
HEARING FOR THE ISSUANCE THEREOF;

3. THE COURT OF APPEALS GRAVELY AND PATENTLY ERRED IN SUSTAINING THE NCIPS ISSUANCE OF A
WRIT OF PRELIMINARY INJUNCTION DESPITE ABSOLUTE ABSENCE OF CLEAR, UNMISTAKABLE AND
POSITIVE LEGAL RIGHTS ON THE PART OF THE APPLICANTS;

4. THE COURT OF APPEALS GRAVELY AND PATENTLY ERRED IN HOLDING THAT THE NCIP HEARING
OFFICER HAS JURISDICTION OVER A CASE OF INJUNCTION INVOLVING A GOVERNMENT
INFRASTRUCTURE PROJECT;

5. THE COURT OF APPEALS PATENTLY AND GRAVELY ERRED IN BRUSHING ASIDE SECTION 78, A SPECIAL
PROVISION OF REPUBLIC ACT 8371 WHICH EXCLUDES THE CITY OF BAGUIO FROM THE COVERAGE OF
ANCESTRAL LAND CLAIMS APPLICATIONS;

6. THE COURT OF APPEALS GRAVELY AND PATENTLY ERRED IN UPHOLDING RULE XIII OF THE
IMPLEMENTING RULES OF REPUBLIC ACT 8371, EVEN IF THE PROVISIONS OF SAID RULE XIII CLEARLY
OVERSTEPPED AND EXCEEDED SECTION 78 OF R.A. 8371.11

TRO and Preliminary Injunction against Government Infrastructure Projects

The governing law as regards the prohibition to issue restraining orders and injunctions against
government infrastructure projects is Republic Act No. 8975,12 which modified Presidential Decree No.
1818, the law cited by the parties, upon its effectivity on November 26, 2000.13 Section 9 of Republic Act
No. 8975 provides:

Section 9. Repealing Clause. All laws, decrees, including Presidential Decree Nos. 605, 1818 and
Republic Act No. 7160, as amended, orders, rules and regulations or parts thereof inconsistent with this
Act are hereby repealed or amended accordingly.

Thus, in GV Diversified International, Incorporated v. Court of Appeals,14 we ruled that Presidential

Decree No. 1818 have been effectively superseded by Republic Act No. 8975. The prohibition is thus
now delineated in Section 3 of said latter law, which provides:
Section 3. Prohibition on the Issuance of Temporary Restraining Orders, Preliminary Injunctions and
Preliminary Mandatory Injunctions. No court, except the Supreme Court, shall issue any temporary
restraining order, preliminary injunction or preliminary mandatory injunction against the government,
or any of its subdivisions, officials or any person or entity, whether public or private, acting under the
governments direction, to restrain, prohibit or compel the following acts:

(a) Acquisition, clearance and development of the right-of-way and/or site or location of any national
government project;

(b) Bidding or awarding of contract/project of the national government as defined under Section 2
hereof;

(c) Commencement, prosecution, execution, implementation, operation of any such contract or project;

(d) Termination or rescission of any such contract/project; and

(e) The undertaking or authorization of any other lawful activity necessary for such contract/project.

This prohibition shall apply to all cases, disputes or controversies instituted by a private party, including
but not limited to cases filed by bidders or those claiming to have rights through such bidders involving
such contract/project. This prohibition shall not apply when the matter is of extreme urgency involving a
constitutional issue, such that unless a temporary restraining order is issued, grave injustice and
irreparable injury will arise. The applicant shall file a bond, in an amount to be fixed by the court, which
bond shall accrue in favor of the government if the court should finally decide that the applicant was not
entitled to the relief sought.

If after due hearing the court finds that the award of the contract is null and void, the court may, if
appropriate under the circumstances, award the contract to the qualified and winning bidder or order a
rebidding of the same, without prejudice to any liability that the guilty party may incur under the
existing laws. (Emphasis supplied.)

Should a judge violate the preceding section, Republic Act No. 8975 provides the following penalty:

Section 6. Penal Sanction. In addition to any civil and criminal liabilities he or she may incur under
existing laws, any judge who shall issue a temporary restraining order, preliminary injunction or
preliminary mandatory injunction in violation of Section 3 hereof, shall suffer the penalty of suspension
of at least sixty (60) days without pay. (Emphasis added.)

It is clear from the foregoing provisions that the prohibition covers only judges, and does not apply to
the NCIP or its hearing officers. In this respect, Republic Act No. 8975 conforms to the coverage of
Presidential Decree No. 60515 and Presidential Decree No. 1818,16 both of which enjoin only the courts.
Accordingly, we cannot nullify the assailed Orders on the ground of violation of said laws.

The Courts Previous Decision in G.R. No. 180206

On February 4, 2009, this Court promulgated its Decision in G.R. No. 180206, a suit which involved
several of the parties in the case at bar. In G.R. No. 180206, the City Mayor of Baguio City issued three
Demolition Orders with respect to allegedly illegal structures constructed by private respondents therein
on a portion of the Busol Forest Reservation. Private respondents filed a Petition for Injunction with the
NCIP. Atty. Masweng issued two temporary restraining orders directing the City Government of Baguio
to refrain from enforcing said Demolition Orders and subsequently granted private respondents
application for a preliminary injunction. The Court of Appeals, acting on petitioners Petition
for Certiorari, affirmed the temporary restraining orders and the writ of preliminary injunction.

This Court then upheld the jurisdiction of the NCIP on the basis of the allegations in private respondents
Petition for Injunction. It was similarly claimed in said Petition for Injunction that private respondents
were descendants of Molintas and Gumangan whose claims over the portions of the Busol Watershed
Reservation had been recognized by Proclamation No. 15. This Court thus ruled in G.R. No. 180206 that
the nature of the action clearly qualify it as a dispute or controversy over ancestral lands/domains of the
ICCs/IPs.17 On the basis of Section 69(d)18 of the IPRA and Section 82, Rule XV19 of NCIP Administrative
Circular No. 1-03, the NCIP may issue temporary restraining orders and writs of injunction without any
prohibition against the issuance of the writ when the main action is for injunction.20

On petitioners argument that the City of Baguio is exempt from the provisions of the IPRA and,
consequently, the jurisdiction of the NCIP, this Court ruled in G.R. No. 180206 that said exemption
cannot ipso facto be deduced from Section 7821 of the IPRA because the law concedes the validity of
prior land rights recognized or acquired through any process before its effectivity.22

Lastly, however, this Court ruled that although the NCIP has the authority to issue temporary restraining
orders and writs of injunction, it was not convinced that private respondents were entitled to the relief
granted by the Commission.23 Proclamation No. 15 does not appear to be a definitive recognition of
private respondents ancestral land claim, as it merely identifies the Molintas and Gumangan families
as claimants of a portion of the Busol Forest Reservation, but does not acknowledge vested rights over
the same.24 Since it is required before the issuance of a writ of preliminary injunction that claimants
show the existence of a right to be protected, this Court, in G.R. No. 180206, ultimately granted the
petition of the City Government of Baguio and set aside the writ of preliminary injunction issued
therein.1wphi1

In the case at bar, petitioners and private respondents present the very same arguments and counter-
arguments with respect to the writ of injunction against the fencing of the Busol Watershed
Reservation. The same legal issues are thus being litigated in G.R. No. 180206 and in the case at bar,
except that different writs of injunction are being assailed. In both cases, petitioners claim (1) that Atty.
Masweng is prohibited from issuing temporary restraining orders and writs of preliminary injunction
against government infrastructure projects; (2) that Baguio City is beyond the ambit of the IPRA; and (3)
that private respondents have not shown a clear right to be protected. Private respondents, on the
other hand, presented the same allegations in their Petition for Injunction, particularly the alleged
recognition made under Proclamation No. 15 in favor of their ancestors. While res judicata does not
apply on account of the different subject matters of the case at bar and G.R. No. 180206 (they assail
different writs of injunction, albeit issued by the same hearing officer), we are constrained by the
principle of stare decisis to grant the instant petitiOn. The Court explained the principle
of stare decisis25in Ting v. Velez-Ting26:

The principle of stare decisis enjoins adherence by lower courts to doctrinal rules established by this
Court in its final decisions. It is based on the principle that once a question of law has been examined
and decided, it should be deemed settled and closed to further argument. Basically, it is a bar to any
attempt to relitigate the same issues, necessary for two simple reasons: economy and stability. In our
jurisdiction, the principle is entrenched in Article 8 of the Civil Code. (Citations omitted.)

We have also previously held that "under the doctrine of stare decisis, once a court has laid down a
principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all
future cases where the facts are substantially the same."27

However, even though the principal action in the case at bar is denominated as a petition for injunction,
the relief prayed for and granted by the NCIP partakes of the nature of a preliminary injunction in the
sense that its effectivity would cease the moment the NCIP issues its decision in an appropriate action.
The conclusions of this Court in both the case at bar and that in G.R. No. 180206 as regards private
respondents' ancestral land claim should therefore be considered provisional, as they are based merely
on the allegations in the complaint or petition and not on evidence adduced in a full-blown proceeding
on the merits by the proper tribunal. Private respondents are therefore not barred from proving their
alleged ancestral domain claim in the appropriate proceeding, despite the denial of the temporary
injunctive relief prayed for.

WHEREFORE, the present Petition for Review on Certiorari is hereby GRANTED. The Decision and
Resolution of the Court of Appeals in CA-G.R. SP No. 78570 dated April 30, 2007 and December 11, 2007,
respectively, are REVERSED and SET ASIDE.

SO ORDERED.
Republic vs Naguiat

Natural Resources and Environmental Laws

G.R. No. 134209; January 24, 2006

FACTS:

Celestina Naguiat filed an application for registration of title to four parcels of land located in Panan,
Botolan, Zambales. The applicant alleges that she is the owner of the said parcels of land having
acquired them by purchase from its previous owners and their predecessors-in-interest who have been
in possession thereof for more than thirty (30) years; and that to the best of her knowledge, said lots
suffer no mortgage or encumbrance of whatever kind nor is there any person having any interest, legal
or equitable, or in possession thereof.

Petitioner Republic opposed on the ground that neither the applicant nor her predecessors-in interest
have been in open, continuous, exclusive and notorious possession and occupation of the lands in
question since 12 June 1945 or prior thereto, considering the fact that she has not established that the
lands in question have been declassified from forest or timber zone to alienable and disposable
property.

ISSUE:

Did the areas in question cease to have the status of forest or other inalienable lands of the public
domain?

HELD:

No, the said areas are still classified as forest land.The issue of whether or not respondent and her
predecessors-in-interest have been in open, exclusive and continuous possession of the parcels of land
in question is of little moment. For, unclassified land cannot be acquired by adverse occupation or
possession; occupation thereof in the concept of owner, however long, cannot ripen into private
ownership and be registered as title.

A forested area classified as forest land of the public domain does not lose such classification simply
because loggers or settlers have stripped it of its forest cover. Parcels of land classified as forest land
may actually be covered with grass or planted to crops by kaingin cultivators or other farmers. "Forest
lands" do not have to be on mountains or in out of the way places. The classification is merely
descriptive of its legal nature or status and does not have to be descriptive of what the land actually
looks like.
The Director of Forestry vs. Villareal GR No. L-32266

Facts:

The petitioner, Director of Forestry was one of the several persons who opposed the applicationfor
registration of a parcel land classified as mangrove swamps in the municipality of Sapian, Capiz within
uare meters of mangrove swamps, to the applicant "Ruperto Villareal. He alleged that
he and his predecessors in interests had been in possession of the said parcel of land for more than forty
years. Both parties agreed in one point that the disputed land was a mangrove swamp$ Therespondent
argued that mangrove swamp are agricultural land 'ut the petitioner contended that it is a forestall
land therefore not disposable. The Court of the First Instance of Capiz however grants the application of
the respondent$ The decision of the lower court was later affirmed by the Court of Appeals
Hence the Director of Forestry elevated the case to the Supreme Court for review on certiorari.

Issue:

Whether or not, mangrove swamps are agricultural land or forest land$

Held:

The Supreme Court held that mangrove swamps as forest lands is descriptive of its legal nature
or status and does not have to 'e descriptive of what the land actually looks like. Furthermore the
legislative definition emb dministrative Code of 1217 which
declares that mangrove swamps or manglares form part of the public forests of the 3hilippines hence
they are not alienable.

The evidence presented by the respondent in its claim were not sufficient to prove itspossession and
ownership of the land, he only presented tax declarations. Wherefore the decision of the Court of
Appeals was set aside and the application for registration of title by the respondent is dismissed by the
Supreme Court.

G.R. No. L-18897 March 31, 1964

MAXIMA NIETO DE COMILANG, petitioner-appellant,

vs.
ABDON DELENELA, GUILLERMO PEREZ, ET AL., respondents-appellees.

Bienvenido L. Garcia for petitioner-appellant.

Daniel M. Zarate, Guillermo de Guzman, Roque E. Hebron and Celestino L. Luna for respondents-
appellees.
LABRADOR, J.:

This is an appeal from a decision of the Court of First Instance of Baguio, Hon. Jesus de Veyra, presiding,
denying a petition of petitioner herein Maxima Nieto de Comilang to annul an order of the Municipal
Judge of Baguio City dated August 12, 1959 directing the sheriff of Mountain Province to place Guillermo
Perez and Abdon Delenela in possession of the property described as follows:

A parcel of residential land, situated at Tuding, Benguet, Mt. Province, containing an area of about one
and a half (1- ha.) hectares, together with the residential house constructed thereon, made of strong
materials, as well as all other improvements existing thereon, assessed at P10,000.00 under Tax
Declaration No. 4771 in the name of Marcos B. Comilang.1wph1.t

The facts giving rise to the petition for certiorari filed in the lower court, as stated by the court below,
are as follows:

The roots of this case go back as far as 1908 when Nicolas Comilang occupied the land as a mineral claim
and staked out what is now known as the Bua Mineral Claim. Surface rights over this claim were the
subject of litigation resulting in a final decision by the Court of Appeals, holding that Marcos Comilang
only had the right to 1- hectares of this surface (See Decision, Exhibit "F"). Later on March 3, 1958 the
ownership of the Bua Mineral Claim became the subject of litigation, resulting in a settlement whereby
Marcos Comilang was awarded a one-half undivided share in this claim (See Exhibit "D"). However, on
June 1, 1957, by virtue of a Certificate of Sale, whatever right, title, interest and claim, Marcos Comilang
might have over the land of 1- hectares declared for taxation in his name under Tax Declaration No.
4771, was sold at public auction to the Coloma spouses (Exhibit "E") and in turn, defendants Delenela
and Perez, with the knowledge and conformity of Marcos Comilang, and in the exercise of their right of
redemption as co-owners, bought from the Coloma spouses whatever rights, title, interest and claim
they had obtained by virtue of the Certificate of Sale, Exhibit "E" (See Exhibit "5"). This redemption sale
took place on June 11, 1958. On February 9, 1959, the director of Mines recommended the issuance of a
lode patent over the Bua Mineral Claim in favor of Marcos Comilang and Delenela, et al. in undivided
shares as a result of the amicable settlement in the decision, Exhibit "D" (See Exhibit "C"). On August 12,
1959, Respondent Municipal Judge issued a writ of possession in favor of Delenela and Perez directing
the sheriff to evict the Comilang Spouses from the 1- hectares. A motion for reconsideration having
been denied, Maxima Nieto de Comilang, wife of Marcos Comilang, has come to this Court in this
present action for certiorari and injunction on two grounds that as wife, conjugal property is being
levied upon and her share of the same is affected, and secondly that there can be no severance of
surface rights over a mineral claim located under the Philippine Bill of 1902 so that the sheriff could
not have sold surface rights in his certificate of sale, Exhibit "E" ...

The ownership of Marcos Comilang of 1- hectares of agricultural land was declared in the decision of
the Court of Appeals promulgated October 29, 1955 (Exhibit "F"). On the other hand, the ownership of
Marcos Comilang of the undivided share of the Bua Mineral Claim was declared in a decision of the
Court of First Instance of the City of Baguio, which approved an amicable settlement in Civil Case No.
735 of said court entitled "Marcoslina Comilang, et al. vs. Marcos Comilang" dated March 3, 1958
(Annex "B"). The certificate of sale dated June 1, 1957, Exhibit "E", describes the property sold in
compliance with an execution issued by the municipal court of Baguio on December 21, as follows:

A parcel of residential land, situated at Tuding, Itogon, Benguet, Mountain Province, containing an area
of about one and one-half (1- ha.) hectares, together with the residential house constructed thereon,
made of strong materials, as well as all other improvements existing thereon, assessed at P10,000.00
under Tax Declaration No. 4771 in the name of Marcos B. Comilang; (Exhibit "E-1").

On August 12, 1957, the judge of the municipal court of Baguio City issued a writ of possession
commanding the sheriff of Mountain Province to place Guillermo Perez and Abdon Delenela in
possession of the residential land already described above, containing 1- hectares, together with a
residential house constructed thereon, etc.

As stated by the lower court in its decision, the petitioner herein Maxima Nieto de Comilang claims that
the property (residential land and house) sought to be placed in the possession of respondents Delenela
and Perez is conjugal property of herself (Maxima Nieto de Comilang) and Marcos Comilang, and said
conjugal property may not be taken from her, or her share therein can not be taken away without her
consent.

The court below in its judgment made a finding of fact that the judgment "in favor of the Coloma
spouses (by reason of which the writ of execution upon the property was issued) was a conjugal debt so
that conjugal property must answer for the same more so as this was conjugal property acquired
prior to the effectivity of the New Civil Code." This finding of fact made in the decision of the court
below can not be reviewed by Us as the decision was appealed directly to this Court, so that all findings
of fact made by the trial court are deemed to have been admitted by the appellant and only questions
of law may be raised. (Jacinto v. Jacinto, L-12313, July 31, 1959)

The judge further held that since the property executed was acquired prior to the effectivity of the New
Civil Code, the wife, petitioner herein, cannot object to the disposal of the property by the husband, or
the execution of the property in question by reason of the payment of a debt by the husband. (Art. 106,
Civil Code of the Philippines)

We therefore find that the court's order overruling the objection of petitioner that as the property was
conjugal property, the taking away thereof by execution and sale on execution, is well-founded and the
request for a review of this ruling of the court below is hereby denied.

We next come to the effect of the sale on execution of the residential land over the mining claim of
Marcos Comilang. In its decision the court below held as follows:

... Marcos Comilang, having submitted to the jurisdiction of our courts as to the surface rights over this
mineral claim and by final judgment having been awarded 1- hectares of these surface rights, is now
barred by res judicata. Marcos Comilang in consenting to the redemption by Delenela and Perez from
the Coloma spouses (Exhibit "4"), is in estoppel by deed to raise up the question of severability of
surface rights. But from the way this Court looks at the matter Marcos Comilang is in an even worse
condition. By virtue of the amicable settlement in the decision Exhibit "D", on March 3, 1958, Marcos
Comilang became pro indiviso owner of the Bua Mineral Claim to the extent of one-half. When the
Sheriff sold all his right, title and interest over the 1- hectares of land, this pro indiviso share was
deemed to be part of that "right, title and interest" sold so that Marcos Comilang, by virtue of that
auction sale lost all his right, title and interest to his pro indiviso share in the Bua Mineral Claim. Having
lost this right, following his own theory, he also loses all rights to the surface. From all angles of equity
and law, therefore, Marcos Comilang has lost all right over the mineral claim as well as its surface.

We find the above ruling objectionable on two grounds: (1) that the certificate of the sale on execution,
as well as the order of the court for a writ of possession, expressly included a residential land alone and
not the mineral claim known as the Bua Mineral claim of nine hectares covered in part by the 1-
hectares residential lot; and (2) there is no express or implied taking away of the said mineral rights or
the mineral claim by virtue of the execution, nor is there any express act of Marcos Comilang supposedly
consenting to the redemption by Delenela and Perez of the ownership of the mineral claim.

With respect to the first objection above-mentioned, it is to be noted that while the attachment
included both the residential land as well as the mining claim in the said parcel of land (see Exhibit "E"),
the only property actually sold at public auction as described in the certificate of sale, Exhibit "E", is the
residential land containing an area of 1- hectares, together with the improvements existing
thereon, without including the Bua Mineral Claim or the undivided one-half right thereto of Marcos
Comilang (see Exhibit "E-1"). The mineral claim under the said residential land was therefore excluded
from the certificate of sale and such mineral claim was excluded also by the order of the justice of the
peace for the issuance of a writ of possession. No amount of reasoning can lead to the belief, therefore,
that the express sale of the 1- hectare residential land could have included the share of Marcos
Comilang in the nine-hectare mineral claim.

As to the second objection, the court found that Marcos Comilang or his wife, petitioner herein, is
barred from questioning that the mining claim was included because Comilang consented to the
redemption of the land and its sale thereafter to the respondents herein. There was no actual or implied
inclusion of the mining claim. The consent of Marcos Comilang to the repurchase did not extend to the
mineral claim as may be shown by Exhibit "4". Said exhibit refers to an act of redemption and
repurchase, and what could be redeemed was what was sold at public auction in execution and
thereafter covered by the certificate of sale (Exhibit "2" and Exhibit "3"), both of which, including Exhibit
"4", do not include the mining rights.

Aside from the fact that the mineral claim was not sold in execution, the provisions of the Mining Law
expressly declare that the ownership of land for other purposes does not include the minerals, and that
mineral rights are not included in agricultural land patents.

SEC. 4. The ownership and the right to the use of land for agricultural, industrial, commercial,
residential, or for any purpose other than mining does not include the ownership of, nor the right to
extract or utilize, the minerals which may be found on or under the surface.
SEC. 5. The ownership of, and the right to extract and utilize, the mineral included within all areas for
which public agricultural land patents are granted are excluded and excepted from all such patents.
(Com. Act 137)

Pursuant to the above provisions, the ownership over the Bua Mineral Claim by Marcos Comilang of
undivided share thereof was never included in the sale on execution or in the redemption of the land
authorized by Marcos Comilang in Exhibit "4".

For the foregoing considerations the judgment appealed from is hereby affirmed insofar as it denies the
petition of Maxima Nieto de Comilang to exclude from the sale, or annul the sale on execution of the
residential lot formerly owned by her husband, of 1- hectares covered in the final certificate of sale;
but that part of the appealed decision holding that such sale at public auction included the undivided
share of Marcos Comilang to the Bua Mineral Claim, is hereby set aside and said mineral rights of
Marcos Comilang are hereby declared free from execution, or the sale on execution. Without costs. So
ordered.

G.R. No. L-43938 April 15, 1988

REPUBLIC OF THE PHILIPPINES (DIRECTOR OF FOREST DEVELOPMENT), petitioner,

vs.
HON. COURT OF APPEALS (THIRD DIVISION) and JOSE Y. DE LA ROSA, respondents.

G.R. No. L-44081 April 15, 1988

BENGUET CONSOLIDATED, INC., petitioner,

vs.
HON. COURT OF APPEALS, JOSE Y. DE LA ROSA, VICTORIA, BENJAMIN and EDUARDO, all surnamed DE
LA ROSA, represented by their father JOSE Y. DE LA ROSA, respondents.

G.R. No. L-44092 April 15, 1988

ATOK-BIG WEDGE MINING COMPANY, petitioner,

vs.
HON. COURT OF APPEALS, JOSE Y. DE LA ROSA, VICTORlA, BENJAMIN and EDUARDO, all surnamed DE
LA ROSA, represented by their father, JOSE Y. DE LA ROSA, respondents.

CRUZ, J.:
The Regalian doctrine reserves to the State all natural wealth that may be found in the bowels of the
earth even if the land where the discovery is made be private. 1 In the cases at bar, which have been
consolidated because they pose a common issue, this doctrine was not correctly applied.

These cases arose from the application for registration of a parcel of land filed on February 11, 1965, by
Jose de la Rosa on his own behalf and on behalf of his three children, Victoria, Benjamin and Eduardo.
The land, situated in Tuding, Itogon, Benguet Province, was divided into 9 lots and covered by plan Psu-
225009. According to the application, Lots 1-5 were sold to Jose de la Rosa and Lots 6-9 to his children
by Mamaya Balbalio and Jaime Alberto, respectively, in 1964. 2

The application was separately opposed by Benguet Consolidated, Inc. as to Lots 1-5, Atok Big Wedge
Corporation, as to Portions of Lots 1-5 and all of Lots 6-9, and by the Republic of the Philippines, through
the Bureau of Forestry Development, as to lots 1-9. 3

In support of the application, both Balbalio and Alberto testified that they had acquired the subject land
by virtue of prescription Balbalio claimed to have received Lots 1-5 from her father shortly after the
Liberation. She testified she was born in the land, which was possessed by her parents under claim of
ownership. 4 Alberto said he received Lots 6-9 in 1961 from his mother, Bella Alberto, who declared that
the land was planted by Jaime and his predecessors-in-interest to bananas, avocado, nangka and
camote, and was enclosed with a barbed-wire fence. She was corroborated by Felix Marcos, 67 years old
at the time, who recalled the earlier possession of the land by Alberto's father. 5 Balbalio presented her
tax declaration in 1956 and the realty tax receipts from that year to 1964, 6 Alberto his tax declaration in
1961 and the realty tax receipts from that year to 1964. 7

Benguet opposed on the ground that the June Bug mineral claim covering Lots 1-5 was sold to it on
September 22, 1934, by the successors-in-interest of James Kelly, who located the claim in September
1909 and recorded it on October 14, 1909. From the date of its purchase, Benguet had been in actual,
continuous and exclusive possession of the land in concept of owner, as evidenced by its construction of
adits, its affidavits of annual assessment, its geological mappings, geological samplings and trench side
cuts, and its payment of taxes on the land. 8

For its part, Atok alleged that a portion of Lots 1-5 and all of Lots 6-9 were covered by the Emma and
Fredia mineral claims located by Harrison and Reynolds on December 25, 1930, and recorded on January
2, 1931, in the office of the mining recorder of Baguio. These claims were purchased from these locators
on November 2, 1931, by Atok, which has since then been in open, continuous and exclusive possession
of the said lots as evidenced by its annual assessment work on the claims, such as the boring of tunnels,
and its payment of annual taxes thereon. 9

The location of the mineral claims was made in accordance with Section 21 of the Philippine Bill of 1902
which provided that:

SEC. 21. All valuable mineral deposits in public lands in the philippine Islands both surveyed and
unsurveyed are hereby declared to be free and open to exploration, occupation and purchase and the
land in which they are found to occupation and purchase by the citizens of the United States, or of said
islands.

The Bureau of Forestry Development also interposed its objection, arguing that the land sought to be
registered was covered by the Central Cordillera Forest Reserve under Proclamation No. 217 dated
February 16, 1929. Moreover, by reason of its nature, it was not subject to alienation under the
Constitutions of 1935 and 1973. 10

The trial court * denied the application, holding that the applicants had failed to prove their claim of
possession and ownership of the land sought to be registered. 11 The applicants appealed to the
respondent court, * which reversed the trial court and recognized the claims of the applicant, but
subject to the rights of Benguet and Atok respecting their mining claims. 12 In other words, the Court of
Appeals affirmed the surface rights of the de la Rosas over the land while at the same time reserving the
sub-surface rights of Benguet and Atok by virtue of their mining claims.

Both Benguet and Atok have appealed to this Court, invoking their superior right of ownership. The
Republic has filed its own petition for review and reiterates its argument that neither the private
respondents nor the two mining companies have any valid claim to the land because it is not alienable
and registerable.

It is true that the subject property was considered forest land and included in the Central Cordillera
Forest Reserve, but this did not impair the rights already vested in Benguet and Atok at that time. The
Court of Appeals correctly declared that:

There is no question that the 9 lots applied for are within the June Bug mineral claims of Benguet and
the "Fredia and Emma" mineral claims of Atok. The June Bug mineral claim of plaintiff Benguet was one
of the 16 mining claims of James E. Kelly, American and mining locator. He filed his declaration of the
location of the June Bug mineral and the same was recorded in the Mining Recorder's Office on October
14, 1909. All of the Kelly claims ha subsequently been acquired by Benguet Consolidated, Inc. Benguet's
evidence is that it had made improvements on the June Bug mineral claim consisting of mine tunnels
prior to 1935. It had submitted the required affidavit of annual assessment. After World War II, Benguet
introduced improvements on mineral claim June Bug, and also conducted geological mappings,
geological sampling and trench side cuts. In 1948, Benguet redeclared the "June Bug" for taxation and
had religiously paid the taxes.

The Emma and Fredia claims were two of the several claims of Harrison registered in 1931, and which
Atok representatives acquired. Portions of Lots 1 to 5 and all of Lots 6 to 9 are within the Emma and
Fredia mineral claims of Atok Big Wedge Mining Company.

The June Bug mineral claim of Benguet and the Fredia and Emma mineral claims of Atok having been
perfected prior to the approval of the Constitution of the Philippines of 1935, they were removed from
the public domain and had become private properties of Benguet and Atok.
It is not disputed that the location of the mining claim under consideration was perfected prior to
November 15, 1935, when the Government of the Commonwealth was inaugurated; and according to
the laws existing at that time, as construed and applied by this court in McDaniel v. Apacible and
Cuisia (42 Phil. 749), a valid location of a mining claim segregated the area from the public domain. Said
the court in that case: The moment the locator discovered a valuable mineral deposit on the lands
located, and perfected his location in accordance with law, the power of the United States Government
to deprive him of the exclusive right to the possession and enjoyment of the located claim was gone, the
lands had become mineral lands and they were exempted from lands that could be granted to any other
person. The reservations of public lands cannot be made so as to include prior mineral perfected
locations; and, of course, if a valid mining location is made upon public lands afterwards included in a
reservation, such inclusion or reservation does not affect the validity of the former location. By such
location and perfection, the land located is segregated from the public domain even as against the
Government. (Union Oil Co. v. Smith, 249 U.S. 337; Van Mess v. Roonet, 160 Cal. 131; 27 Cyc. 546).

"The legal effect of a valid location of a mining claim is not only to segregate the area from the public
domain, but to grant to the locator the beneficial ownership of the claim and the right to a patent
therefor upon compliance with the terms and conditions prescribed by law. Where there is a valid
location of a mining claim, the area becomes segregated from the public domain and the property of the
locator." (St. Louis Mining & Milling Co. v. Montana Mining Co., 171 U.S. 650; 655; 43 Law ed., 320, 322.)
"When a location of a mining claim is perfected it has the effect of a grant by the United States of the
right of present and exclusive possession, with the right to the exclusive enjoyment of all the surface
ground as well as of all the minerals within the lines of the claim, except as limited by the extralateral
right of adjoining locators; and this is the locator's right before as well as after the issuance of the
patent. While a lode locator acquires a vested property right by virtue of his location made in
compliance with the mining laws, the fee remains in the government until patent issues."(18 R.C.L.
1152) (Gold Creek Mining Corporation v. Hon. Eulogio Rodriguez, Sec. of Agriculture and Commerce, and
Quirico Abadilla, Director of the Bureau of Mines, 66 Phil. 259, 265-266)

It is of no importance whether Benguet and Atok had secured a patent for as held in the Gold Creek
Mining Corp. Case, for all physical purposes of ownership, the owner is not required to secure a patent
as long as he complies with the provisions of the mining laws; his possessory right, for all practical
purposes of ownership, is as good as though secured by patent.

We agree likewise with the oppositors that having complied with all the requirements of the mining
laws, the claims were removed from the public domain, and not even the government of the Philippines
can take away this right from them. The reason is obvious. Having become the private properties of the
oppositors, they cannot be deprived thereof without due process of law. 13

Such rights were not affected either by the stricture in the Commonwealth Constitution against the
alienation of all lands of the public domain except those agricultural in nature for this was made subject
to existing rights. Thus, in its Article XIII, Section 1, it was categorically provided that:
SEC. 1. All agricultural, timber and mineral lands of the public domain, waters, minerals, coal, petroleum
and other mineral oils, all forces of potential energy and other natural resources of the Philipppines
belong to the State, and their disposition, exploitation, development, or utilization shall be limited to
citizens of the Philippines or to corporations or associations at least 60% of the capital of which is owned
by such citizens, subject to any existing right, grant, lease or concession at the time of the inauguration
of the government established under this Constitution. Natural resources with the exception of public
agricultural lands, shall not be alienated, and no license, concession, or lease for the exploitation,
development or utilization of any of the natural resources shall be granted for a period exceeding 25
years, except as to water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, in which case beneficial use may be the measure and the limit of the
grant.

Implementing this provision, Act No. 4268, approved on November 8, 1935, declared:

Any provision of existing laws, executive order, proclamation to the contrary notwithstanding, all
locations of mining claim made prior to February 8, 1935 within lands set apart as forest reserve under
Sec. 1826 of the Revised Administrative Code which would be valid and subsisting location except to the
existence of said reserve are hereby declared to be valid and subsisting locations as of the date of their
respective locations.

The perfection of the mining claim converted the property to mineral land and under the laws then in
force removed it from the public domain. 14 By such act, the locators acquired exclusive rights over the
land, against even the government, without need of any further act such as the purchase of the land or
the obtention of a patent over it. 15 As the land had become the private property of the locators, they
had the right to transfer the same, as they did, to Benguet and Atok.

It is true, as the Court of Appeals observed, that such private property was subject to the "vicissitudes of
ownership," or even to forfeiture by non-user or abandonment or, as the private respondents aver, by
acquisitive prescription. However, the method invoked by the de la Rosas is not available in the case at
bar, for two reasons.

First, the trial court found that the evidence of open, continuous, adverse and exclusive possession
submitted by the applicants was insufficient to support their claim of ownership. They themselves had
acquired the land only in 1964 and applied for its registration in 1965, relying on the earlier alleged
possession of their predecessors-in-interest. 16 The trial judge, who had the opportunity to consider the
evidence first-hand and observe the demeanor of the witnesses and test their credibility was not
convinced. We defer to his judgment in the absence of a showing that it was reached with grave abuse
of discretion or without sufficient basis. 17

Second, even if it be assumed that the predecessors-in-interest of the de la Rosas had really been in
possession of the subject property, their possession was not in the concept of owner of the mining
claim but of the property as agricultural land, which it was not. The property was mineral land, and they
were claiming it as agricultural land. They were not disputing the lights of the mining locators nor were
they seeking to oust them as such and to replace them in the mining of the land. In fact, Balbalio
testified that she was aware of the diggings being undertaken "down below" 18 but she did not mind,
much less protest, the same although she claimed to be the owner of the said land.

The Court of Appeals justified this by saying there is "no conflict of interest" between the owners of the
surface rights and the owners of the sub-surface rights. This is rather doctrine, for it is a well-known
principle that the owner of piece of land has rights not only to its surface but also to everything
underneath and the airspace above it up to a reasonable height. 19 Under the aforesaid ruling, the land is
classified as mineral underneath and agricultural on the surface, subject to separate claims of title. This
is also difficult to understand, especially in its practical application.

Under the theory of the respondent court, the surface owner will be planting on the land while the
mining locator will be boring tunnels underneath. The farmer cannot dig a well because he may interfere
with the operations below and the miner cannot blast a tunnel lest he destroy the crops above. How
deep can the farmer, and how high can the miner, go without encroaching on each other's rights?
Where is the dividing line between the surface and the sub-surface rights?

The Court feels that the rights over the land are indivisible and that the land itself cannot be half
agricultural and half mineral. The classification must be categorical; the land must be either completely
mineral or completely agricultural. In the instant case, as already observed, the land which was originally
classified as forest land ceased to be so and became mineral and completely mineral once the
mining claims were perfected. 20 As long as mining operations were being undertaken thereon, or
underneath, it did not cease to be so and become agricultural, even if only partly so, because it was
enclosed with a fence and was cultivated by those who were unlawfully occupying the surface.

What must have misled the respondent court is Commonwealth Act No. 137, providing as follows:

Sec. 3. All mineral lands of the public domain and minerals belong to the State, and their disposition,
exploitation, development or utilization, shall be limited to citizens of the Philippines, or to corporations,
or associations, at least 60% of the capital of which is owned by such citizens, subject to any existing
right, grant, lease or concession at the time of the inauguration of government established under the
Constitution.

SEC. 4. The ownership of, and the right to the use of land for agricultural, industrial, commercial,
residential, or for any purpose other than mining does not include the ownership of, nor the right to
extract or utilize, the minerals which may be found on or under the surface.

SEC. 5. The ownership of, and the right to extract and utilize, the minerals included within all areas for
which public agricultural land patents are granted are excluded and excepted from all such patents.

SEC. 6. The ownership of, and the right to extract and utilize, the minerals included within all areas for
which Torrens titles are granted are excluded and excepted from all such titles.

This is an application of the Regalian doctrine which, as its name implies, is intended for the benefit of
the State, not of private persons. The rule simply reserves to the State all minerals that may be found in
public and even private land devoted to "agricultural, industrial, commercial, residential or (for) any
purpose other than mining." Thus, if a person is the owner of agricultural land in which minerals are
discovered, his ownership of such land does not give him the right to extract or utilize the said minerals
without the permission of the State to which such minerals belong.

The flaw in the reasoning of the respondent court is in supposing that the rights over the land could be
used for both mining and non-mining purposes simultaneously. The correct interpretation is that once
minerals are discovered in the land, whatever the use to which it is being devoted at the time, such use
may be discontinued by the State to enable it to extract the minerals therein in the exercise of its
sovereign prerogative. The land is thus converted to mineral land and may not be used by any private
party, including the registered owner thereof, for any other purpose that will impede the mining
operations to be undertaken therein, For the loss sustained by such owner, he is of course entitled to
just compensation under the Mining Laws or in appropriate expropriation proceedings. 21

Our holding is that Benguet and Atok have exclusive rights to the property in question by virtue of their
respective mining claims which they validly acquired before the Constitution of 1935 prohibited the
alienation of all lands of the public domain except agricultural lands, subject to vested rights existing at
the time of its adoption. The land was not and could not have been transferred to the private
respondents by virtue of acquisitive prescription, nor could its use be shared simultaneously by them
and the mining companies for agricultural and mineral purposes.

WHEREFORE, the decision of the respondent court dated April 30, 1976, is SET ASIDE and that of the trial
court dated March 11, 1969, is REINSTATED, without any pronouncement as to costs.

SO ORDERED.

G.R. No. 158230, July 16, 2008, REPUBLIC OF THE PHILIPPINES, represented by the DIRECTOR OF
LANDS, Petitioner, vs. REGISTER OF DEEDS OF ROXAS CITY, ELIZABETH LEE, and PACITA YU-LEE,

The Facts:

Lee Liong, a Chinese citizen, bought Lot 398 from the Dinglasans in 1936. When Lee died in 1944
without will, he was succeeded by his sons Lee Bing Hoo and Lee Bun Ting, who extrajudicially settled
the estate among themselves and partitioned Lot 398. When the brothers died, Lot 398 was transferred
by succession to their respective wives, Elizabeth and Pacita Yu-Lee. In the 1956 case of Dinglasan vs.
Lee Bun Ting1, the Court held that the sellers (Dinglasan) cannot invalidate the sale of land (Lot 398) to
the buyers who are Chinese citizen on the ground of in pare delicto; in the latter case of Lee Bun Ting vs
Judge Aligaen2, the Court again dismissed the case on the ground of res judicata, being a mere
relitigation of the Dinglasan case.

On January 26, 1995, the Office of the Solicitor General filed a Complaint for Reversion of Lot 398,
praying that the sale of Lot 398 to Lee Liong be set aside for being null and void, and for Lot 398 to be
reverted to the public domain for State disposal in accordance with law. In their answer, Elizabeth and
Pacita invoked the affirmative defense of prescription; Lee a buyer in good faith and for value, and that
they were qualified to own by succession Lot 398, being Filipino citizens.

The RTC ruled in favour of the OSG and declared the sale of Lot 398 to Lee Liong as null and void. His
being a purchaser I good fait and for value did not cure the nullity of the sale, and prescription does not
run against the State.

The Court of Appeals however reversed the RTC. It ruled that the transfer of the land to Elizabeth and
Pacita who are both Filipino citizens may no longer be impugned even though the initial sale was void,
considering that the objective of the constitutional proscription against alien ownership of lands, that is
to keep our lands in Filipino hands, has been achieved.

The OSG elevated its case to the Supreme Court. It argues that since the acquisition of Lot 398 was null
and void, it did not form part of estate of Lee Liong, and thus cannot be transmitted by succession to his
heirs and eventually to Elizabeth and Pacita.

The Courts ruling:

The petition is without merit.

Petitioner argues that since the sale of Lot No. 398 to Lee Liong was void, Lot No. 398 never became part
of the deceased Lee Liongs estate. Hence, Lot No. 398 could not be transmitted by succession to Lee
Liongs surviving heirs and eventually to private respondents.

We do not subscribe to petitioners position. The circumstances of this case are similar to the case of De
Castro v. Teng Queen Tan,3 wherein a residential lot was sold to a Chinese citizen. Upon the death of the
alien vendee, his heirs entered into an extrajudicial settlement of the estate of the deceased and the
subject land was transferred to a son who was a naturalized Filipino. Subsequently, the vendor of the lot
filed a suit for annulment of sale for alleged violation of the Constitution prohibiting the sale of land to
aliens. Independently of the doctrine of in pari delicto, the Court sustained the sale, holding that while
the vendee was an alien at the time of the sale, the land has since become the property of a naturalized
Filipino citizen who is constitutionally qualified to own land.

Similarly, in this case, upon the death of the original vendee who was a Chinese citizen, his widow and
two sons extrajudicially settled his estate, including Lot No. 398. When the two sons died, Lot No. 398
was transferred by succession to their respective spouses, herein private respondents who are Filipino
citizens.

We now discuss whether reversion proceedings is still viable considering that Lot No. 398 has already
been transfered to Filipino citizens. In the reconstitution case of Lee v. Republic of the
Philippines4 involving Lot No. 398, this Court explained that the OSG may initiate an action for reversion
or escheat of lands which were sold to aliens disqualified from acquiring lands under the Constitution.
However, in the case of Lot No. 398, the fact that it was already transferred to Filipinos militates against
escheat proceedings, thus:
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.

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 [Elizabeth Lee and Pacita Yu Lee]. 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.
Thus, the subsequent transfer of the property to qualified Filipinos may no longer be impugned on the
basis of invalidity of the initial transfer. The objective of the constitutional provision to keep our lands in
Filipino hands has been achieved.5 (Emphasis supplied)

In this case, the reversion proceedings was initiated only after almost 40 years from the promulgation of
the case of Dinglasan v. Lee Bun Ting,6 where the Court held that the sale of Lot No. 398 was null and
void for violating the constitutional prohibition on the sale of land to an alien. If petitioner had
commenced reversion proceedings when Lot No. 398 was still in the hands of the original vendee who
was an alien disqualified to hold title thereto, then reversion of the land to the State would undoubtedly
be allowed. However, this is not the case here. When petitioner instituted the action for reversion of
title in 1995, Lot No. 398 had already been transferred by succession to private respondents who are
Filipino citizens.

Since Lot No. 398 has already been transferred to Filipino citizens, the flaw in the original transaction is
considered cured.7 As held in Chavez v. Public Estates Authority:8

Similarly, where the alien who buys the land subsequently acquires Philippine citizenship, the sale was
validated since the purpose of the constitutional ban to limit land ownership to Filipinos has been
achieved. In short, the law disregards the constitutional disqualification of the buyer to hold land if the
land is subsequently transferred to a qualified party, or the buyer himself becomes a qualified
party.9 (Emphasis supplied)

Clearly, since Lot No. 398 has already been transferred to private respondents who are Filipino citizens,
the prior invalid sale to Lee Liong can no longer be assailed. Hence, reversion proceedings will no longer
prosper since the land is now in the hands of Filipino citizens.

WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 12 July 2002 and the Resolution
dated 9 May 2003 of the Court of Appeals in CA-G.R. CV No. 53890.

SO ORDERED.
IN RE: PETITION FOR SEPARATION OF PROPERTY; MULLER VS. MULLER

G.R. No. 149615, August 29,2006

Doctrine:

He who seeks equity must do equity, and he who comes into equity must come with clean hands.

Facts:

Petitioner Elena Buenaventura Muller and respondent Helmut Muller were married in Hamburg,
Germany on September 22, 1989. The couple resided in Germany at a house owned by respondents
parents but decided to move and reside permanently in the Philippines in 1992. By this time,
respondent had inherited the house in Germany from his parents which he sold and used the proceeds
for the purchase of a parcel of land in Antipolo, Rizal at the cost of P528,000.00 and the construction of
a house amounting to P2,300,000.00. The Antipolo property was registered in the name of petitioner,
Elena Buenaventura Muller.

Due to incompatibilities and respondents alleged womanizing, drinking, and maltreatment, the spouses
eventually separated.

On September 26, 1994, respondent filed a petition for separation of properties before the Regional
Trial Court of Quezon City. The court granted said petition. It also decreed the separation of properties
between them and ordered the equal partition of personal properties located within the country,
excluding those acquired by gratuitous title during the marriage. With regard to the Antipolo property,
the court held that it was acquired using paraphernal funds of the respondent. However, it ruled that
respondent cannot recover his funds because the property was purchased in violation of Section 7,
Article XII of the Constitution.

The respondent elevated the case to the Court of Appeals, which reversed the decision of the RTC. It
held that respondent merely prayed for reimbursement for the purchase of the Antipolo property, and
not acquisition or transfer of ownership to him. It ordered the respondent to REIMBURSE the petitioner
the amount of P528,000.00 for the acquisition of the land and the amount of P2,300,000.00 for the
construction of the house situated in Antipolo, Rizal.

Elena Muller then filed a petition for review on certiorari.

Issue:

Whether or not respondent Helmut Muller is entitled to reimbursement.

Ruling:

No, respondent Helmut Muller is not entitled to reimbursement.

Ratio Decidendi:
There is an express prohibition against foreigners owning land in the Philippines.

Art. XII, Sec. 7 of the 1987 Constitution provides: 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.

In the case at bar, the respondent willingly and knowingly bought the property despite a constitutional
prohibition. And to get away with that constitutional prohibition, he put the property under the name of
his Filipina wife. He tried to do indirectly what the fundamental law bars him to do directly.

With this, the Supreme Court ruled that respondent cannot seek reimbursement on the ground of
equity. It has been held that equity as a rule will follow the law and will not permit that to be done
indirectly which, because of public policy, cannot be done directly.

PHILIP MATTHEWS vs. BENJAMIN A. TAYLOR and JOSELYN C. TAYLOR

G.R. No. 164584 June 22, 2009

Facts:
1. On June 30, 1988, respondent Benjamin, a British subject, married Joselyn, a 17-year old Filipina.
2. On June 9, 1989, while their marriage was subsisting, Joselyn bought from Diosa M. Martin a lot
(Boracay property).
3. The sale was allegedly financed by Benjamin.
4. Joselyn and Benjamin, also using the latters funds, constructed improvements thereon and
eventually converted the property to a vacation and tourist resort known as the Admiral Ben Bow Inn.
5. All required permits and licenses for the operation of the resort were obtained in the name of Ginna
Celestino, Joselyns sister.
6. However, Benjamin and Joselyn had a falling out, and Joselyn ran away with Kim Philippsen.
7. On June 8, 1992, Joselyn executed a SPA in favor of Benjamin, authorizing the latter to maintain, sell,
lease, and sub-lease and otherwise enter into contract with third parties with respect to their Boracay
property.
8. On July 20, 1992, Joselyn as lessor and petitioner Philip Matthews as lessee, entered into an
Agreement of Lease involving the Boracay property for a period of 25 years, with an annual rental of
P12,000.00.
9. Petitioner thereafter took possession of the property and renamed the resort as Music Garden
Resort.
10. Claiming that the Agreement was null and void since it was entered into by Joselyn without
Benjamins consent, Benjamin instituted an action for Declaration of Nullity of Agreement of Lease with
Damages against Joselyn and the petitioner.
11. Benjamin claimed that his funds were used in the acquisition and improvement of the Boracay
property, and coupled with the fact that he was Joselyns husband, any transaction involving said
property required his consent.

Issue:
1. Whether or not the Agreement of Lease of a parcel of land entered into by a Filipino wife without the
consent of her British husband is valid
2. Whether or not Benjamin is the actual owner of the property since he provided the funds used in
purchasing the same

Ruling:

Section 7, Article XII of the 1987 Constitution states:

Section 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.
Aliens, whether individuals or corporations, have been disqualified from acquiring lands of the public
domain. Hence, by virtue of the aforecited constitutional provision, they are also disqualified from
acquiring private lands. The primary purpose of this constitutional provision is the conservation of the
national patrimony. Our fundamental law cannot be any clearer. The right to acquire lands of the public
domain is reserved only to Filipino citizens or corporations at least sixty percent of the capital of which is
owned by Filipinos.
The rule is clear and inflexible: aliens are absolutely not allowed to acquire public or private lands in the
Philippines, save only in constitutionally recognized exceptions. There is no rule more settled than this
constitutional prohibition, as more and more aliens attempt to circumvent the provision by trying to
own lands through another.
Benjamin has no right to nullify the Agreement of Lease between Joselyn and petitioner. Benjamin,
being an alien, is absolutely prohibited from acquiring private and public lands in the Philippines.
Considering that Joselyn appeared to be the designated "vendee" in the Deed of Sale of said property,
she acquired sole ownership thereto. This is true even if we sustain Benjamins claim that he provided
the funds for such acquisition. By entering into such contract knowing that it was illegal, no implied trust
was created in his favor; no reimbursement for his expenses can be allowed; and no declaration can be
made that the subject property was part of the conjugal/community property of the spouses. In any
event, he had and has no capacity or personality to question the subsequent lease of the Boracay
property by his wife on the theory that in so doing, he was merely exercising the prerogative of a
husband in respect of conjugal property. To sustain such a theory would countenance indirect
controversion of the constitutional prohibition. If the property were to be declared conjugal, this would
accord the alien husband a substantial interest and right over the 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.
G.R. No. 195670, December 03, 2012, WILLEM BEUMER, PETITIONER, VS. AVELINA AMORES,
RESPONDENT.

The Facts:

Willem (Beumer), a Dutch national, married Avelina (Amores) on March 29, 1980. Their marriage was
declared a nullity by the RTC on November 10, 2000 by reason of psychological incapacity, thus Willem
filed a petition for dissolution of conjugal partnership and distribution of properties which he claimed
were acquired during their marriage. Among the properties included in the inventory were several lots
and residential house, described below:

1. a Lot 1, Block 3 of the consolidated survey of Lots 2144 & 2147 of the Dumaguete Cadastre,
covered by Transfer Certificate of Title (TCT) No. 22846, containing an area of 252 square meters
(sq.m.), including a residential house constructed thereon.

2. Lot 2142 of the Dumaguete Cadastre, covered by TCT No. 21974, containing an area of 806
sq.m., including a residential house constructed thereon.

3. Lot 5845 of the Dumaguete Cadastre, covered by TCT No. 21306, containing an area of 756
sq.m.

4. Lot 4, Block 4 of the consolidated survey of Lots 2144 & 2147 of the Dumaguete Cadastre,
covered by TCT No. 21307, containing an area of 45 sq.m.

During trial, Willem testified that Lots 1, 2142, 5845 and 4 were registered in the name of Avelina, but it
was purchased using funds he received from the Dutch government as disability benefit, and Avelina
had no sufficient income to purchase the properties. On the other hand, Avelina alleged that except for
the two residential houses and Lots 1 and 2142, all the other lots were her paraphernal properties and
acquired thru her funds.

After trial the RTC disposed of the properties as follows: It awarded to Willem several personal
properties (tools and equipments), the two houses standing on Lots 1 and 2142 were declared as co-
owned by Willem and Avelina as there was no prohibition on aliens owning buildings and houses and
were acquired during the marital union. On the other hand, all the lots covered by several TCTs were
declared paraphernal properties , though acquired during the marriages, in view of the constitutional
prohibition against aliens owning real property in the Philippines. On appeal to the CA, Willem asserted
that all the money for the purchase of the lots came from his funds, and were registered only in the
name of Avelina because of the constitutional prohibition, hence he prayed for reimbursement of one
half of the value of the lots. The CA disagreed, ruling that he cannot invoke equity when he very well
knew the constitutional prohibition on aliens owning real property in the Philippines. Thus, Willem
elevated his case to the Supreme Court to assail the RTC and CA decision.

The Issue/s:
Whether or not Willem is entitled to the whole or at least one half of the purchase price of the lots
subject of the case.

The Courts ruling:

The petition lacks merit.

The issue to be resolved is not of first impression. In In Re: Petition For Separation of Property-Elena
Buenaventura Muller v. Helmut Muller1 the Court had already denied a claim for reimbursement of the
value of purchased parcels of Philippine land instituted by a foreigner Helmut Muller, against his former
Filipina spouse, Elena Buenaventura Muller. It held that Helmut Muller cannot seek reimbursement on
the ground of equity where it is clear that he willingly and knowingly bought the property despite the
prohibition against foreign ownership of land2 enshrined under Section 7, Article XII of the 1987
Philippine Constitution which reads:

Section 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.

Undeniably, petitioner openly admitted that he is well aware of the *above-cited] constitutional
prohibition3 and even asseverated that, because of such prohibition, he and respondent registered the
subject properties in the latters name. Clearly, petitioners actuations showed his palpable intent to
skirt the constitutional prohibition. On the basis of such admission, the Court finds no reason why it
should not apply the Muller ruling and accordingly, deny petitioners claim for reimbursement.

As also explained in Muller, the time-honored principle is that he who seeks equity must do equity, and
he who comes into equity must come with clean hands. Conversely stated, he who has done inequity
shall not be accorded equity. Thus, a litigant may be denied relief by a court of equity on the ground that
his conduct has been inequitable, unfair and dishonest, or fraudulent, or deceitful.4

In this case, petitioners statements regarding the real source of the funds used to purchase the subject
parcels of land dilute the veracity of his claims: While admitting to have previously executed a joint
affidavit that respondents personal funds were used to purchase Lot 1,5 he likewise claimed that his
personal disability funds were used to acquire the same. Evidently, these inconsistencies show his
untruthfulness. Thus, as petitioner has come before the Court with unclean hands, he is now precluded
from seeking any equitable refuge.

In any event, the Court cannot, even on the grounds of equity, grant reimbursement to petitioner given
that he acquired no right whatsoever over the subject properties by virtue of its unconstitutional
purchase. It is well-established that equity as a rule will follow the law and will not permit that to be
done indirectly which, because of public policy, cannot be done directly6. Surely, a contract that violates
the Constitution and the law is null and void, vests no rights, creates no obligations and produces no
legal effect at all.7 Corollary thereto, under Article 1412 of the Civil Code,8 petitioner cannot have the
subject properties deeded to him or allow him to recover the money he had spent for the purchase
thereof. The law will not aid either party to an illegal contract or agreement; it leaves the parties where
it finds them.9 Indeed, one cannot salvage any rights from an unconstitutional transaction knowingly
entered into.

Neither can the Court grant petitioners claim for reimbursement on the basis of unjust
enrichment10. As held in Frenzel v. Catito, a case also involving a foreigner seeking monetary
reimbursement for money spent on purchase of Philippine land, the provision on unjust enrichment
does not apply if the action is proscribed by the Constitution, to wit:

Futile, too, is petitioners reliance on Article 22 of the New Civil Code which reads:

Art. 22. Every person who through an act of performance by another, or any other means, acquires or
comes into possession of something at the expense of the latter without just or legal ground, shall
return the same to him.

The provision is expressed in the maxim: MEMO CUM ALTERIUS DETER DETREMENTO PROTEST (No
person should unjustly enrich himself at the expense of another). An action for recovery of what has
been paid without just cause has been designated as an accion in rem verso. This provision does not
apply if, as in this case, the action is proscribed by the Constitution or by the application of the pari
delicto doctrine. It may be unfair and unjust to bar the petitioner from filing an accion in rem verso over
the subject properties, or from recovering the money he paid for the said properties, but, as Lord
Mansfield stated in the early case of Holman v. Johnson: The objection that a contract is immoral or
illegal as between the plaintiff and the defendant, sounds at all times very ill in the mouth of the
defendant. It is not for his sake, however, that the objection is ever allowed; but it is founded in general
principles of policy, which the defendant has the advantage of, contrary to the real justice, as between
him and the plaintiff.11 (Citations omitted)

Nor would the denial of his claim amount to an injustice based on his foreign citizenship12. Precisely, it is
the Constitution itself which demarcates the rights of citizens and non-citizens in owning Philippine land.
To be sure, the constitutional ban against foreigners applies only to ownership of Philippine land and not
to the improvements built thereon, such as the two (2) houses standing on Lots 1 and 2142 which were
properly declared to be co-owned by the parties subject to partition. Needless to state, the purpose of
the prohibition is to conserve the national patrimony13 and it is this policy which the Court is duty-
bound to protect.

WHEREFORE, the petition is DENIED. Accordingly, the assailed October 8, 2009 Decision and January 24,
2011 Resolution of the Court of Appeals in CA-G.R. CV No. 01940 are AFFIRMED.

SO ORDERED.
G.R. No. 156364 September 3, 2007

JACOBUS BERNHARD HULST, petitioner,

vs.
PR BUILDERS, INC., respondent.

DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court
assailing the Decision1 dated October 30, 2002 of the Court of Appeals (CA) in CA-G.R. SP No. 60981.

The facts:

Jacobus Bernhard Hulst (petitioner) and his spouse Ida Johanna Hulst-Van Ijzeren (Ida), Dutch nationals,
entered into a Contract to Sell with PR Builders, Inc. (respondent), for the purchase of a 210-sq m
residential unit in respondent's townhouse project in Barangay Niyugan, Laurel, Batangas.

When respondent failed to comply with its verbal promise to complete the project by June 1995, the
spouses Hulst filed before the Housing and Land Use Regulatory Board (HLURB) a complaint for
rescission of contract with interest, damages and attorney's fees, docketed as HLRB Case No. IV6-
071196-0618.

On April 22, 1997, HLURB Arbiter Ma. Perpetua Y. Aquino (HLURB Arbiter) rendered a Decision2 in favor
of spouses Hulst, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the complainant, rescinding
the Contract to Sell and ordering respondent to:

1) Reimburse complainant the sum of P3,187,500.00, representing the purchase price paid by the
complainants to P.R. Builders, plus interest thereon at the rate of twelve percent (12%) per annum from
the time complaint was filed;

2) Pay complainant the sum of P297,000.00 as actual damages;

3) Pay complainant the sum of P100,000.00 by way of moral damages;

4) Pay complainant the sum of P150,000.00 as exemplary damages;

5) P50,000.00 as attorney's fees and for other litigation expenses; and

6) Cost of suit.

SO ORDERED.3

Meanwhile, spouses Hulst divorced. Ida assigned her rights over the purchased property to
petitioner.4 From then on, petitioner alone pursued the case.
On August 21, 1997, the HLURB Arbiter issued a Writ of Execution addressed to the Ex-Officio Sheriff of
the Regional Trial Court of Tanauan, Batangas directing the latter to execute its judgment.5

On April 13, 1998, the Ex-Officio Sheriff proceeded to implement the Writ of Execution. However, upon
complaint of respondent with the CA on a Petition for Certiorari and Prohibition, the levy made by the
Sheriff was set aside, requiring the Sheriff to levy first on respondent's personal properties.6 Sheriff
Jaime B. Ozaeta (Sheriff) tried to implement the writ as directed but the writ was returned unsatisfied.7

On January 26, 1999, upon petitioner's motion, the HLURB Arbiter issued an Alias Writ of Execution.8

On March 23, 1999, the Sheriff levied on respondent's 15 parcels of land covered by 13 Transfer
Certificates of Title (TCT)9 in Barangay Niyugan, Laurel, Batangas.10

In a Notice of Sale dated March 27, 2000, the Sheriff set the public auction of the levied properties on
April 28, 2000 at 10:00 a.m..11

Two days before the scheduled public auction or on April 26, 2000, respondent filed an Urgent Motion
to Quash Writ of Levy with the HLURB on the ground that the Sheriff made an overlevy since the
aggregate appraised value of the levied properties at P6,500.00 per sq m is P83,616,000.00, based on
the Appraisal Report12 of Henry Hunter Bayne Co., Inc. dated December 11, 1996, which is over and
above the judgment award.13

At 10:15 a.m. of the scheduled auction date of April 28, 2000, respondent's counsel objected to the
conduct of the public auction on the ground that respondent's Urgent Motion to Quash Writ of Levy was
pending resolution. Absent any restraining order from the HLURB, the Sheriff proceeded to sell the 15
parcels of land. Holly Properties Realty Corporation was the winning bidder for all 15 parcels of land for
the total amount of P5,450,653.33. The sum of P5,313,040.00 was turned over to the petitioner in
satisfaction of the judgment award after deducting the legal fees.14

At 4:15 p.m. of the same day, while the Sheriff was at the HLURB office to remit the legal fees relative to
the auction sale and to submit the Certificates of Sale15 for the signature of HLURB Director Belen G.
Ceniza (HLURB Director), he received the Order dated April 28, 2000 issued by the HLURB Arbiter to
suspend the proceedings on the matter.16

Four months later, or on August 28, 2000, the HLURB Arbiter and HLURB Director issued an Order
setting aside the sheriff's levy on respondent's real properties,17 reasoning as follows:

While we are not making a ruling that the fair market value of the levied properties is PhP6,500.00 per
square meter (or an aggregate value of PhP83,616,000.00) as indicated in the Hunter Baynes Appraisal
Report, we definitely cannot agree with the position of the Complainants and the Sheriff that the
aggregate value of the 12,864.00-square meter levied properties is only around PhP6,000,000.00. The
disparity between the two valuations are [sic] so egregious that the Sheriff should have looked into the
matter first before proceeding with the execution sale of the said properties, especially when the
auction sale proceedings was seasonably objected by Respondent's counsel, Atty. Noel Mingoa.
However, instead of resolving first the objection timely posed by Atty. Mingoa, Sheriff Ozaete totally
disregarded the objection raised and, posthaste, issued the corresponding Certificate of Sale even prior
to the payment of the legal fees (pars. 7 & 8, Sheriff's Return).

While we agree with the Complainants that what is material in an execution sale proceeding is the
amount for which the properties were bidded and sold during the public auction and that, mere
inadequacy of the price is not a sufficient ground to annul the sale, the court is justified to intervene
where the inadequacy of the price shocks the conscience (Barrozo vs. Macaraeg, 83 Phil. 378). The
difference between PhP83,616,000.00 and Php6,000,000.00 is PhP77,616,000.00 and it definitely invites
our attention to look into the proceedings had especially so when there was only one bidder, the HOLLY
PROPERTIES REALTY CORPORATION represented by Ma, Chandra Cacho (par. 7, Sheriff's Return) and the
auction sale proceedings was timely objected by Respondent's counsel (par. 6, Sheriff's Return) due to
the pendency of the Urgent Motion to Quash the Writ of Levy which was filed prior to the execution
sale.

Besides, what is at issue is not the value of the subject properties as determined during the auction
sale, but the determination of the value of the properties levied upon by the Sheriff taking into
consideration Section 9(b) of the 1997 Rules of Civil Procedure x x x.

xxxx

It is very clear from the foregoing that, even during levy, the Sheriff has to consider the fair market value
of the properties levied upon to determine whether they are sufficient to satisfy the judgment, and any
levy in excess of the judgment award is void (Buan v. Court of Appeals, 235 SCRA 424).

x x x x18 (Emphasis supplied).

The dispositive portion of the Order reads:

WHEREFORE, the levy on the subject properties made by the Ex-Officio Sheriff of the RTC of Tanauan,
Batangas, is hereby SET ASIDE and the said Sheriff is hereby directed to levy instead Respondent's real
properties that are reasonably sufficient to enforce its final and executory judgment, this time, taking
into consideration not only the value of the properties as indicated in their respective tax declarations,
but also all the other determinants at arriving at a fair market value, namely: the cost of acquisition, the
current value of like properties, its actual or potential uses, and in the particular case of lands, their size,
shape or location, and the tax declarations thereon.

SO ORDERED.19

A motion for reconsideration being a prohibited pleading under Section 1(h), Rule IV of the 1996 HLURB
Rules and Procedure, petitioner filed a Petition for Certiorari and Prohibition with the CA on September
27, 2000.

On October 30, 2002, the CA rendered herein assailed Decision20 dismissing the petition. The CA held
that petitioner's insistence that Barrozo v. Macaraeg21 does not apply since said case stated that "when
there is a right to redeem inadequacy of price should not be material" holds no water as what is
obtaining in this case is not "mere inadequacy," but an inadequacy that shocks the senses; that Buan v.
Court of Appeals22 properly applies since the questioned levy covered 15 parcels of land posited to have
an aggregate value of P83,616,000.00 which shockingly exceeded the judgment debt of only
around P6,000,000.00.

Without filing a motion for reconsideration,23 petitioner took the present recourse on the sole ground
that:

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE ARBITER'S ORDER SETTING
ASIDE THE LEVY MADE BY THE SHERIFF ON THE SUBJECT PROPERTIES.24

Before resolving the question whether the CA erred in affirming the Order of the HLURB setting aside
the levy made by the sheriff, it behooves this Court to address a matter of public and national
importance which completely escaped the attention of the HLURB Arbiter and the CA: petitioner and his
wife are foreign nationals who are disqualified under the Constitution from owning real property in their
names.

Section 7 of Article XII of the 1987 Constitution provides:

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.
(Emphasis supplied).

The capacity to acquire private land is made dependent upon the capacity to acquire or hold lands of the
public domain. Private land may be transferred or conveyed only to individuals or entities "qualified to
acquire lands of the public domain." The 1987 Constitution reserved the right to participate in the
disposition, exploitation, development and utilization of lands of the public domain for Filipino
citizens25 or corporations at least 60 percent of the capital of which is owned by Filipinos.26 Aliens,
whether individuals or corporations, have been disqualified from acquiring public lands; hence, they
have also been disqualified from acquiring private lands.27

Since petitioner and his wife, being Dutch nationals, are proscribed under the Constitution from
acquiring and owning real property, it is unequivocal that the Contract to Sell entered into by petitioner
together with his wife and respondent is void. Under Article 1409 (1) and (7) of the Civil Code, all
contracts whose cause, object or purpose is contrary to law or public policy and those expressly
prohibited or declared void by law are inexistent and void from the beginning. Article 1410 of the same
Code provides that the action or defense for the declaration of the inexistence of a contract does not
prescribe. A void contract is equivalent to nothing; it produces no civil effect.28It does not create, modify
or extinguish a juridical relation.29

Generally, parties to a void agreement cannot expect the aid of the law; the courts leave them as they
are, because they are deemed in pari delicto or "in equal fault."30 In pari delicto is "a universal doctrine
which holds that no action arises, in equity or at law, from an illegal contract; no suit can be maintained
for its specific performance, or to recover the property agreed to be sold or delivered, or the money
agreed to be paid, or damages for its violation; and where the parties are in pari delicto, no affirmative
relief of any kind will be given to one against the other."31

This rule, however, is subject to exceptions32 that permit the return of that which may have been given
under a void contract to: (a) the innocent party (Arts. 1411-1412, Civil Code);33 (b) the debtor who pays
usurious interest (Art. 1413, Civil Code);34 (c) the party repudiating the void contract before the illegal
purpose is accomplished or before damage is caused to a third person and if public interest is
subserved by allowing recovery (Art. 1414, Civil Code);35 (d) the incapacitated party if the interest of
justice so demands (Art. 1415, Civil Code);36 (e) the party for whose protection the prohibition by law is
intended if the agreement is not illegal per se but merely prohibited and if public policy would be
enhanced by permitting recovery (Art. 1416, Civil Code);37 and (f) the party for whose benefit the law
has been intended such as in price ceiling laws (Art. 1417, Civil Code)38 and labor laws (Arts. 1418-1419,
Civil Code).39

It is significant to note that the agreement executed by the parties in this case is a Contract to Sell and
not a contract of sale. A distinction between the two is material in the determination of when ownership
is deemed to have been transferred to the buyer or vendee and, ultimately, the resolution of the
question on whether the constitutional proscription has been breached.

In a contract of sale, the title passes to the buyer upon the delivery of the thing sold. The vendor has lost
and cannot recover the ownership of the property until and unless the contract of sale is itself resolved
and set aside.40 On the other hand, a contract to sell is akin to a conditional sale where the efficacy or
obligatory force of the vendor's obligation to transfer title is subordinated to the happening of a future
and uncertain event, so that if the suspensive condition does not take place, the parties would stand as
if the conditional obligation had never existed.41 In other words, in a contract to sell, the prospective
seller agrees to transfer ownership of the property to the buyer upon the happening of an event, which
normally is the full payment of the purchase price. But even upon the fulfillment of the suspensive
condition, ownership does not automatically transfer to the buyer. The prospective seller still has to
convey title to the prospective buyer by executing a contract of absolute sale.42

Since the contract involved here is a Contract to Sell, ownership has not yet transferred to the petitioner
when he filed the suit for rescission. While the intent to circumvent the constitutional proscription on
aliens owning real property was evident by virtue of the execution of the Contract to Sell, such violation
of the law did not materialize because petitioner caused the rescission of the contract before the
execution of the final deed transferring ownership.

Thus, exception (c) finds application in this case. Under Article 1414, one who repudiates the agreement
and demands his money before the illegal act has taken place is entitled to recover. Petitioner is
therefore entitled to recover what he has paid, although the basis of his claim for rescission, which was
granted by the HLURB, was not the fact that he is not allowed to acquire private land under the
Philippine Constitution. But petitioner is entitled to the recovery only of the amount of P3,187,500.00,
representing the purchase price paid to respondent. No damages may be recovered on the basis of a
void contract; being nonexistent, the agreement produces no juridical tie between the parties
involved.43 Further, petitioner is not entitled to actual as well as interests thereon,44 moral and
exemplary damages and attorney's fees.

The Court takes into consideration the fact that the HLURB Decision dated April 22, 1997 has long been
final and executory. Nothing is more settled in the law than that a decision that has acquired finality
becomes immutable and unalterable and may no longer be modified in any respect even if the
modification is meant to correct erroneous conclusions of fact or law and whether it was made by the
court that rendered it or by the highest court of the land.45 The only recognized exceptions to the
general rule are the correction of clerical errors, the so-called nunc pro tunc entries which cause no
prejudice to any party, void judgments, and whenever circumstances transpire after the finality of the
decision rendering its execution unjust and inequitable.46 None of the exceptions is present in this case.
The HLURB decision cannot be considered a void judgment, as it was rendered by a tribunal with
jurisdiction over the subject matter of the complaint.47

Ineluctably, the HLURB Decision resulted in the unjust enrichment of petitioner at the expense of
respondent. Petitioner received more than what he is entitled to recover under the circumstances.

Article 22 of the Civil Code which embodies the maxim, nemo ex alterius incommode debet
lecupletari (no man ought to be made rich out of another's injury), states:

Art. 22. Every person who through an act of performance by another, or any other means, acquires or
comes into possession of something at the expense of the latter without just or legal ground, shall
return the same to him.

The above-quoted article is part of the chapter of the Civil Code on Human Relations, the provisions of
which were formulated as basic principles to be observed for the rightful relationship between human
beings and for the stability of the social order; designed to indicate certain norms that spring from the
fountain of good conscience; guides for human conduct that should run as golden threads through
society to the end that law may approach its supreme ideal which is the sway and dominance of
justice.48 There is unjust enrichment when a person unjustly retains a benefit at the loss of another, or
when a person retains money or property of another against the fundamental principles of justice,
equity and good conscience.49

A sense of justice and fairness demands that petitioner should not be allowed to benefit from his act of
entering into a contract to sell that violates the constitutional proscription.

This is not a case of equity overruling or supplanting a positive provision of law or judicial rule. Rather,
equity is exercised in this case "as the complement of legal jurisdiction [that] seeks to reach and to
complete justice where courts of law, through the inflexibility of their rules and want of power to adapt
their judgments to the special circumstances of cases, are incompetent to do so."50

The purpose of the exercise of equity jurisdiction in this case is to prevent unjust enrichment and to
ensure restitution. Equity jurisdiction aims to do complete justice in cases where a court of law is unable
to adapt its judgments to the special circumstances of a case because of the inflexibility of its statutory
or legal jurisdiction.51

The sheriff delivered to petitioner the amount of P5,313,040.00 representing the net proceeds (bidded
amount is P5,450,653.33) of the auction sale after deducting the legal fees in the amount
of P137,613.33.52 Petitioner is only entitled to P3,187,500.00, the amount of the purchase price of the
real property paid by petitioner to respondent under the Contract to Sell. Thus, the Court in the exercise
of its equity jurisdiction may validly order petitioner to return the excess amount of P2,125,540.00.

The Court shall now proceed to resolve the single issue raised in the present petition: whether the CA
seriously erred in affirming the HLURB Order setting aside the levy made by the Sheriff on the subject
properties.

Petitioner avers that the HLURB Arbiter and Director had no factual basis for pegging the fair market
value of the levied properties at P6,500.00 per sq m or P83,616,000.00; that reliance on the appraisal
report was misplaced since the appraisal was based on the value of land in neighboring developed
subdivisions and on the assumption that the residential unit appraised had already been built; that the
Sheriff need not determine the fair market value of the subject properties before levying on the same
since what is material is the amount for which the properties were bidded and sold during the public
auction; that the pendency of any motion is not a valid ground for the Sheriff to suspend the execution
proceedings and, by itself, does not have the effect of restraining the Sheriff from proceeding with the
execution.

Respondent, on the other hand, contends that while it is true that the HLURB Arbiter and Director did
not categorically state the exact value of the levied properties, said properties cannot just amount
to P6,000,000.00; that the HLURB Arbiter and Director correctly held that the value indicated in the tax
declaration is not the sole determinant of the value of the property.

The petition is impressed with merit.

If the judgment is for money, the sheriff or other authorized officer must execute the same pursuant to
the provisions of Section 9, Rule 39 of the Revised Rules of Court, viz:

Sec. 9. Execution of judgments for money, how enforced.

(a) Immediate payment on demand. - The officer shall enforce an execution of a judgment for money by
demanding from the judgment obligor the immediate payment of the full amount stated in the writ of
execution and all lawful fees. x x x

(b) Satisfaction by levy. - If the judgment obligor cannot pay all or part of the obligation in cash, certified
bank check or other mode of payment acceptable to the judgment obligee, the officer shall levy upon
the properties of the judgment obligor of every kind and nature whatsoever which may be disposed
of for value and not otherwise exempt from execution, giving the latter the option to immediately
choose which property or part thereof may be levied upon, sufficient to satisfy the judgment. If the
judgment obligor does not exercise the option, the officer shall first levy on the personal properties, if
any, and then on the real properties if the personal properties are insufficient to answer for the
judgment.

The sheriff shall sell only a sufficient portion of the personal or real property of the judgment obligor
which has been levied upon.

When there is more property of the judgment obligor than is sufficient to satisfy the judgment and
lawful fees, he must sell only so much of the personal or real property as is sufficient to satisfy the
judgment and lawful fees.

Real property, stocks, shares, debts, credits, and other personal property, or any interest in either real
or personal property, may be levied upon in like manner and with like effect as under a writ of
attachment (Emphasis supplied).53

Thus, under Rule 39, in executing a money judgment against the property of the judgment debtor, the
sheriff shall levy on all property belonging to the judgment debtor as is amply sufficient to satisfy the
judgment and costs, and sell the same paying to the judgment creditor so much of the proceeds as will
satisfy the amount of the judgment debt and costs. Any excess in the proceeds shall be delivered to the
judgment debtor unless otherwise directed by the judgment or order of the court.54

Clearly, there are two stages in the execution of money judgments. First, the levy and then the
execution sale.

Levy has been defined as the act or acts by which an officer sets apart or appropriates a part or the
whole of a judgment debtor's property for the purpose of satisfying the command of the writ of
execution.55 The object of a levy is to take property into the custody of the law, and thereby render it
liable to the lien of the execution, and put it out of the power of the judgment debtor to divert it to any
other use or purpose.56

On the other hand, an execution sale is a sale by a sheriff or other ministerial officer under the authority
of a writ of execution of the levied property of the debtor.57

In the present case, the HLURB Arbiter and Director gravely abused their discretion in setting aside the
levy conducted by the Sheriff for the reason that the auction sale conducted by the sheriff rendered
moot and academic the motion to quash the levy. The HLURB Arbiter lost jurisdiction to act on the
motion to quash the levy by virtue of the consummation of the auction sale. Absent any order from the
HLURB suspending the auction sale, the sheriff rightfully proceeded with the auction sale. The winning
bidder had already paid the winning bid. The legal fees had already been remitted to the HLURB. The
judgment award had already been turned over to the judgment creditor. What was left to be done was
only the issuance of the corresponding certificates of sale to the winning bidder. In fact, only the
signature of the HLURB Director for that purpose was needed58 a purely ministerial act.

A purely ministerial act or duty is one which an officer or tribunal performs in a given state of facts, in a
prescribed manner, in obedience to the mandate of a legal authority, without regard for or the exercise
of his own judgment upon the propriety or impropriety of the act done. If the law imposes a duty upon a
public officer and gives him the right to decide how or when the duty shall be performed, such duty is
discretionary and not ministerial. The duty is ministerial only when the discharge of the same requires
neither the exercise of official discretion nor judgment.59In the present case, all the requirements of
auction sale under the Rules have been fully complied with to warrant the issuance of the corresponding
certificates of sale.

And even if the Court should go into the merits of the assailed Order, the petition is meritorious on the
following grounds:

Firstly, the reliance of the HLURB Arbiter and Director, as well as the CA, on Barrozo v.
Macaraeg60 and Buan v. Court of Appeals61 is misplaced.

The HLURB and the CA misconstrued the Court's pronouncements in Barrozo. Barrozo involved a
judgment debtor who wanted to repurchase properties sold at execution beyond the one-year
redemption period. The statement of the Court in Barrozo, that "only where such inadequacy shocks the
conscience the courts will intervene," is at best a mere obiter dictum. This declaration should be taken in
the context of the other declarations of the Court in Barrozo, to wit:

Another point raised by appellant is that the price paid at the auction sale was so inadequate as to shock
the conscience of the court. Supposing that this issue is open even after the one-year period has expired
and after the properties have passed into the hands of third persons who may have paid a price higher
than the auction sale money, the first thing to consider is that the stipulation contains no statement of
the reasonable value of the properties; and although defendant' answer avers that the assessed value
was P3,960 it also avers that their real market value was P2,000 only. Anyway, mere inadequacy of
price which was the complaint' allegation is not sufficient ground to annul the sale. It is only where
such inadequacy shocks the conscience that the courts will intervene. x x x Another consideration is
that the assessed value being P3,960 and the purchase price being in effect P1,864 (P464 sale price
plus P1,400 mortgage lien which had to be discharged) the conscience is not shocked upon examining
the prices paid in the sales in National Bank v. Gonzales, 45 Phil., 693 and Guerrero v. Guerrero, 57 Phil.,
445, sales which were left undisturbed by this Court.

Furthermore, where there is the right to redeem as in this case inadequacy of price should not be
material because the judgment debtor may re-acquire the property or else sell his right to redeem and
thus recover any loss he claims to have suffered by reason of the price obtained at the execution sale.

x x x x (Emphasis supplied).62

In other words, gross inadequacy of price does not nullify an execution sale. In an ordinary sale, for
reason of equity, a transaction may be invalidated on the ground of inadequacy of price, or when such
inadequacy shocks one's conscience as to justify the courts to interfere; such does not follow when the
law gives the owner the right to redeem as when a sale is made at public auction,63 upon the theory that
the lesser the price, the easier it is for the owner to effect redemption.64 When there is a right to
redeem, inadequacy of price should not be material because the judgment debtor may re-acquire the
property or else sell his right to redeem and thus recover any loss he claims to have suffered by reason
of the price obtained at the execution sale.65 Thus, respondent stood to gain rather than be harmed by
the low sale value of the auctioned properties because it possesses the right of redemption. More
importantly, the subject matter in Barrozo is the auction sale, not the levy made by the Sheriff.

The Court does not sanction the piecemeal interpretation of a decision. To get the true intent and
meaning of a decision, no specific portion thereof should be isolated and resorted to, but the decision
must be considered in its entirety.66

As regards Buan, it is cast under an entirely different factual milieu. It involved the levy on two parcels of
land owned by the judgment debtor; and the sale at public auction of one was sufficient to fully satisfy
the judgment, such that the levy and attempted execution of the second parcel of land was declared
void for being in excess of and beyond the original judgment award granted in favor of the judgment
creditor.

In the present case, the Sheriff complied with the mandate of Section 9, Rule 39 of the Revised Rules of
Court, to "sell only a sufficient portion" of the levied properties "as is sufficient to satisfy the judgment
and the lawful fees." Each of the 15 levied properties was successively bidded upon and sold, one after
the other until the judgment debt and the lawful fees were fully satisfied. Holly Properties Realty
Corporation successively bidded upon and bought each of the levied properties for the total amount
of P5,450,653.33 in full satisfaction of the judgment award and legal fees.67

Secondly, the Rules of Court do not require that the value of the property levied be exactly the same as
the judgment debt; it can be less or more than the amount of debt. This is the contingency addressed by
Section 9, Rule 39 of the Rules of Court. In the levy of property, the Sheriff does not determine the exact
valuation of the levied property. Under Section 9, Rule 39, in conjunction with Section 7, Rule 57 of the
Rules of Court, the sheriff is required to do only two specific things to effect a levy upon a realty: (a) file
with the register of deeds a copy of the order of execution, together with the description of the levied
property and notice of execution; and (b) leave with the occupant of the property copy of the same
order, description and notice.68 Records do not show that respondent alleged non-compliance by the
Sheriff of said requisites.

Thirdly, in determining what amount of property is sufficient out of which to secure satisfaction of the
execution, the Sheriff is left to his own judgment. He may exercise a reasonable discretion, and must
exercise the care which a reasonably prudent person would exercise under like conditions and
circumstances, endeavoring on the one hand to obtain sufficient property to satisfy the purposes of the
writ, and on the other hand not to make an unreasonable and unnecessary levy.69 Because it is
impossible to know the precise quantity of land or other property necessary to satisfy an execution, the
Sheriff should be allowed a reasonable margin between the value of the property levied upon and the
amount of the execution; the fact that the Sheriff levies upon a little more than is necessary to satisfy
the execution does not render his actions improper.70 Section 9, Rule 39, provides adequate safeguards
against excessive levying. The Sheriff is mandated to sell so much only of such real property as is
sufficient to satisfy the judgment and lawful fees.
In the absence of a restraining order, no error, much less abuse of discretion, can be imputed to the
Sheriff in proceeding with the auction sale despite the pending motion to quash the levy filed by the
respondents with the HLURB. It is elementary that sheriffs, as officers charged with the delicate task of
the enforcement and/or implementation of judgments, must, in the absence of a restraining order, act
with considerable dispatch so as not to unduly delay the administration of justice; otherwise, the
decisions, orders, or other processes of the courts of justice and the like would be futile.71 It is not within
the jurisdiction of the Sheriff to consider, much less resolve, respondent's objection to the continuation
of the conduct of the auction sale. The Sheriff has no authority, on his own, to suspend the auction sale.
His duty being ministerial, he has no discretion to postpone the conduct of the auction sale.

Finally, one who attacks a levy on the ground of excessiveness carries the burden of sustaining that
contention.72In the determination of whether a levy of execution is excessive, it is proper to take into
consideration encumbrances upon the property, as well as the fact that a forced sale usually results in a
sacrifice; that is, the price demanded for the property upon a private sale is not the standard for
determining the excessiveness of the levy.73

Here, the HLURB Arbiter and Director had no sufficient factual basis to determine the value of the levied
property. Respondent only submitted an Appraisal Report, based merely on surmises. The Report was
based on the projected value of the townhouse project after it shall have been fully developed, that is,
on the assumption that the residential units appraised had already been built. The Appraiser in fact
made this qualification in its Appraisal Report: "[t]he property subject of this appraisal has not been
constructed. The basis of the appraiser is on the existing model units."74 Since it is undisputed that the
townhouse project did not push through, the projected value did not become a reality. Thus, the
appraisal value cannot be equated with the fair market value. The Appraisal Report is not the best proof
to accurately show the value of the levied properties as it is clearly self-serving.

Therefore, the Order dated August 28, 2000 of HLURB Arbiter Aquino and Director Ceniza in HLRB Case
No. IV6-071196-0618 which set aside the sheriff's levy on respondent's real properties, was clearly
issued with grave abuse of discretion. The CA erred in affirming said Order.

WHEREFORE, the instant petition is GRANTED. The Decision dated October 30, 2002 of the Court of
Appeals in CA-G.R. SP No. 60981 is REVERSED and SET ASIDE. The Order dated August 28, 2000 of
HLURB Arbiter Ma. Perpetua Y. Aquino and Director Belen G. Ceniza in HLRB Case No. IV6-071196-0618
is declared NULL and VOID. HLURB Arbiter Aquino and Director Ceniza are directed to issue the
corresponding certificates of sale in favor of the winning bidder, Holly Properties Realty Corporation.
Petitioner is ordered to return to respondent the amount of P2,125,540.00, without interest, in excess
of the proceeds of the auction sale delivered to petitioner. After the finality of herein judgment, the
amount of P2,125,540.00 shall earn 6% interest until fully paid.

SO ORDERED.

This resolves petitioner's Motion for Partial Reconsideration.

On September 3, 2007, the Court rendered a Decision[1] in the present case, the dispositive portion of
which reads:

WHEREFORE, the instant petition is GRANTED. The Decision dated October 30, 2002 of the Court of
Appeals in CA-G.R. SP No. 60981 is REVERSED and SET ASIDE. The Order dated August 28, 2000 of HLURB
Arbiter Ma. Perpetua Y. Aquino and Director Belen G. Ceniza in HLRB Case No. IV6-071196-0618 is
declared NULL and VOID. HLURB Arbiter Aquino and Director Ceniza are directed to issue the
corresponding certificates of sale in favor of the winning bidder, Holly Properties Realty
Corporation. Petitioner is ordered to return to respondent the amount of P2,125,540.00, without
interest, in excess of the proceeds of the auction sale delivered to petitioner. After the finality of
herein judgment, the amount of P2,125,540.00 shall earn 6% interest until fully paid.

SO ORDERED.[2] (Emphasis supplied)

Petitioner filed the present Motion for Partial Reconsideration[3] insofar as he was ordered to return to
respondent the amount of P2,125,540.00 in excess of the proceeds of the auction sale delivered to
petitioner. Petitioner contends that the Contract to Sell between petitioner and respondent involved a
condominium unit and did not violate the Constitutional proscription against ownership of land by
aliens. He argues that the contract to sell will not transfer to the buyer ownership of the land on which
the unit is situated; thus, the buyer will not get a transfer certificate of title but merely a Condominium
Certificate of Title as evidence of ownership; a perusal of the contract will show that what the buyer
acquires is the seller's title and rights to and interests in the unit and the common areas.

Despite receipt of this Courts Resolution dated February 6, 2008, respondent failed to file a comment on
the subject motion.

The Motion for Partial Reconsideration is impressed with merit.

The Contract to Sell between petitioner and respondent provides as follows:

Section 3. TITLE AND OWNERSHIP OF UNIT

a. Upon full payment by the BUYER of the purchase price stipulated in Section 2 hereof, x x x, the SELLER
shall deliver to the BUYER the Deed of Absolute Sale conveying its rights, interests and title to the UNIT
and to the common areas appurtenant to such UNIT, and the corresponding Condominium Certificate
of Title in the SELLER's name; x x x

b. The Seller shall register with the proper Registry of Deeds, the Master Deed with the Declaration of
Restrictions and other documents and shall immediately comply with all requirements of Republic Act
No. 4726 (The Condominium Act) and Presidential Decree No. 957 (Regulating the Sale of Subdivision
Lots and Condominiums, Providing Penalties for Violations Thereof). It is hereby understood that all
title, rights and interest so conveyed shall be subject to the provisions of the Condominium Act, the
Master Deed with Declaration of Restrictions, the Articles of Incorporation and By-Laws and the Rules
and Regulations of the Condominium Corporation, zoning regulations and such other restrictions on the
use of the property as annotated on the title or may be imposed by any government agency or
instrumentality having jurisdiction thereon.[4] (Emphasis supplied)

Under Republic Act (R.A.) No. 4726, otherwise known as the Condominium Act, foreign nationals can
own Philippine real estate through the purchase of condominium units or townhouses constituted under
the Condominium principle with Condominium Certificates of Title. Section 5 of R.A. No. 4726 states:

SECTION 5. Any transfer or conveyance of a unit or an apartment, office or store or other space therein,
shall include the transfer or conveyance of the undivided interest in the common areas or, in a proper
case, the membership or shareholdings in the condominium corporation; Provided, however, That
where the common areas in the condominium project are held by the owners of separate units as co-
owners thereof, no condominium unit therein shall be conveyed or transferred to persons other than
Filipino citizens or corporations at least 60% of the capital stock of which belong to Filipino citizens,
except in cases of hereditary succession. Where the common areas in a condominium project are held
by a corporation, no transfer or conveyance of a unit shall be valid if the concomitant transfer of the
appurtenant membership or stockholding in the corporation will cause the alien interest in such
corporation to exceed the limits imposed by existing laws. (Emphasis supplied)

The law provides that no condominium unit can be sold without at the same time selling the
corresponding amount of rights, shares or other interests in the condominium management body, the
Condominium Corporation; and no one can buy shares in a Condominium Corporation without at the
same time buying a condominium unit. It expressly allows foreigners to acquire condominium units and
shares in condominium corporations up to not more than 40% of the total and outstanding capital stock
of a Filipino-owned or controlled corporation. Under this set up, the ownership of the land is legally
separated from the unit itself. The land is owned by a Condominium Corporation and the unit owner is
simply a member in this Condominium Corporation.[5] As long as 60% of the members of this
Condominium Corporation are Filipino, the remaining members can be foreigners.

Considering that the rights and liabilities of the parties under the Contract to Sell is covered by the
Condominium Act wherein petitioner as unit owner was simply a member of the Condominium
Corporation and the land remained owned by respondent, then the constitutional proscription against
aliens owning real property does not apply to the present case. There being no circumvention of the
constitutional prohibition, the Court's pronouncements on the invalidity of the Contract of Sale should
be set aside.

WHEREFORE, the Motion for Partial Reconsideration is GRANTED. Accordingly, the Decision
dated September 3, 2007 of the Court is MODIFIED by deleting the order to petitioner to return to
respondent the amount of P2,125,540.00 in excess of the proceeds of the auction sale delivered to
petitioner.

SO ORDERED.

LA BUGAL-B'LAAN vs DENR
Jan. 21, 2004

Facts: R.A. No. 7942 defines the modes of mineral agreements for mining operations, outlines the
procedure for their filing and approval, assignment/transfer and withdrawal, and fixes their terms.
Similar provisions govern financial or technical assistance agreements.

Petitioners filed the present petition for prohibition and mandamus, with a prayer for a temporary
restraining order alleging that at the time of the filing of the petition, 100 FTAA applications had already
been filed, covering an area of 8.4 million hectares, 64 of which applications are by fully foreign-owned
corporations covering a total of 5.8 million hectares, and at least one by a fully foreign-owned mining
company over offshore areas.

Issue: Are foreign-owned corporations in the large-scale exploration, development, and utilization of
petroleum, minerals and mineral oils limited to technical or financial assistance only?
Ruling: Only technical assistance or financial assistance agreements may be entered into, and only for
large-scale activities. These are contract forms which recognize and assert our sovereignty and
ownership over natural resources since the foreign entity is just a pure contractor and not a beneficial
owner of our economic resources. The proposal recognizes the need for capital and technology to
develop our natural resources without sacrificing our sovereignty and control over such resources by the
safeguard of a special law which requires two-thirds vote of all the members of the Legislature.
It is true that the word technical encompasses a broad number of possible services. However, the law
follows the maxim casus omisus pro omisso habendus est which means a person, object or thing
omitted from an enumeration must be held to have been omitted intentionally.

LA BUGAL-B'LAAN vs DENR
Dec. 1, 2004

Facts: On January 27, 2004, the Court en banc promulgated its Decision granting the Petition and
declaring the unconstitutionality of certain provisions of RA 7942, DAO 96-40, as well as of the entire
FTAA executed between the government and WMCP, mainly on the finding that FTAAs are service
contracts prohibited by the 1987 Constitution.

The Decision struck down the subject FTAA for being similar to service contracts, which, though
permitted under the 1973 Constitution, were subsequently denounced for being antithetical to the
principle of sovereignty over our natural resources, because they allowed foreign control over the
exploitation of our natural resources, to the prejudice of the Filipino nation.

Issue: Are foreign-owned corporations in the large-scale exploration, development, and utilization of
petroleum, minerals and mineral oils limited to technical or financial assistance only?

Ruling: Only technical assistance or financial assistance agreements may be entered into, and only for
large-scale activities. Full control is not anathematic to day-to-day management by the contractor,
provided that the State retains the power to direct overall strategy; and to set aside, reverse or modify
plans and actions of the contractor. The idea of full control is similar to that which is exercised by the
board of directors of a private corporation: the performance of managerial, operational, financial,
marketing and other functions may be delegated to subordinate officers or given to contractual entities,
but the board retains full residual control of the business.
Republic vs Pagadian City

This is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court seeking to nullify and set
aside the Decision[2] dated October 18, 2001 and the Resolution[3]dated July 24, 2003 of the Court of
Appeals in CA-G.R. SP No. 59194 entitled Pagadian City Timber Co., Inc. v. Antonio Cerilles, as Secretary
of the Department of Environment and Natural Resources (DENR) and Antonio Mendoza, as Regional
Executive Director, DENR, Region IX.

The antecedent facts are as follows:

On October 14, 1994, petitioner, through the DENR, and respondent Pagadian City Timber Co., Inc.
executed Industrial Forest Management Agreement (IFMA) No. R-9-040[4]whereby petitioner,
represented by then Regional Executive Director (RED) for Region IX, Leonito C. Umali, authorized
respondent, represented by its President Filomena San Juan, to develop, utilize, and manage a specified
forest area covering 1,999.14 hectares located in Barangays Langapod, Cogonan, and Datagan,
Municipality of Labangan, Zamboanga del Sur, for the production of timber and other forest products
subject to a production-sharing scheme.

Respondent later submitted the required Comprehensive Development and Management Plan (CDMP)
which the DENR approved on August 17, 1995.

On October 8, 1998, in response to the numerous complaints filed by members of the Subanen tribe
regarding respondents alleged failure to implement the CDMP, disrespect of their rights as an
indigenous people, and the constant threats and harassment by armed men employed by respondent,
RED Antonio Mendoza, DENR Region IX, issued Regional Special Order No. 217 creating a regional team
to evaluate and assess IFMA No. R-9-040.

Thus, the DENR sent a letter dated October 22, 1998 to respondent, giving notice of the evaluation and
assessment to be conducted on the area from October 22-30, 1998covering the years 1997 and 1998. In
the notice, the DENR requested any representative of the company to appear at the CENRO
Office, Pagadian City, and bring with him documents and maps concerning its IFMA operations.

On October 23, 1998, a DENR Evaluation Team composed of Aniceto Wenceslao (Forester, DENR,
Zamboanga del Sur), Isabelo Mangaya-ay (Intern Chief, RCBF/MCO), Philidor Lluisma (Forester II,
Regional Office), Chanito Paul Siton (C. Forester, CENRO-Pagadian City), Adelberto Roullo (Forester,
CENRO, Pagadian City), and Francisco Martin (Carto LEP, CENRO, Pagadian City) went to the IFMA
site. After a briefing conference between the Evaluation Team and respondents Operations Manager,
Inocencio Santiago, actual field evaluation and assessment followed.

On October 29, 1998, an exit conference and dialogue on post evaluation and assessment of IFMA R-9-
04 was held between DENR officials, namely, CENR Officer Maximo O. Dichoso, IFMA Regional Team
Leader, Forester Isabelo C. Mangaya-ay, and IFMA Regional Team Member, Forester Philidor O. Lluisma,
and IFMA Representative and Operations Manager Inocencio Santiago at the
CENRO, Pagadian City.[5] The exit conference was called to order at 1:30 p.m. and was concluded at 3:00
p.m. Forester Mangaya-ay presented the representative results and findings of the Evaluation Team, to
wit:

The presiding officer started with the mango plantation in the Noran, Langapod side. That out of the
estimated number of seedlings planted of about 2,008 hills, within an equivalent area of 20 hectares,
the result or finding of the inventory conducted at 100% intensity is only 98 hills of seedlings survived
including the doubtful and badly deformed. The species planted along trails are Gmelina and Mahogany
species. The said foot trail planted with the aforementioned species starts from the entrance of the
IFMA are where the notice billboard is posted up to the only existing look-out tower. The estimated
average of percent survival for Gmelina is more or less 30%. There are also portions where higher
percentage of survival is recorded at 56% and lower at 14%.There are areas planted declared by
Kagawad Cerning Becagas of Barangay Cogonan now covered by CSC. The areas covered by CSC, a
waiver is needed to be issued by the IFMA holder.

CENR Officer Maximo O. Dichoso commented that during a meeting held before, the IFMA holder was
willing to give up the said areas.

The presiding officer continued that on the courtesy call made to the Barangay Chairman of Barangay
Cogonan, Mr. Roberto Palaran recounted the assistance extended by the IFMA holder to his barangay as
Community Assistance/service which includes electric generator, handheld radio and laborers for the
repair of Noburan Cogonan road and the repair of the hanging bridge at Sitio Tialaic to which the said
Barangay Chairman issued a duly signed certification to this effect.

With regards, the seedling stock within the nursery, there are approximately a total number of about
44,460 seedlings of Gmelina species. That the infrastructure implemented or constructed, there exist
only one look-out tower of the reported 4 look-out towers constructed. Moreover, the team had also
noted only 1 bunkhouse and 1 stockroom or shedhouse. There is also 1 Multi-purpose shed and 1
dilapidated or neglected notice billboard poster at the entrance trail leading to the IFMA area. That with
regards the concrete monument, there are only 2 recorded. The other corners visible are those located
at junctions of creeks and rivers. But the others cannot be visibly or never planted for the same cannot
be pinpointed or shown to the team allegedly for lack of knowledge by the representative of the IFMA
holder. Finally, the presiding officer reminded the herein IFMA representative Mr. Inocencio Santiago
that per actual survey, inspection and ground verification, the team believes that the other reported
areas planted are located outside the designated IFMA area particularly the Noburan and Langapod
sides.[6]

After the presentation, Mangaya-ay asked Santiago if he had comments, suggestions, or questions
regarding the matter and the manner of the conduct of the evaluation and assessment by the Evaluation
Team. Santiago said he had none, but requested a copy of the report of the Evaluation Team. Mangaya-
ay informed him that it was only RED Mendoza who may furnish him a copy of the report.

Later, the Evaluation Team submitted a report through a Memorandum[7] dated November 6, 1998 to
the DENR-RED of Region 9, Zamboanga City, on the evaluation and assessment of respondent under
IFMA No. R-9-040. The said Memorandum stated

In compliance with Regional Special Order No. 217, Series of 1998, please be informed that the herein
information is the result or findings of the team for the conduct of evaluation and assessment following
the guidelines setforth under Department Administrative Order (DAO) No. 11, Series of 1995 of
Pagadian Timber Co., Inc. under IFMA No. R9-040 against their actual accomplishment as mandated
under the terms and conditions of the IFMA including other applicable laws, rules and regulations of the
department on the matter.

At the onset, the team conducted a briefing conference and dialogue with the IFMA holder, the CENR
Officer of Pagadian City and personnel concerned for the proper and orderly implementation and
conduct of the evaluation and assessment (please see attached).

The team was composed of the Regional Evaluating Team, the CENRO and PENRO representatives and
the representatives of the IFMA holder. The team proceeded to the western portion of the area of the
herein IFMA particularly Barangay Cogonan, Labangan, Zamboanga del Sur. The evaluation and
assessment was then conducted on the main nursery, the established plantation, the look-out towers,
the boundary of ISF and claimed or occupied areas, natural or residual forest, the IFMA boundary,
monuments planted, foot trails, other improvements introduced and the billboard and signboard
posted. The inspection, evaluation and assessment conducted were all undertaken in the presence of
the IFMA holder, representatives, laborers and other personnel on the area. (please see attached
report, tall sheets, pictorials and map).

In the conduct of the same, the IFMA representatives or laborers that assisted the team could only show
the subject area under evaluation but the other areas alluded to as accomplished or undertaken by the
company appeared upon actual verification and inspection to be negative and non-existent thus
dispelling their allegation.

With regard the information and dissemination conducted by the IFMA holder including other services
extended to the communities within the IFMA area and vicinities, it is noteworthy for recognition the
donations made by the company. (Please see attached minutes of the dialogue with the barangay
officials of Barangay Cogonan and pictorials).

The evaluation conducted on the nursery operations show that the facilities and other necessary
implements were generally below par. An inventory of the seedlings stock of pure Gmelina species have
already lapsed its plantability or have overgrown in the seedbed with an average grand total of about
44,460 within the established 2-hectare main nursery area. There was no other subsidiary nursery
established in the area. Also noted is the enrichment planting conducted along both sides of the foot-
trail which extends approximately 18 kms. From the entrance of the IFMA area going to the lookout
tower of the four (4) lookout towers reported, only one (1) has been noted remaining in the area and
the rest were destroyed or burned (pls. see attached pictorials). The signboard posted was unattended
and in the state of disrepair. There were no monument planted or any marking along the IFMA
boundary and in residual forest except the monuments found in the ISF boundaries within the IFMA
area (please see attached pictorials). The plantation established is composed of Gmelina species with 4 x
4 spacing over a total of about 10.18 hectares. Basing on 5% estimate inventory, the result is 43%
seedling survival.

Thereafter, the team also conducted evaluation and assessment at the eastern portion particularly at
Langapod, Labangan, Zamboanga del Sur. The team inspected and verified on the ground the reported
20 hectares mango plantation with a spacing of 10 x 10 meters at 100% intensity inventory. The
accounted number of mango seedlings planted of about 2,008 hills, only 98 seedlings
survived. Wherefore, it generally represents 5% seedling survival. (Please see attached)

Finally, the team conducted an exit conference with the CENR Officer, and the IFMA holder where the
tentative and general findings of the evaluation and assessment was laid-out and presented to the body.
(Please see attached)[8]

On the basis of such findings, the Evaluation Team made the following recommendations

1. The lessee should be required to explain why they failed to develop their IFMA area
(Plantation Development) in accordance with the approved Comprehensive Development and
Management Plan (CDMP);

2. The boundary and area coverage of IFMA No. R9-040 should be amended to exclude areas
covered by Certificates of Stewardship Contracts (CSC) under the ISF Program with an area of 226.17
hectares, other areas previously identified as occupied/claimed and other conflict areas;

3. The amended boundary should be delineated/surveyed on the ground with a precise

instrument and all corners appropriately marked/monumented;

4. The company should hire a full time forester.[9]

Acting on the Memorandum dated November 6, 1998, RED Antonio M. Mendoza, DENR-
IX, Zamboanga City, submitted to the DENR Secretary a Memorandum[10]dated April 7, 1999 regarding
the performance evaluation of IFMA No. R-9-040. The RED Memorandum reads

This has reference with the instruction to validate the performance/accomplishment of IFMAs of Region
IX, Western Mindanao. Validation of IFMAs is in accordance with the existing policy of the DENR, to
determine the capabilities of the holders to develop their Lease areas in consonance with their
submitted and approved Comprehensive Development Management Plan.
xxxx

On 6 November 1998, Foresters Isabelo C. Mangaya-ay and Philidor Lluisma, pursuant to Regional
Special Order No. 217, Series of 1998, conducted the evaluation of the performance of IFMA No. R9-040
of Pagadian City Timber Company, Inc. located at Langapod and Cogonan, Municipality of Labangan and
Datagan, Municipality of Sominot, all of Zamboanga del Sur.Result of the evaluation reveals that the
holder violated the following DENR existing Rules and Regulations particularly Section 26 of DAO 97-04
GROUNDS FOR CANCELLATION of IFMA which provides that, any of the following violations shall be
sufficient grounds for the cancellation of IFMA.

1. Paragraph 26.5, Section 26, DAO 97-04, Series of 1997, provides that failure to implement
the approved Comprehensive Development and Management Plan.

As of 1998, the 4th year of existence of IFMA No. R9-040, the holder must have developed a total of
1,597.0 hectares as per approved CDMP. However, based on the report submitted by the Evaluation
Team only 365.2 hectares was planted which are about 22.8%. During the evaluation, however, the
IFMA representative could not even pinpoint the planted areas.

Per report of the Pagadian CENRO Composite Monitoring Team conducted on 21 August 1998 the
plantation area was burned resulting to the damage of about 300 hectares leaving only about 20.0
hectares undamaged. No report had been submitted/received since then.

In infrastructure, the holder managed to put up one (1) out of four (4) programmed look-out towers;
developed one (1) out of two (2) forest nurseries and constructed only 6 km. foot trail which is only
about 27% accomplishment of the whole infrastructure.

2. Paragraph 26.8 of Section 26, DAO 97-04, specifically provides that failure to implement or
adopt agreements made with communities and other relevant sectors.

Attached herewith, please find several petitions, sworn statements, affidavits and resolutions from
various sectors particularly the Subanen Communities (IPs) within the area. The existence and approval
of IFMA No. R9-040 contract is being protested and is demanding for its cancellation.
The primary complaint was a blatant disrespect to their rights as an Indigenous People and the non-
peaceful co-existence between them and the holder of the IFMA R9-040.Accordingly, they were
constantly threatened/harassed by armed men employed by the holder.

In the same Memorandum, RED Mendoza recommended to the DENR Secretary the cancellation of
IFMA No. R-9-040. [11]

It appears that RED Mendoza issued a subsequent but similar Memorandum[12] dated April 21, 1999 to
the DENR Secretary relative to IFMA No. R-9-040. It stated

This has reference with the instruction to validate the performance/accomplishment of IFMAs of Region
IX, Western Mindanao. Validation of IFMAs is in accordance with the existing policy of the DENR to
determine the capabilities of the holders to develop their Lease areas in consonance with their
approved Comprehensive Development and Management Plan.

In furtherance thereto, Foresters Isabelo C. Mangaya-ay and Philidor Lluisma, pursuant to Regional
Special Order No. 217, Series of 1998, conducted the evaluation of the performance of IFMA No. R9-040
of Pagadian City Timber Company, Inc. located at the Municipalities of Labangan, Datagan and Sominot,
all of Zamboanga del Sur, on November 6, 1998. Result of the evaluation revealed that the holder
violated Rules and Regulations which are sufficient ground for cancellation as stipulated under Section
26 of DAO 97-04, they are as follows

1. FAILURE TO IMPLEMENT THE APPROVED COMPREHENSIVE DEVELOPMENT AND

MANAGEMENT PLAN.

Under the approved comprehensive and development plan, 1,597.0 ha of plantation should have been
established from the Approval of the CDMP. However, only 365.2 ha were reportedly planted from CY
1995 to 1997. This represents only 28% of the targeted goal on plantation establishment.
Field validation of the reported established plantation revealed otherwise. The findings of the team are:

A. Portion of the area reported as established plantation by the IFMA holder is an ISF project
with an area of 226.17 ha. These are covered with Certificate of Stewardship;

B. Locations and boundaries of reported plantations established from 1995 to 1997 cannot be
located on the ground by the team neither by the representative of the IFMA holder who accompanied
the validating team; and

C. No plantation was established during CY 1998.

On Infrastructure, the holder constructed only one (1) lookout tower as against the goal of 4 towers;
established one (1) nursery as against the goal of two (2); and constructed only 6km foot trail. These
represent only 27% of the total infrastructure to be undertaken by the holder over the area.

2. FAILURE TO IMPLEMENT OR ADOPT AGREEMENT WITH COMMUNITIES AND OTHER

RELEVANT SECTORS.

Attached herewith are copies of petitions, sworn statements, affidavit and resolutions from Subanen
Communities (IPs) and other sectors in the area demanding the cancellation of IFMA R9-040.

The complaints and demand for cancellation by the people where the IFMA is located is a manifestation
and proof of non-social acceptance of the project by the residents in the locality.

In view of the above findings, IFMA No. R9-040 is hereby recommended for cancellation.[13]

Acting on the latter Memorandum from RED Mendoza, then DENR Secretary Antonio H. Cerilles, on June
7, 1999, issued an Order[14] canceling IFMA No. R-9-040 for failure to implement the approved CDMP
and for failure of the lessee to protect the area from forest fires. The dispositive portion of the Order
reads:

WHEREFORE, premises considered, IFMA No. R9-040 issued to Pagadian City Timber Co., Inc. is hereby
ordered cancelled. The IFMA holder is hereby ordered to immediately vacate the area and to
surrender/return copy of the Agreement to the Regional Executive Director, DENR Region
9, Zamboanga City.

The RED concerned or his duly authorized representative is hereby directed to serve this Order;
determine best end use of the land; take appropriate measures to protect the same and inform this
Office immediately of his compliance.

SO ORDERED.[15]

On July 2, 1999, respondents President, Filomena S. San Juan, wrote DENR Secretary Cerilles that the
company was surprised to receive the Order of the cancellation of IFMA No. R-9-040 on June 22,
1999. She claimed that

The DENR regional office is fully aware that the company is doing its best to manage and develop the
area by continually planting trees and protecting the area from forest fires and illegalities. No company
would ever set fire on its own plantation for obvious reasons. The company observed precautionary
measures especially during the time of the El Nio phenomenon. If there have been mistakes and
miscommunications in the reports of the DENR field officers, these could have been threshed out by a
conference between DENR and the Pagadian Timber Company Inc.

The company was not accorded due process before the order of cancellation was issued. The company
was not furnished copy of the evaluation and recommendation of the DENR Regional Executive Director
of Region IX. Had the company been given the opportunity to contest the findings, evaluation and
recommendation of the said office, the result would be otherwise.[16]
She appealed for the reconsideration of the Order asking that a re-investigation be conducted to comply
with due process.

Even as the said letter for reconsideration was not yet acted upon, respondent appealed to the Office of
the President (OP).

In the Resolution[17] dated January 12, 2000, the OP affirmed the cancellation order based on the results
of the actual evaluation and assessment of the DENR team. It ruled that the cancellation of IFMA No. R-
9-040 was primarily and specifically governed by Section 26 of Department Administrative Order (DAO)
97-04. Relative to respondents invocation of due process, the OP held that respondent was afforded the
right to be heard when it filed its motion for reconsideration and its subsequent appeal to the OP.

The motion for reconsideration filed by respondent of the January 12, 2000 Resolution was denied by
the OP in the Resolution[18] dated May 8, 2000.

Respondent went up to the Court of Appeals (CA) via a petition for review with a prayer for the issuance
of a writ of preliminary injunction against the implementation of the assailed Order dated June 7, 1999.

In its Resolution dated January 17, 2001, the CA issued the writ of preliminary injunction prayed for,
directing and ordering respondents (petitioner) and/or any other person acting under their command,
authority and/or for and in their behalf, to DESIST from implementing the assailed Order of cancellation
dated June 7, 1999, and/or taking over the IFMA premises of [respondent], pending the termination of
this proceeding.

In its Decision[19] dated October 18, 2001, the CA ruled in favor of respondents. In striking down the
rulings of the OP and the Order dated June 7, 1999, the CA declared that IFMA No. R-9-040 was a
contract that could not be unilaterally cancelled without infringing on the rights of respondent to due
process and against impairment of contracts.The appellate court agreed with respondent when the
latter argued that it was entitled to the benefits of Sections 35[20] and 36[21] of IFMA No. R-9-040 such
that respondent should have been given 30 days, after due notice, to remedy any breach or default of
the provisions of the IFMA and/or that the dispute regarding the bases for the cancellation of the IFMA
should have first been submitted to arbitration.
Petitioner moved to reconsider the CA Decision. In the Resolution[22] dated July 24, 2003, the motion
was denied for lack of merit. Hence, this petition based on the following grounds:

I. The Court of Appeals gravely erred in ruling that IFMA No. R9-040 is a contract and not a mere
privilege granted by the State to respondent.

II. The Court of Appeals seriously erred in ordaining that respondent can rightfully invoke prior resort to
arbitration or the option to mend its violations under IFMA No. R9-040.[23]

In essence, petitioner argues that an IFMA is not an ordinary contract which is protected by the
Constitution against impairment[24] but a mere privilege granted by the State to qualified persons by
means of a permit, license, franchise, agreement, or other similar concessions, which in this case is the
exploration, development and utilization of the forest lands belonging to the State under its full control
and supervision. Thus, the cancellation of the IFMA does not amount to a rescission of a contract but a
mere withdrawal of this privilege. As such, the due process clause under the Constitution[25] does not
likewise apply since the IFMA area cannot be considered as property of respondent. According to
petitioner, IFMA No. R-9-040, with the forest lands covered by it, is imbued with paramount
considerations of public interest and public welfare such that whatever rights respondent may have
under it must yield to the police power of the State. In this sense, respondent cannot take refuge in
Sections 35 and 36 of IFMA No. R-9-040 to prevent the IFMAs cancellation.

Inasmuch as the grounds cited by petitioner are interrelated, they shall be jointly discussed hereunder.

The petition is impressed with merit.

IFMA No. R-9-040 is a license agreement under Presidential Decree (P.D.) No. 705 (Revised Forestry
Code), the law which is the very basis for its existence.[26] Under Section 3, paragraph (dd) thereof, a
license agreement is defined as a privilege[27] granted by the State to a person to utilize forest resources
within any forest land with the right of possession and occupation thereof to the exclusion of others,
except the government, but with the corresponding obligation to develop, protect and rehabilitate the
same in accordance with the terms and conditions set forth in said agreement. This is evident in the
following features, among others, of IFMA No. R-9-040, to wit:
1. The State agreed to devolve to the holder of IFMA No. R-9-040 the responsibility to manage the
specified IFMA area for a period of 25 years, specifically until October 14, 2019, which period is
automatically renewable for another 25 years thereafter;

2. The State imposed upon respondent, as holder of IFMA No. R-9-040, the conditions, the means, and
the manner by which the IFMA area shall be managed, developed, and protected;

3. The State, through the DENR Secretary, shall not collect any rental within the first five (5) years of the
IFMA, after which it shall be entitled to annual rental of fifty centavos (P0.50) per hectare from the sixth
to the tenth year thereof, and one peso (P1.00) per hectare thereafter;

4. The IFMA area, except only the trees and other crops planted and the permanent improvements
constructed by the IFMA holder, remains the property of the State; and

5. Upon cancellation of the IFMA through the fault of the holder, all improvements including forest
plantations existing within the IFMA area shall revert to and become the property of the State.

An IFMA has for its precursor the Timber License Agreement (TLA), one of the tenurial instruments
issued by the State to its grantees for the efficient management of the countrys dwindling forest
resources. Jurisprudence has been consistent in holding that license agreements are not contracts
within the purview of the due process and the non-impairment of contracts clauses enshrined in the
Constitution. Our pronouncement in Alvarez v. PICOP Resources, Inc.[28] is enlightening

In unequivocal terms, we have consistently held that such licenses concerning the harvesting of timber
in the countrys forests cannot be considered contracts that would bind the Government regardless of
changes in policy and the demands of public interest and welfare. (citing Oposa v. Factoran, Jr., G.R. No.
101083, July 30, 1993, 224 SCRA 792, 811) Such unswerving verdict is synthesized in Oposa v. Factoran,
Jr., (id., at pp. 811, 812) where we held:
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 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.

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, [125 SCRA 302, 325 (1983)] 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 [190
SCRA 673, 684 (1990):

x x x Timber licenses, permits and license agreements are the principal instruments by which the State
regulates the utilization and disposition of forest resources to the end that public welfare is
promoted. And it can hardly be gainsaid that they merely evidence a privilege granted by the State to
qualified entities, and do not vest in the latter a permanent or irrevocable right to the particular
concession area and the forest products therein. They may be validly amended, modified, replaced or
rescinded by the Chief Executive when national interests so require. Thus, they are not deemed
contracts within the purview of the due process of law clause. [See Sections 3(ee) and 20 of Pres. Decree
No. 705, as amended. Also, Tan v. Director of Forestry, G.R. No. L-24548, October 27, 1983, 125 SCRA
302].

Since timber licenses are not contracts, the non-impairment clause, which reads:

SEC. 10. No law impairing, the obligation of contracts shall be passed.

cannot be invoked.

Even assuming arguendo that an IFMA can be considered a contract or an agreement, we agree with the
Office of the Solicitor General that the alleged property rights that may have arisen from it are not
absolute.

All Filipino citizens are entitled, by right, to a balanced and healthful ecology as declared under Section
16,[29] Article II of the Constitution. This right carries with it the correlative duty to refrain from impairing
the environment,[30] particularly our diminishing forest resources. To uphold and protect this right is an
express policy of the State.[31]The DENR is the instrumentality of the State mandated to actualize this
policy. It is the primary government agency responsible for the conservation, management,
development and proper use of the countrys environment and natural 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.[32]

Thus, private rights must yield when they come in conflict with this public policy and common
interest. They must give way to the police or regulatory power of the State, in this case through the
DENR, to ensure that the terms and conditions of existing laws, rules and regulations, and the IFMA
itself are strictly and faithfully complied with.
Respondent was not able to overturn by sufficient evidence the presumption of regularity in the
performance of official functions of the Evaluation Team when the latter inspected, assessed, and
reported the violations respondent committed under DAO No. 97-04 which eventually led to the
cancellation of IFMA No. R-9-040.

It is worthy to note that petitioner followed regular procedure regarding the assessment of IFMA No. R-
9-040. It gave notice of the evaluation on October 22, 1998 to be held within the period October 22-30,
1998. Respondent admitted through the affidavits of its President,[33] Operations Manager,[34] and
workers[35] that an Evaluation Team arrived at the IFMA area on October 23, 1998. On October 23, 1998,
prior to the actual assessment, a briefing was held on the conduct thereof in the presence of the IFMA
representatives. On October 29, 1998, an exit conference with IFMA Operations Manager Inocencio
Santiago was held at the CENRO Office, Pagadian City, where the results of the assessment were
presented. That day, the DENR officials asked Santiago if he had any questions or comments on the
assessment results and on the manner the evaluation was conducted, but the latter replied that he had
none.

We do not understand why Santiago did not lift a finger or raise an objection to the assessment results,
and only much later in his Affidavit executed almost ten months thereafter, or on August 12, 1999, to
claim so belatedly that there was no notice given on October 22, 1998, that the Evaluation Team did not
actually extensively inspect the IFMA area on October 23, 1998, and that there was no proper exit
conference held on October 29, 1998. The same observation applies to respondents President herself,
who instead claimed that she vehemently opposed the appointment of then DENR Secretary Cerilles
because he was bent on canceling the IFMA at all costs, prior to the cancellation of IFMA No. R-9-040.

Besides, the detailed findings on the failure of respondent to implement its CDMP under its IFMA, as
shown by the November 6, 1998 Report of the Evaluation Team and the Memoranda dated April 7, 1999
and April 21, 1999, together with all its attachments, belie respondents claim that there was no actual
evaluation and assessment that took place on October 23, 1998. That the Evaluation Report was
dated November 6, 1998 does not conclusively show that the evaluation was actually held on that
date. Neither was this properly proven by the Memoranda of RED Mendoza which stated that the
evaluation was conducted on November 6, 1998, since RED Mendoza could have been merely misled
into such an assumption because of the date of the Evaluation Report. The sweeping denials made by
the IFMA representatives and their self-serving accomplishment reports cannot prevail over the actual
inspection conducted, the results of which are shown by documentary proof.
Respondent, likewise, cannot insist that, pursuant to Section 35 of IFMA No. R-9-040, it should have
been given notice of its breach of the IFMA and should have been given 30 days therefrom to remedy
the breach. It is worthy to note that Section 35 uses the word may which must be interpreted as
granting petitioner the discretion whether or not to give such notice and allow the option to remedy the
breach. In this case, despite the lack of any specific recommendation from the Evaluation Team for the
cancellation of the IFMA, DENR Secretary Cerilles deemed it proper to cancel the IFMA due to the extent
and the gravity of respondents violations.

It is also futile for respondent to claim that it is entitled to an arbitration under Section 36 of IFMA No.
R-9-040 before the license agreement may be canceled. A reading of the said Section shows that the
dispute should be based on the provisions of the IFMA to warrant a referral to arbitration of an
irreconcilable conflict between the IFMA holder and the DENR Secretary. In this case, the cancellation
was grounded on Section 26 of DAO No. 97-04, particularly respondents failure to implement the
approved CDMP and its failure to implement or adopt agreements made with communities and other
relevant sectors. The contrary notwithstanding, what remains is that respondent never refuted the
findings of the Evaluation Team when given the opportunity to do so but waited until IFMA No. R-9-040
was already cancelled before it made its vigorous objections as to the conduct of the evaluation, harping
only on its alleged right to due process.

Indeed, respondent was given the opportunity to contest the findings that caused the cancellation of its
IFMA when it moved to reconsider the Order of cancellation and when it filed its appeal and motion for
reconsideration before the OP.

The essence of due process is simply an opportunity to be heard, or as applied to administrative

proceedings, an opportunity to explain ones side or an opportunity to seek a reconsideration of the
action or ruling complained of. What the law prohibits is the absolute absence of the opportunity to be
heard; hence, a party cannot feign denial of due process where he had been afforded the opportunity to
present his side.[36]

WHEREFORE, the Decision dated October 18, 2001 and the Resolution dated July 24, 2003 of the Court
of Appeals in CA-G.R. SP No. 59194 are REVERSED and SET ASIDE, and the Order dated June 7, 1999 of
then DENR Secretary Antonio Cerilles, and the Resolutions of the Office of the President dated January
12, 2000 and May 8, 2000 affirming the said Order, are REINSTATED and AFFIRMED. No pronouncement
as to costs.

SO ORDERED.
HON. HEHERSON T. ALVAREZ v. PICOP RESOURCES, INC.

G.R. No. 162243, December 3, 2009

Chico-Nazario, J.:

Doctrine:

The approval of the Sanggunian concerned is required by law, not because the local government has

control over such project, but because the local government has the duty to protect its constituents

and their stake in the implementation of the project.

Facts:

PICOP filed with the DENR an application to have its Timber License Agreement (TLA) No. 43

converted into an IFMA.

PICOP initially sought to comply with the requirement under Sections 26 and 27 of the
Local

Government Code to procure prior approval of the Sanggunians concerned. However, only one of the

many provinces affected approved the issuance of an IFMA. PICOP nevertheless submitted to the

DENR the purported resolution of the Province of Surigao del Sur indorsing the approval of PICOPs

application for IFMA conversion.

PICOP filed a petition for MANDAMUS against DENR Sec Alvarez for refusing to sign and execute

the IFMA contract.

Issue:

Whether PICOP complied with the LGC requirement of obtaining prior approval of the Sanggunian

concerned by submitting a purported resolution of the Province of Surigao del Sur indorsing the

approval of PICOPs application for IFMA conversion.

Held:

NO. This cannot be deemed sufficient compliance with the foregoing provision. Surigao del Sur is not

the only province affected by the area covered by the proposed IFMA. The approval of
the
Sanggunian concerned is required by law, not because the local government has control over such

project, but because the local government has the duty to protect its constituents and their stake in

the implementation of the project. Again, Section 26 states that it applies to projects that "may cause

pollution, climatic change, depletion of non-renewable resources, loss of crop land, rangeland, or

forest cover, and extinction of animal or plant species." The local government should thus represent

the communities in such area, the very people who will be affected by flooding, landslides or even

climatic change if the project is not properly regulated, and who likewise have a stake in the resources

in the area, and deserve to be adequately compensated when these resources are exploited.

Indeed, it would be absurd to claim that the project must first be devolved to the local government

before the requirement of the national government seeking approval from the local government can

be applied.

Province of Rizal vs. Executive Secretary; consultation to LGU regarding national projects

6/26/2013

0 Comments

G.R. No. 129546 December 13, 2005

Facts:
This is a petition filed by the Province of Rizal, the municipality of San Mateo, and various concerned
citizens for review on certiorari of the Decision of the Court of Appeals, denying, for lack of cause of
action, the petition for certiorari, prohibition and mandamus with application for a temporary
restraining order/writ of preliminary injunction assailing the legality and constitutionality of
Proclamation No. 635.

At the height of the garbage crisis plaguing Metro Manila and its environs, parts of the Marikina
Watershed Reservation were set aside by the Office of the President [President Ramos], through
Proclamation No. 635, for use as a sanitary landfill and similar waste disposal applications.

The petioners opposed the implementation of said order since the creation of dump site under the
territorial jurisdiction would compromise the health of their constutents. Moreso, the the dump site is
to be constructed in Watershed reservation.

Through their concerted efforts of the officials and residents of Province of Rizal and Municipality of
San Mateo, the dump site was closed. However, during the term of President Estrada in 2003, the
dumpsite was re-opened.

A temporary restraining order was then filed. Although petitioners did not raised the question that
the project was not consulted and approved by their appropriate Sanggunian, the court take it into
consideration since a mere MOA does not guarantee the dump sites permanent closure.

Issue:
Whether or not the consultation and approval of the Province of Rizal and municipality of San Mateo
is needed before the implementation of the project..

Ruling:
The court reiterated again that "the earth belongs in usufruct to the living."

Yes, as lucidly explained by the court: contrary to the averment of the respondents, Proclamation No.
635, which was passed on 28 August 1995, is subject to the provisions of the Local Government Code,
which was approved four years earlier, on 10 October 1991.

Section 2(c) of the said law declares that it is the policy of the state- "to require all national agencies
and offices to conduct periodic consultation with appropriate local government units, non-governmental
and people's organization, and other concerned sectors of the community before any project or
program is implemented in their respective jurisdiction." Likewise Section 27 requires prior
consultations before a program shall be implemented by government authorities ans the prior approval
of the Sanggunian is obtained." Corollarily as held in Lina , Jr. v. Pao, Section 2 (c), requiring
consultations with the appropriate local government units, should apply to national government
projects affecting the environmental or ecological balance of the particular community implementing
the project.

Relative to the case, during the oral arguments at the hearing for the temporary restraining order,
Director Uranza of the MMDA Solid Waste Management Task Force declared before the Court of
Appeals that they had conducted the required consultations. However, the ambivalence of his reply was
brought to the fore when at the height of the protest rally and barricade made by the residents of
petitioners to stop dump trucks from reaching the site, all the municipal mayors of the province of Rizal
openly declared their full support for the rally and notified the MMDA that they would oppose any
further attempt to dump garbage in their province.

Moreover, Section 447, which enumerates the powers, duties and functions of the municipality,
grants the sangguniang bayan the power to, among other things, enact ordinances, approve
resolutions and appropriate funds for the general welfare of the municipality and its inhabitants
pursuant to Section 16 of th(e) Code. These include:

(1) Approving ordinances and passing resolutions to protect the environment and impose appropriate
penalties for acts which endanger the environment, such as dynamite fishing and other forms of
destructive fishing, illegal logging and smuggling of logs, smuggling of natural resources products and of
endangered species of flora and fauna, slash and burn farming, and such other activities which result in
pollution, acceleration of eutrophication of rivers and lakes, or of ecological imbalance; [Section 447
(1)(vi)]

(2) Prescribing reasonable limits and restraints on the use of property within the jurisdiction of the
municipality, adopting a comprehensive land use plan for the municipality, reclassifying land within the
jurisdiction of the city, subject to the pertinent provisions of this Code, enacting integrated zoning
ordinances in consonance with the approved comprehensive land use plan, subject to existing laws,
rules and regulations; establishing fire limits or zones, particularly in populous centers; and regulating
the construction, repair or modification of buildings within said fire limits or zones in accordance with
the provisions of this Code;[Section 447 (2)(vi-ix)]

(3) Approving ordinances which shall ensure the efficient and effective delivery of the basic services and
facilities as provided for under Section 17 of this Code, and in addition to said services and facilities,
providing for the establishment, maintenance, protection, and conservation of communal forests and
watersheds, tree parks, greenbelts, mangroves, and other similar forest development projects .and,
subject to existing laws, establishing and providing for the maintenance, repair and operation of an
efficient waterworks system to supply water for the inhabitants and purifying the source of the water
supply; regulating the construction, maintenance, repair and use of hydrants, pumps, cisterns and
reservoirs; protecting the purity and quantity of the water supply of the municipality and, for this
purpose, extending the coverage of appropriate ordinances over all territory within the drainage area of
said water supply and within one hundred (100) meters of the reservoir, conduit, canal, aqueduct,
pumping station, or watershed used in connection with the water service; and regulating the
consumption, use or wastage of water.*Section 447 (5)(i) & (vii)+

Briefly stated, under the Local Government Code, two requisites must be met before a national
project that affects the environmental and ecological balance of local communities can be
implemented:
(1) prior consultation with the affected local communities, and
(2)prior approval of the project by the appropriate sanggunian.

Absent either of these mandatory requirements, the projects implementation is illegal.

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

BANGUS FRY FISHERFOLK DIWATA MAGBUHOS, ANGELITA BINAY, ELMA GARCIA, VIRGILIO PANGUIO,
ARSENIO CASTILLO, ARIEL PANGUIO, ANTONIO PANGUIO, ANTONIO BUNQUIN, GENEROSO BUNQUIN,
CHARLIE DIMAYACYAC, RENATO PANGUIO, ATILANO BUNQUIN, CARLOS CHAVEZ, JUAN DIMAYACYAC,
FILEMON BUNQUIN, MARIO MAGBUHOS, MAURO MAGBUHOS, NORA MAGBUHOS, JEOVILYN,
GENALYN and JORVAN QUIMUEL, minors, represented by their parents FELICIANA and SABINO
QUIMUEL, MARICAR MAGBUHOS, minor, represented by her parents CARMELITA and ANTONIO
MAGBUHOS, MARLO BINAY, minor, represented by his parents EFRENITA and CHARLITO BINAY, and
the BANGUS, BANGUS FRY and other MARINE LIFE OF MINOLO COVE, petitioners, vs. THE HONORABLE
ENRICO LANZANAS as Judge of the Regional Trial Court of Manila, Branch VII, THE DEPARTMENT OF
ENVIRONMENT AND NATURAL RESOURCES Region IV, represented by its Regional Executive Director
and its Regional Director for Environment, THE NATIONAL POWER CORPORATION, ORIENTAL
MINDORO ELECTRIC COOPERATIVE, PROVINCIAL GOVERNMENT OF ORIENTAL MINDORO, herein
represented by GOVERNOR RODOLFO VALENCIA, PUERTO GALERA MAYOR GREGORIO DELGADO, VICE
MAYOR ARISTEO ATIENZA, and MEMBERS OF THE SANGGUNIANG BAYAN OF PUERTO GALERA, JUAN
ASCAN, JR., RAFAEL ROMEY, CENON SALCEDO, JERRY DALISAY, SIMON BALITAAN, RENATO CATAQUIS,
MARCELINO BANAAG, DANIEL ENRIQUEZ, AMELYN MARCO, GABRIEL ILAGAN, MUNICIPAL ENGINEER
RODEL RUBIO, and MUNICIPAL PLANNING and DEVELOPMENT COORDINATOR WILHELMINA
LINESES, respondents.

DECISION

CARPIO, J.:

The Case

This is a petition for review[1] of the Order[2] dated 7 November 1997 of the Regional Trial Court of
Manila, Branch 7 (Manila RTC), dismissing petitioners complaint for lack of cause of action and lack of
jurisdiction.

The Facts

On 30 June 1997, Regional Executive Director Antonio G. Principe (RED Principe) of Region IV,
Department of Environment and Natural Resources (DENR), issued an Environmental Clearance
Certificate (ECC) in favor of respondent National Power Corporation (NAPOCOR). The ECC authorized
NAPOCOR to construct a temporary mooring facility in Minolo Cove, Sitio Minolo, Barangay San Isidro,
Puerto Galera, Oriental Mindoro. The Sangguniang Bayan of Puerto Galera has declared Minolo Cove, a
mangrove area and breeding ground for bangus fry, an eco-tourist zone.[3]

The mooring facility would serve as the temporary docking site of NAPOCORs power barge, which, due
to turbulent waters at its former mooring site in Calapan, Oriental Mindoro, required relocation to a
safer site like Minolo Cove. The 14.4 megawatts power barge would provide the main source of power
for the entire province of Oriental Mindoro pending the construction of a land-based power plant in
Calapan, Oriental Mindoro. The ECC for the mooring facility was valid for two years counted from its
date of issuance or until 30 June 1999.[4]

Petitioners, claiming to be fisherfolks from Minolo, San Isidro, Puerto Galera,[5] sought reconsideration
of the ECC issuance. RED Principe, however, denied petitioners plea on 15 July 1997. On 21 July 1997,
petitioners filed a complaint with the Regional Trial Court of Manila, Branch 7, for the cancellation of the
ECC and for the issuance of a writ of injunction to stop the construction of the mooring facility.
Impleaded as defendants were the following: (1) NAPOCOR, (2) RED Principe, (3) DENR Region IV
Technical Director for Environment Oscar Dominguez, (4) Oriental Mindoro Electric Cooperative
(ORMECO), which is engaged in the distribution of electricity in Oriental Mindoro, and (5) certain
officials of Puerto Galera.[6]Petitioners subsequently amended their complaint to include as additional
defendants the elective officials of Oriental Mindoro represented by then Governor Rodolfo G.
Valencia.Petitioners further prayed for the demolition of mooring structures that respondents had
already built.

On 28 July 1997, prior to the filing of the amended complaint, the trial court issued a 20-day temporary
restraining order enjoining the construction of the mooring facility. However, the trial court lifted the
same on 6 August 1997 on NAPOCORs manifestation that the provincial government of Oriental
Mindoro was the one undertaking the construction of the mooring facility.[7]

On 28 August 1997, before filing their answers, respondents ORMECO and the provincial officials of
Oriental Mindoro moved to dismiss the complaint. These respondents claimed that petitioners failed to
exhaust administrative remedies, rendering the complaint without cause of action. They also asserted
that the Manila RTC has no jurisdiction to enjoin the construction of the mooring facility in Oriental
Mindoro, which lies outside the Manila RTCs territorial jurisdiction.

Petitioners opposed the motion on the ground that there was no need to exhaust administrative
remedies. They argued that the issuance of the ECC was in patent violation of Presidential Decree No.
1605,[8] Sections 26 and 27 of Republic Act No. 7160,[9] and the provisions of DENR Department
Administrative Order No. 96-37 (DAO 96-37) on the documentation of ECC applications. Petitioners also
claimed that the implementation of the ECC was in patent violation of its terms.

In its order of 7 November 1997, the trial court granted the motion and dismissed petitioners complaint.

Hence, this petition.

The Ruling of the Trial Court

The trial courts order dismissing the complaint reads in part:

After careful evaluation and analysis, this Court finds the Motion to Dismiss tenable and meritorious.

Petitioners have clearly failed to exhaust all administrative remedies before taking this legal action in
Court x x x.
It is x x x worth mentioning that the decision of the Regional Director may still be x x x elevated to the
Office of the Secretary of the DENR to fully comply with the process of exhaustion of administrative
remedies. And well settled is the rule in our jurisdiction that before bringing an action in or resorting to
the Courts of Justice, all remedies of administrative character affecting or determinative of the
controversy at that level should first be exhausted by the aggrieved party (Pestanas vs. Dyogi, L-25786,
February 27, 1978). And petitioners failure to exhaust administrative remedies renders his [sic] petition
dismissible (Chia vs. Acting Collector of Customs, 177 SCRA 755). And a dismissal on the ground of failure
to exhaust administrative remedies is tantamount to a dismissal based on lack of cause of action
(Baguiro vs. Basa, Jr., 214 SCRA 437; Pineda vs. CFI of Davao, 111 Phil. 643; Sarabia vs. Secretary
of Agriculture & Natural Resources, L-16002, May 23, 1961; Gone, et al. vs. District Engineer, et. al., L-
22782, August 29, 1975; Abe-Abe, et al. vs. Manta, et. al., L-4827, May 31, 1979) although it does not
affect the jurisdiction of the court over the subject matter (Mun. of La Trinidad, et al. vs. CFI of Baguio-
Benguet, et al., L-33889, June 28, 1983).

Moreover, this Court finds the Opposition of the Petitioners highly untenable and bereft of merits that
the controverted act in question is patently illegal and there was an immediate need for judicial
intervention.

The ECC in question was issued by the Regional Office of the DENR which has jurisdiction and authority
over the same x x x. And corollary to this, the issue as to whether or not the Minolo Cove is within the
enclosed coves and waters embraced by Puerto Galera bay and protected by Medio island is a clear
question of fact which the DENR may appropriately resolve before resorting to [the] Court[s].

This Court is likewise aware and cognizant of its territorial jurisdiction in the enforcement of Writ of
Injunction. That truly, [a] writ of injunction can only be enforced within [the] territorial jurisdiction of
this Court but not for acts which are being or about to be committed outside its territorial
jurisdiction. Thus, in Philippine National Bank vs. Pineda, 197 SCRA 1, the Honorable Supreme Court
ruled: Regional Trial Courts can only enforce their writs of injunction within their respective designated
territories. Furthermore, we find the issuance of the preliminary injunction directed against the
Provincial Sheriff of Negros Occidental a jurisdictional paux [sic] pas (from Black Dictionary means
jurisdictional falsity) as the Courts of First Instance now Regional Trial Court[s], can only enforce their
writs of injunction within their respective designated territories.

And finally, this Court is not unmindful of the relevant and square application in the case at bar of
Presidential Decree No. 1818, Executive Order No. 380 dated November 27, 1989, and Circular No. 2-91
of the Supreme Court that the National Power Corporation (NPC) is a public utility, created under special
legislation, engaged in the generation and distribution of electric power and energy. The mooring site of
NPC in Puerto Galera, Oriental Mindoro is one of its infrastructure projects falling within the mantle of
Executive Order No. 380, November 27, 1989 x x x.

And as held by the Supreme Court in the case of National Power Corporation vs. Honorable Abraham P.
Vera, et al., 170 SCRA 721, courts are without jurisdiction to issue injunctive writs against [the] National
Power Corporation. The latter enjoys the protective mantle of P.D. 1818, (Circular No. 2-91).
xxx

Injunction in this case is not a mere ancillary [sic] writ but the main action itself together with the
Annulment of the Environmental Clearance Certificate (ECC). Even assuming arguendo that the court
[can] annul the ECC how can the latter enforce the same against the Provincial Government of Oriental
Mindoro which was impleaded by the petitioners as a necessary party together with the Oriental
Mindoro Electric Cooperative and the government officials of Puerto Galera, Oriental Mindoro, whose
acts and functions are being performed outside the territorial jurisdiction of this court? x x
x Indisputably, the injunction and annulment of ECC as prayed for in the petition are inseparable x x x.

The conclusion, therefore, is inescapable that petitioners have failed to exhaust all the available
administrative remedies and this Court has no jurisdiction to issue the injunctive writ prayed for in the
Amended [Complaint].[10]

The Issue

The issue is whether the trial court erred in dismissing petitioners complaint for lack of cause of action
and lack of jurisdiction.

The Ruling of the Court

The petition has no merit.

Jurisdiction of the Manila RTC over the Case

Jurisdiction over the subject matter of a case is conferred by law. Such jurisdiction is determined by the
allegations in the complaint, irrespective of whether the plaintiff is entitled to all or some of the reliefs
sought.[11]

A perusal of the allegations in the complaint shows that petitioners principal cause of action is the
alleged illegality of the issuance of the ECC. The violation of laws on environmental protection and on
local government participation in the implementation of environmentally critical projects is an issue that
involves the validity of NAPOCORs ECC. If the ECC is void, then as a necessary consequence, NAPOCOR
or the provincial government of Oriental Mindoro could not construct the mooring facility. The
subsidiary issue of non-compliance with pertinent local ordinances in the construction of the mooring
facility becomes immaterial for purposes of granting petitioners main prayer, which is the annulment of
the ECC. Thus, if the court has jurisdiction to determine the validity of the issuance of the ECC, then it
has jurisdiction to hear and decide petitioners complaint.

Petitioners complaint is one that is not capable of pecuniary estimation. It falls within the exclusive and
original jurisdiction of the Regional Trial Courts under Section 19(1) of Batas Pambansa Blg. 129, as
amended by Republic Act No. 7691. The question of whether petitioners should file their complaint in
the Regional Trial Court of Manila or Oriental Mindoro then becomes a matter of venue, to be
determined by the residence of the parties.[12]
Petitioners main prayer is the annulment of the ECC. The principal respondent, DENR Region IV, has its
main office at the L & S Building, Roxas Boulevard, Manila. Regional Executive Director Principe of the
DENR Region IV, who issued the ECC, holds office there. Plainly, the principal respondent resides in
Manila, which is within the territorial jurisdiction of the Manila RTC. Thus, petitioners filed their
complaint in the proper venue.

On the other hand, the jurisdiction of Regional Trial Courts to issue injunctive writs is limited to acts
committed or about to be committed within their judicial region.[13] Moreover, Presidential Decree No.
1818 (PD No. 1818) prohibited[14] courts from issuing injunctive writs against government infrastructure
projects like the mooring facility in the present case.Republic Act No. 8975 (RA No. 8975), which took
effect on 26 November 2000, superseded PD No. 1818 and delineates more clearly the coverage of the
prohibition, reserves the power to issue such writs exclusively with this Court, and provides penalties for
its violation.[15] Obviously, neither the Manila RTC nor the Oriental Mindoro RTC can issue an injunctive
writ to stop the construction of the mooring facility. Only this Court can do so under PD No. 1818 and
later under RA No. 8975. Thus, the question of whether the Manila RTC has jurisdiction over the
complaint considering that its injunctive writ is not enforceable in Oriental Mindoro is academic.

Clearly, the Manila RTC has jurisdiction to determine the validity of the issuance of the ECC, although it
could not issue an injunctive writ against the DENR or NAPOCOR. However, since the construction of the
mooring facility could not proceed without a valid ECC, the validity of the ECC remains the determinative
issue in resolving petitioners complaint.

Exhaustion of Administrative Remedies

The settled rule is before a party may seek the intervention of the courts, he should first avail of all the
means afforded by administrative processes. Hence, if a remedy within the administrative machinery is
still available, with a procedure prescribed pursuant to law for an administrative officer to decide the
controversy, a party should first exhaust such remedy before resorting to the courts. The premature
invocation of a courts intervention renders the complaint without cause of action and dismissible on
such ground.[16]

RED Principe of the DENR Region IV Office issued the ECC based on (1) Presidential Decree No. 1586 (PD
No. 1586) and its implementing rules establishing the Environmental Impact Statement System, (2) DAO
96-37[17] and (3) the Procedural Manual of DAO 96-37. Section 4[18] of PD No. 1586 requires a proponent
of an environmentally critical project, or a project located within an environmentally critical area as
declared by the President, to secure an ECC prior to the projects operation.[19] NAPOCOR thus secured
the ECC because the mooring facility in Minolo Cove, while not an environmentally critical project, is
located within an environmentally critical area under Presidential Proclamation No. 2146, issued on 14
December 1981.[20]

The rules on administrative appeals from rulings of the DENR Regional Directors on the implementation
of PD No. 1586 are found in Article VI of DAO 96-37, which provides:
SECTION 1.0. Appeal to the Office of the Secretary. Any party aggrieved by the final decision of the RED
may, within 15 days from receipt of such decision, file an appeal with the Office of the Secretary.The
decision of the Secretary shall be immediately executory.

SECTION 2.0. Grounds for Appeal. The grounds for appeal shall be limited to grave abuse of discretion
and serious errors in the findings of fact which would cause grave or irreparable injury to the aggrieved
party. Frivolous appeals shall not be countenanced.

SECTION 3.0. Who May Appeal. The proponent or any stakeholder, including but not limited to, the
LGUs concerned and affected communities, may file an appeal.

The DENR Procedural Manual for DAO 96-37 explains these provisions thus:

Final decisions of the RED may be appealed. These decisions include those relating to the issuance or
non-issuance of an ECC, and the imposition of fines and penalties. By inference, the decision of the
Secretary on the issuance or non-issuance of the ECC may also be appealed based on this
provision. Resort to courts prior to availing of this remedy would make the appellants action dismissible
on the ground of non-exhaustion of administrative remedies.

The right to appeal must be exercised within 15 days from receipt by the aggrieved party of such
decision. Failure to file such appeal within the requisite period will result in the finality of the REDs or
Secretarys decision(s), which can no longer be disturbed.

An appeal shall not stay the effectivity of the REDs decision, unless the Secretary directs otherwise.

The right to appeal does not prevent the aggrieved party from first resorting to the filing of a motion for
reconsideration with the RED, to give the RED an opportunity to re-evaluate his decision. (Emphasis
added)

Instead of following the foregoing procedure, petitioners bypassed the DENR Secretary and immediately
filed their complaint with the Manila RTC, depriving the DENR Secretary the opportunity to review the
decision of his subordinate, RED Principe. Under the Procedural Manual for DAO 96-37 and applicable
jurisprudence, petitioners omission renders their complaint dismissible for lack of cause of
action.[21] Consequently, the Manila RTC did not err in dismissing petitioners complaint for lack of cause
of action.

On the Alleged Patent Illegality of the ECC

Petitioners nevertheless contend that they are exempt from filing an appeal with the DENR Secretary
because the issuance of the ECC was in patent violation of existing laws and regulations. These are (1)
Section 1 of Presidential Decree No. 1605, as amended, (2) Sections 26 and 27 of Republic Act No. 7160
(Local Government Code of 1991), and (3) the provisions of DAO 96-37 on the documentary
requirements for the zoning permit and social acceptability of the mooring facility.
Petitioners contention is without merit. While the patent illegality of an act exempts a party from
complying with the rule on exhaustion of administrative remedies,[22] this does not apply in the present
case.

Presidential Decree No. 1605

Presidential Decree No. 1605 (PD No. 1605),[23] as amended by Presidential Decrees Nos. 1605-A and
1805, declares as ecologically threatened zone the coves and waters embraced by Puerto Galera Bay as
protected by Medio Island. This decree provides in part:

Section 1. Any provision of law to the contrary notwithstanding, the construction of marinas, hotels,
restaurants, other commercial structures; commercial or semi-commercial wharfs [sic]; commercial
docking within the enclosed coves of Puerto Galera; the destruction of its mangrove stands; the
devastation of its corals and coastline by large barges, motorboats, tugboat propellers, and any form of
destruction by other human activities are hereby prohibited.

Section 2. x x x

No permit for the construction of any wharf, marina, hotel, restaurants and other commercial
structures in Puerto Galera shall be issued without prior approval of the Office of the President upon the
recommendation of the Philippine Tourism Authority. (Emphasis supplied)

NAPOCOR claims that since Minolo Cove lies outside of Puerto Galera Bay as protected by Medio
Island,[24] PD No. 1605 does not apply to this case. However, petitioners assert that Minolo Cove is one
of the enclosed coves of Puerto Galera[25] and thus protected under PD No. 1605. This is a question of
fact that the DENR Secretary should have first resolved. In any event, there is no dispute that NAPOCOR
will use the mooring facility for its power barge that will supply 14.4 megawatts of electricity to the
entire province of Oriental Mindoro, including Puerto Galera. The mooring facility is obviously a
government-owned public infrastructure intended to serve a basic need of the people of Oriental
Mindoro. The mooring facility is not a commercial structure; commercial or semi-commercial wharf or
commercial docking as contemplated in Section 1 of PD No. 1605. Therefore, the issuance of the ECC
does not violate PD No. 1605 which applies only to commercial structures like wharves, marinas, hotels
and restaurants.

Sections 26 and 27 of RA No. 7160

Congress introduced Sections 26 and 27 in the Local Government Code to emphasize the legislative
concern for the maintenance of a sound ecology and clean environment.[26] These provisions require
every national government agency or government-owned and controlled corporation to hold prior
consultations with the local government unit concerned and to secure the prior approval of
its sanggunian before implementing any project or program that may cause pollution, climatic change,
depletion of non-renewable resources, loss of cropland, rangeland, or forest cover and extinction of
animal or plant species. Sections 26 and 27 respectively provide:
Section 26. Duty of National Government Agencies in the Maintenance of Ecological Balance. - It shall be
the duty of every national agency or government-owned or controlled corporation authorized or
involved in the planning and implementation of any project or program that may cause pollution,
climatic change, depletion of non-renewable resources, loss of crop land, rangeland, or forest cover and
extinction of animal or plant species, to consult with the local government units, non-governmental
organizations, and other sectors concerned and explain the goals and objectives of the project or
program, its impact upon the people and the community in terms of environmental or ecological
balance, and the measures that will be undertaken to prevent or minimize the adverse effects thereof.

Section 27. Prior Consultations Required. - No project or program shall be implemented by government
authorities unless the consultations mentioned in Section x x x 26 hereof are complied with, and prior
approval of the sanggunian concerned is obtained: Provided, That occupants in areas where such
projects are to be implemented shall not be evicted unless appropriate relocation sites have been
provided, in accordance with the provisions of the Constitution.

In Lina, Jr. v. Pao,[27] the Court interpreted these provisions in this manner:

Section 27 of the Code should be read in conjunction with Section 26 thereof x x x.

Thus, the projects and programs mentioned in Section 27 should be interpreted to mean projects and
programs whose effects are among those enumerated in Sections 26 and 27, to wit, those that: (1) may
cause pollution; (2) may bring about climatic change; (3) may cause the depletion of non-renewable
resources; (4) may result in loss of crop land, rangeland, or forest cover; (5) may eradicate certain
animal or plant species; and (6) other projects or programs that may call for the eviction of a particular
group of people residing in the locality where these will be implemented.

Again, Sections 26 and 27 do not apply to this case because as petitioners admit,[28] the mooring facility
itself is not environmentally critical and hence does not belong to any of the six types of projects
mentioned in the law. There is no statutory requirement for the concerned sanggunian to approve the
construction of the mooring facility. It is another matter if the operation of the power barge is at issue.
As an environmentally critical project that causes pollution, the operation of the power barge needs the
prior approval of the concerned sanggunian. However, what is before this Court is only the construction
of the mooring facility, not the operation of the power barge. Thus, the issuance of the ECC does not
violate Sections 26 and 27 of RA No. 7160.

Documentary Requirements for

ECC Applications

Under DAO 96-37, an ECC applicant for a project located within an environmentally critical area is
required to submit an Initial Environment Examination, which must contain a brief description of the
environmental setting and a documentation of the consultative process undertaken, when
appropriate.[29] As part of the description of the environmental setting, the ECC applicant must submit a
certificate of locational clearance or zoning certificate.
Petitioners further contend that NAPOCOR, in applying for the ECC, did not submit to the DENR Region
IV Office the documents proving the holding of consultations and the issuance of a locational clearance
or zoning certificate. Petitioners assert that this omission renders the issuance of the ECC patently
illegal.

The contention is also without merit. While such documents are part of the submissions required from a
project proponent, their mere absence does not render the issuance of the ECC patently illegal. To
justify non-exhaustion of administrative remedies due to the patent illegality of the ECC, the public
officer must have issued the ECC [without any] semblance of compliance, or even an attempt to comply,
with the pertinent laws; when manifestly, the officer has acted without jurisdiction or has exceeded his
jurisdiction, or has committed a grave abuse of discretion; or when his act is clearly and obviously
devoid of any color of authority.[30]

RED Principe, as chief of DENR Region IV, is the officer duly authorized under DAO 96-37[31] to issue ECCs
for projects located within environmentally critical areas. RED Principe issued the ECC on the
recommendation of Amelia Supetran, the Director of the Environmental Management Bureau. Thus,
RED Principe acted with full authority pursuant to DENR regulations. Moreover, the legal presumption is
that he acted with the requisite authority.[32] This clothes RED Principes acts with presumptive validity
and negates any claim that his actions are patently illegal or that he gravely abused his discretion. While
petitioners may present proof to the contrary, they must do so before the proper administrative forum
before resorting to judicial remedies.

On the Alleged Non-Compliance with the Terms of the ECC

Lastly, petitioners claim that they are justified in immediately seeking judicial recourse because
NAPOCOR is guilty of violating the conditions of the ECC, which requires it to secure a separate ECC for
the operation of the power barge. The ECC also mandates NAPOCOR to secure the usual local
government permits, like zoning and building permits, from the municipal government of Puerto Galera.

The contention is similarly without merit. The fact that NAPOCORs ECC is subject to cancellation for non-
compliance with its conditions does not justify petitioners conduct in ignoring the procedure prescribed
in DAO 96-37 on appeals from the decision of the DENR Executive Director. Petitioners vigorously insist
that NAPOCOR should comply with the requirements of consultation and locational clearance prescribed
in DAO 96-37. Ironically, petitioners themselves refuse to abide with the procedure for filing complaints
and appealing decisions laid down in DAO 96-37.

DAO 96-37 provides for a separate administrative proceeding to address complaints for the cancellation
of an ECC. Under Article IX of DAO 96-37, complaints to nullify an ECC must undergo an administrative
investigation, after which the hearing officer will submit his report to the EMB Director or the Regional
Executive Director, who will then render his decision. The aggrieved party may file an appeal to the
DENR Secretary, who has authority to issue cease and desist orders. Article IX also classifies the types of
violations covered under DAO 96-37, including projects operating without an ECC or violating the
conditions of the ECC. This is the applicable procedure to address petitioners complaint on NAPOCORs
alleged violations and not the filing of the instant case in court.
A Final Word

The Court commends petitioners for their courageous efforts to safeguard and maintain the ecological
balance of Minolo Cove. This Court recognizes the utmost importance of protecting the
environment.[33] Indeed, we have called for the vigorous prosecution of violators of environmental
laws.[34] Legal actions to achieve this end, however, must be done in accordance with established rules
of procedure that were intended, in the first place, to achieve orderly and efficient administration of
justice.

WHEREFORE, we DENY the petition for lack of merit.

SO ORDERED.

G.R. No. 196870 : June 26, 2012

BORACAY FOUNDATION, INC., Petitioner, v. THE PROVINCE OF AKLAN, REPRESENTED BY GOV.

CARLITO S. MARQUEZ, THE PHIL. RECLAMATION AUTHORITY & THE DENR-EMB (REGION
VI),Respondents.

LEONARDO-DE CASTRO, J.:

FACTS:

Boracay Island (Boracay), a tropical paradise located in the Western Visayas region of the Philippines
and one of the countrys most popular tourist destinations, was declared a tourist zone and marine
reserve in 1973 under Presidential Proclamation No. 1801. The island comprises the barangays of
Manoc-manoc, Balabag, and Yapak, all within the municipality of Malay, in the province of Aklan.

More than a decade ago, respondent Province built the Caticlan Jetty Port and Passenger Terminal at
Barangay Caticlan to be the main gateway to Boracay.It also built the corresponding Cagban Jetty Port
and Passenger Terminal to be the receiving end for tourists in Boracay. Respondent Province operates
both ports to provide structural facilities suited for locals, tourists and guests and to provide safety and
security measures.

Governor Marquez sent a letter to respondent PRA on March 12, 2009 expressing the interest of
respondent Province to reclaim about 2.64 hectares of land along the foreshores of Barangay Caticlan,
Municipality of Malay, Province of Aklan, pursuant to Resolution No. 13, s. 2008 issued by the
Sangguniang Barangay of Caticlan.
Sometime in April 2009, respondent Province entered into an agreement with the Financial
Advisor/Consultant that won in the bidding process held a month before, to conduct the necessary
feasibility study of the proposed project for the Renovation/Rehabilitation of the Caticlan Passenger
Terminal Building and Jetty Port, Enhancement and Recovery of Old Caticlan Coastline, and Reclamation
of a Portion of Foreshore for Commercial Purposes (the Marina Project), in Malay, Aklan.

Subsequently, on May 7, 2009, the Sangguniang Panlalawigan of respondent Province issued Resolution
No. 2009110, which authorized Governor Marquez to file an application to reclaim the 2.64 hectares of
foreshore area in Caticlan, Malay, Aklan with respondent PRA.

Meanwhile, the Sangguniang Bayan of the Municipality of Malay expressed its strong opposition to the
intended foreshore lease application, through Resolution No. 044, approved on July 22, 2009,
manifesting therein that respondent Provinces foreshore lease application was for business enterprise
purposes for its benefit, at the expense of the local government of Malay, which by statutory provisions
was the rightful entity to develop, utilize and reap benefits from the natural resources found within its
jurisdiction.

In August 2009, a Preliminary Geohazard Assessmentfor the enhancement/expansion of the existing

Caticlan Jetty Port and Passenger Terminal through beach zone restoration and Protective Marina
Developments in Caticlan, Malay, Aklan was completed.

Thereafter, Governor Marquez submitted an Environmental Performance Report and Monitoring

Program (EPRMP) to DENR-EMB RVI, which he had attached to his letter dated September 19, 2009, as
an initial step for securing an Environmental Compliance Certificate (ECC). The letter reads in part:

With the project expected to start its construction implementation next month, the province hereby
assures your good office that it will give preferential attention to and shall comply with whatever
comments that you may have on this EPRMP.

Within the same month of October 2009, respondent Province deliberated on the possible expansion
from its original proposed reclamation area of 2.64 hectares to forty (40) hectares.

Respondent PRA approved the reclamation project on April 20, 2010 in its Resolution No. 4094and
authorized its General Manager/Chief Executive Officer (CEO) to enter into a MOA with respondent
Province for the implementation of the reclamation project.

On April 27, 2010, DENR-EMB RVI issued to respondent Province ECC-R6-1003-096-7100 (the questioned
ECC) for Phase 1 of the Reclamation Project to the extent of 2.64 hectares to be done along the Caticlan
side beside the existing jetty port.

On May 17, 2010, respondent Province entered into a MOA with respondent PRA.
In Resolution No. 046, Series of 2010, adopted on June 23, 2010, the Malay Municipality reiterated its
strong opposition to respondent Provinces project and denied its request for afavorableendorsement of
the Marina Project.

The Malay Municipality subsequently issued Resolution No. 016, Series of 2010, adopted on August 3,
2010, to request respondent PRA not to grant reclamation permit and notice to proceed to the Marina
Project of the respondent Provincial Government of Aklan located at Caticlan, Malay, Aklan.

In a letter dated October 12, 2010, petitioner informed respondent PRA of its opposition to the
reclamation project.

Petitioner likewise transmitted its Resolution No. 001, Series of 2010, registering its opposition to the
reclamation project to respondent Province, respondent PRA, respondent DENR-EMB, the National
Economic Development Authority Region VI, the Malay Municipality, and other concerned entities.

Petitioner alleges that despite the Malay Municipalitys denial of respondent Provinces request for
afavorableendorsement, as well as the strong opposition manifested both by Barangay Caticlan and
petitioner as an NGO, respondent Province still continued with the implementation of the Reclamation
Project.

On June 1, 2011, petitioner filed the instant Petition for Environmental Protection Order/Issuance of the
Writ of Continuing Mandamus. On June 7, 2011, this Court issued a Temporary Environmental
Protection Order (TEPO) and ordered the respondents to file their respective comments to the petition.

After receiving a copy of the TEPO on June 9, 2011, respondent Province immediately issued an order to
the Provincial Engineering Office and the concerned contractor to cease and desist from conducting any
construction activities until further orders from this Court.

ISSUES:

[1] Whether or not the petition should be dismissed for having been rendered moot and academic;

[2] Whether or not the petition is premature because petitioner failed to exhaust administrative
remedies before filing this case;

[3] Whether or not respondent Province failed to perform a full EIA as required by laws and regulations
based on the scope and classification of the project;

[4] Whether or not respondent Province complied with all the requirements under the pertinent laws and
regulations; and
[5] Whether or not there was proper, timely, and sufficient public consultation for the project

HELD:

A close reading of the two LGUs respective resolutions would reveal that they are not sufficient to
render the petition moot and academic, as there are explicit conditions imposed that must be
complied with by respondent Province. In Resolution No. 003, series of 2012, of the Sangguniang
Barangay of Caticlan it is stated that any vertical structures to be constructed shall be subject for
barangay endorsement. Clearly, what the barangay endorsed was the reclamation only, and not the
entire project that includes the construction of a commercial building and wellness center, and other
tourism-related facilities.Petitioners objections, as may be recalled, pertain not only to the reclamation
per se, but also to the building to be constructed and the entire projects perceived ill effects to the
surrounding environment.

The Sangguniang Bayan of Malay obviously imposed explicit conditions for respondent Province to
comply with on pain of revocation of its endorsement of the project, including the need to conduct a
comprehensive study on the environmental impact of the reclamation project, which is the heart of the
petition before us. Therefore, the contents of the two resolutions submitted by respondent Province do
not support its conclusion that the subsequent favorable endorsement of the LGUs had already
addressed all the issues raised and rendered the instant petition moot and academic.

We do not agree with respondents appreciation of the applicability of the rule on exhaustion of
administrative remedies in this case. We are reminded of our ruling in Pagara v. Court of Appeals,
which summarized our earlier decisions on the procedural requirement of exhaustion of administrative
remedies, to wit:

REMEDIAL LAW: exhaustion of administrative remedies

The rule regarding exhaustion of administrative remedies is not a hard and fast rule. It is not applicable:
(1) where the question in dispute is purely a legal one, or (2) where the controverted act is patently
illegal or was performed without jurisdiction or in excess of jurisdiction; or (3) where the respondent is a
department secretary, whose acts as an alter ego of the President bear the implied or assumed approval
of the latter, unless actually disapproved by him, or (4) where there are circumstances indicating the
urgency of judicial intervention.

Said principle may also be disregarded when it does not provide a plain, speedy and adequate remedy,
when there is no due process observed, or where the protestant has no other recourse.

Although petitioner was not a party to the proceedings where the decision to issue an ECC was
rendered, it stands to be aggrieved by the decision, because it claims that the reclamation of land on the
Caticlan side would unavoidably adversely affect the Boracay side, where petitioners members own
establishments engaged in the tourism trade. As noted earlier, petitioner contends that the declared
objective of the reclamation project is to exploit Boracays tourism trade because the project is intended
to enhance support services thereto; however, this objective would not be achieved since the white-
sand beaches for which Boracay is famous might be negatively affected by the project. Petitioners
conclusion is that respondent Province, aided and abetted by respondents PRA and DENR-EMB RVI,
ignored the spirit and letter of our environmental laws, and should thus be compelled to perform their
duties under said laws.

REMEDIAL LAW: new rules of procedure for environmental cases; writ of continuing mandamus

The new Rules of Procedure for Environmental Cases, A.M. No. 09-6-8-SC, provides a relief for petitioner
under the writ of continuing mandamus, which is a special civil action that may be availed of to compel
the performance of an act specifically enjoined by law and which provides for the issuance of a TEPO as
an auxiliary remedy prior to the issuance of the writ itself. The Rationale of the said Rules explains the
writ in this wise:

Environmental law highlights the shift in the focal-point from the initiation of regulation by Congress to
the implementation of regulatory programs by the appropriate government agencies.

Thus, a government agencys inaction, if any, has serious implications on the future of environmental law
enforcement. Private individuals, to the extent that they seek to change the scope of the regulatory
process, will have to rely on such agencies to take the initial incentives, which may require a judicial
component. Accordingly, questions regarding the propriety of an agencys action or inaction will need to
be analyzed.

This point is emphasized in the availability of the remedy of the writ of mandamus, which allows for the
enforcement of the conduct of the tasks to which the writ pertains: the performance of a legal duty.

The writ of continuing mandamus permits the court to retain jurisdiction after judgment in order to
ensure the successful implementation of the reliefs mandated under the courts decision and, in order to
do this, the court may compel the submission of compliance reports from the respondent government
agencies as well as avail of other means to monitor compliance with its decision.

Petitioner had three options where to file this case under the rule: the Regional Trial Court exercising
jurisdiction over the territory where the actionable neglect or omission occurred, the Court of Appeals,
or this Court.

Petitioner had no other plain, speedy, or adequate remedy in the ordinary course of law to determine
the questions of unique national and local importance raised here that pertain to laws and rules for
environmental protection, thus it was justified in coming to this Court.

3) Being the administrator of the EIS System, respondent DENR-EMB RVIs submissions bear great weight
in this case.However, the following are the issues that put in question the wisdom of respondent DENR-
EMB RVI in issuing the ECC:

[1] Its approval of respondent Provinces classification of the project as a mere expansion of the existing
jetty port in Caticlan, instead of classifying it as a new project;
[2] Its classification of the reclamation project as a single instead of a co-located project;
[3] The lack of prior public consultations and approval of local government agencies; and
[4] The lack of comprehensive studies regarding the impact of the reclamation project to the
environment.

As may be gleaned from the breakdown of the 2.64 hectares as described by respondent Province
above, a significant portion of the reclaimed area would be devoted to the construction of a commercial
building, and the area to be utilized for the expansion of the jetty port consists of a mere 3,000 square
meters (sq. m). To be true to its definition, the EIA report submitted by respondent Province should at
the very least predict the impact that the construction of the new buildings on the reclaimed land would
have on the surrounding environment. These new constructions and their environmental effects were
not covered by the old studies that respondent Province previously submitted for the construction of
the original jetty port in 1999, and which it re-submitted in its application for ECC in this alleged
expansion, instead of conducting updated and more comprehensive studies.

Any impact on the Boracay side cannot be totally ignored, as Caticlan and Boracay are separated only by
a narrow strait. This becomes more imperative because of the significant contributions of Boracays
white-sand beach to the countrys tourism trade, which requires respondent Province to proceed with
utmost caution in implementing projects within its vicinity.

POLITICAL LAW: public consultation

The Local Government Code establishes the duties of national government agencies in the maintenance
of ecological balance, and requires them to secure prior public consultation and approval of local
government units for the projects described therein.

In the case before us, the national agency involved is respondent PRA. Even if the project proponent is
the local government of Aklan, it is respondent PRA which authorized the reclamation, being the
exclusive agency of the government to undertake reclamation nationwide. Hence, it was necessary for
respondent Province to go through respondent PRA and to execute a MOA, wherein respondent PRAs
authority to reclaim was delegated to respondent Province. Respondent DENR-EMB RVI, regional office
of the DENR, is also a national government institution which is tasked with the issuance of the ECC that
is a prerequisite to projects covered by environmental laws such as the one at bar.

This project can be classified as a national project that affects the environmental and ecological balance
of local communities, and is covered by the requirements found in the Local Government Code
provisions.
Under the Local Government Code, therefore, two requisites must be met before a national project that
affects the environmental and ecological balance of local communities can be implemented: prior
consultationwith the affected local communities, and prior approval of the project by the appropriate
sanggunian. Absent either of these mandatory requirements, the projects implementation is illegal.

Based on the above, therefore, prior consultations and prior approval are required by law to have been
conducted and secured by the respondent Province. Accordingly, the information dissemination
conducted months after the ECC had already been issued was insufficient to comply with this
requirement under the Local Government Code. Had they been conducted properly, the prior public
consultation should have considered the ecological or environmental concerns of the stakeholders and
studied measures alternative to the project, to avoid or minimize adverse environmental impact or
damage. In fact, respondent Province once tried to obtain the favorable endorsement of the
Sangguniang Bayan of Malay, but this was denied by the latter.

Moreover, DENR DAO 2003-30 provides:

5.3. ublic Hearing / Consultation Requirements

For projects under Category A-1, the conduct of public hearing as part of the EIS review is mandatory
unless otherwise determined by EMB. For all other undertakings, a public hearing is not mandatory
unless specifically required by EMB.

Proponents should initiate public consultations early in order to ensure that environmentally relevant
concerns of stakeholders are taken into consideration in the EIA study and the formulation of the
management plan. All public consultations and public hearings conducted during the EIA process are to
be documented. The public hearing/consultation Process reportshall be validated by the EMB/EMB RD
and shall constitute part of the records of the EIA process.

In essence, the above-quoted rule shows that in cases requiring public consultations, the same should
be initiated early so that concerns of stakeholders could be taken into consideration in the EIA study. In
this case, respondent Province had already filed its ECC application before it met with the local
government units of Malay and Caticlan.

The lack of prior public consultation and approval is not corrected by the subsequent endorsement of
the reclamation project by the Sangguniang Barangay of Caticlan on February 13, 2012, and the
Sangguniang Bayan of the Municipality of Malay onFebruary 28, 2012, which were both undoubtedly
achieved at the urging and insistence of respondent Province. As we have established above, the
respective resolutions issued by the LGUs concerned did not render this petition moot and academic.

It is clear that both petitioner and respondent Province are interested in the promotion of tourism in
Boracay and the protection of the environment, lest they kill the proverbial hen that lays the golden egg.
At the beginning of this decision, we mentioned that there are common goals of national significance
that are very apparent from both the petitioners and the respondents respective pleadings and
memoranda.

As shown by the above provisions of our laws and rules, the speedy and smooth resolution of these
issues would benefit all the parties. Thus, respondent Provinces cooperation with respondent DENR-
EMB RVI in the Court-mandated review of the proper classification and environmental impact of the
reclamation project is of utmost importance.

WHEREFORE, premises considered, the petition is hereby PARTIALLY GRANTED. The TEPO issued by this
Court is hereby converted into a writ of continuing mandamus specifically as follows:

1. Respondent Department of Environment and Natural Resources-Environmental Management Bureau

Regional Office VI shall revisit and review the following matters:

a. its classification of the reclamation project as a single instead of a co-located project;

b. its approval of respondent Provinces classification of the project as a mere expansion of the existing
jetty port in Caticlan, instead of classifying it as a new project; and

c. the impact of the reclamation project to the environment based on new, updated, and
comprehensive studies, which should forthwith be ordered by respondent DENR-EMB RVI.

2. Respondent Province of Aklan shall perform the following:

a. fully cooperate with respondent DENR-EMB RVI in its review of the reclamation project proposal and
submit to the latter the appropriate report and study; and

b. secure approvals from local government units and hold proper consultations with non-governmental
organizations and other stakeholders and sectors concerned as required by Section 27 in relation to
Section 26 of the Local Government Code.

Respondent Philippine Reclamation Authority shall closely monitor the submission by respondent
Province of the requirements to be issued by respondent DENR-EMB RVI in connection to the
environmental concerns raised by petitioner, and shall coordinate with respondent Province in
modifying the MOA, if necessary, based on the findings of respondent DENR-EMB RVI.

The petitioner Boracay Foundation, Inc. and the respondents The Province of Aklan, represented by
Governor Carlito S. Marquez, The Philippine Reclamation Authority, and The DENR-EMB (Region VI)
are mandated to submit their respective reports to this Court regarding their compliance with the
requirements set forth in this Decision no later than three (3) months from the date of promulgation
of this Decision.
In the meantime, the respondents, their concerned contractor/s, and/or their agents, representatives
or persons acting in their place or stead, shall immediately cease and desist from continuing the
implementation of the project covered by ECC-R6-1003-096-7100 until further orders from this Court.
For this purpose, the respondents shall report within five (5) days to this Court the status of the
project as of their receipt of this Decision, copy furnished the petitioner.

Special people Inc. Foundation v Canda and others

G.R. No. 160932

Abstract

In this case, the plaintiff is the proponent of a water resource development and utilization project in
Barangay Jimilia-an which would involve the tapping and purifying of water from the Loboc River. The
plaintiff filed a petition for mandamus and damages requiring that the Environmental Management
Bureau (EMB) issued him a Certificate of Non-Coverage (CNC). Indeed, the EMB had refused to deliver a
CNC and alleged that because the project was located within an environmentally critical area, an Initial
Environmental Examination is required.

The plaintiff brought the case in front of the court of first instance. The judge of the court of first
instance reviewed the evidence provided by the parties, especially the certificates showing that the area
where the planned project was an environmentally critical area due to its seismic specificities. The Court
considered that the EMB was the only one who could decide if a region was environmentally critical
area. As a result, the court dismissed the petition.

The plaintiff sought an appeal in front of the Supreme Court. The judges of the supreme court held that
there was no evidence showing that the plaintiff satisfactorily complied with the requirement to submit
the Certificate of Non- Coverage and that the 1981 Presidential Proclamation No. 2146 provided that the
tapping of water are considered to be critical for the environment. Therefore, the court dismissed the
appeal.

Resident Marine Mammals of the Protected Seascape Taon Strait v. Secretary Angelo Reyes, G.R. No.
180771 (April 21, 2015)
Supreme Court of the Philippines

Two sets of petitioners filed separate cases challenging the legality of Service Contract No. 46 (SC-46)
awarded to Japan Petroleum Exploration Co. (JAPEX). The service contract allowed JAPEX to conduct oil
exploration in the Taon Strait during which it performed seismic surveys and drilled one exploration
well. The first petition was brought on behalf of resident marine mammals in the Taon Strait by two
individuals acting as legal guardians and stewards of the marine mammals. The second petition was
filed by a non-governmental organization representing the interests of fisherfolk, along with individual
representatives from fishing communities impacted by the oil exploration activities. The petitioners filed
their cases in 2007, shortly after JAPEX began drilling in the strait. In 2008, JAPEX and the government
of the Philippines mutually terminated the service contract and oil exploration activities ceased. The
Supreme Court consolidated the cases for the purpose of review.

In its decision, the Supreme Court first addressed the important procedural point of whether the case
was moot because the service contract had been terminated. The Court declared that mootness is not
a magical formula that can automatically dissuade the courts in resolving a case. Id., p. 12. Due to the
alleged grave constitutional violations and paramount public interest in the case, not to mention the fact
that the actions complained of could be repeated, the Court found it necessary to reach the merits of
the case even though the particular service contract had been terminated. Id.

Reviewing the numerous claims filed by the petitioners, the Supreme Court narrowed them down to
two: 1) whether marine mammals, through their stewards, have legal standing to pursue the case; and
2) whether the service contract violated the Philippine Constitution or other domestic laws. Id., p. 11.

As to standing, the Court declined to extend the principle of standing beyond natural and juridical
persons, even though it recognized that the current trend in Philippine jurisprudence moves towards
simplification of procedures and facilitating court access in environmental cases. Id., p. 15. Instead,
the Court explained, the need to give the Resident Marine Mammals legal standing has been
eliminated by our Rules, which allow any Filipino citizen, as a steward of nature, to bring a suit to
enforce our environmental laws. Id., p. 16-17.

The Court then held that while SC-46 was authorized Presidential Decree No. 87 on oil extraction, the
contract did not fulfill two additional constitutional requirements. Section 2 Article XII of the 1987
Constitution requires a service contract for oil exploration and extraction to be signed by the president
and reported to congress. Because the JAPEX contract was executed solely by the Energy Secretary, and
not reported to the Philippine congress, the Court held that it was unconstitutional. Id., pp. 24-25.

In addition, the Court also ruled that the contract violated the National Integrated Protected Areas
System Act of 1992 (NIPAS Act), which generally prohibits exploitation of natural resources in protected
areas. In order to explore for resources in a protected area, the exploration must be performed in
accordance with an environmental impact assessment (EIA). The Court noted that JAPEX started the
seismic surveys before any EIA was performed; therefore its activity was unlawful. Id., pp. 33-
34. Furthermore, the Tanon Strait is a NIPAS area, and exploration and utilization of energy resources
can only be authorized through a law passed by the Philippine Congress. Because Congress had not
specifically authorized the activity in Taon Strait, the Court declared that no energy exploration should
be permitted in that area.
G.R. No. 163509 PICOP RESOURCES, INC.,petitioner, - versus BASE METALS MINERAL RESOURCES
ADJUDICATION BOARD, respondents. CORPORATION and THE MINES

FACTS: Central Mindanao Mining and Development Corporation (CMMCI for brevity) entered into a
Mines Operating Agreement (Agreement for brevity) with Banahaw Mining and Development
Corporation (Banahaw Mining for brevity) whereby the latter agreed to act as Mine Operator for the
exploration, development, and eventual commercial operation of CMMCIs eighteen (18) mining claims
located in Agusan del Sur. Pursuant to the terms of the Agreement, Banahaw Mining filed applications
for Mining Lease Contracts over the mining claims with the Bureau of Mines. So that Banahaw Mining
was issued a Mines Temporary Permit authorizing it to extract and dispose of precious minerals found
within its mining claims. Upon its expiration, the temporary permit was subsequently renewed thrice by
the Bureau of Mines, the last being on June 28, 1991. Since a portion of Banahaw Minings mining
claims was located in petitioner PICOPs logging concession in Agusan del Sur, Banahaw Mining and
petitioner PICOP entered into a Memorandum of Agreement, whereby, in mutual recognition of each
others right to the area concerned, petitioner PICOP allowed Banahaw Mining an access/right of way to
its mining claims. Banahaw Mining converted its mining claims to applications for Mineral Production
Sharing Agreements (MPSA for brevity). While the MPSA were pending, Banahaw Mining, on December
18, 1996, decided to sell/assign its rights and interests over thirty-seven (37) mining claims in favor of
private respondent Base Metals Mineral Resources Corporation (Base Metals for brevity). The transfer
included mining claims held by Banahaw Mining in its own right as claim owner, as well as those covered
by its mining operating agreement with CMMCI. Upon being informed of the development, CMMCI, as
claim owner, immediately approved the assignment made by Banahaw Mining in favor of private
respondent Base Metals, thereby recognizing private respondent Base Metals as the new operator of its
claims. On March 10, 1997, private respondent Base Metals amended Banahaw Minings pending MPSA
applications with the Bureau of Mines to substitute itself as applicant and to submit additional
documents in support of the application. Area clearances from the DENR Regional Director and
Superintendent of the Agusan Marsh and Wildlife Sanctuary were submitted, as required. On October 7,
1997, private respondent Base Metals amended MPSA applications were published in accordance with
the requirements of the Mining Act of 1995. On November 18, 1997, petitioner PICOP filed with the
Mines Geo-Sciences Bureau (MGB), Caraga Regional Office No. XIII an Adverse Claim and/or Opposition
to private respondent Base Metals application. After the submission of their respective position paper,
the Panel Arbitrator issued an Order disapproving private respondent Base Metals MPSA on the
reasons that adverse claim was filed on time, that the granting of the MPSA application on area subject
of an IFMA or PTLA which is covered by a Presidential Warranty, the panel believes it cannot, unless the
grantee consents thereto, without the grantees consent, the area is considered closed to mining
location (sec. 19) (b) (No. 2), DAO No. 96-40) and that the mining location in forest or timberland is
allowed only if such forest or timberland is not leased by the government to a qualified person or entity
and if it is leased the consent of the lessor is necessary, in addition to the area clearance to be issued by
the agency concerned before it is subjected to mining operation. Plantation is considered closed to
mining locations because it is off tangent to mining. Both are extremes. They can not exist at the same
time. The other must necessarily stop before the other operate. Private respondent Base Metals filed a
Notice of Appeal with public respondent MAB, the latter rendered the assailed decision setting aside the
Panel Arbitrators order. The Court of Appeals upheld the decision of the MAB. Hence this petition.
PICOP presents the following issues: (1) the 2,756 hectares subject of Base Metals MPSA are closed to
mining operations except upon PICOPs written consent pursuant to existing laws, rules and regulations
and by virtue of the Presidential Warranty; (2) its Presidential Warranty is protected by the non-
impairment clause of the Constitution; and (3) it does not raise new issues in its petition. PICOP asserts
that its concession areas are closed to mining operations as these are within the Agusan-Surigao-Davao
forest reserve established under Proclamation No. 369 of then Gov. Gen. Dwight Davis. The area is
allegedly also part of permanent forest established under Republic Act No. 3092 (RA 3092), and overlaps
the wilderness area where mining applications are expressly prohibited under RA 7586. Hence, the area
is closed to mining operations under Sec. 19(f) of RA 7942.

ISSUE: Whether or not the area covered by Base Metals MPSA is, by law, closed to mining activities
Whether or not the Presidential Warranty is a contract protected by the non-impairment clause of the
1987 Constitution.

HELD: Anent the first issue, the Court ruled that the area covered by Base Metals MPSA is, by law, not
closed to mining activities. There is no evidence in this case that the area covered by Base Metals MPSA
has been proclaimed as watershed forest reserves. Even granting that the area covered by the MPSA is
part of the Agusan-Davao-Surigao Forest Reserve, such does not necessarily signify that the area is
absolutely closed to mining activities. Contrary to PICOPs obvious misreading of our decision in Apex
Mining Co., Inc. v. Garcia, supra, to the effect that mineral agreements are not allowed in the forest
reserve established under Proclamation 369, the Court in that case actually ruled that pursuant to PD
463 as amended by PD 1385, one can acquire mining rights within forest reserves, such as the Agusan-
Davao-Surigao Forest Reserve, by initially applying for a permit to prospect with the Bureau of Forest
and Development and subsequently for a permit to explore with the Bureau of Mines and Geosciences.
Moreover, Sec. 18 RA 7942 allows mining even in timberland or forestty subject to existing rights and
reservations. Similarly, Sec. 47 of PD 705 permits mining operations in forest lands which include the
public forest, the permanent forest or forest reserves, and forest reservations With regard to the second
issue, the Court do not subscribe to PICOPs argument that the Presidential Warranty dated September
25, 1968 is a contract protected by the nonimpairment clause of the 1987 Constitution. An examination
of the Presidential Warranty at once reveals that it simply reassures PICOP of the governments
commitment to uphold the terms and conditions of its timber license and guarantees PICOPs peaceful
and adequate possession and enjoyment of the areas which are the basic sources of raw materials for its
wood processing complex. The warranty covers only the right to cut, collect, and remove timber in its
concession area, and does not extend to the utilization of other resources, such as mineral resources,
occurring within the concession. The Presidential Warranty cannot be considered a contract distinct
from PTLA No. 47 and IFMA No. 35. It is merely a collateral undertaking which cannot amplify PICOPs
rights under its timber license. Since timber licenses are not contracts, the non-impairment clause
cannot be invoked.
SEA LION FISHING CORPORATION VS. PEOPLE OF THE PHILIPPINES G.R. No. 172678, March 23, 2011

FACTS: In response to fishermen's report of poaching off Mangsee Island in Balabac, Palawan, a
combined team of Philippine Marines, Coast Guard and barangay officials conducted search and seizure
operations therein. There they found F/V Sea Lion anchored three nautical miles northwest of Mangsee
Island. Beside it were five boats and a long fishing net already spread over the water. The team boarded
the vessel and apprehended her captain, a Filipino, and a crew composed of three Filipinos and three
Chinese. Also arrested were 17 Chinese fishermen aboard F/V Sea Lion. The Provincial Prosecutor of
Palawan dismissed the charges except those against the 17 Chinese fishermen. This was after it was
found out that the crew of F/V Sea Lion did not assent to the illegal acts of said 17 Chinese fishermen
who were rescued by the crew of the F/V Sea Lion from a distressed Chinese vessel. The prosecutor
concluded that the crew, unarmed, outnumbered and hampered by language barrier, acted only out of
uncontrollable fear of imminent danger to their lives and property which hindered them from asserting
their authority over these Chinese nationals. With the crew of F/V Sea Lion now exculpated, F/V Sea Lion
was thus, recommended to be released to the petitioner upon proper showing of evidence of its
ownership of the aforesaid vessel. Petitioner, however, failed to act in accordance with said Resolutions.
The Seventeen (17) accused were found guilty beyond reasonable doubt as principals for the crime of
Violation of Section 88, sub-par. (3) of R.A. 8550 and sentenced them to suffer an imprisonment of FIVE
(5) YEARS TO SIX (6) YEARS, SIX (6) MONTHS AND SEVEN (7) DAYS. The Fishing Vessel F/V Sea Lion I as
well as the fishing paraphernalia and equipments used by the accused in committing the crime was
ordered confiscated in favor of the government. The petitioner filed a Motion for Reconsideration to
delete from said Sentences the confiscation of F/V Sea Lion but was denied by RTC and CA, thus this
petitioner was filed. Petitioner contends that F/V Sea Lion should be released to it because it is the
registered owner of said vessel and her captain and crew members were not among those accused of
and convicted invoking Article 45 of the Revised Penal Code. The OSG contends that even if Article 45 of
the Revised Penal Code is applicable, still the present petition must fail due to petitioner's failure to
present its third-party claim at the earliest opportunity.

ISSUE: Whether or not the confiscation of F/V Sea Lion was valid.

HELD: YES. The petition has no merit. The CA did not find either lack or error of jurisdiction or grave
abuse of discretion. There was no jurisdictional error because based on the Informations, the offenses
were committed within the territorial jurisdiction of the trial court. The penalties imposable under the
law were also within its jurisdiction. As a necessary consequence, the trial court had the authority to
determine how the subject fishing vessel should be disposed of. Likewise, no grave abuse of discretion
attended the issuance of the trial court's order to confiscate F/V Sea Lion considering the absence of
evidence showing that said vessel is owned by a third party. Evidently, the remedial relief pursued by
the petitioner was infirm and improper. Significantly, the lack of any factual basis for the third-party
claim of ownership was not cured at all when the petitioner filed its motion for reconsideration before
the trial court. At that point, evidence should have been adduced to support the petitioner's claim (so
that a new trial or reopening of the trial on the confiscation aspect should have been prayed for, rather
than a mere motion for reconsideration.) There is firstly the factual issue - to be proved by proper
evidence in order to be properly considered by the court - that the vessel is owned by a third party other
than the accused. Article 45 required too that proof be adduced that the third party is not liable for the
offense. After the admission by the accused through their guilty plea that the vessel had been used in
the commission of a crime, we believe and so hold that this additional Article 45 requirement cannot be
simply inferred from the mere fact that the alleged owner is not charged in the same case before the
court. Given the absence of any admissible evidence of third-party ownership and the failure to comply
with the additional Article 45 requirement, the court's order to confiscate the F/V Sea Lion pursuant to
Article 87 of R.A. No. 8550 cannot be incorrect to the point of being an act in grave abuse of discretion.