G.R. No.
92013 July 25, 1990 (1) The Nampeidai Property at 11-24 Nampeidai-machi, Shibuya-ku, Tokyo which has an area of
SALVADOR H. LAUREL, petitioner,
vs.
RAMON GARCIA, as head of the Asset Privatization Trust, RAUL MANGLAPUS, as Secretary of
Foreign Affairs, and CATALINO MACARAIG, as Executive Secretary, respondents.
G.R. No. 92047 July 25, 1990
DIONISIO S. OJEDA, petitioner,
vs.
EXECUTIVE SECRETARY MACARAIG, JR., ASSETS PRIVATIZATION TRUST CHAIRMAN RAMON
T. GARCIA, AMBASSADOR RAMON DEL ROSARIO, et al., as members of the PRINCIPAL AND
BIDDING COMMITTEES ON THE UTILIZATION/DISPOSITION PETITION OF PHILIPPINE
GOVERNMENT PROPERTIES IN JAPAN, respondents.
Arturo M. Tolentino for petitioner in 92013.
GUTIERREZ, JR., J.:
These are two petitions for prohibition seeking to enjoin respondents, their representatives and
agents from proceeding with the bidding for the sale of the 3,179 square meters of land at 306
Roppongi, 5-Chome Minato-ku Tokyo, Japan scheduled on February 21, 1990. We granted the
prayer for a temporary restraining order effective February 20, 1990. One of the petitioners (in G.R.
No. 92047) likewise prayes for a writ of mandamus to compel the respondents to fully disclose to
the public the basis of their decision to push through with the sale of the Roppongi property inspire
of strong public opposition and to explain the proceedings which effectively prevent the
participation of Filipino citizens and entities in the bidding process.
The oral arguments in G.R. No. 92013, Laurel v. Garcia, et al. were heard by the Court on March 13,
1990. After G.R. No. 92047, Ojeda v. Secretary Macaraig, et al. was filed, the respondents were
required to file a comment by the Court's resolution dated February 22, 1990. The two petitions
were consolidated on March 27, 1990 when the memoranda of the parties in the Laurel case were
deliberated upon.
The Court could not act on these cases immediately because the respondents filed a motion for an
extension of thirty (30) days to file comment in G.R. No. 92047, followed by a second motion for an
extension of another thirty (30) days which we granted on May 8, 1990, a third motion for extension
of time granted on May 24, 1990 and a fourth motion for extension of time which we granted on
June 5, 1990 but calling the attention of the respondents to the length of time the petitions have
been pending. After the comment was filed, the petitioner in G.R. No. 92047 asked for thirty (30)
days to file a reply. We noted his motion and resolved to decide the two (2) cases.
I
The subject property in this case is one of the four (4) properties in Japan acquired by the Philippine
government under the Reparations Agreement entered into with Japan on May 9, 1956, the other
lots being:
approximately 2,489.96 square meters, and is at present the site of the Philippine Embassy
Chancery;
(2) The Kobe Commercial Property at 63 Naniwa-cho, Kobe, with an area of around 764.72 square
meters and categorized as a commercial lot now being used as a warehouse and parking lot for the
consulate staff; and
(3) The Kobe Residential Property at 1-980-2 Obanoyama-cho, Shinohara, Nada-ku, Kobe, a
residential lot which is now vacant.
The properties and the capital goods and services procured from the Japanese government for
national development projects are part of the indemnification to the Filipino people for their losses
in life and property and their suffering during World War II.
The Reparations Agreement provides that reparations valued at $550 million would be payable in
twenty (20) years in accordance with annual schedules of procurements to be fixed by the
Philippine and Japanese governments (Article 2, Reparations Agreement). Rep. Act No. 1789, the
Reparations Law, prescribes the national policy on procurement and utilization of reparations and
development loans. The procurements are divided into those for use by the government sector and
those for private parties in projects as the then National Economic Council shall determine. Those
intended for the private sector shall be made available by sale to Filipino citizens or to one hundred
(100%) percent Filipino-owned entities in national development projects.
The Roppongi property was acquired from the Japanese government under the Second Year
Schedule and listed under the heading "Government Sector", through Reparations Contract No. 300
dated June 27, 1958. The Roppongi property consists of the land and building "for the Chancery of
the Philippine Embassy" (Annex M-D to Memorandum for Petitioner, p. 503). As intended, it became
the site of the Philippine Embassy until the latter was transferred to Nampeidai on July 22, 1976
when the Roppongi building needed major repairs. Due to the failure of our government to provide
necessary funds, the Roppongi property has remained undeveloped since that time.
A proposal was presented to President Corazon C. Aquino by former Philippine Ambassador to
Japan, Carlos J. Valdez, to make the property the subject of a lease agreement with a Japanese firm -
Kajima Corporation — which shall construct two (2) buildings in Roppongi and one (1) building in
Nampeidai and renovate the present Philippine Chancery in Nampeidai. The consideration of the
construction would be the lease to the foreign corporation of one (1) of the buildings to be
constructed in Roppongi and the two (2) buildings in Nampeidai. The other building in Roppongi
shall then be used as the Philippine Embassy Chancery. At the end of the lease period, all the three
leased buildings shall be occupied and used by the Philippine government. No change of ownership
or title shall occur. (See Annex "B" to Reply to Comment) The Philippine government retains the title
all throughout the lease period and thereafter. However, the government has not acted favorably on
this proposal which is pending approval and ratification between the parties. Instead, on August 11,
1986, President Aquino created a committee to study the disposition/utilization of Philippine
government properties in Tokyo and Kobe, Japan through Administrative Order No. 3, followed by
Administrative Orders Numbered 3-A, B, C and D.
On July 25, 1987, the President issued Executive Order No. 296 entitling non-Filipino citizens or
entities to avail of separations' capital goods and services in the event of sale, lease or disposition.
The four properties in Japan including the Roppongi were specifically mentioned in the first
"Whereas" clause.
Amidst opposition by various sectors, the Executive branch of the government has been pushing,
with great vigor, its decision to sell the reparations properties starting with the Roppongi lot. The
property has twice been set for bidding at a minimum floor price of $225 million. The first bidding
was a failure since only one bidder qualified. The second one, after postponements, has not yet
materialized. The last scheduled bidding on February 21, 1990 was restrained by his Court. Later,
the rules on bidding were changed such that the $225 million floor price became merely a suggested
floor price.
The Court finds that each of the herein petitions raises distinct issues. The petitioner in G.R. No.
92013 objects to the alienation of the Roppongi property to anyone while the petitioner in G.R. No.
92047 adds as a principal objection the alleged unjustified bias of the Philippine government in
favor of selling the property to non-Filipino citizens and entities. These petitions have been
consolidated and are resolved at the same time for the objective is the same - to stop the sale of the
Roppongi property.
The petitioner in G.R. No. 92013 raises the following issues:
(1) Can the Roppongi property and others of its kind be alienated by the Philippine Government?;
and
(2) Does the Chief Executive, her officers and agents, have the authority and jurisdiction, to sell the
Roppongi property?
Petitioner Dionisio Ojeda in G.R. No. 92047, apart from questioning the authority of the government
to alienate the Roppongi property assails the constitutionality of Executive Order No. 296 in making
the property available for sale to non-Filipino citizens and entities. He also questions the bidding
procedures of the Committee on the Utilization or Disposition of Philippine Government Properties
in Japan for being discriminatory against Filipino citizens and Filipino-owned entities by denying
them the right to be informed about the bidding requirements.
II
In G.R. No. 92013, petitioner Laurel asserts that the Roppongi property and the related lots were
acquired as part of the reparations from the Japanese government for diplomatic and consular use
by the Philippine government. Vice-President Laurel states that the Roppongi property is classified
as one of public dominion, and not of private ownership under Article 420 of the Civil Code (See
infra).
The petitioner submits that the Roppongi property comes under "property intended for public
service" in paragraph 2 of the above provision. He states that being one of public dominion, no
ownership by any one can attach to it, not even by the State. The Roppongi and related properties
were acquired for "sites for chancery, diplomatic, and consular quarters, buildings and other
improvements" (Second Year Reparations Schedule). The petitioner states that they continue to be
intended for a necessary service. They are held by the State in anticipation of an opportune use.
(Citing 3 Manresa 65-66). Hence, it cannot be appropriated, is outside the commerce of man, or to
put it in more simple terms, it cannot be alienated nor be the subject matter of contracts (Citing
Municipality of Cavite v. Rojas, 30 Phil. 20 [1915]). Noting the non-use of the Roppongi property at
the moment, the petitioner avers that the same remains property of public dominion so long as the
government has not used it for other purposes nor adopted any measure constituting a removal of
its original purpose or use.
The respondents, for their part, refute the petitioner's contention by saying that the subject
property is not governed by our Civil Code but by the laws of Japan where the property is located.
They rely upon the rule of lex situs which is used in determining the applicable law regarding the
acquisition, transfer and devolution of the title to a property. They also invoke Opinion No. 21,
Series of 1988, dated January 27, 1988 of the Secretary of Justice which used the lex situs in
explaining the inapplicability of Philippine law regarding a property situated in Japan.
The respondents add that even assuming for the sake of argument that the Civil Code is applicable,
the Roppongi property has ceased to become property of public dominion. It has become
patrimonial property because it has not been used for public service or for diplomatic purposes for
over thirteen (13) years now (Citing Article 422, Civil Code) and because the intention by the
Executive Department and the Congress to convert it to private use has been manifested by overt
acts, such as, among others: (1) the transfer of the Philippine Embassy to Nampeidai (2) the
issuance of administrative orders for the possibility of alienating the four government properties in
Japan; (3) the issuance of Executive Order No. 296; (4) the enactment by the Congress of Rep. Act
No. 6657 [the Comprehensive Agrarian Reform Law] on June 10, 1988 which contains a provision
stating that funds may be taken from the sale of Philippine properties in foreign countries; (5) the
holding of the public bidding of the Roppongi property but which failed; (6) the deferment by the
Senate in Resolution No. 55 of the bidding to a future date; thus an acknowledgment by the Senate
of the government's intention to remove the Roppongi property from the public service purpose;
and (7) the resolution of this Court dismissing the petition in Ojeda v. Bidding Committee, et al., G.R.
No. 87478 which sought to enjoin the second bidding of the Roppongi property scheduled on March
30, 1989.
III
In G.R. No. 94047, petitioner Ojeda once more asks this Court to rule on the constitutionality of
Executive Order No. 296. He had earlier filed a petition in G.R. No. 87478 which the Court dismissed
on August 1, 1989. He now avers that the executive order contravenes the constitutional mandate to
conserve and develop the national patrimony stated in the Preamble of the 1987 Constitution. It
also allegedly violates:
(1) The reservation of the ownership and acquisition of alienable lands of the public domain to
Filipino citizens. (Sections 2 and 3, Article XII, Constitution; Sections 22 and 23 of Commonwealth
Act 141).i•t•c-aüsl
(2) The preference for Filipino citizens in the grant of rights, privileges and concessions covering the
national economy and patrimony (Section 10, Article VI, Constitution);
(3) The protection given to Filipino enterprises against unfair competition and trade practices;
(4) The guarantee of the right of the people to information on all matters of public concern (Section
7, Article III, Constitution);
(5) The prohibition against the sale to non-Filipino citizens or entities not wholly owned by Filipino
citizens of capital goods received by the Philippines under the Reparations Act (Sections 2 and 12 of
Rep. Act No. 1789); and
(6) The declaration of the state policy of full public disclosure of all transactions involving public
interest (Section 28, Article III, Constitution).
Petitioner Ojeda warns that the use of public funds in the execution of an unconstitutional executive
order is a misapplication of public funds He states that since the details of the bidding for the
Roppongi property were never publicly disclosed until February 15, 1990 (or a few days before the
scheduled bidding), the bidding guidelines are available only in Tokyo, and the accomplishment of
requirements and the selection of qualified bidders should be done in Tokyo, interested Filipino
citizens or entities owned by them did not have the chance to comply with Purchase Offer
Requirements on the Roppongi. Worse, the Roppongi shall be sold for a minimum price of $225
million from which price capital gains tax under Japanese law of about 50 to 70% of the floor price
would still be deducted.
IV
The petitioners and respondents in both cases do not dispute the fact that the Roppongi site and the
three related properties were through reparations agreements, that these were assigned to the
government sector and that the Roppongi property itself was specifically designated under the
Reparations Agreement to house the Philippine Embassy.
The nature of the Roppongi lot as property for public service is expressly spelled out. It is dictated
by the terms of the Reparations Agreement and the corresponding contract of procurement which
bind both the Philippine government and the Japanese government.
There can be no doubt that it is of public dominion unless it is convincingly shown that the property
has become patrimonial. This, the respondents have failed to do.
As property of public dominion, the Roppongi lot is outside the commerce of man. It cannot be
alienated. Its ownership is a special collective ownership for general use and enjoyment, an
application to the satisfaction of collective needs, and resides in the social group. The purpose is not
to serve the State as a juridical person, but the citizens; it is intended for the common and public
welfare and cannot be the object of appropration. (Taken from 3 Manresa, 66-69; cited in Tolentino,
Commentaries on the Civil Code of the Philippines, 1963 Edition, Vol. II, p. 26).
The applicable provisions of the Civil Code are:
ART. 419. Property is either of public dominion or of private ownership.
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.
ART. 421. All other property of the State, which is not of the character stated in
the preceding article, is patrimonial property.
The Roppongi property is correctly classified under paragraph 2 of Article 420 of the Civil Code as
property belonging to the State and intended for some public service.
Has the intention of the government regarding the use of the property been changed because the lot
has been Idle for some years? Has it become patrimonial?
The fact that the Roppongi site has not been used for a long time for actual Embassy service does
not automatically convert it to patrimonial property. Any such conversion happens only if the
property is withdrawn from public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66 SCRA 481
[1975]). A property continues to be part of the public domain, not available for private
appropriation or ownership until there is a formal declaration on the part of the government to
withdraw it from being such (Ignacio v. Director of Lands, 108 Phil. 335 [1960]).
The respondents enumerate various pronouncements by concerned public officials insinuating a
change of intention. We emphasize, however, that an abandonment of the intention to use the
Roppongi property for public service and to make it patrimonial property under Article 422 of the
Civil Code must be definiteAbandonment cannot be inferred from the non-use alone specially if the
non-use was attributable not to the government's own deliberate and indubitable will but to a lack
of financial support to repair and improve the property (See Heirs of Felino Santiago v. Lazaro, 166
SCRA 368 [1988]). Abandonment must be a certain and positive act based on correct legal premises.
A mere transfer of the Philippine Embassy to Nampeidai in 1976 is not relinquishment of the
Roppongi property's original purpose. Even the failure by the government to repair the building in
Roppongi is not abandonment since as earlier stated, there simply was a shortage of government
funds. The recent Administrative Orders authorizing a study of the status and conditions of
government properties in Japan were merely directives for investigation but did not in any way
signify a clear intention to dispose of the properties.
Executive Order No. 296, though its title declares an "authority to sell", does not have a provision in
its text expressly authorizing the sale of the four properties procured from Japan for the
government sector. The executive order does not declare that the properties lost their public
character. It merely intends to make the properties available to foreigners and not to Filipinos
alone in case of a sale, lease or other disposition. It merely eliminates the restriction under Rep. Act
No. 1789 that reparations goods may be sold only to Filipino citizens and one hundred (100%)
percent Filipino-owned entities. The text of Executive Order No. 296 provides:
Section 1. The provisions of Republic Act No. 1789, as amended, and of other
laws to the contrary notwithstanding, the above-mentioned properties can be
made available for sale, lease or any other manner of disposition to non-
Filipino citizens or to entities owned by non-Filipino citizens.
Executive Order No. 296 is based on the wrong premise or assumption that the Roppongi and the
three other properties were earlier converted into alienable real properties. As earlier stated, Rep.
Act No. 1789 differentiates the procurements for the government sector and the private sector
(Sections 2 and 12, Rep. Act No. 1789). Only the private sector properties can be sold to end-users
who must be Filipinos or entities owned by Filipinos. It is this nationality provision which was
amended by Executive Order No. 296.
Section 63 (c) of Rep. Act No. 6657 (the CARP Law) which provides as one of the sources of funds for
its implementation, the proceeds of the disposition of the properties of the Government in foreign
countries, did not withdraw the Roppongi property from being classified as one of public dominion
when it mentions Philippine properties abroad. Section 63 (c) refers to properties which are
alienable and not to those reserved for public use or service. Rep Act No. 6657, therefore, does not
authorize the Executive Department to sell the Roppongi property. It merely enumerates possible
sources of future funding to augment (as and when needed) the Agrarian Reform Fund created
under Executive Order No. 299. Obviously any property outside of the commerce of man cannot be
tapped as a source of funds.
The respondents try to get around the public dominion character of the Roppongi property by
insisting that Japanese law and not our Civil Code should apply.
It is exceedingly strange why our top government officials, of all people, should be the ones to insist
that in the sale of extremely valuable government property, Japanese law and not Philippine law
should prevail. The Japanese law - its coverage and effects, when enacted, and exceptions to its
provision — is not presented to the Court It is simply asserted that the lex loci rei sitae or Japanese
law should apply without stating what that law provides. It is a ed on faith that Japanese law would
allow the sale.
We see no reason why a conflict of law rule should apply when no conflict of law situation exists. A
conflict of law situation arises only when: (1) There is a dispute over the title or ownership of an
immovable, such that the capacity to take and transfer immovables, the formalities of conveyance,
the essential validity and effect of the transfer, or the interpretation and effect of a conveyance, are
to be determined (See Salonga, Private International Law, 1981 ed., pp. 377-383); and (2) A foreign
law on land ownership and its conveyance is asserted to conflict with a domestic law on the same
matters. Hence, the need to determine which law should apply.
In the instant case, none of the above elements exists.
The issues are not concerned with validity of ownership or title. There is no question that the
property belongs to the Philippines. The issue is the authority of the respondent officials to validly
dispose of property belonging to the State. And the validity of the procedures adopted to effect its
sale. This is governed by Philippine Law. The rule of lex situs does not apply.
The assertion that the opinion of the Secretary of Justice sheds light on the relevance of the lex
situs rule is misplaced. The opinion does not tackle the alienability of the real properties procured
through reparations nor the existence in what body of the authority to sell them. In discussing who
are capable of acquiring the lots, the Secretary merely explains that it is the foreign law which
should determine who can acquire the properties so that the constitutional limitation on acquisition
of lands of the public domain to Filipino citizens and entities wholly owned by Filipinos is
inapplicable. We see no point in belaboring whether or not this opinion is correct. Why should we
discuss who can acquire the Roppongi lot when there is no showing that it can be sold?
The subsequent approval on October 4, 1988 by President Aquino of the recommendation by the
investigating committee to sell the Roppongi property was premature or, at the very least,
conditioned on a valid change in the public character of the Roppongi property. Moreover, the
approval does not have the force and effect of law since the President already lost her legislative
powers. The Congress had already convened for more than a year.
Assuming for the sake of argument, however, that the Roppongi property is no longer of public
dominion, there is another obstacle to its sale by the respondents.
There is no law authorizing its conveyance.
Section 79 (f) of the Revised Administrative Code of 1917 provides
Section 79 (f ) Conveyances and contracts to which the Government is a party. —
In cases in which the Government of the Republic of the Philippines is a party
to any deed or other instrument conveying the title to real estate or to any
other property the value of which is in excess of one hundred thousand pesos,
the respective Department Secretary shall prepare the necessary papers
which, together with the proper recommendations, shall be submitted to the
Congress of the Philippines for approval by the same. Such deed, instrument, or
contract shall be executed and signed by the President of the Philippines on
behalf of the Government of the Philippines unless the Government of the
Philippines unless the authority therefor be expressly vested by law in another
officer. (Emphasis supplied)
The requirement has been retained in Section 48, Book I of the Administrative Code of 1987
(Executive Order No. 292).
SEC. 48. Official Authorized to Convey Real Property. — Whenever real property
of the Government is authorized by law to be conveyed, the deed of conveyance
shall be executed in behalf of the government by the following:
(1) For property belonging to and titled in the name of the Republic of the
Philippines, by the President, unless the authority therefor is expressly vested
by law in another officer.
(2) For property belonging to the Republic of the Philippines but titled in the
name of any political subdivision or of any corporate agency or
instrumentality, by the executive head of the agency or instrumentality.
(Emphasis supplied)
It is not for the President to convey valuable real property of the government on his or her own sole
will. Any such conveyance must be authorized and approved by a law enacted by the Congress. It
requires executive and legislative concurrence.
Resolution No. 55 of the Senate dated June 8, 1989, asking for the deferment of the sale of the
Roppongi property does not withdraw the property from public domain much less authorize its
sale. It is a mere resolution; it is not a formal declaration abandoning the public character of the
Roppongi property. In fact, the Senate Committee on Foreign Relations is conducting hearings on
Senate Resolution No. 734 which raises serious policy considerations and calls for a fact-finding
investigation of the circumstances behind the decision to sell the Philippine government properties
in Japan.
The resolution of this Court in Ojeda v. Bidding Committee, et al., supra, did not pass upon the
constitutionality of Executive Order No. 296. Contrary to respondents' assertion, we did not uphold
the authority of the President to sell the Roppongi property. The Court stated that the
constitutionality of the executive order was not the real issue and that resolving the constitutional
question was "neither necessary nor finally determinative of the case." The Court noted that "[W]hat
petitioner ultimately questions is the use of the proceeds of the disposition of the Roppongi
property." In emphasizing that "the decision of the Executive to dispose of the Roppongi property to
finance the CARP ... cannot be questioned" in view of Section 63 (c) of Rep. Act No. 6657, the Court
did not acknowledge the fact that the property became alienable nor did it indicate that the
President was authorized to dispose of the Roppongi property. The resolution should be read to
mean that in case the Roppongi property is re-classified to be patrimonial and alienable by authority
of law, the proceeds of a sale may be used for national economic development projects including the
CARP.
Moreover, the sale in 1989 did not materialize. The petitions before us question the proposed 1990
sale of the Roppongi property. We are resolving the issues raised in these petitions, not the issues
raised in 1989.
Having declared a need for a law or formal declaration to withdraw the Roppongi property from
public domain to make it alienable and a need for legislative authority to allow the sale of the
property, we see no compelling reason to tackle the constitutional issues raised by petitioner Ojeda.
The Court does not ordinarily pass upon constitutional questions unless these questions are
properly raised in appropriate cases and their resolution is necessary for the determination of the
case (People v. Vera, 65 Phil. 56 [1937]). The Court will not pass upon a constitutional question
although properly presented by the record if the case can be disposed of on some other ground such
as the application of a statute or general law (Siler v. Louisville and Nashville R. Co., 213 U.S. 175,
[1909], Railroad Commission v. Pullman Co., 312 U.S. 496 [1941]).

The petitioner in G.R. No. 92013 states why the Roppongi property should not be sold:

The Roppongi property is not just like any piece of property. It was given to the
Filipino people in reparation for the lives and blood of Filipinos who died and
suffered during the Japanese military occupation, for the suffering of widows
and orphans who lost their loved ones and kindred, for the homes and other
properties lost by countless Filipinos during the war. The Tokyo properties are
a monument to the bravery and sacrifice of the Filipino people in the face of an
invader; like the monuments of Rizal, Quezon, and other Filipino heroes, we do
not expect economic or financial benefits from them. But who would think of
selling these monuments? Filipino honor and national dignity dictate that we
keep our properties in Japan as memorials to the countless Filipinos who died
and suffered. Even if we should become paupers we should not think of selling
them. For it would be as if we sold the lives and blood and tears of our
countrymen. (Rollo- G.R. No. 92013, p.147)

The petitioner in G.R. No. 92047 also states:

Roppongi is no ordinary property. It is one ceded by the Japanese government

in atonement for its past belligerence for the valiant sacrifice of life and limb
and for deaths, physical dislocation and economic devastation the whole
Filipino people endured in World War II.

It is for what it stands for, and for what it could never bring back to life, that its
significance today remains undimmed, inspire of the lapse of 45 years since the
war ended, inspire of the passage of 32 years since the property passed on to
the Philippine government.

Roppongi is a reminder that cannot — should not — be dissipated ... (Rollo-

92047, p. 9)

It is indeed true that the Roppongi property is valuable not so much because of the inflated prices
fetched by real property in Tokyo but more so because of its symbolic value to all Filipinos —
veterans and civilians alike. Whether or not the Roppongi and related properties will eventually be
sold is a policy determination where both the President and Congress must concur. Considering the
properties' importance and value, the laws on conversion and disposition of property of public
dominion must be faithfully followed.

WHEREFORE, IN VIEW OF THE FOREGOING, the petitions are GRANTED. A writ of prohibition is
issued enjoining the respondents from proceeding with the sale of the Roppongi property in Tokyo,
Japan. The February 20, 1990 Temporary Restraining Order is made PERMANENT.

SO ORDERED.

Melencio-Herrera, Paras, Bidin, Griño-Aquino and Regalado, JJ., concur.

EN BANC x--------------------------------------------------x

THE SECRETARY OF THE G.R. No. 167707
DEPARTMENT OF ENVIRONMENT
AND NATURAL RESOURCES, THE
REGIONAL EXECUTIVE Present:
DIRECTOR, DENR-REGION VI,
REGIONAL TECHNICAL PUNO, C.J.,
DIRECTOR FOR LANDS, QUISUMBING,
LANDS MANAGEMENT BUREAU, YNARES-SANTIAGO,
REGION VI PROVINCIAL CARPIO,
ENVIRONMENT AND NATURAL AUSTRIA-MARTINEZ,
RESOURCES OFFICER OF KALIBO, CORONA,*
AKLAN, REGISTER OF DEEDS, CARPIO MORALES,
DIRECTOR OF LAND AZCUNA,
REGISTRATION AUTHORITY, TINGA,
DEPARTMENT OF TOURISM CHICO-NAZARIO,
SECRETARY, DIRECTOR OF VELASCO, JR.,
PHILIPPINE TOURISM NACHURA,**
AUTHORITY, REYES,
Petitioners, LEONARDO-DE CASTRO, and
BRION, JJ.
- versus -
MAYOR JOSE S. YAP, LIBERTAD
TALAPIAN, MILA Y. SUMNDAD, and
ANICETO YAP, in their behalf and Promulgated:
in behalf of all those similarly situated,
Respondents. October 8, 2008
x--------------------------------------------------x
DR. ORLANDO SACAY and G.R. No. 173775
WILFREDO GELITO, joined by
THE LANDOWNERS OF
BORACAY SIMILARLY
SITUATED NAMED IN A LIST,
ANNEX A OF THIS PETITION,
Petitioners,
DECISION
REYES, R.T., J.:
AT stake in these consolidated cases is the right of the present occupants of Boracay Island to secure
titles over their occupied lands.
There are two consolidated petitions. The first is G.R. No. 167707, a petition for review
on certiorari of the Decision[1] of the Court of Appeals (CA) affirming that[2]of the Regional Trial
Court (RTC) in Kalibo, Aklan, which granted the petition for declaratory relief filed by respondents-
claimants Mayor Jose Yap, et al. and ordered the survey of Boracay for titling purposes. The second
is G.R. No. 173775, a petition for prohibition, mandamus, and nullification of Proclamation No.
1064[3] issued by President Gloria Macapagal-Arroyo classifying Boracay into reserved forest and
agricultural land.
The Antecedents
G.R. No. 167707
Boracay Island in the Municipality of Malay, Aklan, with its powdery white sand beaches and warm
crystalline waters, is reputedly a premier Philippine tourist destination. The island is also home to
12,003 inhabitants[4] who live in the bone-shaped islands three barangays.[5]
On April 14, 1976, the Department of Environment and Natural Resources (DENR)
approved the National Reservation Survey of Boracay
Island,[6] which identified several lots as being occupied or claimed by named persons. [7]
On November 10, 1978, then President Ferdinand Marcos issued Proclamation
No. 1801[8] declaring Boracay Island, among other islands, caves and peninsulas in the Philippines,
as tourist zones and marine reserves under the administration of the Philippine Tourism Authority
(PTA). President Marcos later approved the issuance of PTACircular 3-82[9] dated September 3,
1982, to implement Proclamation No. 1801.
Claiming that Proclamation No. 1801 and PTA Circular No 3-82 precluded them from filing an
application for judicial confirmation of imperfect title or survey of land for titling purposes,
respondents-claimants
Mayor Jose S. Yap, Jr., Libertad Talapian, Mila Y. Sumndad, and Aniceto Yap filed a petition for
declaratory relief with the RTC in Kalibo, Aklan.

- versus - In their petition, respondents-claimants alleged that Proclamation No. 1801 and PTA Circular No. 3-
82 raised doubts on their right to secure titles over their occupied lands. They declared that they
THE SECRETARY OF THE themselves, or through their predecessors-in-interest, had been in open, continuous, exclusive, and
DEPARTMENT OF ENVIRONMENT notorious possession and occupation in Boracay since June 12, 1945, or earlier since time
AND NATURAL RESOURCES, THE immemorial. They declared their lands for tax purposes and paid realty taxes on them.[10]
REGIONAL TECHNICAL
DIRECTOR FOR LANDS, LANDS Respondents-claimants posited that Proclamation No. 1801 and its implementing Circular did not
MANAGEMENT BUREAU, place Boracay beyond the commerce of man. Since the Island was classified as a tourist zone, it was
REGION VI, PROVINCIAL susceptible of private ownership. Under Section 48(b) of Commonwealth Act (CA) No. 141,
ENVIRONMENT AND NATURAL otherwise known as the Public Land Act, they had the right to have the lots registered in their
RESOURCES OFFICER, KALIBO, names through judicial confirmation of imperfect titles.
AKLAN,
Respondents. The Republic, through the Office of the Solicitor General (OSG), opposed the petition for declaratory
relief. The OSG countered 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 Presidential Decree (PD) No. 705 or the Revised Forestry Code, [11] as
amended.
The OSG maintained that respondents-claimants reliance on PD No. 1801 and PTA Circular No. 3-82
was misplaced. Their right to judicial confirmation of title was governed by CA No. 141 and PD No.
705. Since Boracay Island had not been classified as alienable and disposable, whatever possession
they had cannot ripen into ownership.
During pre-trial, respondents-claimants and the OSG stipulated on the following facts: (1)
respondents-claimants were presently in possession of parcels of land in Boracay Island; (2) these
parcels of land were planted with coconut trees and other natural growing trees; (3) the coconut
trees had heights of more or less twenty (20) meters and were planted more or less fifty (50) years
ago; and (4) respondents-claimants declared the land they were occupying for tax purposes.[12]
The parties also agreed that the principal issue for resolution was purely legal: whether
Proclamation No. 1801 posed any legal hindrance or impediment to the titling of the lands in
Boracay. They decided to forego with the trial and to submit the case for resolution upon
submission of their respective memoranda.[13]
The RTC took judicial notice[14] that certain parcels of land in Boracay Island, more particularly Lots
1 and 30, Plan PSU-5344, were covered by Original Certificate of Title No. 19502 (RO 2222) in the
name of the Heirs of Ciriaco S. Tirol. These lots were involved in Civil Case Nos. 5222 and 5262 filed
before the RTC of Kalibo, Aklan.[15] The titles were issued on
August 7, 1933.[16]
RTC and CA Dispositions
On July 14, 1999, the RTC rendered a decision in favor of respondents-claimants, with
a fallo reading:
WHEREFORE, in view of the foregoing, the Court declares that Proclamation No. 1801
and PTA Circular No. 3-82 pose no legal obstacle to the petitioners and those similarly situated to
acquire title to their lands in Boracay, in accordance with the applicable laws and in the manner
prescribed therein; and to have their lands surveyed and approved by respondent Regional
Technical Director of Lands as the approved survey does not in itself constitute a title to the land.
SO ORDERED.[17]
The RTC upheld respondents-claimants right to have their occupied lands titled in their name. It
ruled that neither Proclamation No. 1801 nor PTA Circular No. 3-82 mentioned that lands in
Boracay were inalienable or could not be the subject of disposition.[18] The Circular itself recognized
private ownership of lands.[19] The trial court cited Sections 87[20] and 53[21] of the Public Land Act as
basis for acknowledging private ownership of lands in Boracay and that only those forested areas in
public lands were declared as part of the forest reserve.[22]
The OSG moved for reconsideration but its motion was denied. [23] The Republic then appealed to the
CA.
On December 9, 2004, the appellate court affirmed in toto the RTC decision, disposing as follows:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us DENYING the
appeal filed in this case and AFFIRMING the decision of the lower court. [24]
The CA held that respondents-claimants could not be prejudiced by a declaration that the lands they
occupied since time immemorial were part of a forest reserve.
Again, the OSG sought reconsideration but it was similarly denied.[25] Hence, the present petition
under Rule 45.
G.R. No. 173775
On May 22, 2006, during the pendency of G.R. No. 167707, President Gloria Macapagal-Arroyo
issued Proclamation No. 1064[26] classifying Boracay Island into four hundred (400) hectares of
reserved forest land (protection purposes) and six hundred twenty-eight and 96/100 (628.96)
hectares of agricultural land (alienable and disposable). The Proclamation likewise provided for a
fifteen-meter buffer zone on each side of the centerline of roads and trails, reserved for right-of-way
and which shall form part of the area reserved for forest land protection purposes.
On August 10, 2006, petitioners-claimants Dr. Orlando Sacay,[27] Wilfredo Gelito,[28] and other
landowners[29] in Boracay filed with this Court an original petition for prohibition, mandamus, and
nullification of Proclamation No. 1064.[30] They allege that the Proclamation infringed on their prior
vested rights over portions of Boracay. They have been in continued possession of their respective
lots in Boracay since time immemorial. They have also invested billions of pesos in developing their
lands and building internationally renowned first class resorts on their lots.[31]
Petitioners-claimants contended that there is no need for a proclamation reclassifying Boracay into
agricultural land. Being classified as neither mineral nor timber land, the island
is deemed agricultural pursuant to the Philippine Bill of 1902 and Act No. 926, known as the first
Public Land Act.[32] Thus, their possession in the concept of owner for the required period entitled
them to judicial confirmation of imperfect title.
Opposing the petition, the OSG argued that petitioners-claimants do not have a vested right over
their occupied portions in the island. Boracay is an unclassified public forest land pursuant to
Section 3(a) of PD No. 705. Being public forest, the claimed portions of the island are inalienable and
cannot be the subject of judicial confirmation of imperfect title. It is only the executive department,
not the courts, which has authority to reclassify lands of the public domain into alienable and
disposable lands. There is a need for a positive government act in order to release the lots for
disposition.
On November 21, 2006, this Court ordered the consolidation of the two petitions as they principally
involve the same issues on the land classification of BoracayIsland.[33]
Issues
G.R. No. 167707
The OSG raises the lone issue of whether Proclamation No. 1801 and PTA Circular No. 3-82 pose any
legal obstacle for respondents, and all those similarly situated, to acquire title to their occupied
lands in Boracay Island.[34]
G.R. No. 173775
Petitioners-claimants hoist five (5) issues, namely:
I.
AT THE TIME OF THE ESTABLISHED POSSESSION OF PETITIONERS IN CONCEPT OF OWNER OVER
THEIR RESPECTIVE AREAS IN BORACAY, SINCE TIME IMMEMORIAL OR AT THE LATEST SINCE 30
YRS. PRIOR TO THE FILING OF THE PETITION FOR DECLARATORY RELIEF ON NOV. 19,
1997, WERE THE AREAS OCCUPIED BY THEM PUBLIC AGRICULTURAL LANDS AS DEFINED
BY LAWS THEN ON JUDICIAL CONFIRMATION OF IMPERFECT TITLES OR PUBLIC FOREST AS
DEFINED BY SEC. 3a, PD 705?
II.
HAVE PETITIONERS OCCUPANTS ACQUIRED PRIOR VESTED RIGHT OF PRIVATE
OWNERSHIP OVER THEIR OCCUPIED PORTIONS OF BORACAY LAND, DESPITE THE FACT THAT
THEY HAVE NOT APPLIED YET FOR JUDICIAL CONFIRMATION OF IMPERFECT TITLE?
III.
IS THE EXECUTIVE DECLARATION OF THEIR AREAS AS
ALIENABLE AND DISPOSABLE UNDER SEC 6, CA 141 [AN] INDISPENSABLE PRE-REQUISITE FOR
PETITIONERS TO OBTAIN TITLE UNDER THE TORRENS SYSTEM?
IV.
IS THE ISSUANCE OF PROCLAMATION 1064 ON MAY 22, 2006, VIOLATIVE OF THE PRIOR VESTED
RIGHTS TO PRIVATE OWNERSHIP OF PETITIONERS OVER THEIR LANDS IN BORACAY,
PROTECTED BY THE DUE PROCESS CLAUSE OF THE CONSTITUTION OR IS PROCLAMATION 1064
CONTRARY TO SEC. 8, CA 141, OR SEC. 4(a) OF RA 6657.
V.
CAN RESPONDENTS BE COMPELLED BY MANDAMUS TO ALLOW THE SURVEY AND TO APPROVE
THE SURVEY PLANS FOR PURPOSES OF THE APPLICATION FOR TITLING OF THE LANDS OF
PETITIONERS IN BORACAY?[35] (Underscoring supplied)
In capsule, the main issue is whether private claimants (respondents-claimants in G.R. No. 167707
and petitioners-claimants in G.R. No. 173775) have a right to secure titles over their occupied
portions in Boracay. The twin petitions pertain to their right, if any, to judicial confirmation of
imperfect title under CA No. 141, as amended. They do not involve their right to secure title under
other pertinent laws.
Our Ruling
Regalian Doctrine and power of the executive
to reclassify lands of the public domain
Private claimants rely on three (3) laws and executive acts in their bid for judicial confirmation of
imperfect title, namely: (a) Philippine Bill of 1902[36] in relation to Act No. 926, later amended
and/or superseded by Act No. 2874 and CA No. 141;[37] (b) Proclamation No. 1801[38] issued by then
President Marcos; and (c) Proclamation No. 1064[39] issued by President Gloria Macapagal-
Arroyo. We shall proceed to determine their rights to apply for judicial confirmation of imperfect
title under these laws and executive acts.
But first, a peek at the Regalian principle and the power of the executive to reclassify lands of the
public domain.
The 1935 Constitution classified lands of the public domain into agricultural, forest or
timber.[40] Meanwhile, the 1973 Constitution provided the following divisions: agricultural,
industrial or commercial, residential, resettlement, mineral, timber or forest and grazing lands, and
such other classes as may be provided by law,[41] giving the government great leeway for
classification.[42] Then the 1987 Constitution reverted to the 1935 Constitution classification with
one addition: national parks.[43] Of these, only agricultural lands may be alienated.[44] Prior to
Proclamation No. 1064 of May 22, 2006, Boracay Island had never been expressly and
administratively classified under any of these grand divisions. Boracay was an unclassified land of
the public domain.
The Regalian Doctrine dictates that all lands of the public domain belong to the State, that the State
is the source of any asserted right to ownership of land and charged with the conservation of such
patrimony.[45] The doctrine has been consistently adopted under the 1935, 1973, and 1987
Constitutions.[46]
All lands not otherwise appearing to be clearly within private ownership are presumed to belong to
the State.[47] Thus, all lands that have not been acquired from the government, either by purchase or
by grant, belong to the State as part of the inalienable public domain. [48] Necessarily, it is up to the
State to determine if lands of the public domain will be disposed of for private ownership. The
government, as the agent of the state, is possessed of the plenary power as the persona in law to
determine who shall be the favored recipients of public lands, as well as under what terms they may
be granted such privilege, not excluding the placing of obstacles in the way of their exercise of what
otherwise would be ordinary acts of ownership.[49]
Our present land law traces its roots to the Regalian Doctrine. Upon the Spanish conquest of
the Philippines, ownership of all lands, territories and possessions in the Philippines passed to the
Spanish Crown.[50] The Regalian doctrine was first introduced in the Philippines through the Laws of
the Indies and the Royal Cedulas, which laid the foundation that all lands that were not acquired from
the Government, either by purchase or by grant, belong to the public domain. [51]
The Laws of the Indies was followed by the Ley Hipotecaria or the Mortgage Law of 1893. The
Spanish Mortgage Law provided for the systematic registration of titles and deeds as well as
possessory claims.[52]
The Royal Decree of 1894 or the Maura Law[53] partly amended the Spanish Mortgage Law and
the Laws of the Indies. It established possessory information as the method of legalizing possession
of vacant Crown land, under certain conditions which were set forth in said decree. [54] Under Section
393 of the Maura Law, an informacion posesoria or possessory information title,[55] when duly
inscribed in the Registry of Property, is converted into a title of ownership only after the lapse of
twenty (20) years of uninterrupted possession which must be actual, public, and adverse, [56] from
the date of its inscription.[57] However, possessory information title had to be perfected one year
after the promulgation of the Maura Law, or until April 17, 1895. Otherwise, the lands would revert
to the State.[58]
In sum, private ownership of land under the Spanish regime could only be founded on royal
concessions which took various forms, namely: (1) titulo real or royal grant; (2) concesion
especial or special grant; (3) composicion con el estado or adjustment title; (4) titulo de compra or
title by purchase; and (5) informacion posesoria or possessory information title.[59]
The first law governing the disposition of public lands in the Philippines under American rule was
embodied in the Philippine Bill of 1902.[60] By this law, lands of the public domain in the Philippine
Islands were classified into three (3) grand divisions, to wit: agricultural, mineral, and timber or
forest lands.[61] The act provided for, among others, the disposal of mineral lands by means of
absolute grant (freehold system) and by lease (leasehold system).[62] It also provided the definition
by exclusion of agricultural public lands.[63] Interpreting the meaning of agricultural lands under the
Philippine Bill of 1902, the Court declared in Mapa v. Insular Government:[64]
x x x In other words, that the phrase agricultural land as used in Act No. 926 means those public
lands acquired from Spain which are not timber or mineral lands. x x x[65](Emphasis Ours)
On February 1, 1903, the Philippine Legislature passed Act No. 496, otherwise known as the Land
Registration Act. The act established a system of registration by which recorded title becomes
absolute, indefeasible, and imprescriptible. This is known as the Torrens system.[66]
Concurrently, on October 7, 1903, the Philippine Commission passed Act No. 926, which was the
first Public Land Act. The Act introduced the homestead system and made provisions for judicial
and administrative confirmation of imperfect titles and for the sale or lease of public lands. It
permitted corporations regardless of the nationality of persons owning the controlling stock to
lease or purchase lands of the public domain.[67] Under the Act, open, continuous, exclusive, and
notorious possession and occupation of agricultural lands for the next ten (10) years preceding July
26, 1904 was sufficient for judicial confirmation of imperfect title. [68]
On November 29, 1919, Act No. 926 was superseded by Act No. 2874, otherwise known as the
second Public Land Act. This new, more comprehensive law limited the exploitation of agricultural
lands to Filipinos and Americans and citizens of other countries which gave Filipinos the same
privileges. For judicial confirmation of title, possession and occupation en concepto dueo since time
immemorial, or since July 26, 1894, was required.[69]
After the passage of the 1935 Constitution, CA No. 141 amended Act No. 2874 on December 1,
1936. To this day, CA No. 141, as amended, remains as the existing general law governing the
classification and disposition of lands of the public domain other than timber and mineral
lands,[70] and privately owned lands which reverted to the State.[71]
Section 48(b) of CA No. 141 retained the requirement under Act No. 2874 of possession and
occupation of lands of the public domain since time immemorial or since July 26, 1894. However,
this provision was superseded by Republic Act (RA) No. 1942, [72] which provided for a simple thirty-
year prescriptive period for judicial confirmation of imperfect title. The provision was last amended
by PD No. 1073,[73] which now provides for possession and occupation of the land applied
for since June 12, 1945, or earlier.[74]
The issuance of PD No. 892[75] on February 16, 1976 discontinued the use of Spanish titles as
evidence in land registration proceedings.[76] Under the decree, all holders of Spanish titles or grants
should apply for registration of their lands under Act No. 496 within six (6) months from the
effectivity of the decree on February 16, 1976. Thereafter, the recording of all unregistered
lands[77] shall be governed by Section 194 of the Revised Administrative Code, as amended by Act
No. 3344.
On June 11, 1978, Act No. 496 was amended and updated by PD No. 1529, known as the Property
Registration Decree. It was enacted to codify the various laws relative to registration of
property.[78] It governs registration of lands under the Torrens system as well as unregistered lands,
including chattel mortgages.[79]
A positive act declaring land as alienable and disposable is required. In keeping with the presumption
of State ownership, the Court has time and again emphasized that there must be a positive act of the
government, such as an official proclamation,[80] declassifying inalienable public land into
disposable land for agricultural or other purposes.[81] In fact, Section 8 of CA No. 141 limits alienable
or disposable lands only to those lands which have been officially delimited and classified. [82]
The burden of proof in overcoming the presumption of State ownership of the lands of the public
domain is on the person applying for registration (or claiming ownership), who must prove that the
land subject of the application is alienable or disposable.[83] To overcome this presumption,
incontrovertible evidence must be established that the land subject of the application (or claim) is
alienable or disposable.[84] There must still be a positive act declaring land of the public domain as
alienable and disposable. To prove that the land subject of an application for registration is
alienable, the applicant must establish the existence of a positive act of the government such as a
presidential proclamation or an executive order; an administrative action; investigation reports of
Bureau of Lands investigators; and a legislative act or a statute. [85] The applicant may also secure a
certification from the government that the land claimed to have been possessed for the required
number of years is alienable and disposable.[86]
In the case at bar, no such proclamation, executive order, administrative action, report, statute, or
certification was presented to the Court. The records are bereft of evidence showing that, prior to
2006, the portions of Boracay occupied by private claimants were subject of a government
proclamation that the land is alienable and disposable. Absent such well-nigh incontrovertible
evidence, the Court cannot accept the submission that lands occupied by private claimants were
already open to disposition before 2006. Matters of land classification or reclassification cannot be
assumed. They call for proof.[87]
Ankron and De Aldecoa did not make the whole of Boracay Island, or portions of it, agricultural lands.
Private claimants posit that Boracay was already an agricultural land pursuant to the old
cases Ankron v. Government of the Philippine Islands (1919)[88] and De Aldecoa v. The Insular
Government (1909).[89] These cases were decided under the provisions of the Philippine Bill of 1902
and Act No. 926. There is a statement in these old cases that in the absence of evidence to the
contrary, that in each case the lands are agricultural lands until the contrary is shown. [90]
Private claimants reliance on Ankron and De Aldecoa is misplaced. These cases did not have the
effect of converting the whole of Boracay Island or portions of it into agricultural lands. It should be
stressed that the Philippine Bill of 1902 and Act No. 926 merely provided the manner through
which land registration courts would classify lands of the public domain. Whether the land would be
classified as timber, mineral, or agricultural depended on proof presented in each case.
Ankron and De Aldecoa were decided at a time when the President of the Philippines had no power
to classify lands of the public domain into mineral, timber, and agricultural. At that time, the courts
were free to make corresponding classifications in justiciable cases, or were vested with implicit
power to do so, depending upon the preponderance of the evidence. [91] This was the Courts ruling
in Heirs of the Late Spouses Pedro S. Palanca and Soterranea Rafols Vda. De Palanca v. Republic,[92] in
which it stated, through Justice Adolfo Azcuna, viz.:
x x x Petitioners furthermore insist that a particular land need not be formally released by an act of
the Executive before it can be deemed open to private ownership, citing the cases of Ramos v.
Director of Lands and Ankron v. Government of the Philippine Islands.
xxxx
Petitioners reliance upon Ramos v. Director of Lands and Ankron v. Government is misplaced. These
cases were decided under the Philippine Bill of 1902 and the first Public Land Act No. 926 enacted
by the Philippine Commission on October 7, 1926, under which there was no legal provision vesting
in the Chief Executive or President of the Philippines the power to classify lands of the public
domain into mineral, timber and agricultural so that the courts then were free to make
corresponding classifications in justiciable cases, or were vested with implicit power to do so,
depending upon the preponderance of the evidence.[93]
To aid the courts in resolving land registration cases under Act No. 926, it was then necessary to
devise a presumption on land classification. Thus evolved the dictum in Ankron that the courts have
a right to presume, in the absence of evidence to the contrary, that in each case the lands are
agricultural lands until the contrary is shown.[94]
But We cannot unduly expand the presumption in Ankron and De Aldecoa to an argument that all
lands of the public domain had been automatically reclassified as disposable and alienable
agricultural lands. By no stretch of imagination did the presumption convert all lands of the public
domain into agricultural lands.
If We accept the position of private claimants, the Philippine Bill of 1902 and Act No. 926 would
have automatically made all lands in the Philippines, except those already classified as timber or
mineral land, alienable and disposable lands. That would take these lands out of State ownership
and worse, would be utterly inconsistent with and totally repugnant to the long-entrenched
Regalian doctrine.
The presumption in Ankron and De Aldecoa attaches only to land registration cases brought under
the provisions of Act No. 926, or more specifically those cases dealing with judicial and
administrative confirmation of imperfect titles. The presumption applies to an applicant for judicial
or administrative conformation of imperfect title under Act No. 926. It certainly cannot apply to
landowners, such as private claimants or their predecessors-in-interest, who failed to avail
themselves of the benefits of Act No. 926. As to them, their land remained unclassified and, by virtue
of the Regalian doctrine, continued to be owned by the State.
In any case, the assumption in Ankron and De Aldecoa was not absolute. Land classification was, in
the end, dependent on proof. If there was proof that the land was better suited for non-agricultural
uses, the courts could adjudge it as a mineral or timber land despite the presumption. In Ankron, this
Court stated:
In the case of Jocson vs. Director of Forestry (supra), the Attorney-General admitted in effect that
whether the particular land in question belongs to one class or another is a question of fact. The
mere fact that a tract of land has trees upon it or has mineral within it is not of itself sufficient to
declare that one is forestry land and the other, mineral land. There must be some proof of the extent
and present or future value of the forestry and of the minerals. While, as we have just said, many
definitions have been given for agriculture, forestry, and mineral lands, and that in each case it is a
question of fact, we think it is safe to say that in order to be forestry or mineral land the proof must
show that it is more valuable for the forestry or the mineral which it contains than it is for
agricultural purposes. (Sec. 7, Act No. 1148.) It is not sufficient to show that there exists some trees
upon the land or that it bears some mineral. Land may be classified as forestry or mineral today,
and, by reason of the exhaustion of the timber or mineral, be classified as agricultural land
tomorrow. And vice-versa, by reason of the rapid growth of timber or the discovery of valuable
minerals, lands classified as agricultural today may be differently classified tomorrow. Each case
must be decided upon the proof in that particular case, having regard for its present or future value
for one or the other purposes. We believe, however, considering the fact that it is a matter of public
knowledge that a majority of the lands in the Philippine Islands are agricultural lands that the courts
have a right to presume, in the absence of evidence to the contrary, that in each case the lands are
agricultural lands until the contrary is shown. Whatever the land involved in a particular land
registration case is forestry or mineral land must, therefore, be a matter of proof. Its superior value
for one purpose or the other is a question of fact to be settled by the proof in each particular
case. The fact that the land is a manglar [mangrove swamp] is not sufficient for the courts to decide
whether it is agricultural, forestry, or mineral land. It may perchance belong to one or the other of
said classes of land. The Government, in the first instance, under the provisions of Act No. 1148,
may, by reservation, decide for itself what portions of public land shall be considered forestry land,
unless private interests have intervened before such reservation is made. In the latter case, whether
the land is agricultural, forestry, or mineral, is a question of proof. Until private interests have
intervened, the Government, by virtue of the terms of said Act (No. 1148), may decide for itself what
portions of the public domain shall be set aside and reserved as forestry or mineral land. (Ramos vs.
Director of Lands,39 Phil. 175; Jocson vs. Director of Forestry, supra)[95] (Emphasis ours)
Since 1919, courts were no longer free to determine the classification of lands from the facts of each
case, except those that have already became private lands. [96] Act No. 2874, promulgated in 1919
and reproduced in Section 6 of CA No. 141, gave the Executive Department, through the President,
the exclusive prerogative to classify or reclassify public lands into alienable or disposable, mineral
or forest.96-a Since then, courts no longer had the authority, whether express or implied, to
determine the classification of lands of the public domain.[97]
Here, private claimants, unlike the Heirs of Ciriaco Tirol who were issued their title in 1933,[98] did
not present a justiciable case for determination by the land registration court of the propertys land
classification. Simply put, there was no opportunity for the courts then to resolve if the land the
Boracay occupants are now claiming were agricultural lands. When Act No. 926 was supplanted by
Act No. 2874 in 1919, without an application for judicial confirmation having been filed by private
claimants or their predecessors-in-interest, the courts were no longer authorized to determine the
propertys land classification. Hence, private claimants cannot bank on Act No. 926.
We note that the RTC decision[99] in G.R. No. 167707 mentioned Krivenko v. Register of Deeds of
Manila,[100] which was decided in 1947 when CA No. 141, vesting the Executive with the sole power
to classify lands of the public domain was already in effect. Krivenko cited the old cases Mapa v.
Insular Government,[101] De Aldecoa v. The Insular Government,[102] and Ankron v. Government of the
Philippine Islands.[103]
Krivenko, however, is not controlling here because it involved a totally different issue. The pertinent
issue in Krivenko was whether residential lots were included in the general classification of
agricultural lands; and if so, whether an alien could acquire a residential lot. This Court ruled that as
an alien, Krivenko was prohibited by the 1935 Constitution[104] from acquiring agricultural land,
which included residential lots. Here, the issue is whether unclassified lands of the public domain
are automatically deemed agricultural.
Notably, the definition of agricultural public lands mentioned in Krivenko relied on the old cases
decided prior to the enactment of Act No. 2874, including Ankron and De Aldecoa.[105] As We have
already stated, those cases cannot apply here, since they were decided when the Executive did not
have the authority to classify lands as agricultural, timber, or mineral.
Private claimants continued possession under Act No. 926 does not create a presumption that the land
is alienable. Private claimants also contend that their continued possession of portions
of Boracay Island for the requisite period of ten (10) years under Act No. 926[106] ipso
facto converted the island into private ownership. Hence, they may apply for a title in their name.
A similar argument was squarely rejected by the Court in Collado v. Court of
Appeals.[107] Collado, citing the separate opinion of now Chief Justice Reynato S. Puno in Cruz v.
Secretary of Environment and Natural Resources,107-a ruled:
Act No. 926, the first Public Land Act, was passed in pursuance of the provisions of the Philippine
Bill of 1902. The law governed the disposition of lands of the public domain. It prescribed rules and
regulations for the homesteading, selling and leasing of portions of the public domain of the
Philippine Islands, and prescribed the terms and conditions to enable persons to perfect their titles
to public lands in the Islands. It also provided for the issuance of patents to certain native settlers
upon public lands, for the establishment of town sites and sale of lots therein, for the completion of
imperfect titles, and for the cancellation or confirmation of Spanish concessions and grants in
the Islands. In short, the Public Land Act operated on the assumption that title to public lands in the
Philippine Islands remained in the government; and that the governments title to public land sprung
from the Treaty of Paris and other subsequent treaties between Spain and the United States. The term
public land referred to all lands of the public domain whose title still remained in the government
and are thrown open to private appropriation and settlement, and excluded the patrimonial
property of the government and the friar lands.
Thus, it is plain error for petitioners to argue that under the Philippine Bill of 1902
and Public Land Act No. 926, mere possession by private individuals of lands creates the legal
presumption that the lands are alienable and disposable.[108] (Emphasis Ours)
Except for lands already covered by existing titles, Boracay was an unclassified land of the public
domain prior to Proclamation No. 1064. Such unclassified lands are considered public forest under PD
No. 705. The DENR[109] and the National Mapping and Resource Information Authority[110] certify
that Boracay Island is an unclassified land of the public domain.
PD No. 705 issued by President Marcos categorized all unclassified lands of the public domain as
public forest. Section 3(a) of PD No. 705 defines a public forest as a mass of lands of the public
domain which has not been the subject of the present system of classification for the determination of
which lands are needed for forest purpose and which are not. Applying PD No. 705, all unclassified
lands, including those in Boracay Island, are ipso facto considered public forests. PD No. 705,
however, respects titles already existing prior to its effectivity.

The Court notes that the classification of Boracay as a forest land under PD No. 705 may seem to be
out of touch with the present realities in the island. Boracay, no doubt, has been partly stripped of
its forest cover to pave the way for commercial developments. As a premier tourist destination for
local and foreign tourists, Boracay appears more of a commercial island resort, rather than a forest
land.
Nevertheless, that the occupants of Boracay have built multi-million peso beach resorts on the
island;[111] that the island has already been stripped of its forest cover; or that the implementation of
Proclamation No. 1064 will destroy the islands tourism industry, do not negate its character as
public forest.
Forests, in the context of both the Public Land Act and the Constitution [112] classifying lands of the
public domain into agricultural, forest or timber, mineral lands, and national parks, do not
necessarily refer to large tracts of wooded land or expanses covered by dense growths of trees and
underbrushes.[113] The discussion in Heirs of Amunategui v. Director of Forestry[114] is particularly
instructive:
A forested area classified as forest land of the public domain does not lose such classification simply
because loggers or settlers may have stripped it of its forest cover. Parcels of land classified as forest
land may actually be covered with grass or planted to crops by kaingin cultivators or other
farmers. Forest lands do not have to be on mountains or in out of the way places. Swampy areas
covered by mangrove trees, nipa palms, and other trees growing in brackish or sea water may also
be classified as forest land. The classification is descriptive of its legal nature or status and does not
have to be descriptive of what the land actually looks like. Unless and until the land classified as
forest is released in an official proclamation to that effect so that it may form part of the disposable
agricultural lands of the public domain, the rules on confirmation of imperfect title do not
apply.[115] (Emphasis supplied)
There is a big difference between forest as defined in a dictionary and forest or timber land as a
classification of lands of the public domain as appearing in our statutes. One is descriptive of what
appears on the land while the other is a legal status, a classification for legal purposes. [116] At any
rate, the Court is tasked to determine the legal status of Boracay Island, and not look into its
physical layout. Hence, even if its forest cover has been replaced by beach resorts, restaurants and
other commercial establishments, it has not been automatically converted from public forest to
alienable agricultural land.
Private claimants cannot rely on Proclamation No. 1801 as basis for judicial confirmation of imperfect
title. The proclamation did not convert Boracay into an agricultural land. However, private claimants
argue that Proclamation No. 1801 issued by then President Marcos in 1978 entitles them to judicial
confirmation of imperfect title. The Proclamation classified Boracay, among other islands, as a
tourist zone. Private claimants assert that, as a tourist spot, the island is susceptible of private
ownership.
Proclamation No. 1801 or PTA Circular No. 3-82 did not convert the whole of Boracay into an
agricultural land. There is nothing in the law or the Circular which made Boracay Island an
agricultural land. The reference in Circular No. 3-82 to private lands[117] and areas declared as
alienable and disposable[118] does not by itself classify the entire island as agricultural. Notably,
Circular No. 3-82 makes reference not only to private lands and areas but also to public forested
lands. Rule VIII, Section 3 provides:
No trees in forested private lands may be cut without prior authority from the PTA. All forested
areas in public lands are declared forest reserves. (Emphasis supplied)
Clearly, the reference in the Circular to both private and public lands merely recognizes that the
island can be classified by the Executive department pursuant to its powers under CA No. 141. In
fact, Section 5 of the Circular recognizes the then Bureau of Forest Developments authority to
declare areas in the island as alienable and disposable when it provides:
Subsistence farming, in areas declared as alienable and disposable by the Bureau of Forest
Development.
Therefore, Proclamation No. 1801 cannot be deemed the positive act needed to
classify Boracay Island as alienable and disposable land. If President Marcos intended to classify the
island as alienable and disposable or forest, or both, he would have identified the specific limits of
each, as President Arroyo did in Proclamation No. 1064. This was not done in Proclamation No.
1801.
The Whereas clauses of Proclamation No. 1801 also explain the rationale behind the declaration of
Boracay Island, together with other islands, caves and peninsulas in the Philippines, as a tourist
zone and marine reserve to be administered by the PTA to ensure the concentrated efforts of the
public and private sectors in the development of the areas tourism potential with due regard for
ecological balance in the marine environment. Simply put, the proclamation is aimed at
administering the islands for tourism and ecological purposes. It does not address the areas
alienability.[119]
More importantly, Proclamation No. 1801 covers not only Boracay Island, but sixty-four (64) other
islands, coves, and peninsulas in the Philippines, such as Fortune and Verde Islands in Batangas,
Port Galera in Oriental Mindoro, Panglao and Balicasag Islands in Bohol, Coron Island, Puerto
Princesa and surrounding areas in Palawan, Camiguin Island in Cagayan de Oro, and Misamis
Oriental, to name a few. If the designation of Boracay Island as tourist zone makes it alienable and
disposable by virtue of Proclamation No. 1801, all the other areas mentioned would likewise be
declared wide open for private disposition. That could not have been, and is clearly beyond, the
intent of the proclamation.
It was Proclamation No. 1064 of 2006 which positively declared part of Boracay as alienable and
opened the same to private ownership. Sections 6 and 7 of CA No. 141[120] provide that it is only the
President, upon the recommendation of the proper department head, who has the authority to
classify the lands of the public domain into alienable or disposable, timber and mineral lands. [121]
In issuing Proclamation No. 1064, President Gloria Macapagal-Arroyo merely exercised the
authority granted to her to classify lands of the public domain, presumably subject to existing vested
rights. Classification of public lands is the exclusive prerogative of the Executive Department,
through the Office of the President. Courts have no authority to do so.[122] Absent such classification,
the land remains unclassified until released and rendered open to disposition.[123]
Proclamation No. 1064 classifies Boracay into 400 hectares of reserved forest land and 628.96
hectares of agricultural land. The Proclamation likewise provides for a 15-meter buffer zone on each
side of the center line of roads and trails, which are reserved for right of way and which shall form
part of the area reserved for forest land protection purposes.
Contrary to private claimants argument, there was nothing invalid or irregular, much less
unconstitutional, about the classification of Boracay Island made by the President through
Proclamation No. 1064. It was within her authority to make such classification, subject to existing
vested rights.
Proclamation No. 1064 does not violate the Comprehensive Agrarian Reform Law. Private claimants
further assert that Proclamation No. 1064 violates the provision of the Comprehensive Agrarian
Reform Law (CARL) or RA No. 6657 barring conversion of public forests into agricultural
lands. They claim that since Boracay is a public forest under PD No. 705, President Arroyo can no
longer convert it into an agricultural land without running afoul of Section 4(a) of RA No. 6657,
thus:
SEC. 4. Scope. The Comprehensive Agrarian Reform Law of 1988 shall cover, regardless of tenurial
arrangement and commodity produced, all public and private agricultural lands as provided in
Proclamation No. 131 and Executive Order No. 229, including other lands of the public domain
suitable for agriculture.
More specifically, the following lands are covered by the Comprehensive Agrarian Reform Program:
(a) All alienable and disposable lands of the public domain devoted to or suitable for
agriculture. No reclassification of forest or mineral lands to agricultural lands shall be undertaken
after the approval of this Act until Congress, taking into account ecological, developmental and
equity considerations, shall have determined by law, the specific limits of the public domain.
That Boracay Island was classified as a public forest under PD No. 705 did not bar the Executive
from later converting it into agricultural land. Boracay Island still remained an unclassified land of
the public domain despite PD No. 705.
In Heirs of the Late Spouses Pedro S. Palanca and Soterranea Rafols v. Republic,[124] the Court stated
that unclassified lands are public forests.
While it is true that the land classification map does not categorically state that the islands are
public forests, the fact that they were unclassified lands leads to the same result. In the absence of
the classification as mineral or timber land, the land remains unclassified land until released and
rendered open to disposition.[125] (Emphasis supplied)
Moreover, the prohibition under the CARL applies only to a reclassification of land. If the land had
never been previously classified, as in the case of Boracay, there can be no prohibited
reclassification under the agrarian law. We agree with the opinion of the Department of
Justice[126] on this point:
Indeed, the key word to the correct application of the prohibition in Section 4(a) is the word
reclassification. Where there has been no previous classification of public forest [referring, we repeat,
to the mass of the public domain which has not been the subject of the present system of classification
for purposes of determining which are needed for forest purposes and which are not] into permanent
forest or forest reserves or some other forest uses under the Revised Forestry Code, there can be no
reclassification of forest lands to speak of within the meaning of Section 4(a).
Thus, obviously, the prohibition in Section 4(a) of the CARL against the reclassification of forest
lands to agricultural lands without a prior law delimiting the limits of the public domain, does not,
and cannot, apply to those lands of the public domain, denominated as public forest under the
Revised Forestry Code, which have not been previously determined, or classified, as needed for
forest purposes in accordance with the provisions of the Revised Forestry Code. [127]
Private claimants are not entitled to apply for judicial confirmation of imperfect title under CA No.
141. Neither do they have vested rights over the occupied lands under the said law. There are two
requisites for judicial confirmation of imperfect or incomplete title under CA No. 141, namely: (1)
open, continuous, exclusive, and notorious possession and occupation of the subject land by himself
or through his predecessors-in-interest under a bona fide claim of ownership since time
immemorial or from June 12, 1945; and (2) the classification of the land as alienable and disposable
land of the public domain.[128]
As discussed, the Philippine Bill of 1902, Act No. 926, and Proclamation No. 1801 did not convert
portions of Boracay Island into an agricultural land. The island remained an unclassified land of the
public domain and, applying the Regalian doctrine, is considered State property.
Private claimants bid for judicial confirmation of imperfect title, relying on the Philippine Bill of
1902, Act No. 926, and Proclamation No. 1801, must fail because of the absence of the second
element of alienable and disposable land. Their entitlement to a government grant under our
present Public Land Act presupposes that the land possessed and applied for is already alienable
and disposable. This is clear from the wording of the law itself.[129] Where the land is not alienable
and disposable, possession of the land, no matter how long, cannot confer ownership or possessory
rights.[130]
Neither may private claimants apply for judicial confirmation of imperfect title under Proclamation
No. 1064, with respect to those lands which were classified as agricultural lands. Private claimants
failed to prove the first element of open, continuous, exclusive, and notorious possession of their
lands in Boracay since June 12, 1945.
We cannot sustain the CA and RTC conclusion in the petition for declaratory relief that private
claimants complied with the requisite period of possession.
The tax declarations in the name of private claimants are insufficient to prove the first element of
possession. We note that the earliest of the tax declarations in the name of private claimants were
issued in 1993. Being of recent dates, the tax declarations are not sufficient to convince this
Court that the period of possession and occupation commenced on June 12, 1945.
Private claimants insist that they have a vested right in Boracay, having been in possession of the
island for a long time. They have invested millions of pesos in developing the island into a tourist
spot. They say their continued possession and investments give them a vested right which cannot be
unilaterally rescinded by Proclamation No. 1064.
The continued possession and considerable investment of private claimants do not automatically
give them a vested right in Boracay. Nor do these give them a right to apply for a title to the land
they are presently occupying. This Court is constitutionally bound to decide cases based on the
evidence presented and the laws applicable. As the law and jurisprudence stand, private claimants
are ineligible to apply for a judicial confirmation of title over their occupied portions in Boracay
even with their continued possession and considerable investment in the island.
One Last Note
The Court is aware that millions of pesos have been invested for the development of Boracay Island,
making it a by-word in the local and international tourism industry. The Court also notes that for a
number of years, thousands of people have called the island their home. While the Court
commiserates with private claimants plight, We are bound to apply the law strictly and
judiciously. This is the law and it should prevail. Ito ang batas at ito ang dapat umiral.
All is not lost, however, for private claimants. While they may not be eligible to apply for judicial
confirmation of imperfect title under Section 48(b) of CA No. 141, as amended, this does not denote
their automatic ouster from the residential, commercial, and other areas they possess now classified
as agricultural. Neither will this mean the loss of their substantial investments on their occupied
alienable lands. Lack of title does not necessarily mean lack of right to possess.
For one thing, those with lawful possession may claim good faith as builders of improvements. They
can take steps to preserve or protect their possession. For another, they may look into other modes
of applying for original registration of title, such as by homestead[131] or sales patent,[132] subject to
the conditions imposed by law.
More realistically, Congress may enact a law to entitle private claimants to acquire title to their
occupied lots or to exempt them from certain requirements under the present land laws. There is
one such bill[133] now pending in the House of Representatives. Whether that bill or a similar bill will
become a law is for Congress to decide.
In issuing Proclamation No. 1064, the government has taken the step necessary to open up the
island to private ownership. This gesture may not be sufficient to appease some sectors which view
the classification of the island partially into a forest reserve as absurd. That the island is no longer
overrun by trees, however, does not becloud the vision to protect its remaining forest cover and to
strike a healthy balance between progress and ecology. Ecological conservation is as important as
economic progress.

To be sure, forest lands are fundamental to our nations survival. Their promotion and protection are
not just fancy rhetoric for politicians and activists. These are needs that become more urgent as
destruction of our environment gets prevalent and difficult to control. As aptly observed by Justice
Conrado Sanchez in 1968 in Director of Forestry v. Munoz:[134]

The view this Court takes of the cases at bar is but in adherence to public policy that should be
followed with respect to forest lands. Many have written much, and many more have spoken, and
quite often, about the pressing need for forest preservation, conservation, protection, development
and reforestation. Not without justification. For, forests constitute a vital segment of any country's
natural resources. It is of common knowledge by now that absence of the necessary green cover on
our lands produces a number of adverse or ill effects of serious proportions. Without the trees,
watersheds dry up; rivers and lakes which they supply are emptied of their contents. The fish
disappear. Denuded areas become dust bowls. As waterfalls cease to function, so will hydroelectric
plants. With the rains, the fertile topsoil is washed away; geological erosion results. With erosion
come the dreaded floods that wreak havoc and destruction to property crops, livestock, houses, and
highways not to mention precious human lives. Indeed, the foregoing observations should be
written down in a lumbermans decalogue.[135]

WHEREFORE, judgment is rendered as follows:

1. The petition for certiorari in G.R. No. 167707 is GRANTED and the Court of Appeals Decision
in CA-G.R. CV No. 71118 REVERSED AND SET ASIDE.

2. The petition for certiorari in G.R. No. 173775 is DISMISSED for lack of merit.

SO ORDERED.
G.R. No. 177168, August 03, 2015 reservation; (b) the deed of sale conveying the property to NOVAI, which became the basis for the
issuance of TCT No. 15387, is fictitious; (c) the LMB has no records of any application made by
NOVAI for the purchase of the property, and of the NOVAFs alleged payment of P14,250,270.00 for
NAVY OFFICERS' VILLAGE ASSOCIATION, INC. (NOVAI), Petitioner, v. REPUBLIC OF THE
the property; and (d) the presidential proclamation, i.e., Proclamation No. 2487, claimed to have
PHILIPPINES, Respondent.
been issued by then President Corazon C. Aquino in 1991 that authorized the transfer and titling of
the property to NOVAI, is fictitious.
DECISION
NOVAI's Answer to the Complaint
BRION, J.:
In its answer (which was later amended) to the Republic's complaint, NOVAI counter-argued that
the property was no longer part of the public dominion, as the land had long been segregated from
We resolve the present petition for review on certiorari1 assailing the December 28, 2006 the military reservation pursuant to Proclamation No. 461.
decision2 and March 28, 2007 resolution3 of the Court of Appeals (CA) in CA-G.R. CV No. 85179.
NOVAI claimed that, contrary to the Republic's contention that there were no records of the sale, it
The CA reversed and set aside the August 20, 2004 decision4 of the Regional Trial Court (RTC) had actually filed a letter-application for a sales patent over the property with the LMB which
Branch 67, Pasig City, that dismissed the complaint filed by the Republic of the Philippines prepared, verified and approved the property's plan and technical description; and that the LMB
(respondent or the Republic) for the cancellation of Transfer Certificate of Title (TCT) No. T-15387 delivered to it a copy of the deed of sale, signed and executed by Dir. Palad, after it had paid a
issued in the name of Navy Officers' Village Association, Inc. or NOVAI (petitioner). portion of the P14,250,270.00 purchase price, corresponding taxes, and other charges, with the
balance to be paid in installments.
The Factual Antecedents
Also, NOVAI contended that, since any alleged irregularities that may have attended the sale
TCT No. T-15387,5 issued in NOVAI's name, covers a 475,009 square-meter parcel of land (the pertained only to formalities, the proper remedy for the Republic was to file an action for
property)6 situated inside the former Fort Andres Bonifacio Military Reservation (FBMR) in Taguig, reformation of instrument, not for cancellation of title. In any event, it added that the Republic's
Metro Manila. cause of action had prescribed because its title to the property had already become indefeasible.

The property previously formed part of a larger 15,812,684 square-meter parcel of land situated at The RTC's decision
the former Fort William McKinley, Rizal, which was covered by TCT No. 61524 issued in the name of
the Republic of the Philippines. The RTC narrowed down the issues to: (a) the character of the property in question, i.e., whether the
property in question was part of the FBMR, and hence, inalienable; and (b) the validity of the deed
On July 12, 1957, then President Carlos P. Garcia issued Proclamation No. 4237 "reserving for of sale conveying the property to NOVAI, i.e., whether the title over the property was acquired by
military purposes certain parcels of the public domain situated in the municipalities of Pasig, NOVAI through fraud. The RTC resolved both issues in NOVAI's favor.
Taguig, Parañaque, province of Rizal, and Pasay City," which included the 15,812,684 square-meter
parcel of land covered by TCT No. 61524. In its decision, the RTC ruled that: (a) the property is alienable and disposable in character, as the
land falls within the area segregated from the FBMR pursuant to Proclamation No. 461; (b) the
On September 29, 1965, then Pres. Diosdado Macapagal issued Proclamation No. 4618 which subject deed of sale should be presumed valid on its face, as it was executed with all the formalities
excluded from Fort McKinley "a certain portion of land embraced therein, situated in the of a notarial certification; (c) notwithstanding the claims of forgery, the signature of Dir. Palad on
municipalities of Taguig and Parañaque, Province of Rizal, and Pasay City," with an area of the deed of sale appeared genuine and authentic; and (d) NOVAI's title to the property had attained
2,455,310 square meters, and declared the excluded area as "AFP Officers' Village" to be disposed of indefeasibility since the Republic's action for cancellation of title was filed close to two (2) years
under the provisions of Republic Act Nos. 2749 and 730.10cralawrednad from the issuance of the title.

Barely a month after, or on October 25, 1965, Pres. Macapagal issued Proclamation No. The CA's decision
47811"reserving for the veterans rehabilitation, medicare and training center site purposes" an area
of 537,520 square meters of the land previously declared as AFP Officers' Village under The CA reversed and set aside the RTC's decision. It ruled that the property is inalienable land of
Proclamation No. 461, and placed the reserved area under the administration of the Veterans the public domain; thus, it cannot be disposed of or be the subject of a sale. It pointed out that, since
Federation of the Philippines (VFP). NOVAI failed to discharge its burden of proving the existence of Proclamation No. 2487 - the
positive governmental act that would have removed the property from the public domain — the
The property is within the 537,520 square-meter parcel of land reserved in VFP's favor. property remained reserved for veterans rehabilitation purposes under Proclamation No. 478, the
latest executive issuance affecting the property.
On November 15, 1991, the property was the subject of a Deed of Sale12between the Republic
of the Philippines, through former Land Management Bureau (LMB) Director Abelardo G. Palad, Jr., Since the property is inalienable, the CA held that the incontestability and indefeasibility generally
(Dir. Palad) and petitioner NOVAI. The deed of sale was subsequently registered and from accorded to a Torrens title cannot apply because the property, as in this case, is unregistrable land;
which TCT No. T-15387 was issued in NOVAI's name. that a title issued by reason or on account of any sale, alienation, or transfer of an inalienable
property is void and a patent nullity; and that, consequently, the Republic's action for the
The Republic's Complaint for Cancellation of Title cancellation of NOVAI's title cannot be barred by prescription.
In its complaint13 filed with the RTC on December 23, 1993, the Republic sought to cancel NOVAFs Also, the CA held that there can be no presumption of regularity in the execution of the subject deed
title based on the following grounds: (a) the land covered by NOVAFs title is part of a military of sale given the questionable circumstances that surrounded the alleged sale of the property to
NOVAI,14e.g., NOVAI's failure to go through the regular process in the Department of Environment
and Natural Resources (DENR) or the LMB Offices in the filing of an application for sales patent and On the petition's substance, the Republic counters that:ChanRoblesvirtualLawlibrary
in the conduct of survey and investigation; the execution of the deed of sale without payment of the
full purchase price as required by policy; and the appearances of forgery and falsification of Dir. (a) The property is inalienable public land incapable of private appropriation because, while the
Palad's signature on the deed of sale and on the receipts issued to NOVAI for its installment property formed part of the area segregated from the FBMR under Proclamation No. 461, it was
payments on the property, among others. subsequently reserved for a specific public use or purpose under Proclamation No. 478;
(b)Proclamation No. 2487, which purportedly revoked Proclamation No. 478, does not legally exist
Lastly, the CA held that the Court's observations and ruling in Republic of the Philippines v. Southside and thus cannot be presumed valid and constitutional unless proven otherwise; the presumption
Homeowners Association, Inc (Southside)15 is applicable to the present case. In Southside, the of validity and constitutionality of a law applies only where there is no dispute as to the
Republic similarly sought the cancellation of title - TCT No. 15084 - issued in favor of Southside authenticity and due execution of the law in issue;
Homeowners Association, Inc. (SHAI) over a 39.99 hectare area of land situated in what was known (c) The deed of sale executed by NOVAI and by Dir. Palad was undeniably forged, as Dir. Palad
as the Joint U.S. Military Assistance Group (JUSMAG) housing area in Fort Bonifacio. The Court categorically denied having signed the deed of sale, and a handwriting expert from the National
cancelled the certificate of title issued to SHAI, as the latter failed to prove that the JUSMAG area had Bureau of Investigation (NBI) confirmed that Dir. Palad's signature was indeed a forgery; 18
been withdrawn from the military reservation and had been declared open for disposition. The (d)NOVAI, a private corporation, is disqualified from purchasing the property because R.A. Nos. 274
Court therein ruled that, since the JUSMAG area was still part of the FBMR, its alleged sale to SHAI is and 730, and the Public Land Act only allow the sale of alienable and disposable public lands to
necessarily void and of no effect. natural persons, not juridical persons; and
(e) The Court's decision in Southside applies to the present case because of the strong factual and
NOVAI sought reconsideration of the CA's decision, which the CA denied in its March 28, 2007 evidentiary relationship between the two cases.
resolution;16 hence, this petition.
BCDA's Comment-in-Intervention
The Petition
On December 28, 2007, and while the case was pending before this Court, the Bases Conversion
NOVAI alleges that the CA erred in declaring that: (a) the property is inalienable land of the public Development Authority (BCDA) filed a motion for leave to file comment-in-intervention and to
domain, (b) the deed of sale and Proclamation No. 2487 were void and nonexistent, respectively, (c) admit the attached comment-in-intervention.19cralawrednad
the Republic's action for cancellation of title was not barred by prescription, and (d) the ruling
in Southsidewas applicable to the present case. In a resolution dated February 18, 2008,20 the Court allowed the BCDA's intervention.

In support of its petition, NOVAI raises the following arguments:ChanRoblesvirtualLawlibrary As the Republic has done, the BCDA contends that NOVAI is disqualified from acquiring the property
given the constitutional and statutory provisions that prohibit the acquisition of lands of the public
(a) The property is no longer part of the public domain because, by virtue of Proclamation No. 461, s. domain by a corporation or association; that any sale of land in violation of the Constitution or of the
of 1965, the property was excluded from the FBMR and made available for disposition to provisions of R.A. Nos. 274 and 730, and the Public Land Act are null and void; and that any title
qualified persons, subject to the provisions of R.A. Nos. 274 and 720 in relation to the Public which may have been issued by mistake or error on the part of a public official can be cancelled at
Land Act; any time by the State.
(b)The deed of sale was, in all respects, valid and enforceable, as it was shown to have been officially
executed by an authorized public officer under the provisions of the Public Land Act, and The BCDA further contends that NOVAI miserably failed to comply with the legal requirements for
celebrated with all the formalities of a notarial certification; the release of the property from the military reservation. More specifically, (1) the Director of Lands
(c) Proclamation No. 2487 is to be presumed valid until proven otherwise; that the Republic carried did not cause the property's subdivision, including the determination of the number of prospective
the burden of proving that Proclamation No. 2487 was a forgery, and that it failed to discharge applicants and the area of each subdivision lot which should not exceed one thousand (1,000)
this burden; square meters for residential purposes; (2) the purchase price for the property was not fixed by the
(d)The CA should not have considered as evidence the testimony of Senator Franklin Drilon on the Director of Lands as approved by the DENR Secretary; (3) NOVAI did not pay the purchase price or a
nonexistence of Proclamation No. 2487 because such testimony was given by Senator Drilon in portion of it to the LMB; and (4) the Deed of Sale was not signed by the President of the Republic of
another case17 and was not formally offered in evidence by the Republic during the trial of the the Philippines or by the Executive Secretary, but was signed only by the LMB Director.
present case before the RTC;
(e) The action for cancellation of title filed by the Republic is already barred by prescription because Also, the BCDA observed that NOVAI was incorporated only on December 11, 1991, while the deed
it was filed only on December 23, 1993, or close to two (2) years from the issuance of NOVAI's of sale was purportedly executed on November 15, 1991, which shows that NOVAI did not yet
title on January 9, 1992; and legally exist at the time of the property's purported sale.
(f) The case of Southside is not a cognate or companion case to the present case because the two
cases involve completely dissimilar factual and doctrinal bases; thus, the Court's observations OUR RULING
and ruling in Southside should not be applied to the present case.
We resolve to DENY NOVAI's petition for review on certiorari as we find no reversible
The Republic's Comment to the Petition error committed by the CA in issuing its December 28, 2006 decision and March 28, 2007
resolution.
Procedurally, the Republic assails the propriety of the issues raised by NOVAI, such as "whether
Proclamation No. 2487 and the signature of LMB Director Palad on the assailed deed of sale are I. Procedural Objections
forged or fictitious," and "whether the Republic had presented adequate evidence to establish the
spuriousness of the subject proclamation," which are factual in nature and not allowed in a Rule 45 A. In the filing of the present petition before this Court
petition.
 II. Substantive Issues
Under Section 1, Rule 45 of the Rules of Court, a party desiring to appeal from a judgment or final
order of the CA shall raise only questions of law which must be distinctly set forth. A. The property is non-disposable land of the public domain reserved for public or quasi-public
use or purpose
A question of law exists when the doubt or controversy concerns the correct application of law or
jurisprudence on a certain state of facts.21 The issue does not call for an examination of the We agree with the CA that the property remains a part of the public domain that could not have
probative value of the evidence presented, the truth or falsehood of the facts being admitted.22 In been validly disposed of in NOVAI's favor. NOVAI failed to discharge its burden of proving that the
contrast, a question of fact exists when a doubt or difference arises as to the truth or falsehood of property was withdrawn from the intended public or quasi-public use or purpose.
facts or when the query invites the calibration of the whole evidence considering mainly the
credibility of the witnesses; the existence and relevancy of specific surrounding circumstances, as While the parties disagree on the character and nature of the property at the time of the questioned
well as their relation to each other and to the whole; and the probability of the sale, they agree, however, that the property formed part of the FBMR - a military reservation
situation.23cralawrednad belonging to the public domain. We note that the FBMR has been the subject of several presidential
proclamations and statues issued subsequent to Proclamation No. 423, which either removed or
The rule that only questions of law may be the subject of a Rule 45 Petition before this Court, reserved for specific public or quasi-public use or purpose certain of its portions.
however, has exceptions.24 Among these exceptions is when there is conflict between the factual
findings of the RTC and that of the CA. On the one hand, NOVAI argues that Proclamation No. 461 had already transferred the property
from the State's "public domain" to its "private domain." On the other hand, the respondents argue
In this case, the CA totally reversed the RTC on the nature and character of the land, in question, and that Proclamation No. 478, in relation with RA 7227 and EO No. 40, had reverted the property to the
on the,validity of the deed of sale between the parties. Due to the conflicting findings of the RTC and inalienable property of the "public domain."
the CA on these issues, we are allowed to reexamine the facts and the parties' evidence in order to
finally resolve the present controversy. The classification and disposition of lands of the public domain are governed by Commonwealth Act
(C.A.) No. 141 or the Public Land Act, the country's primary law on the matter.
B. On BCD A's Intervention
Under Section 6 of C.A. No. 141, the President of the Republic of the Philippines, upon the
In its reply25cralawred to the BCDA's comment-in-intervention, NOVAI primarily objects to the recommendation of the Secretary of Agriculture and Natural Resources, may, from time to
BCDA's intervention because it was made too late. time, classifylands of the public domain into alienable or disposable, timber and mineral lands,
and transfer these lands from one class to another for purposes of their administration and
Intervention is a proceeding in a suit or action by which a third person is permitted by the court to disposition.
make himself a party, either joining the plaintiff or defendant, or demanding something adverse to
both of them.26 Its purpose is to enable such third party to protect or preserve a right or interest Under Section 7 of C.A. No. 141, the President may, from time to time, upon recommendation of the
which may be affected by the proceeding,27 such interest being actual, material, direct and Secretary of Agriculture and Natural Resources and for purposes of the administration and
immediate, not simply contingent and expectant. 28cralawrednad disposition of alienable and disposable public lands, declare what lands are open to disposition or
concession under the Acts' provisions.33cralawrednad
As a general rule, intervention cannot be made at the appeal stage. Section 2, Rule 19 of the Rules of
Court, governing interventions, provides that "the motion to intervene may be filed at any time Section 8 of C.A. No. 141 sets out the public lands open to disposition or concession and the
before rendition of judgment by the trial court." This rule notwithstanding, intervention may be requirement that they have been officially delimited and classified, and when practicable, surveyed.
allowed after judgment where it is necessary to protect some interest which cannot otherwise be Section 8 excludes (by implication) from disposition or concession, public lands which have been
protected, and may be allowed for the purpose of preserving the intervenor's right to appeal. 29 "The reserved for public or quasi-public uses; appropriated by the Government; or in any manner have
rule on intervention, like all other rules of procedure, is intended to make the powers of the Court become private property, or those on which a private right authorized and recognized by the Act or
fully and completely available for justice x x x and aimed to facilitate a comprehensive adjudication any other valid law may be claimed. Further, Section 8 authorizes the President to suspend the
of rival claims overriding technicalities on the timeliness of the filing thereof." 30cralawrednad concession or disposition of lands previously declared open to disposition, until again declared open
to disposition by his proclamation or by act of Congress.
Thus, in exceptional cases, the Court may allow intervention although the trial court has already
rendered judgment. In fact, the Court had allowed intervention in one case even when the petition Lands of the public domain classified as alienable and disposable are further classified, under
for review was already submitted for decision before it. 31cralawrednad Section 9 of C.A. No. 141, according to their use or purpose into: (1) agricultural; (2) residential,
commercial, industrial, or for similar productive purposes; (3) educational, charitable, or other
In the present case, the BCDA is indisputably the agency specifically created under R.A. No. 7227 32 to similar purposes; and (4) reservations for townsites and for public and quasi-public uses. Section 9
own, hold and/or administer military reservations including, among others, those located inside the also authorizes the President to make the classifications and, at any time, transfer lands from one
FBMR. If we are to affirm the CA's decision, the BCDA stands to benefit as a favorable ruling will class to another.
enable it to pursue its mandate under R.A. No. 7227. On the other hand, if we reverse the CA's
decision, it stands to suffer as the contrary ruling will greatly affect the BCDA's performance of its Section 83 of C.A. No. 141 defines public domain lands classified as reservations for public and
legal mandate as it will lose the property without the opportunity to defend its right in court. quasi-public uses as "any tract or tracts of land of the public domain" which the President, by
proclamation and upon recommendation of the Secretary of Agriculture and Natural Resources,
Indeed, the BCDA has such substantial and material interest both in the outcome of the case and in may designate "as reservations for the use of the Republic of the Philippines or any of its branches,
the disputed property that a final adjudication cannot be made in its absence without affecting such or of the inhabitants thereof or "for quasi-public uses or purposes when the public interest requires
interest. Clearly, the BCDA's intervention is necessary; hence, we allow the BCDA's intervention it."34 Under Section 88 of the same Act, these "reserved tract or tracts of lands shall be non-
although made beyond the period prescribed under Section 2, Rule 19 of the Rules of Court. alienable and shall not be subject to occupation, entry, sale, lease or other disposition until
again declared alienable under the provisions of [CA No. 141] or by proclamation of the
President."35cralawrednad
As these provisions operate, the President may classify lands of the public domain as alienable and
disposable, mineral or timber land, and transfer such lands from one class to another at any time.
Within the class of alienable and disposable lands of the public domain, the President may further
classify public domain lands, according to the use or purpose to which they are destined, as
agricultural: residential, commercial, industrial, etc.; educational, charitable, etc.; and reservations
for townsites and for public and quasi-public uses; and, he may transfer such lands from one class to
the other at any time.
Thus, the President may, for example, transfer a certain parcel of land from its classification as
agricultural (under Section 9 [a]), to residential, commercial, industrial, or for similar purposes
(under Section 9 [b]) and declare it available for disposition under any of the modes of disposition
of alienable and disposable public lands available under C.A. No. 141, as amended.
The modes of disposition of alienable and disposable lands available under C.A. No. 141 include: (1)
by homestead settlement (Chapter IV), by sale (Chapter V), by lease (Chapter VI) and by
confirmation of imperfect or incomplete titles (Chapters VII and VIII) for agricultural lands under
Title II of C.A. No. 141 as amended; (2) by sale or by lease for residential, commercial, or industrial
lands under Title III of C.A. No. 141, as amended; (3) by donation, sale, lease, exchange or any other
form for educational and charitable lands under Title IV of C.A. No. 141, as amended; and (4) by sale
by public auction for townsite reservations under Chapter XI, Title V of C.A. No. 141, as amended.
public domain lands until they are actually disposed of in favor of private persons.
Complementing and reinforcing this interpretation - that lands designated as reservations for public
and quasi-public uses are non-alienable and non-disposable and retain their character as land of the
public domain is the Civil Code with its provisions on Property that deal with lands in general. We
find these provisions significant to our discussion and interpretation as lands are property, whether
they are public lands or private lands.36cralawrednad
In this regard, Article 419 of the Civil Code classifies property as either of public dominion or of
private ownership. Article 42037 defines property of the public dominion as those which are
intended for public use or, while not intended for public use, belong to the State and are intended
for some public service. Article 421, on the other hand, defines patrimonial property as all other
property of the State which is not of the character stated in Article 420. While Article 422 states that
public dominion property which is no longer intended for public use or service shall form part of the
State's patrimonial property.
Thus, from the perspective of the general Civil Code provisions on Property, lands which are
intended for public use or public service such as reservations for public or quasi-public uses are
property of the public dominion and remain to be so as long as they remain reserved.
As property of the public dominion, public lands reserved for public or quasi-public uses are outside
the commerce of man.38 They cannot be subject to sale, disposition or encumbrance; any sale,
disposition or encumbrance of such property of the public dominion is void for being contrary to
law and public policy.39cralawrednad

Once these parcels of lands are actually acquired by private persons, either by sale, grant, or other To be subject to sale, occupation or other disposition, lands of the public domain designated as
modes of disposition, they are removed from the mass of land of the public domain and become, by reservations must first be withdrawn, by act of Congress or by proclamation of the President, from
operation of law, their private property. the public or quasi-public use for which it has been reserved or otherwise positively declared to
have been converted to patrimonial property, pursuant to Sections 8 and 88 of C.A. No. 141 and
With particular regard, however, to parcels of land classified as reservations for public and quasi- Article 422 of the Civil Code.40 Without such express declaration or positive governmental act, the
public uses (under Section 9 [d]), when the President transfers them to the class of .alienable and reserved public domain lands remain to be public dominion property of the State. 41cralawrednad
disposable public domain lands destined for residential, commercial, industrial, or for similar
purposes (under Section 9 [b]), or some other class under Section 9, these reserved public domain To summarize our discussion:ChanRoblesvirtualLawlibrary
lands become available for disposition under any of the available modes of disposition under C.A.
No. 141, as provided above. Once these re-classified lands (to residential purposes from reservation (1) Lands of the public domain classified as reservations for public or quasi-public uses are non-
for public and quasi-public uses) are actually acquired by private persons, they become private alienable and shall not be subject to disposition, although they are, by the general classification
property. under Section 6 of C.A. No. 141, alienable and disposable lands of the public domain, until declared
open for disposition by proclamation of the President; and
In the meantime, however, and until the parcels of land are actually granted to, acquired, or
purchased by private persons, they remain lands of the public domain which the President, under (2) Lands of the public domain classified as reservations are property of the public dominion; they
Section 9 of C.A. No. 141, may classify again as reservations for public and quasi-public uses. The remain to be property of the public dominion until withdrawn from the public or quasi-public use
President may also, under Section 8 of C.A. No. 141, suspend their concession or disposition. for which they have been reserved, by act of Congress or by proclamation of the President, or
otherwise positively declared to have been converted to patrimonial property.
If these parcels of land are re-classified as reservations before they are actually acquired by private
persons, or if the President suspends their concession or disposition, they shall not be subject to Based on these principles, we now examine the various issuances affecting the property in order to
occupation, entry, sale, lease, or other disposition until again declared open for disposition by determine the property's character and nature, i.e., whether the property remains public domain
proclamation of the President pursuant to Section 88 in relation with Section 8 of C.A. No. 141. property of the State or has become its private property.

Thus, in a limited sense, parcels of land classified as reservations for public or quasi-public uses
under Section 9 (d) of C.A. No. 141 are still non-alienable and non-disposable, even though they are,
by the general classification under Section 6, alienable and disposable lands of the public domain. By
specific declaration under Section 88, in relation with Section 8, these lands classified as
reservations are non-alienable and non-disposable.
In short, parcels of land classified as reservations for public or quasi-public uses: (1) are non-
alienable and non-disposable in view of Section 88 (in relation with Section 8) of CA No. 141
specifically declaring them as non-alienable and not subject to disposition; and (2) they remain
For easier reference, we reiterate the various presidential proclamations and statutes affecting the
property:cralawlawlibrary
(1)Proclamation No. 423, series of 1957 - established the FBMR, a military reservation; the property
falls within the FBMR;
(2)Proclamation No. 461, series of (September) 1965 - segregated, from the FBMR, a portion of
Parcel 3, plan Psd-2031, which includes the property, for disposition in favor of the AFPOVAI;
(3)Proclamation No. 478, series of (October) 1965 — reserved the property in favor of the Veterans
Rehabilitation and Medical Training Center (VRMTC); and
(4)RA No. 7227 (1992), as implemented by EO No. 40, series of 1992 - subject to certain specified
 exemptions, transferred the military camps within Metro Manila, among others, to the BCDA.
1. Proclamation No. 461 was not the legal basis for the property's sale in favor of NOVAI
We agree with the respondents that while Proclamation No. 461, issued in September 1965,
removed from the FBMR a certain parcel of land that includes the property, Proclamation No. 478,
issued in October 1965, in turn segregated the property from the area made available for
disposition under Proclamation No. 461, and reserved it for the use of the VRMTC.
We find it clear that Proclamation No. 478 was issued after, not before, Proclamation No. 461.
Hence, while Proclamation No. 461 withdrew a certain area or parcel of land from the FBMR and
made the covered area available for disposition in favor of the AFPOVAI, Proclamation No. 478
subsequently withdrew the property from the total disposable portion and reserved it for the use of
the VRMTC. With the issuance of Proclamation No. 478, the property was transferred back to that
class of public domain land reserved for public or quasi-public use or purpose which, consistent
with Article 420 of the Civil Code, is property of the public dominion, not patrimonial property of
the State.
Even under the parties' deed of sale, Proclamation No. 2487, not Proclamation No. 461, was used as
the authority for the transfer and sale of the property to NOVAI. The subject deed of sale pertinently
reads:cralawlawlibrary
"This DEED OF SALE, made and executed in Manila, Philippines, by the Director of Lands, Pursuant
to Batas Pambansa Blg. 878 and in representation of the Republic of the Philippines, hereinafter
referred to as the Vendor, in favor of THE NAVY OFFICERS VILLAGE ASSOCIATION (NOVA) and
residing in Fort Bonifacio, Metro Manila, referred to as the Vendee,
WITNESSETH:ChanRoblesvirtualLawlibrary
xxxx
WHEREAS, pursuant to Presidential proclamation No. 478 as amended by proclamation No.
2487 in relation to the provision of Act No. 3038 and similar Acts supplemented thereto, the Vendee
applied for the purchase of a portion of the above-described Property which portion is identical to
Lot 3, Swo-000183 and more particularly described on page two hereof;
xxxx
WHEREAS, the Vendee has complied with all other conditions required by Act No. 3038 in relation
to Commonwealth Act No. 141, as amended, and the rules and regulation promulgated thereunder.
x x x x. (Emphasis supplied)
Clearly, the legal basis of the property's sale could not have been Proclamation No. 461.
2. Proclamation No. 2487 which purportedly revoked Proclamation No. 478 does not legally exist;
hence, it did not withdraw the property from the reservation or from the public dominion
Neither can Proclamation No. 2487 serve as legal basis for the property's sale in NOVAI's favor.
Proclamation No. 2487 purportedly revoked Proclamation No. 478 and declared the property open
for disposition in favor of NOVAI.
The Republic and the BCD A (now respondents) argue that Proclamation No. 2487 does not legally
exist; it could not have served to release the property from the mass of the non-alienable property
of the State.
Hence, even if NOVAI relies on Proclamation No. 2487 - on which it did not as it relied on
Proclamation No. 4.61 - the sale and NOVAI's title are still void. NOVAI, on the other hand, claims in
defense that Proclamation No. 2487 is presumed valid and constitutional, and the burden of proving
otherwise rests on the respondents.
In insisting on the presumptive validity of law, NOVAI obviously failed to grasp and appreciate the
thrust of the respondents' arguments, including the impact of the evidence which they presented to
support the question they raised regarding the authenticity of Proclamation No. 2487.
Rather than the validity or constitutionality of Proclamation No. 2487, what the respondents
assailed was its legal existence, not whether it was constitutional or not. Put differently, they
claimed that Proclamation No. 2487 was never issued by former Pres. Aquino; hence, the
presumptive validity and constitutionality of laws cannot apply.
Accordingly, after the respondents presented their evidence, it was NOVAI's turn to present its own
evidence sufficient to rebut that of the respondents. On this point, we find the Republic's evidence
sufficiently convincing to show that Proclamation No. 2487 does not legally exist. These pieces of
evidence include:ChanRoblesvirtualLawlibrary
First, the October 26, 1993 letter of the Solicitor General to the Office of the President inquiring
about the existence of Proclamation No. 2487.42cralawrednad
Second, the November 12, 1993 letter-reply of the Office of the President informing the Solicitor
General that Proclamation No. 2487 "is not among the alleged documents on file with [its]
Office."43cralawrednad
Third, the testimony of the Assistant Director of the Records Office in Malacañang confirming that
indeed, after verifying their records or of the different implementing agencies, "[t]here is no existing
document(s) in [their] possession regarding that alleged Proclamation No. 2487;" 44 and
Fourth and last, the October 11, 1993 Memorandum of then Department of Justice Secretary
Frahklin M. Drilon (DOJ Secretary Drilon) to the NBI to investigate, among others, the circumstances
surrounding the issuance of Proclamation No. 2487.45 Notably, this October 11, 1993 Memorandum
of DOJ Secretary Drilon stated that: "Proclamation No. 2487 is null and void x x x. [It] does not exist
in the official records of the Office of the President x x x [and] could riot have been issued by the
former President since the last Proclamation issued during her term was proclamation No. 932
dated 19 June 1992."46cralawrednad
In this regard, we quote with approval the CA's observations in its December 28, 2006
decision:cralawlawlibrary
Cast against this backdrop, it stands to reason enough that the defendant-appellee NOVAI was
inevitably duty bound to prove and establish the very existence, as well as the genuineness or
authenticity, of this Presidential Proclamation No. 2487. For certain inexplicable reasons, however,
the defendant-appellee did not do so, but opted to build up and erect its case upon Presidential
Proclamation No. 461.
To be sure, the existence of Presidential Proclamation No. 2487 could be easily proved, and
established, by its publication in the Official Gazette. But the defendant-appellee could not, as
it did not, submit or present any copy or issue of the Official Gazette mentioning or referring
to this Presidential Proclamation No. 2487, this even in the face of the Government's determined
and unrelenting claim that it does not exist at all.47 (Emphasis supplied)
A final point, we did not fail to notice the all too obvious and significant difference between the
proclamation number of Proclamation No. 2487 and the numbers of the proclamations actually
issued by then President Corazon C. Aquino on or about that time.
We take judicial notice that on September 25, 1991 - the very day when Proclamation No. 2487 was
supposedly issued - former Pres. Aquino issued Proclamation No. 80048 and Proclamation No.
801.49Previously, on September 20, 1991, Pres. Aquino issued Proclamation No. 799; 50 and
thereafter, on September 27, 1991, she issued Proclamation No. 802. 51cralawrednad
Other proclamations issued around or close to September 25, 1991, included the As the property remains a reserved public domain land, it is outside the commerce of man. Property
following:cralawlawlibrary which are intended for public or quasi- public use or for some public purpose are public dominion
1. Proclamation No. 750 issued on July 1, 1991; 52cralawrednad property of the State68 and are outside the commerce of man. NOVAI, therefore, could not have
validly purchased the property in 1991.
2. Proclamation No. 760 issued on July 18, 1991; 53cralawrednad
We reiterate and emphasize that property which has been reserved for public or quasi-public use or
3. Proclamation No. 770 issued on August 12, 1991; 54cralawrednad purpose are non-alienable and shall not be subject to sale or other disposition until again declared
alienable by law or by proclamation of the President. 69 Any sale or disposition of property of the
4. Proclamation No. 780 issued on August 26, 1991; 55cralawrednad public dominion is void for being contrary to law and public policy.70cralawrednad

5. Proclamation No. 790 issued on September 3, 1991; 56cralawrednad Since the sale of the property, in this case, is void, the title issued to NOVAI is similarly void ab initio.
It is a well-settled doctrine that registration under the Torrens System does not, by itself, vest title
6. Proclamation No. 792 issued on September 5, 1991; 57cralawrednad as it is not a mode of acquiring ownership;71 that registration under the Torrens System merely
confirms the registrant's already existing title.72cralawrednad
7. Proclamation No. 797 issued on September 11, 1991; 58cralawrednad
Accordingly, the indefeasibility of a Torrens title does not apply in this case and does not attach to
8. Proclamation No. 798 issued on September 12, 1991; 59cralawrednad NOVAI's title. The principle of indefeasibility does not apply when the sale of the property and the
title based thereon are null and void. Hence, the Republic's action to declare the nullity of NOVAI's
9. Proclamation No. 804 issued on September 30, 1991; 60cralawrednad void title has not prescribed.

10. Proclamation No. 805 issued on September 30, 1991;61cralawrednad NOVAI insists that the deed of sale carries the presumption of regularity in the performance of
official duties as it bears all the earmarks of a valid deed of sale and is duly notarized.
11. Proclamation No. 806 issued on October 2, 1991; 62cralawrednad
While we agree that duly notarized deeds of sale carry the legal presumption of regularity in the
12. Proclamation No. 810 issued on October 7, 1991; 63cralawrednad performance of official duties,73 the presumption of regularity in the performance of official duties,
like all other disputable legal presumptions, applies only in the absence of clear and convincing
13. Proclamation No. 820 issued on October 25, 1991; 64cralawrednad evidence establishing the contrary.74cralawrednad

14. Proclamation No. 834 issued on November 13, 1991;65 and When, as in this case, the evidence on record shows not only that the property was reserved for
public use or purpose, and thus, non-disposable - a fact that on its own defeats all the evidence
15. Proclamation No. 840 issued on November 26, 1991.66 which the petitioner may have had to support the validity of the sale - but also shows that the sale
This list shows that the proclamations issued by former Pres. Aquino followed a series or sequential and the circumstances leading to it are void in form and in substance, the disputable presumption of
pattern with each succeeding issuance bearing a proclamation number one count higher than the regularity in the performance of official duties certainly cannot apply.
proclamation number of the preceding Presidential Proclamation. It also shows that on or about the
time Proclamation No. 2487 was purportedly issued, the proclamation numbers of the C. Even assuming that Proclamation No. 2487 legally exists, the sale of the property to NOVAI is
proclamations issued by President Aquino did not go beyond the hundreds series. illegal.

It is highly implausible that Proclamation No. 2487 was issued on September 25, 1991, or on any 1. Dir. Palad did not have the authority to sell and convey the property.
day close to September 25, 1991, when the proclamations issued for the same period were
sequentially numbered and bore three-digit proclamation numbers. The subject deed of sale points to Proclamation No. 2487, purportedly amending Proclamation No.
478, in relation with Act No. 3038,75 as legal basis for authorizing the sale.
As Proclamation No. 2487 does not legally exist and therefore could not have validly revoked
Proclamation No. 478, we find, as the CA also correctly did, that Proclamation No. 478 stands as the Section 176 of Act No. 3038 authorizes the sale or lease only: (i) of land of the private domain, not
most recent manifestation of the State's intention to reserve the property anew for some public or land of the public domain; and (ii) by the Secretary of Agriculture and Natural Resources, not by the
quasi-public use or purpose. Thus, consistent with Sections 88, in relation with Section 8, of C.A. No. LMB Director. Section 277 of the said Act, in fact, specifically exempts from its coverage "land
141 and Article 420 of the Civil Code, as discussed above, the property which was classified again as necessary for the public service." As the sale was executed by the LMB Director covering the
reservation for public or quasi-public use or purpose is non-alienable and not subject to disposition; property that was reserved for the use of the VRMTC, it, therefore, clearly violated the provisions of
it also remains property of the public dominion; hence, non-alienable and non-disposable land of Act No. 3038.
the public domain.
2. The area subject of the sale far exceeded the area that the Director of Lands is authorized to convey.
As a consequence, when R.A. No. 7227 took effect in 1992, the property subject of this case, which
does not fall among the areas specifically designated as exempt from the law's operation 67 was, by Batas Pambansa (B.P.) Blg. 87878 which, per the Deed of Sale, purportedly authorized the Director of
legal fiat, transferred to the BCDA's authority. Lands, representing the Republic, to sell the property in favor of NOVAI, limits the authority of the
Director of Lands to sign patents or certificates covering lands to ten (10) hectares.
B. As the property remains a reserved public domain land, its sale and the title issued pursuant
to the sale are void In this case, the subject deed of sale covers a total area of 475,009 square meters or 47.5009
hectares. Obviously, the area covered by the deed of sale and which NOVAI purportedly purchased,
far exceeds the area that the Director of Lands is authorized to convey under B.P. Blg. 878.

3. The evidence on record and the highly suspect circumstances surrounding the sale fully supports the
conclusion that the property's sale to NOVAI is fictitious, thus, void.

We note the following irregularities that attended the sale of the property to NOVAI:

a. The absence, on file with the LMB, of any request for approval of any survey plan or of an
approved survey plan in NOVAI's name covering the property. 79 The approved survey
plan relating to Lot 3, SWO-13-000183 subject of NOVAI's TCT No. 15387 pertains to the
AFPOVAI under Proclamation No. 461;80cralawrednad

b. The technical description, which the DENR prepared for the property as covered by TCT
No. T-15387, was issued upon NOVAI's request only for purposes of reference, not for
registration of title, and was based on the approved survey plan of the
AFPOVAI;81cralawrednad

c. There is no record of any public land application filed by NOVAI with the LMB or with the
DENR Office for the purchase of the property or of any parcel of land in Metro
Manila;82cralawrednad

d. LMB Dir. Palad categorically denied signing and executing the deed of
sale;83cralawrednad

e. The findings of the NBI handwriting; expert, detailed in the Questioned Documents
Report No. 815-1093 dated October 29, 1993,84 revealed that the, signature of LMB
Director Palad as it appeared on the Deed of Sale and his standard/sample signature as
they appeared on the submitted comparison documents "were not written by one and the
same person,"85 and concluded that "[t]he questioned signature of 'ABELARDG G. PALAD,
JR.' xxx is a TRACED FORGERY by carbon process;"86 and

f. Lastly, the LMB Cashier's Office did not receive the amount of P14,250,270.00 allegedly
paid by NOVAI as consideration for the property. The receipts 87 - O.R. No. 8282851 dated
November 28, 1991, for P160,000.00 and O.R. No. 317024 dated December 23, 1992, for
P200,000.00 - which NOVAI presented as evidence of its alleged payment bore official
receipt numbers which were not among the series of official receipts issued by the
National Printing Office to the LMB, and in fact, were not among the series used by the
LMB on the pertinent dates.88

In sum, we find - based on the facts, the law, and jurisprudence - that the property, at the time of the
sale, was a reserved public domain land. Its sale, therefore, and the corresponding title issued in
favor of petitioner NOVAI, is void.

WHEREFORE, we hereby DENY the present petition for review on certiorari. No reversible error
attended the decision dated December 28, 2006, and the resolution dated March 28, 2007, of the
Court of Appeals in CA-G.R. CV No. 85179.

virtuallawlibrary
SO ORDERED.chanrobles
 [G.R. No. 133250. July 9, 2002]
FRANCISCO I. CHAVEZ, petitioner, vs. PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY
DEVELOPMENT CORPORATION, respondents.
DECISION
CARPIO, J.:
This is an original Petition for Mandamus with prayer for a writ of preliminary injunction and
a temporary restraining order. The petition seeks to compel the Public Estates Authority (PEA for
brevity) to disclose all facts on PEAs then on-going renegotiations with Amari Coastal Bay and
Development Corporation (AMARI for brevity) to reclaim portions of Manila Bay.The petition
further seeks to enjoin PEA from signing a new agreement with AMARI involving such reclamation.
The Facts
On November 20, 1973, the government, through the Commissioner of Public Highways,
signed a contract with the Construction and Development Corporation of the Philippines (CDCP for
brevity) to reclaim certain foreshore and offshore areas of Manila Bay. The contract also included
the construction of Phases I and II of the Manila-Cavite Coastal Road.CDCP obligated itself to carry
out all the works in consideration of fifty percent of the total reclaimed land.
On February 4, 1977, then President Ferdinand E. Marcos issued Presidential Decree No.
1084 creating PEA. PD No. 1084 tasked PEA to reclaim land, including foreshore and submerged
areas, and to develop, improve, acquire, x x x lease and sell any and all kinds of lands. [1] On the same
date, then President Marcos issued Presidential Decree No. 1085 transferring to PEA the lands
reclaimed in the foreshore and offshore of the Manila Bay [2] under the Manila-Cavite Coastal Road
and Reclamation Project (MCCRRP).
On December 29, 1981, then President Marcos issued a memorandum directing PEA to amend
its contract with CDCP, so that [A]ll future works in MCCRRP x x x shall be funded and owned by
PEA. Accordingly, PEA and CDCP executed a Memorandum of Agreement dated December 29, 1981,
which stated:
(i) CDCP shall undertake all reclamation, construction, and such other works in the MCCRRP as may
be agreed upon by the parties, to be paid according to progress of works on a unit price/lump sum
basis for items of work to be agreed upon, subject to price escalation, retention and other terms and
conditions provided for in Presidential Decree No. 1594. All the financing required for such works
shall be provided by PEA.
xxx
(iii) x x x CDCP shall give up all its development rights and hereby agrees to cede and transfer in
favor of PEA, all of the rights, title, interest and participation of CDCP in and to all the areas of land
reclaimed by CDCP in the MCCRRP as of December 30, 1981 which have not yet been sold,
transferred or otherwise disposed of by CDCP as of said date, which areas consist of approximately
Ninety-Nine Thousand Four Hundred Seventy Three (99,473) square meters in the Financial Center
Area covered by land pledge No. 5 and approximately Three Million Three Hundred Eighty Two
Thousand Eight Hundred Eighty Eight (3,382,888) square meters of reclaimed areas at varying
elevations above Mean Low Water Level located outside the Financial Center Area and the First
Neighborhood Unit.[3]
On January 19, 1988, then President Corazon C. Aquino issued Special Patent No. 3517,
granting and transferring to PEA the parcels of land so reclaimed under the Manila-Cavite Coastal
Road and Reclamation Project (MCCRRP) containing a total area of one million nine hundred fifteen
thousand eight hundred ninety four (1,915,894) square meters. Subsequently, on April 9, 1988, the
Register of Deeds of the Municipality of Paraaque issued Transfer Certificates of Title Nos. 7309,
7311, and 7312, in the name of PEA, covering the three reclaimed islands known as the Freedom
Islands located at the southern portion of the Manila-Cavite Coastal Road, Paraaque City. The
Freedom Islands have a total land area of One Million Five Hundred Seventy Eight Thousand Four
Hundred and Forty One (1,578,441) square meters or 157.841 hectares.
On April 25, 1995, PEA entered into a Joint Venture Agreement (JVA for brevity) with AMARI,
a private corporation, to develop the Freedom Islands. The JVA also required the reclamation of an
additional 250 hectares of submerged areas surrounding these islands to complete the
configuration in the Master Development Plan of the Southern Reclamation Project-MCCRRP. PEA
and AMARI entered into the JVA through negotiation without public bidding. [4] On April 28, 1995,
the Board of Directors of PEA, in its Resolution No. 1245, confirmed the JVA. [5] On June 8, 1995, then
President Fidel V. Ramos, through then Executive Secretary Ruben Torres, approved the JVA. [6]
On November 29, 1996, then Senate President Ernesto Maceda delivered a privilege speech in
the Senate and denounced the JVA as the grandmother of all scams. As a result, the Senate
Committee on Government Corporations and Public Enterprises, and the Committee on
Accountability of Public Officers and Investigations, conducted a joint investigation.The Senate
Committees reported the results of their investigation in Senate Committee Report No. 560 dated
September 16, 1997.[7] Among the conclusions of their report are: (1) the reclaimed lands PEA seeks
to transfer to AMARI under the JVA are lands of the public domain which the government has not
classified as alienable lands and therefore PEA cannot alienate these lands; (2) the certificates of
title covering the Freedom Islands are thus void, and (3) the JVA itself is illegal.
On December 5, 1997, then President Fidel V. Ramos issued Presidential Administrative
Order No. 365 creating a Legal Task Force to conduct a study on the legality of the JVA in view of
Senate Committee Report No. 560. The members of the Legal Task Force were the Secretary of
Justice,[8] the Chief Presidential Legal Counsel,[9] and the Government Corporate Counsel.[10] The
Legal Task Force upheld the legality of the JVA, contrary to the conclusions reached by the Senate
Committees.[11]
On April 4 and 5, 1998, the Philippine Daily Inquirer and Today published reports that there
were on-going renegotiations between PEA and AMARI under an order issued by then President
Fidel V. Ramos. According to these reports, PEA Director Nestor Kalaw, PEA Chairman Arsenio Yulo
and retired Navy Officer Sergio Cruz composed the negotiating panel of PEA.
On April 13, 1998, Antonio M. Zulueta filed before the Court a Petition for Prohibition with
Application for the Issuance of a Temporary Restraining Order and Preliminary Injunction docketed as
G.R. No. 132994 seeking to nullify the JVA. The Court dismissed the petition for unwarranted
disregard of judicial hierarchy, without prejudice to the refiling of the case before the proper
court.[12]
On April 27, 1998, petitioner Frank I. Chavez (Petitioner for brevity) as a taxpayer, filed the
instant Petition for Mandamus with Prayer for the Issuance of a Writ of Preliminary Injunction and
Temporary Restraining Order. Petitioner contends the government stands to lose billions of pesos in
the sale by PEA of the reclaimed lands to AMARI. Petitioner prays that PEA publicly disclose the
terms of any renegotiation of the JVA, invoking Section 28, Article II, and Section 7, Article III, of the
1987 Constitution on the right of the people to information on matters of public concern. Petitioner
assails the sale to AMARI of lands of the public domain as a blatant violation of Section 3, Article XII
of the 1987 Constitution prohibiting the sale of alienable lands of the public domain to private
corporations. Finally, petitioner asserts that he seeks to enjoin the loss of billions of pesos in
properties of the State that are of public dominion.
After several motions for extension of time,[13] PEA and AMARI filed their Comments on
October 19, 1998 and June 25, 1998, respectively. Meanwhile, on December 28, 1998, petitioner
filed an Omnibus Motion: (a) to require PEA to submit the terms of the renegotiated PEA-AMARI
contract; (b) for issuance of a temporary restraining order; and (c) to set the case for hearing on
oral argument. Petitioner filed a Reiterative Motion for Issuance of a TRO dated May 26, 1999, which
the Court denied in a Resolution dated June 22, 1999.
In a Resolution dated March 23, 1999, the Court gave due course to the petition and required
the parties to file their respective memoranda.
On March 30, 1999, PEA and AMARI signed the Amended Joint Venture Agreement (Amended
JVA, for brevity). On May 28, 1999, the Office of the President under the administration of then
President Joseph E. Estrada approved the Amended JVA.
Due to the approval of the Amended JVA by the Office of the President, petitioner now prays
that on constitutional and statutory grounds the renegotiated contract be declared null and void.[14]
The Issues
The issues raised by petitioner, PEA[15] and AMARI[16] are as follows:
I. WHETHER THE PRINCIPAL RELIEFS PRAYED FOR IN THE PETITION ARE MOOT AND
ACADEMIC BECAUSE OF SUBSEQUENT EVENTS;
II. WHETHER THE PETITION MERITS DISMISSAL FOR FAILING TO OBSERVE THE
PRINCIPLE GOVERNING THE HIERARCHY OF COURTS;
III. WHETHER THE PETITION MERITS DISMISSAL FOR NON-EXHAUSTION OF
ADMINISTRATIVE REMEDIES;
IV. WHETHER PETITIONER HAS LOCUS STANDI TO BRING THIS SUIT;
V. WHETHER THE CONSTITUTIONAL RIGHT TO INFORMATION INCLUDES OFFICIAL
INFORMATION ON ON-GOING NEGOTIATIONS BEFORE A FINAL AGREEMENT;
VI. WHETHER THE STIPULATIONS IN THE AMENDED JOINT VENTURE AGREEMENT
FOR THE TRANSFER TO AMARI OF CERTAIN LANDS, RECLAIMED AND STILL TO
BE RECLAIMED, VIOLATE THE 1987 CONSTITUTION; AND
VII. WHETHER THE COURT IS THE PROPER FORUM FOR RAISING THE ISSUE OF
WHETHER THE AMENDED JOINT VENTURE AGREEMENT IS GROSSLY
DISADVANTAGEOUS TO THE GOVERNMENT.
The Courts Ruling
First issue: whether the principal reliefs prayed for in the petition are moot and academic
because of subsequent events.
The petition prays that PEA publicly disclose the terms and conditions of the on-going
negotiations for a new agreement. The petition also prays that the Court enjoin PEA from privately
entering into, perfecting and/or executing any new agreement with AMARI.
PEA and AMARI claim the petition is now moot and academic because AMARI furnished
petitioner on June 21, 1999 a copy of the signed Amended JVA containing the terms and conditions
agreed upon in the renegotiations. Thus, PEA has satisfied petitioners prayer for a public disclosure
of the renegotiations. Likewise, petitioners prayer to enjoin the signing of the Amended JVA is now
moot because PEA and AMARI have already signed the Amended JVA on March 30, 1999. Moreover,
the Office of the President has approved the Amended JVA on May 28, 1999.
Petitioner counters that PEA and AMARI cannot avoid the constitutional issue by simply fast-
tracking the signing and approval of the Amended JVA before the Court could act on the
issue. Presidential approval does not resolve the constitutional issue or remove it from the ambit of
judicial review.
We rule that the signing of the Amended JVA by PEA and AMARI and its approval by the
President cannot operate to moot the petition and divest the Court of its jurisdiction. PEA and
AMARI have still to implement the Amended JVA. The prayer to enjoin the signing of the Amended
JVA on constitutional grounds necessarily includes preventing its implementation if in the meantime
PEA and AMARI have signed one in violation of the Constitution. Petitioners principal basis in
assailing the renegotiation of the JVA is its violation of Section 3, Article XII of the Constitution,
which prohibits the government from alienating lands of the public domain to private
corporations. If the Amended JVA indeed violates the Constitution, it is the duty of the Court to
enjoin its implementation, and if already implemented, to annul the effects of such unconstitutional
contract.
The Amended JVA is not an ordinary commercial contract but one which seeks to transfer
title and ownership to 367.5 hectares of reclaimed lands and submerged areas of Manila Bay to
a single private corporation. It now becomes more compelling for the Court to resolve the issue to
insure the government itself does not violate a provision of the Constitution intended to safeguard
the national patrimony. Supervening events, whether intended or accidental, cannot prevent the
Court from rendering a decision if there is a grave violation of the Constitution. In the instant case, if
the Amended JVA runs counter to the Constitution, the Court can still prevent the transfer of title
and ownership of alienable lands of the public domain in the name of AMARI. Even in cases where
supervening events had made the cases moot, the Court did not hesitate to resolve the legal or
constitutional issues raised to formulate controlling principles to guide the bench, bar, and the
public.[17]
Also, the instant petition is a case of first impression. All previous decisions of the Court
involving Section 3, Article XII of the 1987 Constitution, or its counterpart provision in the 1973
Constitution,[18] covered agricultural lands sold to private corporations which acquired the lands
from private parties. The transferors of the private corporations claimed or could claim the right
to judicial confirmation of their imperfect titles[19] under Title II of Commonwealth Act. 141 (CA
No. 141 for brevity). In the instant case, AMARI seeks to acquire from PEA, a public corporation,
reclaimed lands and submerged areas for non-agricultural purposes by purchase under PD No.
1084 (charter of PEA) and Title III of CA No. 141. Certain undertakings by AMARI under the
Amended JVA constitute the consideration for the purchase. Neither AMARI nor PEA can claim
judicial confirmation of their titles because the lands covered by the Amended JVA are newly
reclaimed or still to be reclaimed. Judicial confirmation of imperfect title requires open, continuous,
exclusive and notorious occupation of agricultural lands of the public domain for at least thirty
years since June 12, 1945 or earlier. Besides, the deadline for filing applications for judicial
confirmation of imperfect title expired on December 31, 1987.[20]
Lastly, there is a need to resolve immediately the constitutional issue raised in this petition
because of the possible transfer at any time by PEA to AMARI of title and ownership to portions of
the reclaimed lands. Under the Amended JVA, PEA is obligated to transfer to AMARI the latters
seventy percent proportionate share in the reclaimed areas as the reclamation progresses. The
Amended JVA even allows AMARI to mortgage at any time the entire reclaimed area to raise
financing for the reclamation project.[21]
Second issue: whether the petition merits dismissal for failing to observe the principle
governing the hierarchy of courts.
PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking relief directly from
the Court. The principle of hierarchy of courts applies generally to cases involving factual
questions. As it is not a trier of facts, the Court cannot entertain cases involving factual issues. The
instant case, however, raises constitutional issues of transcendental importance to the public.[22] The
Court can resolve this case without determining any factual issue related to the case. Also, the
instant case is a petition for mandamus which falls under the original jurisdiction of the Court
under Section 5, Article VIII of the Constitution. We resolve to exercise primary jurisdiction over the
instant case.
Third issue: whether the petition merits dismissal for non-exhaustion of administrative
remedies.
PEA faults petitioner for seeking judicial intervention in compelling PEA to disclose publicly
certain information without first asking PEA the needed information. PEA claims petitioners direct
resort to the Court violates the principle of exhaustion of administrative remedies. It also violates
the rule that mandamus may issue only if there is no other plain, speedy and adequate remedy in
the ordinary course of law.
PEA distinguishes the instant case from Taada v. Tuvera[23] where the Court granted the
petition for mandamus even if the petitioners there did not initially demand from the Office of the
President the publication of the presidential decrees. PEA points out that in Taada, the Executive
Department had an affirmative statutory duty under Article 2 of the Civil Code[24] and Section 1 of
Commonwealth Act No. 638[25] to publish the presidential decrees. There was, therefore, no need for
the petitioners in Taada to make an initial demand from the Office of the President. In the instant
case, PEA claims it has no affirmative statutory duty to disclose publicly information about its
renegotiation of the JVA. Thus, PEA asserts that the Court must apply the principle of exhaustion of
administrative remedies to the instant case in view of the failure of petitioner here to demand
initially from PEA the needed information.
The original JVA sought to dispose to AMARI public lands held by PEA, a government
corporation. Under Section 79 of the Government Auditing Code,[26]2 the disposition of government
lands to private parties requires public bidding. PEA was under a positive legal duty to disclose to
the public the terms and conditions for the sale of its lands. The law obligated PEA to make this
public disclosure even without demand from petitioner or from anyone. PEA failed to make this
public disclosure because the original JVA, like the Amended JVA, was the result of a negotiated
contract, not of a public bidding. Considering that PEA had an affirmative statutory duty to make
the public disclosure, and was even in breach of this legal duty, petitioner had the right to seek
direct judicial intervention.
Moreover, and this alone is determinative of this issue, the principle of exhaustion of
administrative remedies does not apply when the issue involved is a purely legal or constitutional
question.[27] The principal issue in the instant case is the capacity of AMARI to acquire lands held by
PEA in view of the constitutional ban prohibiting the alienation of lands of the public domain to
private corporations. We rule that the principle of exhaustion of administrative remedies does not
apply in the instant case.
Fourth issue: whether petitioner has locus standi to bring this suit
PEA argues that petitioner has no standing to institute mandamus proceedings to enforce his
constitutional right to information without a showing that PEA refused to perform an affirmative
duty imposed on PEA by the Constitution. PEA also claims that petitioner has not shown that he will
suffer any concrete injury because of the signing or implementation of the Amended JVA. Thus,
there is no actual controversy requiring the exercise of the power of judicial review.
The petitioner has standing to bring this taxpayers suit because the petition seeks to compel
PEA to comply with its constitutional duties. There are two constitutional issues involved here. First
is the right of citizens to information on matters of public concern. Second is the application of a
constitutional provision intended to insure the equitable distribution of alienable lands of the public
domain among Filipino citizens. The thrust of the first issue is to compel PEA to disclose publicly
information on the sale of government lands worth billions of pesos, information which the
Constitution and statutory law mandate PEA to disclose. The thrust of the second issue is to prevent
PEA from alienating hundreds of hectares of alienable lands of the public domain in violation of the
Constitution, compelling PEA to comply with a constitutional duty to the nation.
Moreover, the petition raises matters of transcendental importance to the public. In Chavez v.
PCGG,[28] the Court upheld the right of a citizen to bring a taxpayers suit on matters of
transcendental importance to the public, thus -
Besides, petitioner emphasizes, the matter of recovering the ill-gotten wealth of the Marcoses is an
issue of transcendental importance to the public. He asserts that ordinary taxpayers have a right to
initiate and prosecute actions questioning the validity of acts or orders of government agencies or
instrumentalities, if the issues raised are of paramount public interest, and if they immediately
affect the social, economic and moral well being of the people.
Moreover, the mere fact that he is a citizen satisfies the requirement of personal interest, when the
proceeding involves the assertion of a public right, such as in this case. He invokes several decisions
of this Court which have set aside the procedural matter of locus standi, when the subject of the case
involved public interest.
xxx
In Taada v. Tuvera, the Court asserted that when the issue concerns a public right and the object of
mandamus is to obtain the enforcement of a public duty, the people are regarded as the real parties
in interest; and because it is sufficient that petitioner is a citizen and as such is interested in the
execution of the laws, he need not show that he has any legal or special interest in the result of the
action. In the aforesaid case, the petitioners sought to enforce their right to be informed on matters
of public concern, a right then recognized in Section 6, Article IV of the 1973 Constitution, in
connection with the rule that laws in order to be valid and enforceable must be published in the
Official Gazette or otherwise effectively promulgated. In ruling for the petitioners' legal standing,
the Court declared that the right they sought to be enforced is a public right recognized by no less
than the fundamental law of the land.
Legaspi v. Civil Service Commission, while reiterating Taada, further declared that when a mandamus
proceeding involves the assertion of a public right, the requirement of personal interest is satisfied
by the mere fact that petitioner is a citizen and, therefore, part of the general 'public' which
possesses the right.
Further, in Albano v. Reyes, we said that while expenditure of public funds may not have been
involved under the questioned contract for the development, management and operation of the
Manila International Container Terminal, public interest [was] definitely involved considering the
important role [of the subject contract] . . . in the economic development of the country and the
magnitude of the financial consideration involved. We concluded that, as a consequence, the
disclosure provision in the Constitution would constitute sufficient authority for upholding the
petitioner's standing.
Similarly, the instant petition is anchored on the right of the people to information and access to
official records, documents and papers a right guaranteed under Section 7, Article III of the 1987
Constitution. Petitioner, a former solicitor general, is a Filipino citizen. Because of the satisfaction of
the two basic requisites laid down by decisional law to sustain petitioner's legal standing, i.e. (1) the
enforcement of a public right (2) espoused by a Filipino citizen, we rule that the petition at bar
should be allowed.
We rule that since the instant petition, brought by a citizen, involves the enforcement of
constitutional rights - to information and to the equitable diffusion of natural resources -matters of
transcendental public importance, the petitioner has the requisite locus standi.
Fifth issue: whether the constitutional right to information includes official information on on-
going negotiations before a final agreement.
Section 7, Article III of the Constitution explains the peoples right to information on matters
of public concern in this manner:
Sec. 7. The right of the people to information on matters of public concern shall be
recognized. Access to official records, and to documents, and papers pertaining to official acts,
transactions, or decisions, as well as to government research data used as basis for policy
development, shall be afforded the citizen, subject to such limitations as may be provided by
law. (Emphasis supplied)
The State policy of full transparency in all transactions involving public interest reinforces the
peoples right to information on matters of public concern. This State policy is expressed in Section
28, Article II of the Constitution, thus:
Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and implements
a policy of full public disclosure of all its transactions involving public interest. (Emphasis
supplied)
These twin provisions of the Constitution seek to promote transparency in policy-making and
in the operations of the government, as well as provide the people sufficient information to exercise
effectively other constitutional rights. These twin provisions are essential to the exercise of freedom
of expression. If the government does not disclose its official acts, transactions and decisions to
citizens, whatever citizens say, even if expressed without any restraint, will be speculative and
amount to nothing. These twin provisions are also essential to hold public officials at all times x x x
accountable to the people,[29] for unless citizens have the proper information, they cannot hold
public officials accountable for anything.Armed with the right information, citizens can participate
in public discussions leading to the formulation of government policies and their effective
implementation. An informed citizenry is essential to the existence and proper functioning of any
democracy. As explained by the Court in Valmonte v. Belmonte, Jr.[30]
An essential element of these freedoms is to keep open a continuing dialogue or process of
communication between the government and the people. It is in the interest of the State that the
channels for free political discussion be maintained to the end that the government may perceive
and be responsive to the peoples will. Yet, this open dialogue can be effective only to the extent that
the citizenry is informed and thus able to formulate its will intelligently. Only when the participants
in the discussion are aware of the issues and have access to information relating thereto can such
bear fruit.
PEA asserts, citing Chavez v. PCGG,[31] that in cases of on-going negotiations the right to
information is limited to definite propositions of the government. PEA maintains the right does not
include access to intra-agency or inter-agency recommendations or communications during the
stage when common assertions are still in the process of being formulated or are in the exploratory
stage.
Also, AMARI contends that petitioner cannot invoke the right at the pre-decisional stage or
before the closing of the transaction. To support its contention, AMARI cites the following discussion
in the 1986 Constitutional Commission:
Mr. Suarez. And when we say transactions which should be distinguished from contracts,
agreements, or treaties or whatever, does the Gentleman refer to the steps leading to the
consummation of the contract, or does he refer to the contract itself?
Mr. Ople: The transactions used here, I suppose is generic and therefore, it can cover both steps
leading to a contract and already a consummated contract, Mr. Presiding Officer.
Mr. Suarez: This contemplates inclusion of negotiations leading to the consummation of the
transaction.
Mr. Ople: Yes, subject only to reasonable safeguards on the national interest.
Mr. Suarez: Thank you.[32] (Emphasis supplied)
AMARI argues there must first be a consummated contract before petitioner can invoke the
right. Requiring government officials to reveal their deliberations at the pre-decisional stage will
degrade the quality of decision-making in government agencies. Government officials will hesitate
to express their real sentiments during deliberations if there is immediate public dissemination of
their discussions, putting them under all kinds of pressure before they decide.
We must first distinguish between information the law on public bidding requires PEA to
disclose publicly, and information the constitutional right to information requires PEA to release to
the public. Before the consummation of the contract, PEA must, on its own and without demand
from anyone, disclose to the public matters relating to the disposition of its property. These include
the size, location, technical description and nature of the property being disposed of, the terms and
conditions of the disposition, the parties qualified to bid, the minimum price and similar
information. PEA must prepare all these data and disclose them to the public at the start of the
disposition process, long before the consummation of the contract, because the Government
Auditing Code requires public bidding. If PEA fails to make this disclosure, any citizen can demand
from PEA this information at any time during the bidding process.
Information, however, on on-going evaluation or review of bids or proposals being
undertaken by the bidding or review committee is not immediately accessible under the right to
information. While the evaluation or review is still on-going, there are no official acts, transactions,
or decisions on the bids or proposals. However, once the committee makes its official
recommendation, there arises a definite proposition on the part of the government. From this
moment, the publics right to information attaches, and any citizen can access all the non-proprietary
information leading to such definite proposition. In Chavez v. PCGG,[33] the Court ruled as follows:
Considering the intent of the framers of the Constitution, we believe that it is incumbent upon the
PCGG and its officers, as well as other government representatives, to disclose sufficient public
information on any proposed settlement they have decided to take up with the ostensible owners
and holders of ill-gotten wealth. Such information, though, must pertain to definite propositions of
the government, not necessarily to intra-agency or inter-agency recommendations or
communications during the stage when common assertions are still in the process of being
formulated or are in the exploratory stage. There is need, of course, to observe the same restrictions
on disclosure of information in general, as discussed earlier such as on matters involving national
security, diplomatic or foreign relations, intelligence and other classified information. (Emphasis
supplied)
Contrary to AMARIs contention, the commissioners of the 1986 Constitutional Commission
understood that the right to information contemplates inclusion of negotiations leading to the
consummation of the transaction. Certainly, a consummated contract is not a requirement for the
exercise of the right to information. Otherwise, the people can never exercise the right if no contract
is consummated, and if one is consummated, it may be too late for the public to expose its defects.
Requiring a consummated contract will keep the public in the dark until the contract, which
may be grossly disadvantageous to the government or even illegal, becomes a fait accompli. This
negates the State policy of full transparency on matters of public concern, a situation which the
framers of the Constitution could not have intended. Such a requirement will prevent the citizenry
from participating in the public discussion of any proposed contract, effectively truncating a basic
right enshrined in the Bill of Rights. We can allow neither an emasculation of a constitutional right,
nor a retreat by the State of its avowed policy of full disclosure of all its transactions involving public
interest.
The right covers three categories of information which are matters of public concern, namely:
(1) official records; (2) documents and papers pertaining to official acts, transactions and decisions;
and (3) government research data used in formulating policies. The first category refers to any
document that is part of the public records in the custody of government agencies or officials. The
second category refers to documents and papers recording, evidencing, establishing, confirming,
supporting, justifying or explaining official acts, transactions or decisions of government agencies or
officials. The third category refers to research data, whether raw, collated or processed, owned by
the government and used in formulating government policies.
The information that petitioner may access on the renegotiation of the JVA includes
evaluation reports, recommendations, legal and expert opinions, minutes of meetings, terms of
reference and other documents attached to such reports or minutes, all relating to the
JVA. However, the right to information does not compel PEA to prepare lists, abstracts, summaries
and the like relating to the renegotiation of the JVA.[34] The right only affords access to records,
documents and papers, which means the opportunity to inspect and copy them. One who exercises
the right must copy the records, documents and papers at his expense. The exercise of the right is
also subject to reasonable regulations to protect the integrity of the public records and to minimize
disruption to government operations, like rules specifying when and how to conduct the inspection
and copying.[35]
The right to information, however, does not extend to matters recognized as privileged
information under the separation of powers.[36] The right does not also apply to information on
military and diplomatic secrets, information affecting national security, and information on
investigations of crimes by law enforcement agencies before the prosecution of the accused, which
courts have long recognized as confidential.[37] The right may also be subject to other limitations
that Congress may impose by law.
There is no claim by PEA that the information demanded by petitioner is privileged
information rooted in the separation of powers. The information does not cover Presidential
conversations, correspondences, or discussions during closed-door Cabinet meetings which, like
internal deliberations of the Supreme Court and other collegiate courts, or executive sessions of
either house of Congress,[38] are recognized as confidential. This kind of information cannot be pried
open by a co-equal branch of government. A frank exchange of exploratory ideas and assessments,
free from the glare of publicity and pressure by interested parties, is essential to protect the
independence of decision-making of those tasked to exercise Presidential, Legislative and Judicial
power.[39] This is not the situation in the instant case.
We rule, therefore, that the constitutional right to information includes official information
on on-going negotiations before a final contract. The information, however, must constitute
definite propositions by the government and should not cover recognized exceptions like privileged
information, military and diplomatic secrets and similar matters affecting national security and
public order.[40] Congress has also prescribed other limitations on the right to information in several
legislations.[41]
Sixth issue: whether stipulations in the Amended JVA for the transfer to AMARI of lands,
reclaimed or to be reclaimed, violate the Constitution.
The Regalian Doctrine
The ownership of lands reclaimed from foreshore and submerged areas is rooted in the
Regalian doctrine which holds that the State owns all lands and waters of the public domain. Upon
the Spanish conquest of the Philippines, ownership of all lands, territories and possessions in the
Philippines passed to the Spanish Crown.[42] The King, as the sovereign ruler and representative of
the people, acquired and owned all lands and territories in the Philippines except those he disposed
of by grant or sale to private individuals.
The 1935, 1973 and 1987 Constitutions adopted the Regalian doctrine substituting, however,
the State, in lieu of the King, as the owner of all lands and waters of the public domain. The Regalian
doctrine is the foundation of the time-honored principle of land ownership that all lands that were
not acquired from the Government, either by purchase or by grant, belong to the public
domain.[43] Article 339 of the Civil Code of 1889, which is now Article 420 of the Civil Code of 1950,
incorporated the Regalian doctrine.
Ownership and Disposition of Reclaimed Lands
The Spanish Law of Waters of 1866 was the first statutory law governing the ownership and
disposition of reclaimed lands in the Philippines. On May 18, 1907, the Philippine Commission
enacted Act No. 1654 which provided for the lease, but not the sale, of reclaimed lands of the
government to corporations and individuals. Later, on November 29, 1919, the Philippine
Legislature approved Act No. 2874, the Public Land Act, which authorized the lease, but not the
sale, of reclaimed lands of the government to corporations and individuals. On November 7,
1936, the National Assembly passed Commonwealth Act No. 141, also known as the Public Land Act,
which authorized the lease, but not the sale, of reclaimed lands of the government to
corporations and individuals. CA No. 141 continues to this day as the general law governing the
classification and disposition of lands of the public domain.
The Spanish Law of Waters of 1866 and the Civil Code of 1889
Under the Spanish Law of Waters of 1866, the shores, bays, coves, inlets and all waters within
the maritime zone of the Spanish territory belonged to the public domain for public use. [44] The
Spanish Law of Waters of 1866 allowed the reclamation of the sea under Article 5, which provided
as follows:
Article 5. Lands reclaimed from the sea in consequence of works constructed by the State, or by the
provinces, pueblos or private persons, with proper permission, shall become the property of the
party constructing such works, unless otherwise provided by the terms of the grant of authority.
Under the Spanish Law of Waters, land reclaimed from the sea belonged to the party undertaking
the reclamation, provided the government issued the necessary permit and did not reserve
ownership of the reclaimed land to the State.
Article 339 of the Civil Code of 1889 defined property of public dominion as follows:
Art. 339. Property of public dominion is
1. That devoted to public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, riverbanks, shores, roadsteads, and that of a similar
character;
2. That belonging exclusively to the State which, without being of general public use, is
employed in some public service, or in the development of the national wealth,
such as walls, fortresses, and other works for the defense of the territory, and
mines, until granted to private individuals.
Property devoted to public use referred to property open for use by the public. In contrast, property
devoted to public service referred to property used for some specific public service and open only to
those authorized to use the property.
Property of public dominion referred not only to property devoted to public use, but also to
property not so used but employed to develop the national wealth. This class of property
constituted property of public dominion although employed for some economic or commercial
activity to increase the national wealth.
Article 341 of the Civil Code of 1889 governed the re-classification of property of public
dominion into private property, to wit:
Art. 341. Property of public dominion, when no longer devoted to public use or to the defense of the
territory, shall become a part of the private property of the State.
This provision, however, was not self-executing. The legislature, or the executive department
pursuant to law, must declare the property no longer needed for public use or territorial defense
before the government could lease or alienate the property to private parties.[45]
Act No. 1654 of the Philippine Commission
On May 8, 1907, the Philippine Commission enacted Act No. 1654 which regulated the lease of
reclaimed and foreshore lands. The salient provisions of this law were as follows:
Section 1. The control and disposition of the foreshore as defined in existing law, and the title to
all Government or public lands made or reclaimed by the Government by dredging or filling or
otherwise throughout the Philippine Islands, shall be retained by the Government without
prejudice to vested rights and without prejudice to rights conceded to the City of Manila in the
Luneta Extension.
Section 2. (a) The Secretary of the Interior shall cause all Government or public lands made or
reclaimed by the Government by dredging or filling or otherwise to be divided into lots or blocks,
with the necessary streets and alleyways located thereon, and shall cause plats and plans of such
surveys to be prepared and filed with the Bureau of Lands.
(b) Upon completion of such plats and plans the Governor-General shall give notice to the public
that such parts of the lands so made or reclaimed as are not needed for public purposes will be
leased for commercial and business purposes, x x x.
xxx
(e) The leases above provided for shall be disposed of to the highest and best bidder therefore,
subject to such regulations and safeguards as the Governor-General may by executive order
prescribe. (Emphasis supplied)
Act No. 1654 mandated that the government should retain title to all lands reclaimed by
the government. The Act also vested in the government control and disposition of foreshore
lands. Private parties could lease lands reclaimed by the government only if these lands were no
longer needed for public purpose. Act No. 1654 mandated public bidding in the lease of
government reclaimed lands. Act No. 1654 made government reclaimed lands sui generis in that
unlike other public lands which the government could sell to private parties, these reclaimed lands
were available only for lease to private parties.
Act No. 1654, however, did not repeal Section 5 of the Spanish Law of Waters of 1866. Act No.
1654 did not prohibit private parties from reclaiming parts of the sea under Section 5 of the Spanish
Law of Waters. Lands reclaimed from the sea by private parties with government permission
remained private lands.
Act No. 2874 of the Philippine Legislature
On November 29, 1919, the Philippine Legislature enacted Act No. 2874, the Public Land
Act.[46] The salient provisions of Act No. 2874, on reclaimed lands, were as follows:
Sec. 6. The Governor-General, upon the recommendation of the Secretary of Agriculture and
Natural Resources, shall from time to time classify the lands of the public domain into
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands, x x x.
Sec. 7. For the purposes of the government and disposition of alienable or disposable public
lands, the Governor-General, upon recommendation by the Secretary of Agriculture and Natural
Resources, shall from time to time declare what lands are open to disposition or concession
under this Act.
Sec. 8. Only those lands shall be declared open to disposition or concession which have been
officially delimited or classified x x x.
xxx
Sec. 55. Any tract of land of the public domain which, being neither timber nor mineral land, shall be
classified as suitable for residential purposes or for commercial, industrial, or other productive
purposes other than agricultural purposes, and shall be open to disposition or concession, shall
be disposed of under the provisions of this chapter, and not otherwise.
Sec. 56. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or banks of
navigable lakes or rivers;
(d) Lands not included in any of the foregoing classes.
x x x.
Sec. 58. The lands comprised in classes (a), (b), and (c) of section fifty-six shall be disposed of to
private parties by lease only and not otherwise, as soon as the Governor-General, upon
recommendation by the Secretary of Agriculture and Natural Resources, shall declare that the
same are not necessary for the public service and are open to disposition under this chapter. The
lands included in class (d) may be disposed of by sale or lease under the provisions of this
Act. (Emphasis supplied)
Section 6 of Act No. 2874 authorized the Governor-General to classify lands of the public
domain into x x x alienable or disposable[47] lands. Section 7 of the Act empowered the Governor-
General to declare what lands are open to disposition or concession. Section 8 of the Act limited
alienable or disposable lands only to those lands which have been officially delimited and classified.
Section 56 of Act No. 2874 stated that lands disposable under this title[48] shall be classified as
government reclaimed, foreshore and marshy lands, as well as other lands. All these lands, however,
must be suitable for residential, commercial, industrial or other productive non-
agricultural purposes. These provisions vested upon the Governor-General the power to classify
inalienable lands of the public domain into disposable lands of the public domain. These provisions
also empowered the Governor-General to classify further such disposable lands of the public
domain into government reclaimed, foreshore or marshy lands of the public domain, as well as
other non-agricultural lands.
Section 58 of Act No. 2874 categorically mandated that disposable lands of the public domain
classified as government reclaimed, foreshore and marshy lands shall be disposed of to private
parties by lease only and not otherwise. The Governor-General, before allowing the lease of these
lands to private parties, must formally declare that the lands were not necessary for the public
service. Act No. 2874 reiterated the State policy to lease and not to sell government reclaimed,
foreshore and marshy lands of the public domain, a policy first enunciated in 1907 in Act No.
1654. Government reclaimed, foreshore and marshy lands remained sui generis, as the only
alienable or disposable lands of the public domain that the government could not sell to private
parties.
The rationale behind this State policy is obvious. Government reclaimed, foreshore and
marshy public lands for non-agricultural purposes retain their inherent potential as areas for public
service. This is the reason the government prohibited the sale, and only allowed the lease, of these
lands to private parties. The State always reserved these lands for some future public service.
Act No. 2874 did not authorize the reclassification of government reclaimed, foreshore and
marshy lands into other non-agricultural lands under Section 56 (d). Lands falling under Section 56
(d) were the only lands for non-agricultural purposes the government could sell to private
parties. Thus, under Act No. 2874, the government could not sell government reclaimed, foreshore
and marshy lands to private parties, unless the legislature passed a law allowing their sale.[49]
Act No. 2874 did not prohibit private parties from reclaiming parts of the sea pursuant to
Section 5 of the Spanish Law of Waters of 1866. Lands reclaimed from the sea by private parties
with government permission remained private lands.
Dispositions under the 1935 Constitution
On May 14, 1935, the 1935 Constitution took effect upon its ratification by the Filipino people.
The 1935 Constitution, in adopting the Regalian doctrine, declared in Section 1, Article XIII, that
Section 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals, coal,
petroleum, and other mineral oils, all forces of potential energy and other natural resources of the
Philippines belong to the State, and their disposition, exploitation, development, or utilization shall
be limited to citizens of the Philippines or to corporations or associations at least sixty per centum
of the capital of which is owned by such citizens, subject to any existing right, grant, lease, or
concession at the time of the inauguration of the Government established under this
Constitution. Natural resources, with the exception of public agricultural land, shall not be
alienated, and no license, concession, or lease for the exploitation, development, or utilization of
any of the natural resources shall be granted for a period exceeding twenty-five years, renewable
for another twenty-five years, except as to water rights for irrigation, water supply, fisheries, or
industrial uses other than the development of water power, in which cases beneficial use may be the
measure and limit of the grant. (Emphasis supplied)
The 1935 Constitution barred the alienation of all natural resources except public agricultural
lands, which were the only natural resources the State could alienate. Thus, foreshore lands,
considered part of the States natural resources, became inalienable by constitutional fiat, available
only for lease for 25 years, renewable for another 25 years. The government could alienate
foreshore lands only after these lands were reclaimed and classified as alienable agricultural lands
of the public domain. Government reclaimed and marshy lands of the public domain, being neither
timber nor mineral lands, fell under the classification of public agricultural lands.[50] However,
government reclaimed and marshy lands, although subject to classification as disposable public
agricultural lands, could only be leased and not sold to private parties because of Act No. 2874.
The prohibition on private parties from acquiring ownership of government reclaimed and
marshy lands of the public domain was only a statutory prohibition and the legislature could
therefore remove such prohibition. The 1935 Constitution did not prohibit individuals and
corporations from acquiring government reclaimed and marshy lands of the public domain that
were classified as agricultural lands under existing public land laws. Section 2, Article XIII of the
1935 Constitution provided as follows:
Section 2. No private corporation or association may acquire, lease, or hold public agricultural
lands in excess of one thousand and twenty four hectares, nor may any individual acquire such
lands by purchase in excess of one hundred and forty hectares, or by lease in excess of one
thousand and twenty-four hectares, or by homestead in excess of twenty-four hectares. Lands
adapted to grazing, not exceeding two thousand hectares, may be leased to an individual, private
corporation, or association. (Emphasis supplied)
Still, after the effectivity of the 1935 Constitution, the legislature did not repeal Section 58 of Act No.
2874 to open for sale to private parties government reclaimed and marshy lands of the public
domain. On the contrary, the legislature continued the long established State policy of retaining for
the government title and ownership of government reclaimed and marshy lands of the public
domain.
Commonwealth Act No. 141 of the Philippine National Assembly
On November 7, 1936, the National Assembly approved Commonwealth Act No. 141, also
known as the Public Land Act, which compiled the then existing laws on lands of the public
domain. CA No. 141, as amended, remains to this day the existing general law governing the
classification and disposition of lands of the public domain other than timber and mineral lands.[51]
Section 6 of CA No. 141 empowers the President to classify lands of the public domain into
alienable or disposable[52] lands of the public domain, which prior to such classification are
inalienable and outside the commerce of man. Section 7 of CA No. 141 authorizes the President to
declare what lands are open to disposition or concession. Section 8 of CA No. 141 states that the
government can declare open for disposition or concession only lands that are officially delimited
and classified. Sections 6, 7 and 8 of CA No. 141 read as follows:
Sec. 6. The President, upon the recommendation of the Secretary of Agriculture and
Commerce, shall from time to time classify the lands of the public domain into
(a) Alienable or disposable,
 (b) Timber, and
(c) Mineral lands,
and may at any time and in like manner transfer such lands from one class to another, [53] for the
purpose of their administration and disposition.
Sec. 7. For the purposes of the administration and disposition of alienable or disposable public
lands, the President, upon recommendation by the Secretary of Agriculture and
Commerce, shall from time to time declare what lands are open to disposition or
concession under this Act.
Sec. 8. Only those lands shall be declared open to disposition or concession which have
been officially delimited and classified and, when practicable, surveyed, and which have not been
reserved for public or quasi-public uses, nor appropriated by the Government, nor in any manner
become private property, nor those on which a private right authorized and recognized by this Act
or any other valid law may be claimed, or which, having been reserved or appropriated, have ceased
to be so. x x x.
Thus, before the government could alienate or dispose of lands of the public domain, the President
must first officially classify these lands as alienable or disposable, and then declare them open to
disposition or concession. There must be no law reserving these lands for public or quasi-public
uses.
The salient provisions of CA No. 141, on government reclaimed, foreshore and marshy lands
of the public domain, are as follows:
Sec. 58. Any tract of land of the public domain which, being neither timber nor mineral land, is
intended to be used for residential purposes or for commercial, industrial, or other productive
purposes other than agricultural, and is open to disposition or concession, shall be disposed of
under the provisions of this chapter and not otherwise.
Sec. 59. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or banks of
navigable lakes or rivers;
(d) Lands not included in any of the foregoing classes.
Sec. 60. Any tract of land comprised under this title may be leased or sold, as the case may be, to any
person, corporation, or association authorized to purchase or lease public lands for agricultural
purposes. x x x.
Sec. 61. The lands comprised in classes (a), (b), and (c) of section fifty-nine shall be disposed of
to private parties by lease only and not otherwise, as soon as the President, upon
recommendation by the Secretary of Agriculture, shall declare that the same are not necessary
for the public service and are open to disposition under this chapter. The lands included in class
(d) may be disposed of by sale or lease under the provisions of this Act. (Emphasis supplied)
Section 61 of CA No. 141 readopted, after the effectivity of the 1935 Constitution, Section 58
of Act No. 2874 prohibiting the sale of government reclaimed, foreshore and marshy disposable
lands of the public domain. All these lands are intended for residential, commercial, industrial or
other non-agricultural purposes. As before, Section 61 allowed only the lease of such lands to
private parties. The government could sell to private parties only lands falling under Section 59 (d)
of CA No. 141, or those lands for non-agricultural purposes not classified as government reclaimed,
foreshore and marshy disposable lands of the public domain. Foreshore lands, however, became
inalienable under the 1935 Constitution which only allowed the lease of these lands to qualified
private parties.
Section 58 of CA No. 141 expressly states that disposable lands of the public domain intended
for residential, commercial, industrial or other productive purposes other than agricultural shall be
disposed of under the provisions of this chapter and not otherwise. Under Section 10 of CA No.
141, the term disposition includes lease of the land. Any disposition of government reclaimed,
foreshore and marshy disposable lands for non-agricultural purposes must comply with Chapter IX,
Title III of CA No. 141,[54] unless a subsequent law amended or repealed these provisions.
In his concurring opinion in the landmark case of Republic Real Estate Corporation v. Court
of Appeals,[55] Justice Reynato S. Puno summarized succinctly the law on this matter, as follows:
Foreshore lands are lands of public dominion intended for public use. So too are lands reclaimed by
the government by dredging, filling, or other means. Act 1654 mandated that the control and
disposition of the foreshore and lands under water remained in the national government. Said law
allowed only the leasing of reclaimed land. The Public Land Acts of 1919 and 1936 also declared
that the foreshore and lands reclaimed by the government were to be disposed of to private parties
by lease only and not otherwise. Before leasing, however, the Governor-General, upon
recommendation of the Secretary of Agriculture and Natural Resources, had first to determine that
the land reclaimed was not necessary for the public service. This requisite must have been met
before the land could be disposed of. But even then, the foreshore and lands under water were
not to be alienated and sold to private parties. The disposition of the reclaimed land was only
by lease. The land remained property of the State. (Emphasis supplied)
As observed by Justice Puno in his concurring opinion, Commonwealth Act No. 141 has remained in
effect at present.
The State policy prohibiting the sale to private parties of government reclaimed, foreshore
and marshy alienable lands of the public domain, first implemented in 1907 was thus reaffirmed in
CA No. 141 after the 1935 Constitution took effect. The prohibition on the sale of foreshore lands,
however, became a constitutional edict under the 1935 Constitution. Foreshore lands became
inalienable as natural resources of the State, unless reclaimed by the government and classified as
agricultural lands of the public domain, in which case they would fall under the classification of
government reclaimed lands.
After the effectivity of the 1935 Constitution, government reclaimed and marshy disposable
lands of the public domain continued to be only leased and not sold to private parties. [56]These lands
remained sui generis, as the only alienable or disposable lands of the public domain the
government could not sell to private parties.
Since then and until now, the only way the government can sell to private parties government
reclaimed and marshy disposable lands of the public domain is for the legislature to pass a law
authorizing such sale. CA No. 141 does not authorize the President to reclassify government
reclaimed and marshy lands into other non-agricultural lands under Section 59 (d). Lands classified
under Section 59 (d) are the only alienable or disposable lands for non-agricultural purposes that
the government could sell to private parties.
Moreover, Section 60 of CA No. 141 expressly requires congressional authority before lands
under Section 59 that the government previously transferred to government units or entities could
be sold to private parties. Section 60 of CA No. 141 declares that
Sec. 60. x x x The area so leased or sold shall be such as shall, in the judgment of the Secretary of
Agriculture and Natural Resources, be reasonably necessary for the purposes for which such sale or
lease is requested, and shall not exceed one hundred and forty-four hectares: Provided, however,
That this limitation shall not apply to grants, donations, or transfers made to a province,
municipality or branch or subdivision of the Government for the purposes deemed by said entities
conducive to the public interest; but the land so granted, donated, or transferred to a province,
municipality or branch or subdivision of the Government shall not be alienated, encumbered, or
otherwise disposed of in a manner affecting its title, except when authorized by Congress: x x x.
(Emphasis supplied)
The congressional authority required in Section 60 of CA No. 141 mirrors the legislative authority
required in Section 56 of Act No. 2874.
One reason for the congressional authority is that Section 60 of CA No. 141 exempted
government units and entities from the maximum area of public lands that could be acquired from
the State. These government units and entities should not just turn around and sell these lands to
private parties in violation of constitutional or statutory limitations. Otherwise, the transfer of lands
for non-agricultural purposes to government units and entities could be used to circumvent
constitutional limitations on ownership of alienable or disposable lands of the public domain. In the
same manner, such transfers could also be used to evade the statutory prohibition in CA No. 141 on
the sale of government reclaimed and marshy lands of the public domain to private parties. Section
60 of CA No. 141 constitutes by operation of law a lien on these lands. [57]
In case of sale or lease of disposable lands of the public domain falling under Section 59 of CA
No. 141, Sections 63 and 67 require a public bidding. Sections 63 and 67 of CA No. 141 provide as
follows:
Sec. 63. Whenever it is decided that lands covered by this chapter are not needed for public
purposes, the Director of Lands shall ask the Secretary of Agriculture and Commerce (now the
Secretary of Natural Resources) for authority to dispose of the same. Upon receipt of such authority,
the Director of Lands shall give notice by public advertisement in the same manner as in the case of
leases or sales of agricultural public land, x x x.
Sec. 67. The lease or sale shall be made by oral bidding; and adjudication shall be made to the
highest bidder. x x x. (Emphasis supplied)
Thus, CA No. 141 mandates the Government to put to public auction all leases or sales of alienable
or disposable lands of the public domain.[58]
Like Act No. 1654 and Act No. 2874 before it, CA No. 141 did not repeal Section 5 of the
Spanish Law of Waters of 1866. Private parties could still reclaim portions of the sea with
government permission. However, the reclaimed land could become private land only if classified
as alienable agricultural land of the public domain open to disposition under CA No. 141. The
1935 Constitution prohibited the alienation of all natural resources except public agricultural lands.
The Civil Code of 1950
The Civil Code of 1950 readopted substantially the definition of property of public dominion
found in the Civil Code of 1889. Articles 420 and 422 of the Civil Code of 1950 state that
Art. 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and
bridges constructed by the State, banks, shores, roadsteads, and others of similar
character;
(2) Those which belong to the State, without being for public use, and are intended for
some public service or for the development of the national wealth.
x x x.
Art. 422. Property of public dominion, when no longer intended for public use or for public service,
shall form part of the patrimonial property of the State.
Again, the government must formally declare that the property of public dominion is no
longer needed for public use or public service, before the same could be classified as patrimonial
property of the State.[59] In the case of government reclaimed and marshy lands of the public
domain, the declaration of their being disposable, as well as the manner of their disposition, is
governed by the applicable provisions of CA No. 141.
Like the Civil Code of 1889, the Civil Code of 1950 included as property of public dominion
those properties of the State which, without being for public use, are intended for public service or
the development of the national wealth. Thus, government reclaimed and marshy lands of the
State, even if not employed for public use or public service, if developed to enhance the national
wealth, are classified as property of public dominion.
Dispositions under the 1973 Constitution
The 1973 Constitution, which took effect on January 17, 1973, likewise adopted the Regalian
doctrine. Section 8, Article XIV of the 1973 Constitution stated that
Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all
forces of potential energy, fisheries, wildlife, and other natural resources of the Philippines belong
to the State. With the exception of agricultural, industrial or commercial, residential, and
resettlement lands of the public domain, natural resources shall not be alienated, and no
license, concession, or lease for the exploration, development, exploitation, or utilization of any of
the natural resources shall be granted for a period exceeding twenty-five years, renewable for not
more than twenty-five years, except as to water rights for irrigation, water supply, fisheries, or
industrial uses other than the development of water power, in which cases, beneficial use may be
the measure and the limit of the grant. (Emphasis supplied)
The 1973 Constitution prohibited the alienation of all natural resources with the exception of
agricultural, industrial or commercial, residential, and resettlement lands of the public domain. In
contrast, the 1935 Constitution barred the alienation of all natural resources except public
agricultural lands. However, the term public agricultural lands in the 1935 Constitution
encompassed industrial, commercial, residential and resettlement lands of the public domain.[60] If
the land of public domain were neither timber nor mineral land, it would fall under the classification
of agricultural land of the public domain. Both the 1935 and 1973 Constitutions, therefore,
prohibited the alienation of all natural resources except agricultural lands of the public
domain.
The 1973 Constitution, however, limited the alienation of lands of the public domain to
individuals who were citizens of the Philippines. Private corporations, even if wholly owned by
Philippine citizens, were no longer allowed to acquire alienable lands of the public domain unlike in
the 1935 Constitution. Section 11, Article XIV of the 1973 Constitution declared that
Sec. 11. The Batasang Pambansa, taking into account conservation, ecological, and development
requirements of the natural resources, shall determine by law the size of land of the public domain
which may be developed, held or acquired by, or leased to, any qualified individual, corporation, or
association, and the conditions therefor. No private corporation or association may hold
alienable lands of the public domain except by lease not to exceed one thousand hectares in area
nor may any citizen hold such lands by lease in excess of five hundred hectares or acquire by
purchase, homestead or grant, in excess of twenty-four hectares. No private corporation or
association may hold by lease, concession, license or permit, timber or forest lands and other timber
or forest resources in excess of one hundred thousand hectares. However, such area may be
increased by the Batasang Pambansa upon recommendation of the National Economic and
Development Authority. (Emphasis supplied)
Thus, under the 1973 Constitution, private corporations could hold alienable lands of the
public domain only through lease. Only individuals could now acquire alienable lands of the public
domain, and private corporations became absolutely barred from acquiring any kind of
alienable land of the public domain. The constitutional ban extended to all kinds of alienable lands
of the public domain, while the statutory ban under CA No. 141 applied only to government
reclaimed, foreshore and marshy alienable lands of the public domain.
PD No. 1084 Creating the Public Estates Authority
In order for PEA to sell its reclaimed foreshore and submerged alienable lands of the public
domain, there must be legislative authority empowering PEA to sell these lands. This legislative
authority is necessary in view of Section 60 of CA No.141, which states
Sec. 60. x x x; but the land so granted, donated or transferred to a province, municipality, or branch
or subdivision of the Government shall not be alienated, encumbered or otherwise disposed of in a
manner affecting its title, except when authorized by Congress; x x x. (Emphasis supplied)
Without such legislative authority, PEA could not sell but only lease its reclaimed foreshore and
submerged alienable lands of the public domain. Nevertheless, any legislative authority granted to
PEA to sell its reclaimed alienable lands of the public domain would be subject to the constitutional
ban on private corporations from acquiring alienable lands of the public domain. Hence, such
legislative authority could only benefit private individuals.

Dispositions under the 1987 Constitution

On February 4, 1977, then President Ferdinand Marcos issued Presidential Decree No. 1084
creating PEA, a wholly government owned and controlled corporation with a special
charter. Sections 4 and 8 of PD No. 1084, vests PEA with the following purposes and powers:
The 1987 Constitution, like the 1935 and 1973 Constitutions before it, has adopted the
Regalian doctrine. The 1987 Constitution declares that all natural resources are owned by the State,
Sec. 4. Purpose. The Authority is hereby created for the following purposes: and except for alienable agricultural lands of the public domain, natural resources cannot be
(a) To reclaim land, including foreshore and submerged areas, by dredging, filling alienated. Sections 2 and 3, Article XII of the 1987 Constitution state that
or other means, or to acquire reclaimed land;
(b) To develop, improve, acquire, administer, deal in, subdivide, dispose, lease and sell
Section 2. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all
any and all kinds of lands, buildings, estates and other forms of real property, owned,
forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural
managed, controlled and/or operated by the government;
resources are owned by the State. With the exception of agricultural lands, all other natural
(c) To provide for, operate or administer such service as may be necessary for the efficient,
resources shall not be alienated. The exploration, development, and utilization of natural
economical and beneficial utilization of the above properties.
resources shall be under the full control and supervision of the State. x x x.

Sec. 5. Powers and functions of the Authority. The Authority shall, in carrying out the purposes for
Section 3. Lands of the public domain are classified into agricultural, forest or timber, mineral lands,
which it is created, have the following powers and functions:
and national parks. Agricultural lands of the public domain may be further classified by law
(a)To prescribe its by-laws.
according to the uses which they may be devoted. Alienable lands of the public domain shall be
xxx
limited to agricultural lands. Private corporations or associations may not hold such alienable
(i) To hold lands of the public domain in excess of the area permitted to private
lands of the public domain except by lease, for a period not exceeding twenty-five years,
corporations by statute.
renewable for not more than twenty-five years, and not to exceed one thousand hectares in
(j) To reclaim lands and to construct work across, or otherwise, any stream,
area. Citizens of the Philippines may lease not more than five hundred hectares, or acquire not
watercourse, canal, ditch, flume x x x.
more than twelve hectares thereof by purchase, homestead, or grant.
xxx
(o) To perform such acts and exercise such functions as may be necessary for the attainment of the
purposes and objectives herein specified. (Emphasis supplied) Taking into account the requirements of conservation, ecology, and development, and subject to the
requirements of agrarian reform, the Congress shall determine, by law, the size of lands of the public
domain which may be acquired, developed, held, or leased and the conditions therefor. (Emphasis
PD No. 1084 authorizes PEA to reclaim both foreshore and submerged areas of the public
supplied)
domain. Foreshore areas are those covered and uncovered by the ebb and flow of the
tide.[61] Submerged areas are those permanently under water regardless of the ebb and flow of the
tide.[62] Foreshore and submerged areas indisputably belong to the public domain[63]and are The 1987 Constitution continues the State policy in the 1973 Constitution banning private
inalienable unless reclaimed, classified as alienable lands open to disposition, and further declared corporations from acquiring any kind of alienable land of the public domain. Like the 1973
no longer needed for public service. Constitution, the 1987 Constitution allows private corporations to hold alienable lands of the public
domain only through lease. As in the 1935 and 1973 Constitutions, the general law governing the
The ban in the 1973 Constitution on private corporations from acquiring alienable lands of lease to private corporations of reclaimed, foreshore and marshy alienable lands of the public
the public domain did not apply to PEA since it was then, and until today, a fully owned government domain is still CA No. 141.
corporation. The constitutional ban applied then, as it still applies now, only to private corporations
and associations. PD No. 1084 expressly empowers PEA to hold lands of the public domain even in
excess of the area permitted to private corporations by statute. Thus, PEA can hold title to private
lands, as well as title to lands of the public domain. The Rationale behind the Constitutional Ban
 The rationale behind the constitutional ban on corporations from acquiring, except through
lease, alienable lands of the public domain is not well understood. During the deliberations of the
1986 Constitutional Commission, the commissioners probed the rationale behind this ban, thus:
FR. BERNAS: Mr. Vice-President, my questions have reference to page 3, line 5 which says:
`No private corporation or association may hold alienable lands of the public domain
except by lease, not to exceed one thousand hectares in area.
If we recall, this provision did not exist under the 1935 Constitution, but this was introduced in the
1973 Constitution. In effect, it prohibits private corporations from acquiring alienable public
lands. But it has not been very clear in jurisprudence what the reason for this is. In some of the
cases decided in 1982 and 1983, it was indicated that the purpose of this is to prevent large
landholdings. Is that the intent of this provision?
MR. VILLEGAS: I think that is the spirit of the provision.
FR. BERNAS: In existing decisions involving the Iglesia ni Cristo, there were instances where the
Iglesia ni Cristo was not allowed to acquire a mere 313-square meter land where a chapel stood
because the Supreme Court said it would be in violation of this. (Emphasis supplied)
In Ayog v. Cusi,[64] the Court explained the rationale behind this constitutional ban in this
way:
Indeed, one purpose of the constitutional prohibition against purchases of public agricultural lands
by private corporations is to equitably diffuse land ownership or to encourage owner-cultivatorship
and the economic family-size farm and to prevent a recurrence of cases like the instant case. Huge
landholdings by corporations or private persons had spawned social unrest.
However, if the constitutional intent is to prevent huge landholdings, the Constitution could have
simply limited the size of alienable lands of the public domain that corporations could acquire. The
Constitution could have followed the limitations on individuals, who could acquire not more than 24
hectares of alienable lands of the public domain under the 1973 Constitution, and not more than 12
hectares under the 1987 Constitution.
If the constitutional intent is to encourage economic family-size farms, placing the land in the
name of a corporation would be more effective in preventing the break-up of farmlands. If the
farmland is registered in the name of a corporation, upon the death of the owner, his heirs would
inherit shares in the corporation instead of subdivided parcels of the farmland. This would prevent
the continuing break-up of farmlands into smaller and smaller plots from one generation to the
next.
In actual practice, the constitutional ban strengthens the constitutional limitation on
individuals from acquiring more than the allowed area of alienable lands of the public
domain.Without the constitutional ban, individuals who already acquired the maximum area of
alienable lands of the public domain could easily set up corporations to acquire more alienable
public lands. An individual could own as many corporations as his means would allow him. An
individual could even hide his ownership of a corporation by putting his nominees as stockholders
of the corporation. The corporation is a convenient vehicle to circumvent the constitutional
limitation on acquisition by individuals of alienable lands of the public domain.
The constitutional intent, under the 1973 and 1987 Constitutions, is to transfer ownership of
only a limited area of alienable land of the public domain to a qualified individual. This
constitutional intent is safeguarded by the provision prohibiting corporations from acquiring
alienable lands of the public domain, since the vehicle to circumvent the constitutional intent is
removed. The available alienable public lands are gradually decreasing in the face of an ever-
growing population. The most effective way to insure faithful adherence to this constitutional intent
is to grant or sell alienable lands of the public domain only to individuals. This, it would seem, is the
practical benefit arising from the constitutional ban.
The Amended Joint Venture Agreement
The subject matter of the Amended JVA, as stated in its second Whereas clause, consists of
three properties, namely:
1. [T]hree partially reclaimed and substantially eroded islands along Emilio Aguinaldo
Boulevard in Paranaque and Las Pinas, Metro Manila, with a combined titled area
of 1,578,441 square meters;
2. [A]nother area of 2,421,559 square meters contiguous to the three islands; and
3. [A]t AMARIs option as approved by PEA, an additional 350 hectares more or less to
regularize the configuration of the reclaimed area.[65]
PEA confirms that the Amended JVA involves the development of the Freedom Islands and further
reclamation of about 250 hectares x x x, plus an option granted to AMARI to subsequently reclaim
another 350 hectares x x x.[66]
In short, the Amended JVA covers a reclamation area of 750 hectares. Only 157.84 hectares
of the 750-hectare reclamation project have been reclaimed, and the rest of the 592.15 hectares
are still submerged areas forming part of Manila Bay.
Under the Amended JVA, AMARI will reimburse PEA the sum of P1,894,129,200.00 for PEAs
actual cost in partially reclaiming the Freedom Islands. AMARI will also complete, at its own
expense, the reclamation of the Freedom Islands. AMARI will further shoulder all the reclamation
costs of all the other areas, totaling 592.15 hectares, still to be reclaimed.AMARI and PEA will share,
in the proportion of 70 percent and 30 percent, respectively, the total net usable area which is
defined in the Amended JVA as the total reclaimed area less 30 percent earmarked for common
areas. Title to AMARIs share in the net usable area, totaling 367.5 hectares, will be issued in the
name of AMARI. Section 5.2 (c) of the Amended JVA provides that
x x x, PEA shall have the duty to execute without delay the necessary deed of transfer or conveyance
of the title pertaining to AMARIs Land share based on the Land Allocation Plan. PEA, when
requested in writing by AMARI, shall then cause the issuance and delivery of the proper
certificates of title covering AMARIs Land Share in the name of AMARI,x x x; provided, that if
more than seventy percent (70%) of the titled area at any given time pertains to AMARI, PEA shall
deliver to AMARI only seventy percent (70%) of the titles pertaining to AMARI, until such time
when a corresponding proportionate area of additional land pertaining to PEA has been
titled. (Emphasis supplied)
Indisputably, under the Amended JVA AMARI will acquire and own a maximum of 367.5
hectares of reclaimed land which will be titled in its name.
To implement the Amended JVA, PEA delegated to the unincorporated PEA-AMARI joint
venture PEAs statutory authority, rights and privileges to reclaim foreshore and submerged areas in
Manila Bay. Section 3.2.a of the Amended JVA states that
PEA hereby contributes to the joint venture its rights and privileges to perform Rawland
Reclamation and Horizontal Development as well as own the Reclamation Area, thereby granting
the Joint Venture the full and exclusive right, authority and privilege to undertake the Project in
accordance with the Master Development Plan.
The Amended JVA is the product of a renegotiation of the original JVA dated April 25, 1995 and its
supplemental agreement dated August 9, 1995.
The Threshold Issue
The threshold issue is whether AMARI, a private corporation, can acquire and own under the
Amended JVA 367.5 hectares of reclaimed foreshore and submerged areas in Manila Bay in view of
Sections 2 and 3, Article XII of the 1987 Constitution which state that:
Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils,
all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural
resources are owned by the State. With the exception of agricultural lands, all other natural
resources shall not be alienated. x x x.
xxx
Section 3. x x x Alienable lands of the public domain shall be limited to agricultural lands. Private
corporations or associations may not hold such alienable lands of the public domain except by
lease, x x x.(Emphasis supplied)
Classification of Reclaimed Foreshore and Submerged Areas
PEA readily concedes that lands reclaimed from foreshore or submerged areas of Manila Bay
are alienable or disposable lands of the public domain. In its Memorandum,[67] PEA admits that
Under the Public Land Act (CA 141, as amended), reclaimed lands are classified as alienable and
disposable lands of the public domain:
Sec. 59. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the government by dredging, filling, or other
means;
x x x. (Emphasis supplied)
Likewise, the Legal Task Force[68] constituted under Presidential Administrative Order No.
365 admitted in its Report and Recommendation to then President Fidel V. Ramos, [R]eclaimed
lands are classified as alienable and disposable lands of the public domain.[69] The Legal Task
Force concluded that
D. Conclusion
Reclaimed lands are lands of the public domain. However, by statutory authority, the rights of
ownership and disposition over reclaimed lands have been transferred to PEA, by virtue of which
PEA, as owner, may validly convey the same to any qualified person without violating the
Constitution or any statute.
The constitutional provision prohibiting private corporations from holding public land, except by
lease (Sec. 3, Art. XVII,[70] 1987 Constitution), does not apply to reclaimed lands whose ownership
has passed on to PEA by statutory grant.
Under Section 2, Article XII of the 1987 Constitution, the foreshore and submerged areas of
Manila Bay are part of the lands of the public domain, waters x x x and other natural resources and
consequently owned by the State. As such, foreshore and submerged areas shall not be alienated,
unless they are classified as agricultural lands of the public domain.The mere reclamation of these
areas by PEA does not convert these inalienable natural resources of the State into alienable or
disposable lands of the public domain. There must be a law or presidential proclamation officially
classifying these reclaimed lands as alienable or disposable and open to disposition or
concession. Moreover, these reclaimed lands cannot be classified as alienable or disposable if the
law has reserved them for some public or quasi-public use.[71]
Section 8 of CA No. 141 provides that only those lands shall be declared open to disposition or
concession which have been officially delimited and classified.[72] The President has the authority
to classify inalienable lands of the public domain into alienable or disposable lands of the public
domain, pursuant to Section 6 of CA No. 141. In Laurel vs. Garcia,[73]the Executive Department
attempted to sell the Roppongi property in Tokyo, Japan, which was acquired by the Philippine
Government for use as the Chancery of the Philippine Embassy. Although the Chancery had
transferred to another location thirteen years earlier, the Court still ruled that, under Article
422[74] of the Civil Code, a property of public dominion retains such character until formally
declared otherwise. The Court ruled that
The fact that the Roppongi site has not been used for a long time for actual Embassy service does
not automatically convert it to patrimonial property. Any such conversion happens only if the
property is withdrawn from public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66 SCRA 481
[1975]. A property continues to be part of the public domain, not available for private
appropriation or ownership until there is a formal declaration on the part of the government to
withdraw it from being such (Ignacio v. Director of Lands, 108 Phil. 335 [1960]. (Emphasis
supplied)
PD No. 1085, issued on February 4, 1977, authorized the issuance of special land patents for
lands reclaimed by PEA from the foreshore or submerged areas of Manila Bay. On January 19, 1988
then President Corazon C. Aquino issued Special Patent No. 3517 in the name of PEA for the 157.84
hectares comprising the partially reclaimed Freedom Islands.Subsequently, on April 9, 1999 the
Register of Deeds of the Municipality of Paranaque issued TCT Nos. 7309, 7311 and 7312 in the
name of PEA pursuant to Section 103 of PD No. 1529 authorizing the issuance of certificates of title
corresponding to land patents. To this day, these certificates of title are still in the name of PEA.
PD No. 1085, coupled with President Aquinos actual issuance of a special patent covering the
Freedom Islands, is equivalent to an official proclamation classifying the Freedom Islands as
alienable or disposable lands of the public domain. PD No. 1085 and President Aquinos issuance of a
land patent also constitute a declaration that the Freedom Islands are no longer needed for public
service. The Freedom Islands are thus alienable or disposable lands of the public domain, open
to disposition or concession to qualified parties.
At the time then President Aquino issued Special Patent No. 3517, PEA had already reclaimed
the Freedom Islands although subsequently there were partial erosions on some areas. The
government had also completed the necessary surveys on these islands. Thus, the Freedom Islands
were no longer part of Manila Bay but part of the land mass. Section 3, Article XII of the 1987
Constitution classifies lands of the public domain into agricultural, forest or timber, mineral lands,
and national parks. Being neither timber, mineral, nor national park lands, the reclaimed Freedom
Islands necessarily fall under the classification of agricultural lands of the public domain. Under the
1987 Constitution, agricultural lands of the public domain are the only natural resources that the
State may alienate to qualified private parties. All other natural resources, such as the seas or bays,
are waters x x x owned by the State forming part of the public domain, and are inalienable pursuant
to Section 2, Article XII of the 1987 Constitution.
AMARI claims that the Freedom Islands are private lands because CDCP, then a private
corporation, reclaimed the islands under a contract dated November 20, 1973 with the
Commissioner of Public Highways. AMARI, citing Article 5 of the Spanish Law of Waters of 1866,
argues that if the ownership of reclaimed lands may be given to the party constructing the works,
then it cannot be said that reclaimed lands are lands of the public domain which the State may not
alienate.[75] Article 5 of the Spanish Law of Waters reads as follows:
Article 5. Lands reclaimed from the sea in consequence of works constructed by the State, or by the
provinces, pueblos or private persons, with proper permission, shall become the property of the
party constructing such works, unless otherwise provided by the terms of the grant of authority.
(Emphasis supplied)
Under Article 5 of the Spanish Law of Waters of 1866, private parties could reclaim from the
sea only with proper permission from the State. Private parties could own the reclaimed land only if
not otherwise provided by the terms of the grant of authority. This clearly meant that no one could
reclaim from the sea without permission from the State because the sea is property of public
dominion. It also meant that the State could grant or withhold ownership of the reclaimed land
because any reclaimed land, like the sea from which it emerged, belonged to the State. Thus, a
private person reclaiming from the sea without permission from the State could not acquire
ownership of the reclaimed land which would remain property of public dominion like the sea it
replaced.[76] Article 5 of the Spanish Law of Waters of 1866 adopted the time-honored principle of
land ownership that all lands that were not acquired from the government, either by purchase or by
grant, belong to the public domain.[77]
Article 5 of the Spanish Law of Waters must be read together with laws subsequently enacted
on the disposition of public lands. In particular, CA No. 141 requires that lands of the public domain
must first be classified as alienable or disposable before the government can alienate them. These
lands must not be reserved for public or quasi-public purposes.[78]Moreover, the contract between
CDCP and the government was executed after the effectivity of the 1973 Constitution which barred
private corporations from acquiring any kind of alienable land of the public domain. This contract
could not have converted the Freedom Islands into private lands of a private corporation.
Presidential Decree No. 3-A, issued on January 11, 1973, revoked all laws authorizing the
reclamation of areas under water and revested solely in the National Government the power to
reclaim lands. Section 1 of PD No. 3-A declared that
The provisions of any law to the contrary notwithstanding, the reclamation of areas under water,
whether foreshore or inland, shall be limited to the National Government or any person
authorized by it under a proper contract. (Emphasis supplied)
x x x.
PD No. 3-A repealed Section 5 of the Spanish Law of Waters of 1866 because reclamation of areas
under water could now be undertaken only by the National Government or by a person contracted
by the National Government. Private parties may reclaim from the sea only under a contract with
the National Government, and no longer by grant or permission as provided in Section 5 of the
Spanish Law of Waters of 1866.
Executive Order No. 525, issued on February 14, 1979, designated PEA as the National
Governments implementing arm to undertake all reclamation projects of the government,
which shall be undertaken by the PEA or through a proper contract executed by it with any
person or entity. Under such contract, a private party receives compensation for reclamation
services rendered to PEA. Payment to the contractor may be in cash, or in kind consisting of
portions of the reclaimed land, subject to the constitutional ban on private corporations from
acquiring alienable lands of the public domain. The reclaimed land can be used as payment in kind
only if the reclaimed land is first classified as alienable or disposable land open to disposition, and
then declared no longer needed for public service.
The Amended JVA covers not only the Freedom Islands, but also an additional 592.15
hectares which are still submerged and forming part of Manila Bay. There is no legislative or
Presidential act classifying these submerged areas as alienable or disposable lands of the
public domain open to disposition. These submerged areas are not covered by any patent or
certificate of title. There can be no dispute that these submerged areas form part of the public
domain, and in their present state are inalienable and outside the commerce of man. Until
reclaimed from the sea, these submerged areas are, under the Constitution, waters x x x owned by
the State, forming part of the public domain and consequently inalienable. Only when actually
reclaimed from the sea can these submerged areas be classified as public agricultural lands, which
under the Constitution are the only natural resources that the State may alienate. Once reclaimed
and transformed into public agricultural lands, the government may then officially classify these
lands as alienable or disposable lands open to disposition. Thereafter, the government may declare
these lands no longer needed for public service. Only then can these reclaimed lands be considered
alienable or disposable lands of the public domain and within the commerce of man.
The classification of PEAs reclaimed foreshore and submerged lands into alienable or
disposable lands open to disposition is necessary because PEA is tasked under its charter to
undertake public services that require the use of lands of the public domain. Under Section 5 of PD
No. 1084, the functions of PEA include the following: [T]o own or operate railroads, tramways and
other kinds of land transportation, x x x; [T]o construct, maintain and operate such systems of
sanitary sewers as may be necessary; [T]o construct, maintain and operate such storm drains as
may be necessary. PEA is empowered to issue rules and regulations as may be necessary for the
proper use by private parties of any or all of the highways, roads, utilities, buildings and/or any
of its properties and to impose or collect fees or tolls for their use. Thus, part of the reclaimed
foreshore and submerged lands held by the PEA would actually be needed for public use or service
since many of the functions imposed on PEA by its charter constitute essential public services.
Moreover, Section 1 of Executive Order No. 525 provides that PEA shall be primarily
responsible for integrating, directing, and coordinating all reclamation projects for and on behalf of
the National Government. The same section also states that [A]ll reclamation projects shall be
approved by the President upon recommendation of the PEA, and shall be undertaken by the PEA or
through a proper contract executed by it with any person or entity; x x x. Thus, under EO No. 525, in
relation to PD No. 3-A and PD No.1084, PEA became the primary implementing agency of the
National Government to reclaim foreshore and submerged lands of the public domain. EO No. 525
recognized PEA as the government entity to undertake the reclamation of lands and ensure their
maximum utilization in promoting public welfare and interests.[79] Since large portions of these
reclaimed lands would obviously be needed for public service, there must be a formal declaration
segregating reclaimed lands no longer needed for public service from those still needed for public
service.
Section 3 of EO No. 525, by declaring that all lands reclaimed by PEA shall belong to or be
owned by the PEA, could not automatically operate to classify inalienable lands into alienable or
disposable lands of the public domain. Otherwise, reclaimed foreshore and submerged lands of the
public domain would automatically become alienable once reclaimed by PEA, whether or not
classified as alienable or disposable.
The Revised Administrative Code of 1987, a later law than either PD No. 1084 or EO No. 525,
vests in the Department of Environment and Natural Resources (DENR for brevity) the following
powers and functions:
Sec. 4. Powers and Functions. The Department shall:
(1) x x x
xxx
(4) Exercise supervision and control over forest lands, alienable and disposable public lands,
mineral resources and, in the process of exercising such control, impose appropriate taxes, fees,
charges, rentals and any such form of levy and collect such revenues for the exploration,
development, utilization or gathering of such resources;
xxx
(14) Promulgate rules, regulations and guidelines on the issuance of licenses, permits,
concessions, lease agreements and such other privileges concerning the development,
exploration and utilization of the countrys marine, freshwater, and brackish water and over all
aquatic resources of the country and shall continue to oversee, supervise and police our natural
resources; cancel or cause to cancel such privileges upon failure, non-compliance or violations of
any regulation, order, and for all other causes which are in furtherance of the conservation of
natural resources and supportive of the national interest;
(15) Exercise exclusive jurisdiction on the management and disposition of all lands of the
public domain and serve as the sole agency responsible for classification, sub-classification,
surveying and titling of lands in consultation with appropriate agencies. [80] (Emphasis supplied)
As manager, conservator and overseer of the natural resources of the State, DENR exercises
supervision and control over alienable and disposable public lands. DENR also exercises exclusive
jurisdiction on the management and disposition of all lands of the public domain. Thus, DENR
decides whether areas under water, like foreshore or submerged areas of Manila Bay, should be
reclaimed or not. This means that PEA needs authorization from DENR before PEA can undertake
reclamation projects in Manila Bay, or in any part of the country.
DENR also exercises exclusive jurisdiction over the disposition of all lands of the public
domain. Hence, DENR decides whether reclaimed lands of PEA should be classified as alienable
under Sections 6[81] and 7[82] of CA No. 141. Once DENR decides that the reclaimed lands should be
so classified, it then recommends to the President the issuance of a proclamation classifying the
lands as alienable or disposable lands of the public domain open to disposition. We note that then
DENR Secretary Fulgencio S. Factoran, Jr. countersigned Special Patent No. 3517 in compliance with
the Revised Administrative Code and Sections 6 and 7 of CA No. 141.
In short, DENR is vested with the power to authorize the reclamation of areas under water,
while PEA is vested with the power to undertake the physical reclamation of areas under water,
whether directly or through private contractors. DENR is also empowered to classify lands of the
public domain into alienable or disposable lands subject to the approval of the President. On the
other hand, PEA is tasked to develop, sell or lease the reclaimed alienable lands of the public
domain.
Clearly, the mere physical act of reclamation by PEA of foreshore or submerged areas does
not make the reclaimed lands alienable or disposable lands of the public domain, much less
patrimonial lands of PEA. Likewise, the mere transfer by the National Government of lands of the
public domain to PEA does not make the lands alienable or disposable lands of the public domain,
much less patrimonial lands of PEA.
Absent two official acts a classification that these lands are alienable or disposable and open
to disposition and a declaration that these lands are not needed for public service, lands reclaimed
by PEA remain inalienable lands of the public domain. Only such an official classification and formal
declaration can convert reclaimed lands into alienable or disposable lands of the public domain,
open to disposition under the Constitution, Title I and Title III[83] of CA No. 141 and other applicable
laws.[84]
PEAs Authority to Sell Reclaimed Lands
PEA, like the Legal Task Force, argues that as alienable or disposable lands of the public
domain, the reclaimed lands shall be disposed of in accordance with CA No. 141, the Public Land
Act. PEA, citing Section 60 of CA No. 141, admits that reclaimed lands transferred to a branch or
subdivision of the government shall not be alienated, encumbered, or otherwise disposed of in a
manner affecting its title, except when authorized by Congress: x x x.[85] (Emphasis by PEA)
In Laurel vs. Garcia,[86] the Court cited Section 48 of the Revised Administrative Code of
1987, which states that
Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the Government
is authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the
government by the following: x x x.
Thus, the Court concluded that a law is needed to convey any real property belonging to the
Government. The Court declared that -
It is not for the President to convey real property of the government on his or her own sole will. Any
such conveyance must be authorized and approved by a law enacted by the Congress. It requires
executive and legislative concurrence. (Emphasis supplied)
PEA contends that PD No. 1085 and EO No. 525 constitute the legislative authority allowing
PEA to sell its reclaimed lands. PD No. 1085, issued on February 4, 1977, provides that
The land reclaimed in the foreshore and offshore area of Manila Bay pursuant to the contract for
the reclamation and construction of the Manila-Cavite Coastal Road Project between the Republic of
the Philippines and the Construction and Development Corporation of the Philippines dated
November 20, 1973 and/or any other contract or reclamation covering the same area is hereby
transferred, conveyed and assigned to the ownership and administration of the Public Estates
Authority established pursuant to PD No. 1084; Provided, however, That the rights and interests of
the Construction and Development Corporation of the Philippines pursuant to the aforesaid
contract shall be recognized and respected.
Henceforth, the Public Estates Authority shall exercise the rights and assume the obligations of the
Republic of the Philippines (Department of Public Highways) arising from, or incident to, the
aforesaid contract between the Republic of the Philippines and the Construction and Development
Corporation of the Philippines.
In consideration of the foregoing transfer and assignment, the Public Estates Authority shall issue in
favor of the Republic of the Philippines the corresponding shares of stock in said entity with an
issued value of said shares of stock (which) shall be deemed fully paid and non-assessable.
The Secretary of Public Highways and the General Manager of the Public Estates Authority shall
execute such contracts or agreements, including appropriate agreements with the Construction and
Development Corporation of the Philippines, as may be necessary to implement the above.
Special land patent/patents shall be issued by the Secretary of Natural Resources in favor of the
Public Estates Authority without prejudice to the subsequent transfer to the contractor or his
assignees of such portion or portions of the land reclaimed or to be reclaimed as provided for in
the above-mentioned contract. On the basis of such patents, the Land Registration Commission
shall issue the corresponding certificate of title. (Emphasis supplied)
On the other hand, Section 3 of EO No. 525, issued on February 14, 1979, provides that -
Sec. 3. All lands reclaimed by PEA shall belong to or be owned by the PEA which shall be
responsible for its administration, development, utilization or disposition in accordance with the
provisions of Presidential Decree No. 1084. Any and all income that the PEA may derive from the
sale, lease or use of reclaimed lands shall be used in accordance with the provisions of Presidential
Decree No. 1084.
There is no express authority under either PD No. 1085 or EO No. 525 for PEA to sell its
reclaimed lands. PD No. 1085 merely transferred ownership and administration of lands reclaimed
from Manila Bay to PEA, while EO No. 525 declared that lands reclaimed by PEA shall belong to or
be owned by PEA. EO No. 525 expressly states that PEA should dispose of its reclaimed lands in
accordance with the provisions of Presidential Decree No. 1084, the charter of PEA.
PEAs charter, however, expressly tasks PEA to develop, improve, acquire, administer, deal in,
subdivide, dispose, lease and sell any and all kinds of lands x x x owned, managed, controlled
and/or operated by the government.[87] (Emphasis supplied) There is, therefore, legislative
authority granted to PEA to sell its lands, whether patrimonial or alienable lands of the public
domain. PEA may sell to private parties its patrimonial properties in accordance with the PEA
charter free from constitutional limitations. The constitutional ban on private corporations from
acquiring alienable lands of the public domain does not apply to the sale of PEAs patrimonial lands.
PEA may also sell its alienable or disposable lands of the public domain to private
individuals since, with the legislative authority, there is no longer any statutory prohibition against
such sales and the constitutional ban does not apply to individuals. PEA, however, cannot sell any of
its alienable or disposable lands of the public domain to private corporations since Section 3, Article
XII of the 1987 Constitution expressly prohibits such sales. The legislative authority benefits only
individuals. Private corporations remain barred from acquiring any kind of alienable land of the
public domain, including government reclaimed lands.
The provision in PD No. 1085 stating that portions of the reclaimed lands could be transferred
by PEA to the contractor or his assignees (Emphasis supplied) would not apply to private
corporations but only to individuals because of the constitutional ban. Otherwise, the provisions of
PD No. 1085 would violate both the 1973 and 1987 Constitutions.
The requirement of public auction in the sale of reclaimed lands
Assuming the reclaimed lands of PEA are classified as alienable or disposable lands open to
disposition, and further declared no longer needed for public service, PEA would have to conduct a
public bidding in selling or leasing these lands. PEA must observe the provisions of Sections 63 and
67 of CA No. 141 requiring public auction, in the absence of a law exempting PEA from holding a
public auction.[88] Special Patent No. 3517 expressly states that the patent is issued by authority of
the Constitution and PD No. 1084, supplemented by Commonwealth Act No. 141, as amended. This
is an acknowledgment that the provisions of CA No. 141 apply to the disposition of reclaimed
alienable lands of the public domain unless otherwise provided by law. Executive Order No.
654,[89] which authorizes PEA to determine the kind and manner of payment for the transfer of its
assets and properties, does not exempt PEA from the requirement of public auction. EO No. 654
merely authorizes PEA to decide the mode of payment, whether in kind and in installment, but does
not authorize PEA to dispense with public auction.
Moreover, under Section 79 of PD No. 1445, otherwise known as the Government Auditing
Code, the government is required to sell valuable government property through public
bidding. Section 79 of PD No. 1445 mandates that
Section 79. When government property has become unserviceable for any cause, or is no longer
needed, it shall, upon application of the officer accountable therefor, be inspected by the head of the
agency or his duly authorized representative in the presence of the auditor concerned and, if found
to be valueless or unsaleable, it may be destroyed in their presence. If found to be valuable, it may
be sold at public auction to the highest bidder under the supervision of the proper committee on
award or similar body in the presence of the auditor concerned or other authorized representative
of the Commission, after advertising by printed notice in the Official Gazette, or for not less than
three consecutive days in any newspaper of general circulation, or where the value of the
property does not warrant the expense of publication, by notices posted for a like period in at least
three public places in the locality where the property is to be sold. In the event that the public
auction fails, the property may be sold at a private sale at such price as may be fixed by the
same committee or body concerned and approved by the Commission.
It is only when the public auction fails that a negotiated sale is allowed, in which case the
Commission on Audit must approve the selling price.[90] The Commission on Audit implements
Section 79 of the Government Auditing Code through Circular No. 89-296[91] dated January 27,
1989. This circular emphasizes that government assets must be disposed of only through public
auction, and a negotiated sale can be resorted to only in case of failure of public auction.
At the public auction sale, only Philippine citizens are qualified to bid for PEAs reclaimed
foreshore and submerged alienable lands of the public domain. Private corporations are barred
from bidding at the auction sale of any kind of alienable land of the public domain.
PEA originally scheduled a public bidding for the Freedom Islands on December 10,
1991. PEA imposed a condition that the winning bidder should reclaim another 250 hectares of
submerged areas to regularize the shape of the Freedom Islands, under a 60-40 sharing of the
additional reclaimed areas in favor of the winning bidder.[92] No one, however, submitted a bid. On
December 23, 1994, the Government Corporate Counsel advised PEA it could sell the Freedom
Islands through negotiation, without need of another public bidding, because of the failure of the
public bidding on December 10, 1991.[93]
However, the original JVA dated April 25, 1995 covered not only the Freedom Islands and the
additional 250 hectares still to be reclaimed, it also granted an option to AMARI to reclaim another
350 hectares. The original JVA, a negotiated contract, enlarged the reclamation area to 750
hectares.[94] The failure of public bidding on December 10, 1991, involving only 407.84
hectares,[95] is not a valid justification for a negotiated sale of 750 hectares, almost double the area
publicly auctioned. Besides, the failure of public bidding happened on December 10, 1991, more
than three years before the signing of the original JVA on April 25, 1995. The economic situation in
the country had greatly improved during the intervening period.
Reclamation under the BOT Law and the Local Government Code
The constitutional prohibition in Section 3, Article XII of the 1987 Constitution is absolute and
clear: Private corporations or associations may not hold such alienable lands of the public domain
except by lease, x x x. Even Republic Act No. 6957 (BOT Law, for brevity), cited by PEA and AMARI
as legislative authority to sell reclaimed lands to private parties, recognizes the constitutional
ban. Section 6 of RA No. 6957 states
Sec. 6. Repayment Scheme. - For the financing, construction, operation and maintenance of any
infrastructure projects undertaken through the build-operate-and-transfer arrangement or any of
its variations pursuant to the provisions of this Act, the project proponent x x x may likewise be
repaid in the form of a share in the revenue of the project or other non-monetary payments, such as,
but not limited to, the grant of a portion or percentage of the reclaimed land, subject to the
constitutional requirements with respect to the ownership of the land: x x x. (Emphasis supplied)
A private corporation, even one that undertakes the physical reclamation of a government BOT
project, cannot acquire reclaimed alienable lands of the public domain in view of the constitutional
ban.
Section 302 of the Local Government Code, also mentioned by PEA and AMARI, authorizes
local governments in land reclamation projects to pay the contractor or developer in kind consisting
of a percentage of the reclaimed land, to wit:
Section 302. Financing, Construction, Maintenance, Operation, and Management of Infrastructure
Projects by the Private Sector. x x x
xxx
In case of land reclamation or construction of industrial estates, the repayment plan may consist of
the grant of a portion or percentage of the reclaimed land or the industrial estate constructed.
Although Section 302 of the Local Government Code does not contain a proviso similar to that of the
BOT Law, the constitutional restrictions on land ownership automatically apply even though not
expressly mentioned in the Local Government Code.
Thus, under either the BOT Law or the Local Government Code, the contractor or developer, if
a corporate entity, can only be paid with leaseholds on portions of the reclaimed land. If the
contractor or developer is an individual, portions of the reclaimed land, not exceeding 12
hectares[96] of non-agricultural lands, may be conveyed to him in ownership in view of the legislative
authority allowing such conveyance. This is the only way these provisions of the BOT Law and the
Local Government Code can avoid a direct collision with Section 3, Article XII of the 1987
Constitution.
Registration of lands of the public domain
Finally, PEA theorizes that the act of conveying the ownership of the reclaimed lands to public
respondent PEA transformed such lands of the public domain to private lands. This theory is echoed
by AMARI which maintains that the issuance of the special patent leading to the eventual issuance of
title takes the subject land away from the land of public domain and converts the property into
patrimonial or private property. In short, PEA and AMARI contend that with the issuance of Special
Patent No. 3517 and the corresponding certificates of titles, the 157.84 hectares comprising the
Freedom Islands have become private lands of PEA. In support of their theory, PEA and AMARI cite
the following rulings of the Court:
1. Sumail v. Judge of CFI of Cotabato,[97] where the Court held
Once the patent was granted and the corresponding certificate of title was issued,
the land ceased to be part of the public domain and became private property over
which the Director of Lands has neither control nor jurisdiction.
2. Lee Hong Hok v. David,[98] where the Court declared -
After the registration and issuance of the certificate and duplicate certificate of title
based on a public land patent, the land covered thereby automatically comes under
the operation of Republic Act 496 subject to all the safeguards provided therein.
3. Heirs of Gregorio Tengco v. Heirs of Jose Aliwalas,[99] where the Court ruled -
While the Director of Lands has the power to review homestead patents, he may do
so only so long as the land remains part of the public domain and continues to be
under his exclusive control; but once the patent is registered and a certificate of
title is issued, the land ceases to be part of the public domain and becomes private
property over which the Director of Lands has neither control nor jurisdiction.
4. Manalo v. Intermediate Appellate Court,[100] where the Court held
When the lots in dispute were certified as disposable on May 19, 1971, and free
patents were issued covering the same in favor of the private respondents, the said
lots ceased to be part of the public domain and, therefore, the Director of Lands lost
jurisdiction over the same.
5.Republic v. Court of Appeals,[101] where the Court stated
Proclamation No. 350, dated October 9, 1956, of President Magsaysay legally
effected a land grant to the Mindanao Medical Center, Bureau of Medical Services,
Department of Health, of the whole lot, validly sufficient for initial registration
under the Land Registration Act. Such land grant is constitutive of a fee simple title
or absolute title in favor of petitioner Mindanao Medical Center. Thus, Section 122
of the Act, which governs the registration of grants or patents involving public
lands, provides that Whenever public lands in the Philippine Islands belonging to
the Government of the United States or to the Government of the Philippines are
alienated, granted or conveyed to persons or to public or private corporations, the
same shall be brought forthwith under the operation of this Act (Land Registration
Act, Act 496) and shall become registered lands.
The first four cases cited involve petitions to cancel the land patents and the corresponding
certificates of titles issued to private parties. These four cases uniformly hold that the Director of
Lands has no jurisdiction over private lands or that upon issuance of the certificate of title the land
automatically comes under the Torrens System. The fifth case cited involves the registration under
the Torrens System of a 12.8-hectare public land granted by the National Government to Mindanao
Medical Center, a government unit under the Department of Health. The National Government
transferred the 12.8-hectare public land to serve as the site for the hospital buildings and other
facilities of Mindanao Medical Center, which performed a public service. The Court affirmed the
registration of the 12.8-hectare public land in the name of Mindanao Medical Center under Section
122 of Act No. 496. This fifth case is an example of a public land being registered under Act No. 496
without the land losing its character as a property of public dominion.
In the instant case, the only patent and certificates of title issued are those in the name of PEA,
a wholly government owned corporation performing public as well as proprietary functions. No
patent or certificate of title has been issued to any private party. No one is asking the Director of
Lands to cancel PEAs patent or certificates of title. In fact, the thrust of the instant petition is that
PEAs certificates of title should remain with PEA, and the land covered by these certificates, being
alienable lands of the public domain, should not be sold to a private corporation.
Registration of land under Act No. 496 or PD No. 1529 does not vest in the registrant private
or public ownership of the land. Registration is not a mode of acquiring ownership but is merely
evidence of ownership previously conferred by any of the recognized modes of acquiring
ownership. Registration does not give the registrant a better right than what the registrant had
prior to the registration.[102] The registration of lands of the public domain under the Torrens
system, by itself, cannot convert public lands into private lands. [103]
Jurisprudence holding that upon the grant of the patent or issuance of the certificate of title
the alienable land of the public domain automatically becomes private land cannot apply to
government units and entities like PEA. The transfer of the Freedom Islands to PEA was made
subject to the provisions of CA No. 141 as expressly stated in Special Patent No. 3517 issued by then
President Aquino, to wit:
NOW, THEREFORE, KNOW YE, that by authority of the Constitution of the Philippines and in
conformity with the provisions of Presidential Decree No. 1084, supplemented by Commonwealth
Act No. 141, as amended, there are hereby granted and conveyed unto the Public Estates Authority
the aforesaid tracts of land containing a total area of one million nine hundred fifteen thousand
eight hundred ninety four (1,915,894) square meters; the technical description of which are hereto
attached and made an integral part hereof. (Emphasis supplied)
Thus, the provisions of CA No. 141 apply to the Freedom Islands on matters not covered by
PD No. 1084. Section 60 of CA No. 141 prohibits, except when authorized by Congress, the sale of
alienable lands of the public domain that are transferred to government units or entities. Section 60
of CA No. 141 constitutes, under Section 44 of PD No. 1529, a statutory lien affecting title of the
registered land even if not annotated on the certificate of title.[104] Alienable lands of the public
domain held by government entities under Section 60 of CA No. 141 remain public lands because
they cannot be alienated or encumbered unless Congress passes a law authorizing their
disposition. Congress, however, cannot authorize the sale to private corporations of reclaimed
alienable lands of the public domain because of the constitutional ban. Only individuals can benefit
from such law.
The grant of legislative authority to sell public lands in accordance with Section 60 of CA No.
141 does not automatically convert alienable lands of the public domain into private or patrimonial
lands. The alienable lands of the public domain must be transferred to qualified private parties, or to
government entities not tasked to dispose of public lands, before these lands can become private or
patrimonial lands. Otherwise, the constitutional ban will become illusory if Congress can declare
lands of the public domain as private or patrimonial lands in the hands of a government agency
tasked to dispose of public lands. This will allow private corporations to acquire directly from
government agencies limitless areas of lands which, prior to such law, are concededly public lands.
Under EO No. 525, PEA became the central implementing agency of the National
Government to reclaim foreshore and submerged areas of the public domain. Thus, EO No. 525
declares that
EXECUTIVE ORDER NO. 525
Designating the Public Estates Authority as the Agency Primarily Responsible for all Reclamation
Projects
Whereas, there are several reclamation projects which are ongoing or being proposed to be
undertaken in various parts of the country which need to be evaluated for consistency with national
programs;
Whereas, there is a need to give further institutional support to the Governments declared policy to
provide for a coordinated, economical and efficient reclamation of lands;
Whereas, Presidential Decree No. 3-A requires that all reclamation of areas shall be limited to the
National Government or any person authorized by it under proper contract;
Whereas, a central authority is needed to act on behalf of the National Government which shall
ensure a coordinated and integrated approach in the reclamation of lands;
Whereas, Presidential Decree No. 1084 creates the Public Estates Authority as a government
corporation to undertake reclamation of lands and ensure their maximum utilization in
promoting public welfare and interests; and
Whereas, Presidential Decree No. 1416 provides the President with continuing authority to
reorganize the national government including the transfer, abolition, or merger of functions and
offices.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers
vested in me by the Constitution and pursuant to Presidential Decree No. 1416, do hereby order and
direct the following:
Section 1. The Public Estates Authority (PEA) shall be primarily responsible for integrating,
directing, and coordinating all reclamation projects for and on behalf of the National
Government. All reclamation projects shall be approved by the President upon recommendation of
the PEA, and shall be undertaken by the PEA or through a proper contract executed by it with any
person or entity; Provided, that, reclamation projects of any national government agency or entity
authorized under its charter shall be undertaken in consultation with the PEA upon approval of the
President.
xxx.
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, PEAs 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 PEAs name does not
automatically make such lands private.
To allow vast areas of reclaimed lands of the public domain to be transferred to PEA as
private lands will sanction a gross violation of the constitutional ban on private corporations from
acquiring any kind of alienable land of the public domain. PEA will simply turn around, as PEA has
now done under the Amended JVA, and transfer several hundreds of hectares of these reclaimed
and still to be reclaimed lands to a single private corporation in only one transaction. This scheme
will effectively nullify the constitutional ban in Section 3, Article XII of the 1987 Constitution which
was intended to diffuse equitably the ownership of alienable lands of the public domain among
Filipinos, now numbering over 80 million strong.
This scheme, if allowed, can even be applied to alienable agricultural lands of the public
domain since PEA can acquire x x x any and all kinds of lands. This will open the floodgates to
corporations and even individuals acquiring hundreds of hectares of alienable lands of the public
domain under the guise that in the hands of PEA these lands are private lands. This will result in
corporations amassing huge landholdings never before seen in this country - creating the very evil
that the constitutional ban was designed to prevent. This will completely reverse the clear direction
of constitutional development in this country. The 1935 Constitution allowed private corporations
to acquire not more than 1,024 hectares of public lands.[105] The 1973 Constitution prohibited
private corporations from acquiring any kind of public land, and the 1987 Constitution has
unequivocally reiterated this prohibition.
The contention of PEA and AMARI that public lands, once registered under Act No. 496 or PD
No. 1529, automatically become private lands is contrary to existing laws. Several laws authorize
lands of the public domain to be registered under the Torrens System or Act No. 496, now PD No.
1529, without losing their character as public lands. Section 122 of Act No. 496, and Section 103 of
PD No. 1529, respectively, provide as follows:
Act No. 496
Sec. 122. Whenever public lands in the Philippine Islands belonging to the x x x Government of the
Philippine Islands are alienated, granted, or conveyed to persons or the public or private
corporations, the same shall be brought forthwith under the operation of this Act and shall become
registered lands.
PD No. 1529
Sec. 103. Certificate of Title to Patents. Whenever public land is by the Government alienated,
granted or conveyed to any person, the same shall be brought forthwith under the operation of this
Decree. (Emphasis supplied)
Based on its legislative history, the phrase conveyed to any person in Section 103 of PD No. 1529
includes conveyances of public lands to public corporations.
Alienable lands of the public domain granted, donated, or transferred to a province,
municipality, or branch or subdivision of the Government, as provided in Section 60 of CA No. 141,
may be registered under the Torrens System pursuant to Section 103 of PD No. 1529. Such
registration, however, is expressly subject to the condition in Section 60 of CA No. 141 that the land
shall not be alienated, encumbered or otherwise disposed of in a manner affecting its title, except
when authorized by Congress. This provision refers to government reclaimed, foreshore and
marshy lands of the public domain that have been titled but still cannot be alienated or encumbered
unless expressly authorized by Congress. The need for legislative authority prevents the registered
land of the public domain from becoming private land that can be disposed of to qualified private
parties.
The Revised Administrative Code of 1987 also recognizes that lands of the public domain may
be registered under the Torrens System. Section 48, Chapter 12, Book I of the Code states
Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the Government is
authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the
government by the following:
(1) x x x
(2) For property belonging to the Republic of the Philippines, but titled in the name of any
political subdivision or of any corporate agency or instrumentality, by the executive head of the
agency or instrumentality. (Emphasis supplied)
Thus, private property purchased by the National Government for expansion of a public wharf may
be titled in the name of a government corporation regulating port operations in the country. Private
property purchased by the National Government for expansion of an airport may also be titled in
the name of the government agency tasked to administer the airport.Private property donated to a
municipality for use as a town plaza or public school site may likewise be titled in the name of the
municipality.[106] All these properties become properties of the public domain, and if already
registered under Act No. 496 or PD No. 1529, remain registered land. There is no requirement or
provision in any existing law for the de-registration of land from the Torrens System.
Private lands taken by the Government for public use under its power of eminent domain
become unquestionably part of the public domain. Nevertheless, Section 85 of PD No. 1529
authorizes the Register of Deeds to issue in the name of the National Government new certificates of
title covering such expropriated lands. Section 85 of PD No. 1529 states
Sec. 85. Land taken by eminent domain. Whenever any registered land, or interest therein, is
expropriated or taken by eminent domain, the National Government, province, city or municipality,
or any other agency or instrumentality exercising such right shall file for registration in the proper
Registry a certified copy of the judgment which shall state definitely by an adequate description, the
particular property or interest expropriated, the number of the certificate of title, and the nature of
the public use. A memorandum of the right or interest taken shall be made on each certificate of title
by the Register of Deeds, and where the fee simple is taken, a new certificate shall be issued in
favor of the National Government, province, city, municipality, or any other agency or
instrumentality exercising such right for the land so taken. The legal expenses incident to the
memorandum of registration or issuance of a new certificate of title shall be for the account of the
authority taking the land or interest therein. (Emphasis supplied)
Consequently, lands registered under Act No. 496 or PD No. 1529 are not exclusively private or
patrimonial lands. Lands of the public domain may also be registered pursuant to existing laws.
AMARI makes a parting shot that the Amended JVA is not a sale to AMARI of the Freedom
Islands or of the lands to be reclaimed from submerged areas of Manila Bay. In the words of AMARI,
the Amended JVA is not a sale but a joint venture with a stipulation for reimbursement of the
original cost incurred by PEA for the earlier reclamation and construction works performed by the
CDCP under its 1973 contract with the Republic. Whether the Amended JVA is a sale or a joint
venture, the fact remains that the Amended JVA requires PEA to cause the issuance and delivery of
the certificates of title conveying AMARIs Land Share in the name of AMARI.[107]
This stipulation still contravenes Section 3, Article XII of the 1987 Constitution which
provides that private corporations shall not hold such alienable lands of the public domain except
by lease. The transfer of title and ownership to AMARI clearly means that AMARI will hold the
reclaimed lands other than by lease. The transfer of title and ownership is a disposition of the
reclaimed lands, a transaction considered a sale or alienation under CA No. 141,[108] the Government
Auditing Code,[109] and Section 3, Article XII of the 1987 Constitution.
The Regalian doctrine is deeply implanted in our legal system. Foreshore and submerged
areas form part of the public domain and are inalienable. Lands reclaimed from foreshore and
submerged areas also form part of the public domain and are also inalienable, unless converted
pursuant to law into alienable or disposable lands of the public domain. Historically, lands
reclaimed by the government are sui generis, not available for sale to private parties unlike other
alienable public lands. Reclaimed lands retain their inherent potential as areas for public use or
public service. Alienable lands of the public domain, increasingly becoming scarce natural resources,
are to be distributed equitably among our ever-growing population. To insure such equitable
distribution, the 1973 and 1987 Constitutions have barred private corporations from acquiring any
kind of alienable land of the public domain.Those who attempt to dispose of inalienable natural
resources of the State, or seek to circumvent the constitutional ban on alienation of lands of the
public domain to private corporations, do so at their own risk.
We can now summarize our conclusions as follows:
1. The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now
covered by certificates of title in the name of PEA, are alienable lands of the public
domain. PEA may lease these lands to private corporations but may not sell or
transfer ownership of these lands to private corporations. PEA may only sell these
lands to Philippine citizens, subject to the ownership limitations in the 1987
Constitution and existing laws.
2. The 592.15 hectares of submerged areas of Manila Bay remain inalienable natural
resources of the public domain until classified as alienable or disposable lands
open to disposition and declared no longer needed for public service. The
government can make such classification and declaration only after PEA has
reclaimed these submerged areas. Only then can these lands qualify as agricultural
lands of the public domain, which are the only natural resources the government
 can alienate. In their present state, the 592.15 hectares of submerged areas
are inalienable and outside the commerce of man.

3. Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership
of 77.34 hectares[110] of the Freedom Islands, such transfer is void for being
contrary to Section 3, Article XII of the 1987 Constitution which prohibits private
corporations from acquiring any kind of alienable land of the public domain.

4. Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156
hectares[111] of still submerged areas of Manila Bay, such transfer is void for being
contrary to Section 2, Article XII of the 1987 Constitution which prohibits the
alienation of natural resources other than agricultural lands of the public
domain. PEA may reclaim these submerged areas. Thereafter, the government can
classify the reclaimed lands as alienable or disposable, and further declare them no
longer needed for public service. Still, the transfer of such reclaimed alienable
lands of the public domain to AMARI will be void in view of Section 3, Article XII of
the 1987 Constitution which prohibits private corporations from acquiring any
kind of alienable land of the public domain.

Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987
Constitution. Under Article 1409[112] of the Civil Code, contracts whose object or purpose is contrary
to law, or whose object is outside the commerce of men, are inexistent and void from the
beginning. The Court must perform its duty to defend and uphold the Constitution, and therefore
declares the Amended JVA null and void ab initio.

Seventh issue: whether the Court is the proper forum to raise the issue of whether the Amended
JVA is grossly disadvantageous to the government.

Considering that the Amended JVA is null and void ab initio, there is no necessity to rule on
this last issue. Besides, the Court is not a trier of facts, and this last issue involves a determination of
factual matters.

WHEREFORE, the petition is GRANTED. The Public Estates Authority and Amari Coastal Bay
Development Corporation are PERMANENTLY ENJOINED from implementing the Amended Joint
Venture Agreement which is hereby declared NULL and VOID ab initio.

SO ORDERED.
 [G.R. No. 135385. December 6, 2000]
ISAGANI CRUZ and CESAR EUROPA, petitioners, vs. SECRETARY OF ENVIRONMENT AND
NATURAL RESOURCES, SECRETARY OF BUDGET AND MANAGEMENT and
CHAIRMAN and COMMISSIONERS OF THE NATIONAL COMMISSION ON INDIGENOUS
PEOPLES, respondents.
HON. JUAN M .FLAVIER, HON. PONCIANO BENNAGEN, BAYANI ASCARRAGA, EDTAMI
MANSAYANGAN, BASILIO WANDAG, EVELYN DUNUAN, YAOM TUGAS, ALFREMO
CARPIANO, LIBERATO A. GABIN, MATERNIDAD M. COLAS, NARCISA M. DALUPINES,
BAI KIRAM-CONNIE SATURNO, BAE MLOMO-BEATRIZ T. ABASALA, DATU
BALITUNGTUNG-ANTONIO D. LUMANDONG, DATU MANTUMUKAW TEOFISTO
SABASALES, DATU EDUAARDO BANDA, DATU JOEL UNAD, DATU RAMON BAYAAN,
TIMUAY JOSE ANOY, TIMUAY MACARIO D. SALACAO, TIMUAY EDWIN B. ENDING,
DATU SAHAMPONG MALANAW VI, DATU BEN PENDAO CABIGON, BAI NANAPNAY-
LIZA SAWAY, BAY INAY DAYA-MELINDA S. REYMUNDO, BAI TINANGHAGA HELINITA
T. PANGAN, DATU MAKAPUKAW ADOLINO L. SAWAY, DATU MAUDAYAW-CRISPEN
SAWAY, VICKY MAKAY, LOURDES D. AMOS, GILBERT P. HOGGANG, TERESA GASPAR,
MANUEL S. ONALAN, MIA GRACE L. GIRON, ROSEMARIE G. PE, BENITO CARINO,
JOSEPH JUDE CARANTES, LYNETTE CARANTES-VIVAL, LANGLEY SEGUNDO, SATUR S.
BUGNAY, CARLING DOMULOT, ANDRES MENDIOGRIN, LEOPOLDO ABUGAN,
VIRGILIO CAYETANO, CONCHITA G. DESCAGA, LEVY ESTEVES, ODETTE G. ESTEVEZ,
RODOLFO C. AGUILAR, MAURO VALONES, PEPE H. ATONG, OFELIA T. DAVI,
PERFECTO B. GUINOSAO, WALTER N. TIMOL, MANUEL T. SELEN, OSCAR DALUNHAY,
RICO O. SULATAN, RAFFY MALINDA, ALFREDO ABILLANOS, JESSIE ANDILAB,
MIRLANDO H. MANGKULINTAS, SAMIE SATURNO, ROMEO A. LINDAHAY, ROEL S.
MANSANG-CAGAN, PAQUITO S. LIESES, FILIPE G. SAWAY, HERMINIA S. SAWAY,
JULIUS S. SAWAY, LEONARDA SAWAY, JIMMY UGYUB, SALVADOR TIONGSON,
VENANCIO APANG, MADION MALID, SUKIM MALID, NENENG MALID,
MANGKATADONG AUGUSTO DIANO, JOSEPHINE M. ALBESO, MORENO MALID,
MARIO MANGCAL, FELAY DIAMILING, SALOME P. SARZA, FELIPE P. BAGON, SAMMY
SALNUNGAN, ANTONIO D. EMBA, NORMA MAPANSAGONOS, ROMEO SALIGA, SR.,
JERSON P. GERADA, RENATO T. BAGON, JR., SARING MASALONG, SOLEDAD M.
GERARDA, ELIZABETH L. MENDI, MORANTE S. TIWAN, DANILO M. MALUDAO,
MINORS MARICEL MALID, represented by her father CORNELIO MALID, MARCELINO
M. LADRA, represented by her father MONICO D. LADRA, JENNYLYN MALID,
represented by her father TONY MALID, ARIEL M. EVANGELISTA, represented by
her mother LINAY BALBUENA, EDWARD M. EMUY, SR., SUSAN BOLANIO, OND, PULA
BATO BLAAN TRIBAL FARMERS ASSOCIATION, INTER-PEOPLES EXCHANGE, INC.
and GREEN FORUM-WESTERN VISAYAS, intervenors.
COMMISSION ON HUMAN RIGHTS, intervenor.
IKALAHAN INDIGENOUS PEOPLE and HARIBON FOUNDATION FOR THE CONSERVATION OF
NATURAL RESOURCES, INC., intervenor.
RESOLUTION
PER CURIAM:
Petitioners Isagani Cruz and Cesar Europa brought this suit for prohibition and mandamus as
citizens and taxpayers, assailing the constitutionality of certain provisions of Republic Act No. 8371
(R.A. 8371), otherwise known as the Indigenous Peoples Rights Act of 1997 (IPRA), and its
Implementing Rules and Regulations (Implementing Rules).
In its resolution of September 29, 1998, the Court required respondents to comment. [1] In
compliance, respondents Chairperson and Commissioners of the National Commission on
Indigenous Peoples (NCIP), the government agency created under the IPRA to implement its
provisions, filed on October 13, 1998 their Comment to the Petition, in which they defend the
constitutionality of the IPRA and pray that the petition be dismissed for lack of merit.
On October 19, 1998, respondents Secretary of the Department of Environment and Natural
Resources (DENR) and Secretary of the Department of Budget and Management (DBM) filed
through the Solicitor General a consolidated Comment. The Solicitor General is of the view that the
IPRA is partly unconstitutional on the ground that it grants ownership over natural resources to
indigenous peoples and prays that the petition be granted in part.
On November 10, 1998, a group of intervenors, composed of Sen. Juan Flavier, one of the
authors of the IPRA, Mr. Ponciano Bennagen, a member of the 1986 Constitutional Commission, and
the leaders and members of 112 groups of indigenous peoples (Flavier, et. al), filed their Motion for
Leave to Intervene. They join the NCIP in defending the constitutionality of IPRA and praying for the
dismissal of the petition.
On March 22, 1999, the Commission on Human Rights (CHR) likewise filed a Motion to
Intervene and/or to Appear as Amicus Curiae. The CHR asserts that IPRA is an expression of the
principle of parens patriae and that the State has the responsibility to protect and guarantee the
rights of those who are at a serious disadvantage like indigenous peoples. For this reason it prays
that the petition be dismissed.
On March 23, 1999, another group, composed of the Ikalahan Indigenous People and the
Haribon Foundation for the Conservation of Natural Resources, Inc. (Haribon, et al.), filed a motion
to Intervene with attached Comment-in-Intervention. They agree with the NCIP and Flavier, et al.
that IPRA is consistent with the Constitution and pray that the petition for prohibition and
mandamus be dismissed.
The motions for intervention of the aforesaid groups and organizations were granted.
Oral arguments were heard on April 13, 1999. Thereafter, the parties and intervenors filed
their respective memoranda in which they reiterate the arguments adduced in their earlier
pleadings and during the hearing.
Petitioners assail the constitutionality of the following provisions of the IPRA and its
Implementing Rules on the ground that they amount to an unlawful deprivation of the 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:
(1) Section 3(a) which defines the extent and coverage of ancestral domains, and
Section 3(b) which, in turn, defines ancestral lands;
(2) Section 5, in relation to section 3(a), which provides that ancestral domains
including inalienable public lands, bodies of water, mineral and other resources
found within ancestral domains are private but community property of the
indigenous peoples;
(3) Section 6 in relation to section 3(a) and 3(b) which defines the composition of
ancestral domains and ancestral lands;
(4) Section 7 which recognizes and enumerates the rights of the indigenous peoples
over the ancestral domains;
(5) Section 8 which recognizes and enumerates the rights of the indigenous peoples
over the ancestral lands;
(6) Section 57 which provides for priority rights of the indigenous peoples in the
harvesting, extraction, development or exploration of minerals and other natural
 resources within the areas claimed to be their ancestral domains, and the right to
enter into agreements with nonindigenous peoples for the development and
utilization of natural resources therein for a period not exceeding 25 years,
renewable for not more than 25 years; and
(7) Section 58 which gives the indigenous peoples the responsibility to maintain,
develop, protect and conserve the ancestral domains and portions thereof which
are found to be necessary for critical watersheds, mangroves, wildlife sanctuaries,
wilderness, protected areas, forest cover or reforestation.[2]
Petitioners also content that, by providing for an all-encompassing definition of ancestral
domains and ancestral lands which might even include private lands found within said areas,
Sections 3(a) and 3(b) violate the rights of private landowners. [3]
In addition, petitioners question the provisions of the IPRA defining the powers and
jurisdiction of the NCIP and making customary law applicable to the settlement of disputes
involving ancestral domains and ancestral lands on the ground that these provisions violate the due
process clause of the Constitution.[4]
These provisions are:
(1) sections 51 to 53 and 59 which detail the process of delineation and recognition of
ancestral domains and which vest on the NCIP the sole authority to delineate
ancestral domains and ancestral lands;
(2) Section 52[i] which provides that upon certification by the NCIP that a particular
area is an ancestral domain and upon notification to the following officials, namely,
the Secretary of Environment and Natural Resources, Secretary of Interior and
Local Governments, Secretary of Justice and Commissioner of the National
Development Corporation, the jurisdiction of said officials over said area
terminates;
(3) Section 63 which provides the customary law, traditions and practices of
indigenous peoples shall be applied first with respect to property rights, claims of
ownership, hereditary succession and settlement of land disputes, and that any
doubt or ambiguity in the interpretation thereof shall be resolved in favor of the
indigenous peoples;
(4) Section 65 which states that customary laws and practices shall be used to resolve
disputes involving indigenous peoples; and
(5) Section 66 which vests on the NCIP the jurisdiction over all claims and disputes
involving rights of the indigenous peoples.[5]
Finally, petitioners assail the validity of Rule VII, Part II, Section 1 of the NCIP Administrative
Order No. 1, series of 1998, which provides that the administrative relationship of the NCIP to the
Office of the President is characterized as a lateral but autonomous relationship for purposes of
policy and program coordination. They contend that said Rule infringes upon the Presidents power
of control over executive departments under Section 17, Article VII of the Constitution. [6]
Petitioners pray for the following:
(1) A declaration that Sections 3, 5, 6, 7, 8, 52[I], 57, 58, 59, 63, 65 and 66 and other
related provisions of R.A. 8371 are unconstitutional and invalid;
(2) The issuance of a writ of prohibition directing the Chairperson and Commissioners
of the NCIP to cease and desist from implementing the assailed provisions of R.A.
8371 and its Implementing Rules;
(3) The issuance of a writ of prohibition directing the Secretary of the Department of
Environment and Natural Resources to cease and desist from implementing
Department of Environment and Natural Resources Circular No. 2, series of 1998;
(4) The issuance of a writ of prohibition directing the Secretary of Budget and
Management to cease and desist from disbursing public funds for the
implementation of the assailed provisions of R.A. 8371; and
(5) The issuance of a writ of mandamus commanding the Secretary of Environment and
Natural Resources to comply with his duty of carrying out the States constitutional
mandate to control and supervise the exploration, development, utilization and
conservation of Philippine natural resources.[7]
After due deliberation on the petition, the members of the Court voted as follows:
Seven (7) voted to dismiss the petition. Justice Kapunan filed an opinion, which the Chief
Justice and Justices Bellosillo, Quisumbing, and Santiago join, sustaining the validity of the
challenged provisions of R.A. 8371. Justice Puno also filed a separate opinion sustaining all
challenged provisions of the law with the exception of Section 1, Part II, Rule III of NCIP
Administrative Order No. 1, series of 1998, the Rules and Regulations Implementing the IPRA, and
Section 57 of the IPRA which he contends should be interpreted as dealing with the large-scale
exploitation of natural resources and should be read in conjunction with Section 2, Article XII of the
1987 Constitution. On the other hand, Justice Mendoza voted to dismiss the petition solely on the
ground that it does not raise a justiciable controversy and petitioners do not have standing to
question the constitutionality of R.A. 8371.
Seven (7) other members of the Court voted to grant the petition. Justice Panganiban filed a
separate opinion expressing the view that Sections 3 (a)(b), 5, 6, 7 (a)(b), 8, and related provisions
of R.A. 8371 are unconstitutional. He reserves judgment on the constitutionality of Sections 58, 59,
65, and 66 of the law, which he believes must await the filing of specific cases by those whose rights
may have been violated by the IPRA. Justice Vitug also filed a separate opinion expressing the view
that Sections 3(a), 7, and 57 of R.A. 8371 are unconstitutional. Justices Melo, Pardo, Buena, Gonzaga-
Reyes, and De Leon join in the separate opinions of Justices Panganiban and Vitug.
As the votes were equally divided (7 to 7) and the necessary majority was not obtained, the
case was redeliberated upon. However, after redeliberation, the voting remained the
same. Accordingly, pursuant to Rule 56, Section 7 of the Rules of Civil Procedure, the petition is
DISMISSED.
Attached hereto and made integral parts thereof are the separate opinions of Justices Puno,
Vitug, Kapunan, Mendoza, and Panganiban.
SO ORDERED.
G.R. No. 162243 December 3, 2009
HON. HEHERSON ALVAREZ substituted by HON. ELISEA G. GOZUN, in her capacity as Secretary
of the Department of Environment and Natural Resources, Petitioner,
vs.
PICOP RESOURCES, INC., Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 164516
PICOP RESOURCES, INC., Petitioner,
vs.
HON. HEHERSON ALVAREZ substituted by HON. ELISEA G. GOZUN, in her capacity as Secretary
of the Department of Environment and Natural Resources Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 171875
THE HON. ANGELO T. REYES (formerly Hon. Elisea G. Gozun), in his capacity as Secretary of
the Department of Environment and Natural Resources (DENR), Petitioner,
vs.
PAPER INDUSTRIES CORP. OF THE PHILIPPINES (PICOP), Respondent.
RESOLUTION
CHICO-NAZARIO, J.:
The cause of action of PICOP Resources, Inc. (PICOP) in its Petition for Mandamus with the trial
court is clear: the government is bound by contract, a 1969 Document signed by then President
Ferdinand Marcos, to enter into an Integrated Forest Management Agreement (IFMA) with PICOP.
Since the remedy of mandamus lies only to compel an officer to perform a ministerial duty, and
since the 1969 Document itself has a proviso requiring compliance with the laws and the
Constitution, the issues in this Motion for Reconsideration are the following: (1) firstly, is the 1969
Document a contract enforceable under the Non-Impairment Clause of the Constitution, so as to
make the signing of the IFMA a ministerial duty? (2) secondly, did PICOP comply with all the legal
and constitutional requirements for the issuance of an IFMA?
To recall, PICOP filed with the Department of Environment and Natural Resources (DENR) an
application to have its Timber License Agreement (TLA) No. 43 converted into an IFMA. In the
middle of the processing of PICOP’s application, however, PICOP refused to attend further meetings
with the DENR. Instead, on 2 September 2002, PICOP filed before the Regional Trial Court (RTC) of
Quezon City a Petition for Mandamus1 against then DENR Secretary Heherson T. Alvarez. PICOP
seeks the issuance of a privileged writ of mandamus to compel the DENR Secretary to sign, execute
and deliver an IFMA to PICOP, as well as to –
[I]ssue the corresponding IFMA assignment number on the area covered by the IFMA, formerly TLA
No. 43, as amended; b) to issue the necessary permit allowing petitioner to act and harvest timber
from the said area of TLA No. 43, sufficient to meet the raw material requirements of petitioner’s
pulp and paper mills in accordance with the warranty and agreement of July 29, 1969 between the
government and PICOP’s predecessor-in-interest; and c) to honor and respect the Government
Warranties and contractual obligations to PICOP strictly in accordance with the warranty and
agreement dated July 29, [1969] between the government and PICOP’s predecessor-in-interest. x x
x.2
On 11 October 2002, the RTC rendered a Decision granting PICOP’s Petition for Mandamus, thus:
WHEREFORE, premises considered, the Petition for Mandamus is hereby GRANTED.
The Respondent DENR Secretary Hon. Heherson Alvarez is hereby ordered:
1. to sign, execute and deliver the IFMA contract and/or documents to PICOP and issue
the corresponding IFMA assignment number on the area covered by the IFMA, formerly
TLA No. 43, as amended;
2. to issue the necessary permit allowing petitioner to act and harvest timber from the
said area of TLA No. 43, sufficient to meet the raw material requirements of petitioner’s
pulp and paper mills in accordance with the warranty and agreement of July 29, 1969
between the government and PICOP’s predecessor-in-interest; and
3. to honor and respect the Government Warranties and contractual obligations to PICOP
strictly in accordance with the warranty and agreement dated July 29, 1999 (sic) between
the government and PICOP’s predecessor-in-interest (Exhibits "H", "H-1" to "H-5",
particularly the following:
a) the area coverage of TLA No. 43, which forms part and parcel of the
government warranties;
b) PICOP tenure over the said area of TLA No. 43 and exclusive right to cut,
collect and remove sawtimber and pulpwood for the period ending on April 26,
1977; and said period to be renewable for [an]other 25 years subject to
compliance with constitutional and statutory requirements as well as with
existing policy on timber concessions; and
c) The peaceful and adequate enjoyment by PICOP of the area as described and
specified in the aforesaid amended Timber License Agreement No. 43.
The Respondent Secretary Alvarez is likewise ordered to pay petitioner the sum of ₱10 million a
month beginning May 2002 until the conversion of TLA No. 43, as amended, to IFMA is formally
effected and the harvesting from the said area is granted.3
On 25 October 2002, the DENR Secretary filed a Motion for Reconsideration. 4 In a 10 February 2003
Order, the RTC denied the DENR Secretary’s Motion for Reconsideration and granted PICOP’s
Motion for the Issuance of Writ of Mandamus and/or Writ of Mandatory Injunction. 5 The fallo of the
11 October 2002 Decision was practically copied in the 10 February 2003 Order, although there was
no mention of the damages imposed against then DENR Secretary Alvarez. 6 The DENR Secretary
filed a Notice of Appeal7 from the 11 October 2002 Decision and the 10 February 2003 Order.
On 19 February 2004, the Seventh Division of the Court of Appeals affirmed 8 the Decision of the
RTC, to wit:
WHEREFORE, the appealed Decision is hereby AFFIRMED with modification that the order directing
then DENR Secretary Alvarez "to pay petitioner-appellee the sum of P10 million a month beginning
May, 2002 until the conversion to IFMA of TLA No. 43, as amended, is formally effected and the
harvesting from the said area is granted" is hereby deleted. 9
Challenging the deletion of the damages awarded to it, PICOP filed a Motion for Partial
Reconsideration10 of this Decision, which was denied by the Court of Appeals in a 20 July 2004
Resolution.11
The DENR Secretary and PICOP filed with this Court separate Petitions for Review of the 19
February 2004 Court of Appeals Decision. These Petitions were docketed as G.R. No. 162243 and No.
164516, respectively. These cases were consolidated with G.R. No. 171875, which relates to the
lifting of a Writ of Preliminary Injunction enjoining the execution pending appeal of the foregoing
Decision.
On 29 November 2006, this Court rendered the assailed Decision on the Consolidated Petitions:
WHEREFORE, the Petition in G.R. No. 162243 is GRANTED. The Decision of the Court of Appeals
insofar as it affirmed the RTC Decision granting the Petition for Mandamus filed by Paper Industries
Corp. of the Philippines (PICOP) is hereby REVERSED and SET ASIDE. The Petition in G.R. No.
164516 seeking the reversal of the same Decision insofar as it nullified the award of damages in
favor of PICOP is DENIED for lack of merit. The Petition in G.R. No. 171875, assailing the lifting of the
Preliminary Mandatory Injunction in favor of the Secretary of Environment and Natural Resources
is DISMISSED on the ground of mootness.12
On 18 January 2006, PICOP filed the instant Motion for Reconsideration, based on the following
grounds:
I.
THE HONORABLE COURT ERRED IN HOLDING THAT THE CONTRACT WITH PRESIDENTIAL
WARRANTY SIGNED BY THE PRESIDENT OF THE REPUBLIC ON 29 JUNE 1969 ISSUED TO PICOP IS
A MERE PERMIT OR LICENSE AND IS NOT A CONTRACT, PROPERTY OR PROPERTY RIGHT
PROTECTED BY THE DUE PROCESS CLAUSE OF THE CONSTITUTION
II.
THE EVALUATION OF PICOP’S MANAGEMENT OF THE TLA 43 NATURAL FOREST CLEARLY
SHOWED SATISFACTORY PERFORMANCE FOR KEEPING THE NATURAL FOREST GENERALLY
INTACT AFTER 50 YEARS OF FOREST OPERATIONS. THIS COMPLETES THE REQUIREMENT FOR
AUTOMATIC CONVERSION UNDER SECTION 9 OF DAO 99-53.
III.
WITH DUE RESPECT, THE HONORABLE COURT, IN REVERSING THE FINDINGS OF FACTS OF THE
TRIAL COURT AND THE COURT OF APPEALS, MISAPPRECIATED THE EVIDENCE, TESTIMONIAL
AND DOCUMENTARY, WHEN IT RULED THAT:
i.
PICOP FAILED TO SUBMIT A FIVE-YEAR FOREST PROTECTION PLAN AND A SEVEN-YEAR
REFORESTATION PLAN FOR THE YEARS UNDER REVIEW.
ii.
PICOP FAILED TO COMPLY WITH THE PAYMENT OF FOREST CHARGES.
iii.
PICOP DID NOT COMPLY WITH THE REQUIREMENT FOR A CERTIFICATION FROM THE NCIP THAT
THE AREA OF TLA 43 DOES NOT OVERLAP WITH ANY ANCESTRAL DOMAIN.
iv.
PICOP FAILED TO HAVE PRIOR CONSULTATION WITH AND APPROVAL FROM THE SANGUNIAN
CONCERNED, AS REQUIRED BY SECTION 27 OF THE REPUBLIC ACT NO. 7160, OTHERWISE
KNOWN AS THE LOCAL GOVERNMENT CODE OF 1991.
v.
PCIOP FAILED TO SECURE SOCIAL ACCEPTABILITY UNDER PRESIDENTIAL DECREE NO. 1586.
IV
THE MOTIVATION OF ALVAREZ IN RECALLING THE CLEARANCE FOR AUTOMATIC CONVERSION
HE ISSUED ON 25 OCTOBER 2001 WAS NOT DUE TO ANY SHORTCOMING FROM PICOP BUT DUE
TO HIS DETERMINATION TO EXCLUDE 28,125 HECTARES FROM THE CONVERSION AND OTHER
THINGS.
On 15 December 2008, on Motion by PICOP, the Third Division of this Court resolved to refer the
consolidated cases at bar to the Court en banc. On 16 December 2008, this Court sitting en banc
resolved to accept the said cases and set them for oral arguments. Oral arguments were conducted
on 10 February 2009.
PICOP’s Cause of Action: Matters PICOP Should Have Proven to Be Entitled to a Writ of Mandamus
In seeking a writ of mandamus to compel the issuance of an IFMA in its favor, PICOP relied on a 29
July 1969 Document, the so-called Presidential Warranty approved by then President Ferdinand E.
Marcos in favor of PICOP’s predecessor-in-interest, Bislig Bay Lumber Company, Inc. (BBLCI).
PICOP’s cause of action is summarized in paragraphs 1.6 and 4.19 of its Petition for Mandamus:
1.6 Respondent Secretary impaired the obligation of contract under the said Warranty and
Agreement of 29 July 1969 by refusing to respect the tenure; and its renewal for another twenty five
(25) years, of PICOP over the area covered by the said Agreement which consists of permanent
forest lands with an aggregate area of 121,587 hectares and alienable and disposable lands with an
aggregate area of approximately 21,580 hectares, and petitioner’s exclusive right to cut, collect and
remove sawtimber and pulpwood therein and the peaceful and adequate enjoyment of the said area
as described and specified in petitioner’s Timber License Agreement (TLA) No. 43 guaranteed by
the Government, under the Warranty and Agreement of 29 July 1969. 13
4.19 Respondent is in violation of the Constitution and has impaired the obligation of contract by his
refusal to respect: a) the tenurial rights of PICOP over the forest area covered by TLA No. 43, as
amended and its renewal for another twenty five (25) years; b) the exclusive right of PICOP to cut,
collect and remove sawtimber and pulpwood therein; and c) PICOP’s peaceful and adequate
enjoyment of the said area which the government guaranteed under the Warranty and Agreement
of 29 July 1969.14
The grounds submitted by PICOP in its Petition for Mandamus are as follows:
I
Respondent secretary has unlawfully refused and/or neglected to sign and execute the IFMA
contract of PICOP even as the latter has complied with all the legal requirements for the automatic
conversion of TLA No. 43, as amended, into an IFMA.
II
Respondent Secretary acted with grave abuse of discretion and/or in excess of jurisdiction in
refusing to sign and execute PICOP’s IFMA contract, notwithstanding that PICOP had complied with
all the requirements for Automatic Conversion under DAO 99-53, as in fact Automatic Conversion
was already cleared in October, 2001, and was a completed process.
III
Respondent Secretary has impaired the obligation of contract under a valid and binding warranty
and agreement of 29 July 1969 between the government and PICOP’s predecessor-in-interest, by
refusing to respect: a) the tenure of PICOP, and its renewal for another twenty five (25) years, over
the TLA No.43 area covered by said agreement; b) the exclusive right to cut, collect and remove
sawtimber and pulpwood timber; and c) the peaceful and adequate enjoyment of the said area.
IV
As a result of respondent Secretary’s unlawful refusal and/or neglect to sign and deliver the IFMA
contract, and violation of the constitutional rights of PICOP against non-impairment of the
obligation of contract (Sec. 10, Art. III, 1997 [sic] Constitution), PICOP suffered grave and
irreparable damages.15
Petitions for Mandamus are governed by Rule 65 of the Rules of Court, Section 3 of which provides:
SEC. 3. Petition for mandamus.—When any tribunal, corporation, board, officer or person unlawfully
neglects the performance of an act which the law specifically enjoins as a duty resulting from an
office, trust, or station, or unlawfully excludes another from the use and enjoyment of a right or
office to which such other is entitled, and there is no other plain, speedy and adequate remedy in the
ordinary course of law, the person aggrieved thereby may file a verified petition in the proper court,
alleging the facts with certainty and praying that judgment be rendered commanding the
respondent, immediately or at some other time to be specified by the court, to do the act required to
be done to protect the rights of the petitioner, and to pay the damages sustained by the petitioner by
reason of the wrongful acts of the respondent. (Emphasis supplied.)
PICOP is thus asking this Court to conclude that the DENR Secretary is specifically enjoined by law
to issue an IFMA in its favor. An IFMA, as defined by DENR Administrative Order (DAO) No. 99-
53,16 is -
[A] production-sharing contract entered into by and between the DENR and a qualified applicant
wherein the DENR grants to the latter the exclusive right to develop, manage, protect and utilize a
specified area of forestland and forest resource therein for a period of 25 years and may be renewed
for another 25-year period, consistent with the principle of sustainable development and in
accordance with an approved CDMP, and under which both parties share in its produce. 17
PICOP stresses the word "automatic" in Section 9 of this DAO No. 99-53:
Sec. 9. Qualifications of Applicants. – The applicants for IFMA shall be:
(a) A Filipino citizen of legal age; or,
(b) Partnership, cooperative or corporation whether public or private, duly registered
under Philippine laws.
However, in the case of application for conversion of TLA into IFMA, an automatic conversion after
proper evaluation shall be allowed, provided the TLA holder shall have signified such intention
prior to the expiry of the TLA, PROVIDED further, that the TLA holder has showed satisfactory
performance and have complied in the terms of condition of the TLA and pertinent rules and
regulations. (Emphasis supplied.)18
This administrative regulation provision allowing automatic conversion after proper evaluation can
hardly qualify as a law, much less a law specifically enjoining the execution of a contract. To enjoin is
"to order or direct with urgency; to instruct with authority; to command." 19 "‘Enjoin’ is a mandatory
word, in legal parlance, always; in common parlance, usually."20 The word "allow," on the other
hand, is not equivalent to the word "must," and is in no sense a command. 21
As an extraordinary writ, the remedy of mandamus lies only to compel an officer to perform a
ministerial duty, not a discretionary one; mandamus will not issue to control the exercise of
discretion of a public officer where the law imposes upon him the duty to exercise his judgment in
reference to any manner in which he is required to act, because it is his judgment that is to be
exercised and not that of the court.22
The execution of agreements, in itself, involves the exercise of discretion. Agreements are products
of negotiations and mutual concessions, necessitating evaluation of their provisions on the part of
both parties. In the case of the IFMA, the evaluation on the part of the government is specifically
mandated in the afore-quoted Section 3 of DAO No. 99-53. This evaluation necessarily involves the
exercise of discretion and judgment on the part of the DENR Secretary, who is tasked not only to
negotiate the sharing of the profit arising from the IFMA, but also to evaluate the compliance with
the requirements on the part of the applicant.
Furthermore, as shall be discussed later, the period of an IFMA that was merely automatically
converted from a TLA in accordance with Section 9, paragraph 2 of DAO No. 99-53 would only be for
the remaining period of the TLA. Since the TLA of PICOP expired on 26 April 2002, the IFMA that
could have been granted to PICOP via the automatic conversion provision in DAO No. 99-53 would
have expired on the same date, 26 April 2002, and the PICOP’s Petition for Mandamus would have
become moot.
This is where the 1969 Document, the purported Presidential Warranty, comes into play. When
PICOP’s application was brought to a standstill upon the evaluation that PICOP had yet to comply
with the requirements for such conversion, PICOP refused to attend further meetings with the
DENR and instead filed a Petition for Mandamus, insisting that the DENR Secretary had impaired the
obligation of contract by his refusal to respect: a) the tenurial rights of PICOP over the forest area
covered by TLA No. 43, as amended, and its renewal for another twenty-five (25) years; b) the
exclusive right of PICOP to cut, collect and remove sawtimber and pulpwood therein; and c) PICOP’s
peaceful and adequate enjoyment of the said area which the government guaranteed under the
Warranty and Agreement of 29 July 1969. 23
PICOP is, thus, insisting that the government is obligated by contract to issue an IFMA in its favor
because of the 1969 Document.
A contract, being the law between the parties, can indeed, with respect to the State when it is a party
to such contract, qualify as a law specifically enjoining the performance of an act. Hence, it is
possible that a writ of mandamus may be issued to PICOP, but only if it proves both of the following:
1) That the 1969 Document is a contract recognized under the non-impairment clause;
and
2) That the 1969 Document specifically enjoins the government to issue the IFMA.
If PICOP fails to prove any of these two matters, the grant of a privileged writ of mandamus is not
warranted. This was why we pronounced in the assailed Decision that the overriding controversy
involved in the Petition was one of law.24 If PICOP fails to prove any of these two matters, more
significantly its assertion that the 1969 Document is a contract, PICOP fails to prove its cause of
action.25 Not even the satisfactory compliance with all legal and administrative requirements for an
IFMA would save PICOP’s Petition for Mandamus.
The reverse, however, is not true. The 1969 Document expressly states that the warranty as to the
tenure of PICOP is "subject to compliance with constitutional and statutory requirements as well as
with existing policy on timber concessions." Thus, if PICOP proves the two above-mentioned
matters, it still has to prove compliance with statutory and administrative requirements for the
conversion of its TLA into an IFMA.
Exhaustion of Administrative Remedies
PICOP uses the same argument –– that the government is bound by contract to issue the IFMA –– in
its refusal to exhaust all administrative remedies by not appealing the alleged illegal non-issuance of
the IFMA to the Office of the President. PICOP claimed in its Petition for Mandamus with the trial
court that:
1.10 This petition falls as an exception to the exhaustion of administrative remedies. The acts of
respondent DENR Secretary complained of in this petition are patently illegal; in derogation of the
constitutional rights of petitioner against non-impairment of the obligation of contracts; without
jurisdiction, or in excess of jurisdiction or so capriciously as to constitute an abuse of discretion
amounting to excess or lack of jurisdiction; and moreover, the failure or refusal of a high
government official such as a Department head from whom relief is brought to act on the matter
was considered equivalent to exhaustion of administrative remedies (Sanoy v. Tantuico, 50 SCRA
455 [1973]), and there are compelling and urgent reasons for judicial intervention (Bagatsing v.
Ramirez, 74 SCRA 306 [1976]).
Thus, if there has been no impairment of the obligation of contracts in the DENR Secretary’s non-
issuance of the IFMA, the proper remedy of PICOP in claiming that it has complied with all statutory
and administrative requirements for the issuance of the IFMA should have been with the Office of
the President. This makes the issue of the enforceability of the 1969 Document as a contract even
more significant.
The Nature and Effects of the Purported 29 July 1969 Presidential Warranty
Base Metals Case
PICOP challenges our ruling that the 1969 Document is not a contract. Before we review this finding,
however, it must be pointed out that one week after the assailed Decision, another division of this
Court promulgated a Decision concerning the very same 1969 Document. Thus, in PICOP Resources,
Inc. v. Base Metals Mineral Resources Corporation, 26 five other Justices who were still unaware of
this Division’s Decision,27 came up with the same conclusion as regards the same issue of whether
former President Marcos’s Presidential Warranty is a contract:
Finally, we do not subscribe to PICOP’s argument that the Presidential Warranty dated September
25, 1968 is a contract protected by the non-impairment clause of the 1987 Constitution.
An examination of the Presidential Warranty at once reveals that it simply reassures PICOP of the
government’s commitment to uphold the terms and conditions of its timber license and guarantees
PICOP’s 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 FMA No.
35. We agree with the OSG’s position that it is merely a collateral undertaking which cannot amplify
PICOP’s rights under its timber license. Our definitive ruling in Oposa v. Factoran that a timber
license is not a contract within the purview of the non-impairment clause is edifying. We declared:
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, 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 a 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 a property or a property right, nor does it create a vested right; nor is it
taxation' (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:
"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 ATTY. AGABIN:
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
Yes, Your Honor.
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]." JUSTICE TINGA:

Since timber licenses are not contracts, the non-impairment clause, which reads: And therefore any ruling on the part of the Court on that issue could not be an obiter dictum.

"SEC. 10. No law impairing the obligation of contracts shall be passed." ATTY. AGABIN:

cannot be invoked. Your Honor, actually we believe that the basic issue in that case was whether or not Base Metals
could conduct mining activities underneath the forest reserve allotted to PICOP and the Honorable
Court ruled that the Mining Act of 1995 as well as the Department Order of DENR does not disallow
The Presidential Warranty cannot, in any manner, be construed as a contractual undertaking
mining activity under a forest reserve.
assuring PICOP of exclusive possession and enjoyment of its concession areas. Such an
interpretation would result in the complete abdication by the State in favor of PICOP of the
sovereign power to control and supervise the exploration, development and utilization of the JUSTICE TINGA:
natural resources in the area.28
But it was PICOP itself which raised the claim that a Presidential Warranty is a contract. And
The Motion for Reconsideration was denied with finality on 14 February 2007. A Second Motion for therefore be, should be protected on the under the non-impairment clause of the Constitution.
Reconsideration filed by PICOP was denied on 23 May 2007.
ATTY. AGABIN:
PICOP insists that the pronouncement in Base Metals is a mere obiter dictum, which would not bind
this Court in resolving this Motion for Reconsideration. In the oral arguments, however, upon
Yes, Your Honor. Except that…
questioning from the ponente himself of Base Metals, it was agreed that the issue of whether the
1969 Document is a contract was necessary in the resolution of Base Metals:
JUSTICE TINGA:
JUSTICE TINGA:
So, how can you say now that the Court merely uttered, declared, laid down an obiter dictum in
saying that the Presidential Warranty is not a contract, and it is not being a contract, it is not
And do you confirm that one of the very issues raised by PICOP in that case [PICOP Resources Inc. v.
prohibited by the non-impairment clause.
Base Metal Mineral Resources Corporation] revolves around its claim that a Presidential Warranty
is protected by the non-impairment c[l]ause of the Constitution.
ATTY. AGABIN:
ATTY. AGABIN:
This Honorable Court could have just ruled, held that the mining law allows mining activities under
a forest reserve without deciding on that issue that was raised by PICOP, your Honor, and therefore
Yes, I believe that statement was made by the Court, your Honor.
we believe….

JUSTICE TINGA:
JUSTICE TINGA:

Yes. And that claim on the part of PICOP necessarily implies that the Presidential Warranty
It could have been better if PICOP has not raised that issue and had not claimed that the Presidential
according to PICOP is a contract protected by the non-impairment clause.
Warranty is not a contract.

ATTY. AGABIN:
ATTY. AGABIN:

Yes, Your Honor.

Well, that is correct, your Honor except that the Court could have just avoided that question.
Because…
JUSTICE TINGA:
JUSTICE TINGA:
Essentially, the PICOP raised the issue of whether the Presidential Warranty is a contract or not.
Why[?] ATTY. AGABIN:

ATTY. AGABIN: Anyway, your Honor, we beg the Court to revisit, not to…29

It already settled the issue, the basic issue. Interpretation of the 1969 Document That Would Be in Harmony with the Constitution

JUSTICE TINGA: To remove any doubts as to the contents of the 1969 Document, the purported Presidential
Warranty, below is a complete text thereof:
Yes, because the Court in saying that merely reiterated a number of rulings to the effect that the
Presidential Warranty, a Timber License for that matter is not a contract protected by the non- Republic of the Philippines
impairment laws. Department of Agriculture and Natural Resources
OFFICE OF THE SECRETARY
Diliman, Quezon City
ATTY. AGABIN:

D-53, Licenses (T.L.A. No. 43)

Well, it is our submission, your Honor, that it is obiter because, that issue even a phrase by PICOP
Bislig Bay Lumber Co., Inc.
was not really fully argued by the parties for the Honorable Court and it seems from my reading at
(Bislig, Surigao)
least it was just an aside given by the Honorable Court to decide on that issue raised by PICOP but it
was not necessary to the decision of the court.
July 29, 1969
JUSTICE TINGA:
Bislig Bay Lumber Co., Inc.
[unreadable word] Bldg.
It was not necessary[?]
Makati, Rizal

ATTY. AGABIN:
S i r s:

To the decision of the Court.

This has reference to the request of the Board of Investments through its Chairman in a letter dated
July 16, 1969 for a warranty on the boundaries of your concession area under Timber License
JUSTICE TINGA: Agreement No. 43, as amended.

It was. We are made to understand that your company is committed to support the first large scale
integrated wood processing complex hereinafter called: "The Project") and that such support will be
provided not only in the form of the supply of pulpwood and other wood materials from your
ATTY. AGABIN:
concession but also by making available funds generated out of your own operations, to supplement
PICOP’s operational sources of funds and other financial arrangements made by him. In order that
It was not necessary. your company may provide such support effectively, it is understood that you will call upon your
stockholders to take such steps as may be necessary to effect a unification of managerial, technical,
economic and manpower resources between your company and PICOP.
JUSTICE TINGA:

It is in the public interest to promote industries that will enhance the proper conservation of our
It was.
forest resources as well as insure the maximum utilization thereof to the benefit of the national
economy. The administration feels that the PICOP project is one such industry which should enjoy
ATTY. AGABIN: priority over the usual logging operations hitherto practiced by ordinary timber licensees: For this
reason, we are pleased to consider favorably the request.
Yes.
We confirm that your Timber License Agreement No. 43, as amended (copy of which is attached as
Annex "A" hereof which shall form part and parcel of this warranty) definitely establishes the
JUSTICE TINGA:
boundary lines of your concession area which consists of permanent forest lands with an aggregate
area of 121,587 hectares and alienable or disposable lands with an aggregate area of approximately
And PICOP devoted quite a number of pages in [its] memorandum to that issue and so did the Court 21,580 hectares.
[in its Decision].
We further confirm that your tenure over the area and exclusive right to cut, collect and remove
sawtimber and pulpwood shall be for the period ending on April 26, 1977; said period to be
renewable for other 25 years subject to compliance with constitutional and statutory requirements
as well as with existing policy on timber concessions.
The peaceful and adequate enjoyment by you of your area as described and specified in your
aforesaid amended Timber License Agreement No. 43 is hereby warranted provided that pertinent
laws, regulations and the terms and conditions of your license agreement are observed.
Very truly yours,
6.3 Note must be made that the government warranted that PICOP’s tenure over the area and
exclusive right to cut, collect and remove saw timber and pulpwood shall be for the period ending
on 26 April 1977 and said period to be renewable for other 25 years subject to "compliance with
constitutional and statutory requirements as well as existing policy on timber requirements". It is
clear that the renewal for other 25 years, not necessarily for another 25 years is guaranteed. This
explains why on 07 October 1977, TLA No. 43, as amended, was automatically renewed for another
period of twenty five (25) years to expire on 26 April 2002. 30
PICOP’s interpretation of the 1969 Document cannot be sustained. PICOP’s claim that the term of
the warranty is not limited to fifty years, but that it extends to other fifty years, perpetually, violates
Section 2, Article XII of the Constitution which provides:

(Sgd.) FERNANDO LOPEZ

Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils,
Secretary of Agriculture
all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural
and Natural Resources
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
Encl.: shall be under the full control and supervision of the State. The State may directly undertake such
activities, or it may enter into co-production, joint venture, or production-sharing agreements with
Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned
RECOMMENDED BY:
by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable
for not more than twenty-five years, and under such terms and conditions as may be provided by
(Sgd.) JOSE VIADO law. In cases of water rights for irrigation, water supply fisheries, or industrial uses other than the
Acting Director of Forestry development of water power, beneficial use may be the measure and limit of the grant.

APPROVED: Mr. Justice Dante O. Tinga’s interpretation of the 1969 Document is much more in accord with the
laws and the Constitution. What one cannot do directly, he cannot do indirectly. Forest lands cannot
be alienated in favor of private entities. Granting to private entities, via a contract, a permanent,
(Sgd.) FERDINAND E. MARCOS
irrevocable, and exclusive possession of and right over forest lands is tantamount to granting
President of the Philippines
ownership thereof. PICOP, it should be noted, claims nothing less than having exclusive, continuous
and uninterrupted possession of its concession areas,31 where all other entrants are illegal,32 and
ACCEPTED: where so-called "illegal settlers and squatters" are apprehended.33

BISLIG BAY LBR. CO., INC. IFMAs are production-sharing agreements concerning the development and utilization of natural
resources. As such, these agreements "may be for a period not exceeding twenty-five years,
renewable for not more than twenty-five years, and under such terms and conditions as may be
By:
provided by law." Any superior "contract" requiring the State to issue TLAs and IFMAs whenever
they expire clearly circumvents Section 2, Article XII of the Constitution, which provides for the only
(Sgd.) JOSE E. SORIANO permissible schemes wherein the full control and supervision of the State are not derogated: co-
President production, joint venture, or production-sharing agreements within the time limit of twenty-five
years, renewable for another twenty-five years.
PICOP interprets this document in the following manner:
On its face, the 1969 Document was meant to expire on 26 April 2002, upon the expiration of the
expected extension of the original TLA period ending on 26 April 1977:
6.1 It is clear that the thrust of the government warranty is to establish a particular area defined by
boundary lines of TLA No. 43 for the PICOP Project. In consideration for PICOP’s commitment to
pursue and establish the project requiring huge investment/funding from stockholders and lending We further confirm that your tenure over the area and exclusive right to cut, collect and remove
institutions, the government provided a warranty that ensures the continued and exclusive right of sawtimber and pulpwood shall be for the period ending on April 26, 1977; said period to be
PICOP to source its raw materials needs from the forest and renewable trees within the areas renewable for other 25 years subject to compliance with constitutional and statutory requirements
established. as well as with existing policy on timber concessions.1avvphi1

6.2 As a long-term support, the warranty covers the initial twenty five (25) year period and
is renewable for periods of twenty five (25) years provided the project continues to exist and
operate. Very notably, the wording of the Presidential Warranty connotes that for as long as the
holder complies with all the legal requirements, the term of the warranty is not limited to fifty (50)
years but other twenty five (25) years.
Any interpretation extending the application of the 1969 Document beyond 26 April 2002 and any
concession that may be granted to PICOP beyond the said date would violate the Constitution, and
no amount of legal hermeneutics can change that. Attempts of PICOP to explain its way out of this
Constitutional provision only led to absurdities, as exemplified in the following excerpt from the
oral arguments:
JUSTICE CARPIO: ATTY. AGABIN:

The maximum trend of agreement to develop and utilize natural resources like forest products is 25 Well, your Honor, we believe on a question like this, this Honorable Court should balance the
years plus another 25 years or a total of 50 years correct? interest.

ATTY. AGABIN JUSTICE CARPIO:

Yes, Your Honor. The Constitution is very clear, you have only a maximum of 50 years, 25 plus another 25. PICOP
could never have applied for an extension, for a third 25-year term whether under the 1935
Constitution, the 1973 Constitution and the 1987 Constitution, correct?
JUSTICE CARPIO:

ATTY. AGABIN:
That is true for the 1987, 1973, 1935 Constitution, correct?

Your Honor, except that we are invoking the warranty, the terms of the warranty….
ATTY. AGABIN:

JUSTICE CARPIO:
Yes, Your Honor.

Can the warranty prevail over the Constitution?

JUSTICE CARPIO:

ATTY. AGABIN:
The TLA here, TLA 43, expired, the first 25 years expired in 1977, correct?

Well, it is a vested right, your Honor.

ATTY. AGABIN:

JUSTICE CARPIO:
Yes, Your Honor.

Yes, but whatever it is, can it prevail over the Constitution?

JUSTICE CARPIO:

ATTY. AGABIN:
And it was renewed for another 25 years until 2002, the 50th year?

The Constitution itself provides that vested rights should be ….

ATTY. AGABIN:

JUSTICE CARPIO:
Yes, Your Honor.

If it is not in violation of specific provision of the Constitution. The Constitution says, 25 years plus
JUSTICE CARPIO:
another 25 years, that’s the end of it. You mean to say that a President of the Philippines can give
somebody 1,000 years license?
Now, could PICOP before the end of the 50th year let’s say in 2001, one year before the expiration,
could it have asked for an extension of another 25 years of its TLA agreement[?]
ATTY. AGABIN:

ATTY. AGABIN:
Well, that is not our position, Your Honor. Because our position is that ….

I believe so, Your Honor.

JUSTICE CARPIO:

JUSTICE CARPIO:
My question is, what is the maximum term, you said 50 years. So, my next question is, can PICOP
apply for an extension of another 25 years after 2002, the 50th year?
But the Constitution says, maximum of fifty years. How could you ask for another 25 years of its
TLA.
ATTY. AGABIN:
Yes, based on the contract of warranty, Your Honor, because the contract of warranty….
JUSTICE CARPIO:
But in the PICOP license it is very clear, it says here, provision 28, it says the license agreement is for
a total of 50 years. I mean it is very simple, the President or even Congress cannot pass a law
extending the license, whatever kind of license to utilize natural resources for more than fifty
year[s]. I mean even the law cannot do that. It cannot prevail over the Constitution. Is that correct,
Counsel?
ATTY. AGABIN:
It is correct, Your Honor, except that in this case, what is actually our application is that the law
provides for the conversion of existing TLA into IFMA.
JUSTICE CARPIO:
So, they file the petition for conversion before the end of the 50th year for IFMA.
ATTY. AGABIN:
Yes, Your Honor.
JUSTICE CARPIO:
But IFMA is the same, it is based on Section 2, Article 12 of the Constitution, develop and utilize
natural resources because as you said when the new constitution took effect we did away with the
old licensing regime, we have now co-production, a production sharing, joint venture, direct
undertaking but still the same developing and utilizing the natural resources, still comes from
section 2, Art. 12 of the Constitution. It is still a license but different format now.
ATTY. AGABIN:
It is correct, Your Honor, except that the regimes of joint venture, co-production and production
sharing are what is referred to in the constitution, Your Honor, and still covered…
JUSTICE CARPIO:
Yes, but it is covered by same 25 year[s], you mean to say people now can circumvent the 50 year
maximum term by calling their TLA as IFMA and after fifty years calling it ISMA, after another 50
years call it MAMA.
ATTY. AGABIN:
Yes, Your Honor. Because…
JUSTICE CARPIO:
It can be done.
ATTY. AGABIN:
That is provided for by the department itself.34
PICOP is, in effect, arguing that the DENR issued DAO No. 99-53 in order to provide a way to
circumvent the provisions of the Constitution limiting agreements for the utilization of natural
resources to a maximum period of fifty years. Official duties are, however, disputably considered to
be regularly performed,35 and good faith is always presumed.
DAO No. 99-53 was issued to change the means by which the government enters into an agreement
with private entities for the utilization of forest products. DAO No. 99-53 is a late response to the
change in the constitutional provisions on natural resources from the 1973 Constitution, which
allowed the granting of licenses to private entities,36 to the present Constitution, which provides for
co-production, joint venture, or production-sharing agreements as the permissible schemes
wherein private entities may participate in the utilization of forest products. Since the granting of
timber licenses ceased to be a permissible scheme for the participation of private entities under the
present Constitution, their operations should have ceased upon the issuance of DAO No. 99-53, the
rule regulating the schemes under the present Constitution. This would be iniquitous to those with
existing TLAs that would not have expired yet as of the issuance of DAO No. 99-53, especially those
with new TLAs that were originally set to expire after 10 or even 20 or more years. The DENR thus
inserted a provision in DAO No. 99-53 allowing these TLA holders to finish the period of their TLAs,
but this time as IFMAs, without the rigors of going through a new application, which they have
probably just gone through a few years ago.
Such an interpretation would not only make DAO No. 99-53 consistent with the provisions of the
Constitution, but would also prevent possible discrimination against new IFMA applicants:
ASSOCIATE JUSTICE DE CASTRO:
I ask this question because of your interpretation that the period of the IFMA, if your TLA is
converted into IFMA, would cover a new a fresh period of twenty-five years renewable by another
period of twenty-five years.
DEAN AGABIN:
Yes, Your Honor.
ASSOCIATE JUSTICE DE CASTRO:
Don’t you think that will, in effect, be invidious discrimination with respect to other applicants if you
are granted a fresh period of twenty-five years extendible to another twenty-five years?
DEAN AGABIN:
I don’t think it would be, Your Honor, considering that the IFMA is different regime from the TLA.
And not only that, there are considerations of public health and ecology which should come into
play in this case, and which we had explained in our opening statement and, therefore the provision
of the Constitution on the twenty-five limits for renewal of co-production, joint venture and
production sharing agreements, should be balanced with other values stated in the Constitution, like
the value of balanced ecology, which should be in harmony with the rhythm of nature, or the policy
of forest preservation in Article XII, Section 14 of the Constitution. These are all important policy
considerations which should be balanced against the term limits in Article II of the Constitution.
ASSOCIATE JUSTICE DE CASTRO:
The provision of this Administrative Order regarding automatic conversion may be reasonable, if, I
want to know if you agree with me, if we limit this automatic conversion to the remaining period of
the TLA, because in that case there will be a valid ground to make a distinction between those with
existing TLA and those who are applying for the first time for IFMA?
DEAN AGABIN:
Well, Your Honor, we beg to disagree, because as I said TLA’s are completely different from IFMA.
The TLA has no production sharing or co-production agreement or condition. All that the licensee
has to do is, to pay forest charges, taxes and other impositions from the local and national
government. On the other hand, the IFMAs contained terms and conditions which are completely
different, and that they either impose co-production, production sharing or joint venture terms. So
it’s a completely different regime, Your Honor.
ASSOCIATE JUSTICE DE CASTRO:
Precisely, that is the reason why there should be an evaluation of what you mentioned earlier of the
development plan.
DEAN AGABIN:
Yes, Your Honor.
ASSOCIATE JUSTICE DE CASTRO:
So it will be reasonable to convert a TLA into an IFMA without considering the development plan
submitted by other applicants or the development plan itself of one seeking conversion into IFMA if
it will only be limited to the period, the original period of the TLA. But once you go beyond the
period of the TLA, then you will be, the DENR is I think should evaluate the different proposals of
the applicants if we are thinking of a fresh period of twenty-five years, and which is renewable
under the Constitution by another twenty-five years. So the development plan will be important in
this case, the submission of the development plan of the different applicants must be considered. So
I don’t understand why you mentioned earlier that the development plan will later on be a subject
matter of negotiation between the IFMA grantee and the government. So it seems that it will be too
late in the day to discuss that if you have already converted the TLA into IFMA or if the government
has already granted the IFMA, and then it will later on study the development plan, whether it is
viable or not, or it is sustainable or not, and whether the development plan of the different
applicants are, are, which of the development plan of the different applicants is better or more
advantageous to the government.37
PICOP insists that the alleged Presidential Warranty, having been signed on 29 July 1969, could not
have possibly considered the limitations yet to be imposed by future issuances, such as the 1987
Constitution. However, Section 3, Article XVIII of said Constitution, provides:
Section 3. All existing laws, decrees, executive orders, proclamations, letters of instructions, and
other executive issuances not inconsistent with this Constitution shall remain operative until
amended, repealed, or revoked.
In the recent case Sabio v. Gordon,38 we ruled that "(t)he clear import of this provision is that all
existing laws, executive orders, proclamations, letters of instructions and other executive issuances
inconsistent or repugnant to the Constitution are repealed."
When a provision is susceptible of two interpretations, "the one that will render them operative and
effective and harmonious with other provisions of law"39 should be adopted. As the interpretations
in the assailed Decision and in Mr. Justice Tinga’s ponencia are the ones that would not make the
subject Presidential Warranty unconstitutional, these are what we shall adopt.
Purpose of the 1969 Document: Assurance That the Boundaries of Its Concession Area Would Not
Be Altered Despite the Provision in the TLA that the DENR Secretary Can Amend Said Boundaries
In the assailed Decision, we ruled that the 1969 Document cannot be considered a contract that
would bind the government regardless of changes in policy and the demands of public interest and
social welfare. PICOP claims this conclusion "did not take into consideration that PICOP already had
a valid and current TLA before the contract with warranty was signed in 1969." 40 PICOP goes on:
"The TLA is a license that equips any TLA holder in the country for harvesting of timber. A TLA is
signed by the Secretary of the DANR now DENR. The Court ignored the significance of the need for
another contract with the Secretary of the DANR but this time with the approval of the President of
the Republic."41 PICOP then asks us: "If PICOP/BBLCI was only an ordinary TLA holder, why will it
go through the extra step of securing another contract just to harvest timber when the same can be
served by the TLA signed only by the Secretary and not requiring the approval of the President of
the Republic(?)"42
The answer to this query is found in TLA No. 43 itself wherein, immediately after the boundary lines
of TLA No. 43 were established, the following conditions were given:
This license is granted to the said party of the second part upon the following express conditions:
I. That authority is granted hereunder to the party of the second part43 to cut, collect or
remove firewood or other minor forest products from the area embraced in this license
agreement except as hereinafter provided.
II. That the party of the first part44 may amend or alter the description of the boundaries
of the area covered by this license agreement to conform with official surveys and that
the decision of the party of the first part as to the exact location of the said boundaries
shall be final.
III. That if the party of the first part deems it necessary to establish on the ground the
boundary lines of the area granted under this license agreement, the party of the second
part shall furnish to the party of the first part or its representatives as many laborers as it
needs and all the expenses to be incurred on the work including the wages of such
laborers shall be paid by the party of the second part.45
Thus, BBLCI needed an assurance that the boundaries of its concession area, as established in TLA
No. 43, as amended, would not be altered despite this provision. Hence, BBLCI endeavored to obtain
the 1969 Document, which provides:
We confirm that your Timber License Agreement No. 43, as amended (copy of which is attached as
Annex "A" hereof which shall form part and parcel of this warranty) definitely establishes the
boundary lines of your concession area which consists of permanent forest lands with an aggregate
area of 121,587 hectares and alienable or disposable lands with an aggregate area of approximately
21,580 hectares.
We further confirm that your tenure over the area and exclusive right to cut, collect and remove
sawtimber and pulpwood shall be for the period ending on April 26, 1977; said period to be
renewable for other 25 years subject to compliance with constitutional and statutory requirements
as well as with existing policy on timber concessions.
The peaceful and adequate enjoyment by you of your area as described and specified in your
aforesaid amended Timber License Agreement No. 43 is hereby warranted provided that pertinent
laws, regulations and the terms and conditions of your license agreement are observed.46
In Koa v. Court of Appeals,47 we ruled that a warranty is a collateral undertaking and is merely part
of a contract. As a collateral undertaking, it follows the principal wherever it goes. When this was
pointed out by the Solicitor General, PICOP changed its designation of the 1969 Document from
"Presidential Warranty" or "government warranty" in all its pleadings prior to our Decision, to
"contract with warranty" in its Motion for Reconsideration. This, however, is belied by the
statements in the 29 July 1969 Document, which refers to itself as "this warranty."
be given incentives, are still principally and predominantly for the benefit of the investors. Thus, the
"mutual" contract considerations by both parties to this alleged contract would be both for the
benefit of one of the parties thereto, BBLCI, which is not obligated by the 1969 Document to
surrender a share in its proceeds any more than it is already required by its TLA and by the tax laws.
PICOP’s argument that its investments can be considered as contract consideration derogates the
rule that "a license or a permit is not a contract between the sovereignty and the licensee or
permittee, and is not a property in the constitutional sense, as to which the constitutional
proscription against the impairment of contracts may extend." All licensees obviously put up
investments, whether they are as small as a tricycle unit or as big as those put up by multi-billion-
peso corporations. To construe these investments as contract considerations would be to abandon
the foregoing rule, which would mean that the State would be bound to all licensees, and lose its
power to revoke or amend these licenses when public interest so dictates.
The power to issue licenses springs from the State’s police power, known as "the most essential,
insistent and least limitable of powers, extending as it does to all the great public
needs."49 Businesses affecting the public interest, such as the operation of public utilities and those
involving the exploitation of natural resources, are mandated by law to acquire licenses. This is so in
order that the State can regulate their operations and thereby protect the public interest. Thus,
while these licenses come in the form of "agreements," e.g., "Timber License Agreements," they
cannot be considered contracts under the non-impairment clause.50

PICOP found this argument "lame," arguing, thus:

Re: Allegation That There Were Mutual Contract Considerations

43. It is respectfully submitted that the aforesaid pronouncement in the Decision is an egregious and
Had the 29 July 1969 Document been intended as a contract, it could have easily said so. More
monumental error.
importantly, it could have clearly defined the mutual considerations of the parties thereto. It could
have also easily provided for the sanctions for the breach of the mutual considerations specified
therein. PICOP had vigorously argued that the 1969 Document was a contract because of these 44. The Decision could not dismiss as "preposterous" the mutual covenants in the Presidential
mutual considerations, apparently referring to the following paragraph of the 1969 Document: Warranty which calls for a huge investment of Php500 million at that time in 1969 out of which
Php268,440,000 raised from domestic foreign lending institution to establish the first large scale
integrated wood processing complex in the Philippines.
We are made to understand that your company is committed to support the first large scale
integrated wood processing complex hereinafter called: "The Project") and that such support will be
provided not only in the form of the supply of pulpwood and other wood materials from your 45. The Decision puts up a lame explanation that "all licensees put up investments in pursuing their
concession but also by making available funds generated out of your own operations, to supplement business"
PICOP’s operational surces (sic) of funds and other financial arrangements made by him. In order
that your company may provide such support effectively, it is understood that you will call upon
46. Now there are about a hundred timber licenses issued by the Government thru the DENR, but
your stockholders to take such steps as may be necessary to effect a unification of managerial,
these are ordinary timber licenses which involve the mere cutting of timber in the concession area,
technical, economic and manpower resources between your company and PICOP.1avvphi1
and nothing else. Records in the DENR shows that no timber licensee has put up an integrated large
wood processing complex in the Philippines except PICOP.51
This provision hardly evinces a contract consideration (which, in PICOP’s interpretation, is in
exchange for the exclusive and perpetual tenure over 121,587 hectares of forest land and 21,580
PICOP thus argues on the basis of quantity, and wants us to distinguish between the investment of
hectares of alienable and disposable lands). As elucidated by PICOP itself in bringing up the
the tricycle driver and that of the multi-billion corporation. However, not even billions of pesos in
Investment Incentives Act which we shall discuss later, and as shown by the tenor of the 1969
investment can change the fact that natural resources and, therefore, public interest are involved in
Document, the latter document was more of a conferment of an incentive for BBLCI’s investment
PICOP’s venture, consequently necessitating the full control and supervision by the State as
rather than a contract creating mutual obligations on the part of the government, on one hand, and
mandated by the Constitution. Not even billions of pesos in investment can buy forest lands, which
BBLCI, on the other. There was no stipulation providing for sanctions for breach if BBLCI’s being
is practically what PICOP is asking for by interpreting the 1969 Document as a contract giving it
"committed to support the first large scale integrated wood processing complex" remains a
perpetual and exclusive possession over such lands. Among all TLA holders in the Philippines,
commitment. Neither did the 1969 Document give BBLCI a period within which to pursue this
PICOP has, by far, the largest concession area at 143,167 hectares, a land area more than the size of
commitment.
two Metro Manilas.52 How can it not expect to also have the largest investment?

According to Article 1350 of the Civil Code, "(i)n onerous contracts the cause is understood to be, for
Investment Incentives Act
each contracting party, the prestation or promise of a thing or service by the other." 48 Private
investments for one’s businesses, while indeed eventually beneficial to the country and deserving to
PICOP then claims that the contractual nature of the 1969 Document was brought about by its
issuance in accordance with and pursuant to the Investment Incentives Act. According to PICOP:
The conclusion in the Decision that to construe PICOP’s investments as a consideration in a contract
would be to stealthily render ineffective the principle that a license is not a contract between the
sovereignty and the licensee is so flawed since the contract with the warranty dated 29 July 1969
was issued by the Government in accordance with and pursuant to Republic Act No. 5186, otherwise
known as "The Investment Incentives Act."53
PICOP then proceeds to cite Sections 2 and 4(d) and (e) of said act:
Section 2. Declaration of Policy – To accelerate the sound development of the national economy in
consonance with the principles and objectives of economic nationalism, and in pursuance of a
planned, economically feasible and practicable dispersal of industries, under conditions which will
encourage competition and discharge monopolies, it is hereby declared to be the policy of the state
to encourage Filipino and foreign investments, as hereinafter set out, in projects to develop
agricultural, mining and manufacturing industries which increase national income most at the least
cost, increase exports, bring about greater economic stability, provide more opportunities for
employment, raise the standards of living of the people, and provide for an equitable distribution of
wealth. It is further declared to be the policy of the state to welcome and encourage foreign capital
to establish pioneer enterprises that are capital intensive and would utilize a substantial amount of
domestic raw materials, in joint venture with substantial Filipino capital, whenever available.
Section 4. Basic Rights and Guarantees. – All investors and enterprises are entitled to the basic
rights and guarantees provided in the constitution. Among other rights recognized by the
Government of the Philippines are the following:
xxxx
d) Freedom from Expropriation. – There shall be no expropriation by the government of the
property represented by investments or of the property of enterprises except for public use or in
the interest of national welfare and defense and upon payment of just compensation. x x x.
e) Requisition of Investment. – There shall be no requisition of the property represented by the
investment or of the property of enterprises, except in the event of war or national emergency and
only for the duration thereof. Just compensation shall be determined and paid either at the time of
requisition or immediately after cessation of the state of war or national emergency. Payments
received as compensation for the requisitioned property may be remitted in the currency in which
the investment was originally made and at the exchange rate prevailing at the time of remittance,
subject to the provisions of Section seventy-four of republic Act Numbered Two hundred sixty-five.
Section 2 speaks of the policy of the State to encourage Filipino and foreign investments. It does not
speak of how this policy can be implemented. Implementation of this policy is tackled in Sections 5
to 12 of the same law,54 which PICOP failed to mention, and for a good reason. None of the 24
incentives enumerated therein relates to, or even remotely suggests that, PICOP’s proposition that
the 1969 Document is a contract.
PICOP could indeed argue that the enumeration is not exclusive. Certainly, granting incentives to
investors, whether included in the enumeration or not, would be an implementation of this policy.
However, it is presumed that whatever incentives may be given to investors should be within the
bounds of the laws and the Constitution. The declaration of policy in Section 2 cannot, by any stretch
of the imagination, be read to provide an exception to either the laws or, heaven forbid, the
Constitution. Exceptions are never presumed and should be convincingly proven. Section 2 of the
Investment Incentives Act cannot be read as exempting investors from the Constitutional provisions
(1) prohibiting private ownership of forest lands; (2) providing for the complete control and
supervision by the State of exploitation activities; or (3) limiting exploitation agreements to twenty-
five years, renewable for another twenty-five years.
Section 4(d) and (e), on the other hand, is a recognition of rights already guaranteed under the
Constitution. Freedom from expropriation is granted under Section 9 of Article III 55 of the
Constitution, while the provision on requisition is a negative restatement of Section 6, Article XII. 56
Refusal to grant perpetual and exclusive possession to PICOP of its concession area would not result
in the expropriation or requisition of PICOP’s property, as these forest lands belong to the State, and
not to PICOP. This is not changed by PICOP’s allegation that:
Since it takes 35 years before the company can go back and harvest their residuals in a logged-over
area, it must be assured of tenure in order to provide an inducement for the company to manage
and preserve the residuals during their growth period. This is a commitment of resources over a
span of 35 years for each plot for each cycle. No company will undertake the responsibility and cost
involved in policing, preserving and managing residual forest areas until it were sure that it had
firm title to the timber.57
The requirement for logging companies to preserve and maintain forest areas, including the
reforestation thereof, is one of the prices a logging company must pay for the exploitation thereof.
Forest lands are meant to be enjoyed by countless future generations of Filipinos, and not just by
one logging company. The requirements of reforestation and preservation of the concession areas
are meant to protect them, the future generations, and not PICOP. Reforestation and preservation of
the concession areas are not required of logging companies so that they would have something to
cut again, but so that the forest would remain intact after their operations. That PICOP would not
accept the responsibility to preserve its concession area if it is not assured of tenure thereto does
not speak well of its corporate policies.
Conclusion
In sum, PICOP was not able to prove either of the two things it needed to prove to be entitled to a
Writ of Mandamus against the DENR Secretary. The 1969 Document is not a contract recognized
under the non-impairment clause and, even if we assume for the sake of argument that it is, it did
not enjoin the government to issue an IFMA in 2002 either. These are the essential elements in
PICOP’s cause of action, and the failure to prove the same warrants a dismissal of PICOP’s Petition
for Mandamus, as not even PICOP’s compliance with all the administrative and statutory
requirements can save its Petition now.
Whether PICOP Has Complied with the Statutory and Administrative Requirements for the
Conversion of the TLA to an IFMA
In the assailed Decision, our ruling was based on two distinct grounds, each one being sufficient in
itself for us to rule that PICOP was not entitled to a Writ of Mandamus: (1) the 1969 Document, on
which PICOP hinges its right to compel the issuance of an IFMA, is not a contract; and (2) PICOP has
not complied with all administrative and statutory requirements for the issuance of an IFMA.
When a court bases its decision on two or more grounds, each is as authoritative as the other and
neither is obiter dictum.58 Thus, both grounds on which we based our ruling in the assailed Decision
would become judicial dictum, and would affect the rights and interests of the parties to this case
unless corrected in this Resolution on PICOP’s Motion for Reconsideration. Therefore, although
PICOP would not be entitled to a Writ of Mandamus even if the second issue is resolved in its favor,
we should nonetheless resolve the same and determine whether PICOP has indeed complied with all
administrative and statutory requirements for the issuance of an IFMA.
While the first issue (on the nature of the 1969 Document) is entirely legal, this second issue (on
PICOP’s compliance with administrative and statutory requirements for the issuance of an IFMA)
has both legal and factual sub-issues. Legal sub-issues include whether PICOP is legally required to
(1) consult with and acquire an approval from the Sanggunian concerned under Sections 26 and 27
of the Local Government Code; and (2) acquire a Certification from the National Commission on
Indigenous Peoples (NCIP) that the concession area does not overlap with any ancestral domain.
Factual sub-issues include whether, at the time it filed its Petition for Mandamus, PICOP had
submitted the required Five-Year Forest Protection Plan and Seven-Year Reforestation Plan and
whether PICOP had paid all forest charges.
For the factual sub-issues, PICOP invokes the doctrine that factual findings of the trial court,
especially when upheld by the Court of Appeals, deserve great weight. However, deserving of even
greater weight are the factual findings of administrative agencies that have the expertise in the area
of concern. The contentious facts in this case relate to the licensing, regulation and management of
forest resources, the determination of which belongs exclusively to the DENR:
SECTION 4. Mandate. – The Department shall be the primary government agency responsible for the
conservation, management, development and proper use of the country’s environment and natural
resources, specifically forest and grazing lands, mineral resources, including those in reservation
and watershed areas, and lands of the public domain, as well as the licensing and regulation of all
natural resources as may be provided for by law in order to ensure equitable sharing of the benefits
derived therefrom for the welfare of the present and future generations of Filipinos. 59
When parties file a Petition for Certiorari against judgments of administrative agencies tasked with
overseeing the implementation of laws, the findings of such administrative agencies are entitled to
great weight. In the case at bar, PICOP could not have filed a Petition for Certiorari, as the DENR
Secretary had not yet even determined whether PICOP should be issued an IFMA. As previously
mentioned, when PICOP’s application was brought to a standstill upon the evaluation that PICOP
had yet to comply with the requirements for the issuance of an IFMA, PICOP refused to attend
further meetings with the DENR and instead filed a Petition for Mandamus against the latter. By
jumping the gun, PICOP did not diminish the weight of the DENR Secretary’s initial determination.
Forest Protection and Reforestation Plans
The Performance Evaluation Team tasked to appraise PICOP’s performance on its TLA No. 43 found
that PICOP had not submitted its Five-Year Forest Protection Plan and its Seven-Year Reforestation
Plan.60
In its Motion for Reconsideration, PICOP asserts that, in its Letter of Intent dated 28 August 2000
and marked as Exhibit L in the trial court, there was a reference to a Ten-Year Sustainable Forest
Management Plan (SFMP), in which a Five-Year Forest Protection Plan and a Seven-Year
Reforestation Plan were allegedly incorporated. PICOP submitted a machine copy of a certified
photocopy of pages 50-67 and 104-110 of this SFMP in its Motion for Reconsideration. PICOP claims
that the existence of this SFMP was repeatedly asserted during the IFMA application process.61
Upon examination of the portions of the SFMP submitted to us, we cannot help but notice that
PICOP’s concept of forest protection is the security of the area against "illegal" entrants and settlers.
There is no mention of the protection of the wildlife therein, as the focus of the discussion of the
silvicultural treatments and the SFMP itself is on the protection and generation of future timber
harvests. We are particularly disturbed by the portions stating that trees of undesirable quality shall
be removed.
However, when we required the DENR Secretary to comment on PICOP’s Motion for
Reconsideration, the DENR Secretary did not dispute the existence of this SFMP, or question PICOP’s
assertion that a Ten-Year Forest Protection Plan and a Ten-Year Reforestation Plan are already
incorporated therein. Hence, since the agency tasked to determine compliance with IFMA
administrative requirements chose to remain silent in the face of allegations of compliance, we are
constrained to withdraw our pronouncement in the assailed Decision that PICOP had not submitted
a Five-Year Forest Protection Plan and a Seven-Year Reforestation Plan for its TLA No. 43. As
previously mentioned, the licensing, regulation and management of forest resources are the primary
responsibilities of the DENR.62
The compliance discussed above is, of course, only for the purpose of determining PICOP’s
satisfactory performance as a TLA holder, and covers a period within the subsistence of PICOP’s TLA
No. 43. This determination, therefore, cannot prohibit the DENR from requiring PICOP, in the future,
to submit proper forest protection and reforestation plans covering the period of the proposed
IFMA.
Forest Charges
In determining that PICOP did not have unpaid forest charges, the Court of Appeals relied on the
assumption that if it were true that PICOP had unpaid forest charges, it should not have been issued
an approved Integrated Annual Operation Plan (IAOP) for the year 2001-2002 by Secretary Alvarez
himself.63
In the assailed Decision, we held that the Court of Appeals had been selective in its evaluation of the
IAOP, as it disregarded the part thereof that shows that the IAOP was approved subject to several
conditions, not the least of which was the submission of proof of the updated payment of forest
charges from April 2001 to June 2001.64 We also held that even if we considered for the sake of
argument that the IAOP should not have been issued if PICOP had existing forestry accounts, the
issuance of the IAOP could not be considered proof that PICOP had paid the same. Firstly, the best
evidence of payment is the receipt thereof. PICOP has not presented any evidence that such receipts
were lost or destroyed or could not be produced in court. 65 Secondly, the government cannot be
estopped by the acts of its officers. If PICOP has been issued an IAOP in violation of the law, allegedly
because it may not be issued if PICOP had existing forestry accounts, the government cannot be
estopped from collecting such amounts and providing the necessary sanctions therefor, including
the withholding of the IFMA until such amounts are paid.
We therefore found that, as opposed to the Court of Appeals’ findings, which were based merely on
estoppel of government officers, the positive and categorical evidence presented by the DENR
Secretary was more convincing with respect to the issue of payment of forestry charges:
1. Forest Management Bureau (FMB) Senior Forest Management Specialist (SFMS)
Ignacio M. Evangelista testified that PICOP had failed to pay its regular forest charges
covering the period from 22 September 2001 to 26 April 2002 in the total amount of
₱15,056,054.0566 PICOP also allegedly paid late most of its forest charges from 1996
onwards, by reason of which, PICOP is liable for a surcharge of 25% per annum on the tax
due and interest of 20% per annum which now amounts to ₱150,169,485.02.67 Likewise,
PICOP allegedly had overdue and unpaid silvicultural fees in the amount of ₱2,366,901.00
as of 30 August 2002.68 Summing up the testimony, therefore, it was alleged that PICOP
had unpaid and overdue forest charges in the sum of ₱167,592,440.90 as of 10 August
2002.69
 2. Collection letters were sent to PICOP, but no official receipts are extant in the DENR 1. In order for the DENR to be able to exercise closer and more effective supervision, management
record in Bislig City evidencing payment of the overdue amount stated in the said and control over the forest resources within the areas covered by TLA No. 43, PTLA No. 47 and
collection letters.70 There were no official receipts for the period covering 22 September IFMA No. 35 of the PICOP Resources, Inc., (PRI) and, at the same time, provide greater facility in the
2001 to 26 April 2002. delivery of DENR services to various publics, the aforesaid forest holdings of PRI are hereby placed
under the exclusive jurisdiction of DENR Region No. XIII with the CENR Office at Bislig, Surigao del
Sur, as directly responsible thereto. x x x.
We also considered these pieces of evidence more convincing than the other ones presented by
PICOP:
We disagree. Evangelista is an SFMS assigned at the Natural Forest Management Division of the
FMB, DENR. In Evangelista’s aforementioned affidavit submitted as part of his direct examination,
1. PICOP presented the certification of Community Environment and Natural Resources
Evangelista enumerated his duties and functions as SFMS:
Office (CENRO) Officer Philip A. Calunsag, which refers only to PICOP’s alleged payment
of regular forest charges covering the period from 14 September 2001 to 15 May
2002.71 We noted that it does not mention similar payment of the penalties, surcharges 1. As SFMS, I have the following duties and functions:
and interests that PICOP incurred in paying late several forest charges, which fact was not
rebutted by PICOP.
a) To evaluate and act on cases pertaining to forest management referred to in
the Natural forest Management Division;
2. The 27 May 2002 Certification by CENRO Calunsag specified only the period covering
14 September 2001 to 15 May 2002 and the amount of P53,603,719.85 paid by PICOP
b) To monitor, verify and validate forest management and related activities by
without indicating the corresponding volume and date of production of the logs. This is in
timber licences as to their compliance to approved plans and programs;
contrast to the findings of SFMS Evangelista, which cover the period from CY 1996 to 30
August 2002 and includes penalties, interests, and surcharges for late payment pursuant
to DAO 80, series of 1987. c) To conduct investigation and verification of compliance by timber
licenses/permittees to existing DENR rules and regulations;
3. The 21 August 2002 PICOP-requested certification issued by Bill Collector Amelia D.
Arayan, and attested to by CENRO Calunsag himself, shows that PICOP paid only regular d) To gather field data and information to be used in the formulation of forest
forest charges for its log production covering 1 July 2001 to 21 September 2001. policies and regulations; and
However, there were log productions after 21 September 2001, the regular forest charges
for which have not been paid, amounting to ₱15,056,054.05. 72 The same certification
e) To perform other duties and responsibilities as may be directed by
shows delayed payment of forest charges, thereby corroborating the testimony of SFMS
superiors.73
Evangelista and substantiating the imposition of penalties and surcharges.

PICOP also alleges that the testimony of SFMS Evangelista was based on the
In its Motion for Reconsideration, PICOP claims that SFMS Evangelista is assigned to an office that
aforementioned Memoranda of Orlanes and Arayan and that, since neither Orlanes nor
has nothing to do with the collection of forest charges, and that he based his testimony on the
Arayan was presented as a witness, SFMS Evangelista’s testimony should be deemed
Memoranda of Forest Management Specialist II (FMS II) Teofila Orlanes and DENR, Bislig City Bill
hearsay. SFMS Evangelista’s 1 October 2002 Affidavit,74 which was offered as part of his
Collector Amelia D. Arayan, neither of whom was presented to testify on his or her Memorandum.
testimony, provides:
PICOP also submitted an Addendum to Motion for Reconsideration, wherein it appended certified
true copies of CENRO Summaries with attached Official Receipts tending to show that PICOP had
paid a total of ₱81,184,747.70 in forest charges for 10 January 2001 to 20 December 2002, including 2. Sometime in September, 2001 the DENR Secretary was furnished a copy of forest
the period during which SFMS Evangelista claims PICOP did not pay forest charges (22 September Management Specialist II (FMS II) Teofila L. Orlanes’ Memorandum dated September 24,
2001 to 26 April 2002). 2001 concerning unopaid forest charges of PICOP. Attached to the said Memorandum was
a Memorandum dated September 19, 2001 of Amelia D. Arayan, Bill collector of the DENR
R13-14, Bislig City. Copies of the said Memoranda are attached as Annexes 1 and 2,
Before proceeding any further, it is necessary for us to point out that, as with our ruling on the
respectively.
forest protection and reforestation plans, this determination of compliance with the payment of
forest charges is exclusively for the purpose of determining PICOP’s satisfactory performance on its
TLA No. 43. This cannot bind either party in a possible collection case that may ensue. 3. The said Memoranda were referred to the FMB Director for appropriate action.

An evaluation of the DENR Secretary’s position on this matter shows a heavy reliance on the 4. Thus, on August 5, 2002, I was directed by the FMB Director to proceed to Region 13 to
testimony of SFMS Evangelista, making it imperative for us to strictly scrutinize the same with gather forestry-related data and validate the report contained in the Memoranda of Ms.
respect to its contents and admissibility. Orlanes and Arayan.

PICOP claims that SFMS Evangelista’s office has nothing to do with the collection of forest charges. 5. On August 6, 2002, I proceeded to DENR Region 13 in Bislig City. A copy of my Travel
According to PICOP, the entity having administrative jurisdiction over it is CENRO, Bislig City by Order is attached as Annex 3.
virtue of DENR Administrative Order No. 96-36, dated 20 November 1996, which states:
 6. Upon my arrival at CENRO, Bislig, surigao del Sur, I coordinated with CENRO Officer
Philip A. Calunsag and requested him to make available to me the records regarding the
forest products assessments of PICOP.
7. After I was provided with the requested records, I evaluated and collected the data.
8. After the evaluation, I found that the unpaid forest charges adverted to in the
Memoranda of Mr. Orlanes and Arayan covering the period from May 8, 2001 to July 7,
2001 had already been paid but late. I further found out that PICOP had not paid its forest
charges covering the period from September 22, 2001 to April 26, 2002 in the total
amount of ₱15,056,054.05.
9. I also discovered that from 1996 up to august 30, 2002, PICOP paid late some of its
forest charges in 1996 and consistently failed to pay late its forest charges from 1997 up
to the present time.
10. Under Section 7.4 of DAO No. 80 Series of 197\87 and Paragraph (4a), Section 10 of
BIR revenue Regulations No. 2-81 dated November 18, 1980, PICOP is mandated to pay a
surcharge of 25% per annum of the tax due and interest of 20% per annum for late
payment of forest charges.
11. The overdue unpaid forest charges of PICOP as shown in the attached tabulation
marked as Annex 4 hereof is ₱150,169,485.02. Likewise, PICOP has overdue and unpaid
silvicultural fees in the amount of ₱2,366,901.00 from 1996 to the present.
12. In all, PICOP has an outstanding and overdue total obligation of ₱167,592,440.90 as of
August 30, 2002 based on the attached tabulation which is marked as Annex 5 hereof. 75
Clearly, SFMS Evangelista had not relied on the Memoranda of Orlanes and Arayan. On the contrary,
he traveled to Surigao del Sur in order to verify the contents of these Memoranda. SFMS Evangelista,
in fact, revised the findings therein, as he discovered that certain forest charges adverted to as
unpaid had already been paid.
This does not mean, however, that SFMS Evangelista’s testimony was not hearsay. A witness may
testify only on facts of which he has personal knowledge; that is, those derived from his perception,
except in certain circumstances allowed by the Rules. 76 Otherwise, such testimony is considered
hearsay and, hence, inadmissible in evidence.77
SFMS Evangelista, while not relying on the Memoranda of Orlanes and Arayan, nevertheless relied
on records, the preparation of which he did not participate in.78 These records and the persons who
prepared them were not presented in court, either. As such, SFMS Evangelista’s testimony, insofar
as he relied on these records, was on matters not derived from his own perception, and was,
therefore, hearsay.
Section 44, Rule 130 of the Rules of Court, which speaks of entries in official records as an exception
to the hearsay rule, cannot excuse the testimony of SFMS Evangelista. Section 44 provides:
SEC. 44. Entries in official records. – Entries in official records made in the performance of his duty
by a public officer of the Philippines, or by a person in the performance of a duty specially enjoined
by law, are prima facie evidence of the facts therein stated.
In Africa v. Caltex,79 we enumerated the following requisites for the admission of entries in official
records as an exception to the hearsay rule: (1) the entries were made by a public officer or a
private person in the performance of a duty; (2) the performance of the duty is especially enjoined
by law; (3) the public officer or the private person had sufficient knowledge of the facts stated by
him, which must have been acquired by him personally or through official information.
The presentation of the records themselves would, therefore, have been admissible as an exception
to the hearsay rule even if the public officer/s who prepared them was/were not presented in court,
provided the above requisites could be adequately proven. In the case at bar, however, neither the
records nor the persons who prepared them were presented in court. Thus, the above requisites
cannot be sufficiently proven. Also, since SFMS Evangelista merely testified based on what those
records contained, his testimony was hearsay evidence twice removed, which was one step too
many to be covered by the official-records exception to the hearsay rule.
SFMS Evangelista’s testimony of nonpayment of forest charges was, furthermore, based on his
failure to find official receipts corresponding to billings sent to PICOP. As stated above, PICOP
attached official receipts in its Addendum to Motion for Reconsideration to this Court. While this
course of action is normally irregular in judicial proceedings, we merely stated in the assailed
Decision that "the DENR Secretary has adequately proven that PICOP has, at this time, failed to
comply with administrative and statutory requirements for the conversion of TLA No. 43 into an
IFMA,"80 and that "this disposition confers another chance to comply with the foregoing
requirements."81
In view of the foregoing, we withdraw our pronouncement that PICOP has unpaid forestry charges,
at least for the purpose of determining compliance with the IFMA requirements.
NCIP Certification
The Court of Appeals held that PICOP need not comply with Section 59 of Republic Act No. 8371,
which requires prior certification from the NCIP that the areas affected do not overlap with any
ancestral domain before any IFMA can be entered into by the government. According to the Court of
Appeals, Section 59 should be interpreted to refer to ancestral domains that have been duly
established as such by the continuous possession and occupation of the area concerned by
indigenous peoples since time immemorial up to the present. The Court of Appeals held that PICOP
had acquired property rights over TLA No. 43 areas, being in exclusive, continuous and
uninterrupted possession and occupation of these areas since 1952 up to the present.
In the assailed Decision, we reversed the findings of the Court of Appeals. Firstly, the Court of
Appeals ruling defies the settled jurisprudence we have mentioned earlier, that a TLA is neither a
property nor a property right, and that it does not create a vested right.82
Secondly, the Court of Appeals’ resort to statutory construction is misplaced, as Section 59 of
Republic Act No. 8379 is clear and unambiguous:
SEC. 59. Certification Precondition. – All departments and other governmental agencies shall
henceforth be strictly enjoined from issuing, renewing or granting any concession, license or lease,
or entering into any production-sharing agreement, without prior certification from the NCIP that
the area affected does not overlap with any ancestral domain. Such certification shall only be issued
after a field-based investigation is conducted by the Ancestral Domains Office of the area concerned:
Provided, That no certification shall be issued by the NCIP without the free and prior informed and
written consent of the ICCs/IPs concerned: Provided, further, That no department, government
agency or government-owned or controlled corporation may issue new concession, license, lease, or
production sharing agreement while there is a pending application for a CADT: Provided, finally,
That the ICCs/IPs shall have the right to stop or suspend, in accordance with this Act, any project
that has not satisfied the requirement of this consultation process.
PICOP had tried to put a cloud of ambiguity over Section 59 of Republic Act No. 8371 by invoking
the definition of Ancestral Domains in Section 3(a) thereof, wherein the possesssion by Indigenous
Cultural Communities/Indigenous Peoples (ICCs/IPs) must have been continuous to the present.
However, we noted the exception found in the very same sentence invoked by PICOP:
a) Ancestral domains – Subject to Section 56 hereof, refers to all areas generally belonging to
ICCs/IPs comprising lands, inland waters, coastal areas, and natural resources therein, held under a
claim of ownership, occupied or possessed by ICCs/IPs, by themselves or through their ancestors,
communally or individually since time immemorial, continuously to the present except when
interrupted by war, force majeure or displacement by force, deceit, stealth or as a consequence of
government projects or any other voluntary dealings entered into by government and private
individuals/corporations, and which are necessary to ensure their economic, social and cultural
welfare. It shall include ancestral lands, forests, pasture, residential, agricultural, and other lands
individually owned whether alienable and disposable or otherwise, hunting grounds, burial
grounds, worship areas, bodies of water, mineral and other natural resources, and lands which may
no longer be exclusively occupied by ICCs/IPs but from which they traditionally had access to for
their subsistence and traditional activities, particularly the home ranges of ICCs/IPs who are still
nomadic and/or shifting cultivators;
Ancestral domains, therefore, remain as such even when possession or occupation of these areas
has been interrupted by causes provided under the law, such as voluntary dealings entered into by
the government and private individuals/corporations. Consequently, the issuance of TLA No. 43 in
1952 did not cause the ICCs/IPs to lose their possession or occupation over the area covered by TLA
No. 43.
Thirdly, we held that it was manifestly absurd to claim that the subject lands must first be proven to
be part of ancestral domains before a certification that the lands are not part of ancestral domains
can be required, and invoked the separate opinion of now Chief Justice Reynato Puno in Cruz v.
Secretary of DENR83:
As its subtitle suggests, [Section 59 of R.A. No. 8371] requires as a precondition for the issuance of
any concession, license or agreement over natural resources, that a certification be issued by the
NCIP that the area subject of the agreement does not lie within any ancestral domain. The provision
does not vest the NCIP with power over the other agencies of the State as to determine whether to
grant or deny any concession or license or agreement. It merely gives the NCIP the authority to
ensure that the ICCs/IPs have been informed of the agreement and that their consent thereto has
been obtained. Note that the certification applies to agreements over natural resources that do not
necessarily lie within the ancestral domains. For those that are found within the said domains,
Sections 7(b) and 57 of the IPRA apply.
PICOP rejects the entire disposition of this Court on the matter, relying on the following theory:
84. It is quite clear that Section 59 of R.A. 8371 does not apply to the automatic conversion of TLA
43 to IFMA.
First, the automatic conversion of TLA 43 to an IFMA is not a new project. It is a mere continuation
of the harvesting process in an area that PICOP had been managing, conserving and reforesting for
the last 50 years since 1952. Hence any pending application for a CADT within the area, cannot
affect much less hold back the automatic conversion. That the government now wishes to change
the tenurial system to an IFMA could not change the PICOP project, in existence and operating for
the last 30 (sic) years, into a new one.84
PICOP’s position is anything but clear. What is clearly provided for in Section 59 is that it covers
"issuing, renewing or granting (of) any concession, license or lease, or entering into any production
sharing agreement." PICOP is implying that, when the government changed the tenurial system to
an IFMA, PICOP’s existing TLA would just be upgraded or modified, but would be the very same
agreement, hence, dodging the inclusion in the word "renewing." However, PICOP is conveniently
leaving out the fact that its TLA expired in 2002. If PICOP really intends to pursue the argument that
the conversion of the TLA into an IFMA would not create a new agreement, but would only be a
modification of the old one, then it should be willing to concede that the IFMA expired as well in
2002. An automatic modification would not alter the terms and conditions of the TLA except when
they are inconsistent with the terms and conditions of an IFMA. Consequently, PICOP’s concession
period under the renewed TLA No. 43, which is from the year 1977 to 2002, would remain the same.
PICOP cannot rely on a theory of the case whenever such theory is beneficial to it, but refute the
same whenever the theory is damaging to it. In the same way, PICOP cannot claim that the alleged
Presidential Warranty is "renewable for other 25 years" and later on claim that what it is asking for
is not a renewal. Extensions of agreements must necessarily be included in the term renewal.
Otherwise, the inclusion of "renewing" in Section 59 would be rendered inoperative.
PICOP further claims:
85. Verily, in interpreting the term "held under claim of ownership," the Supreme Court could not
have meant to include claims that had just been filed and not yet recognized under the provisions of
DENR Administrative Order No. 2 Series of 1993, nor to any other community / ancestral domain
program prior to R.A. 8371.
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87. One can not imagine the terrible damage and chaos to the country, its economy, its people and
its future if a mere claim filed for the issuance of a CADC or CADT will already provide those who
filed the application, the authority or right to stop the renewal or issuance of any concession, license
or lease or any production-sharing agreement. The same interpretation will give such applicants
through a mere application the right to stop or suspend any project that they can cite for not
satisfying the requirements of the consultation process of R.A. 8371. If such interpretation gets
enshrined in the statures of the land, the unscrupulous and the extortionists can put any ongoing or
future project or activity to a stop in any part of the country citing their right from having filed an
application for issuance of a CADC or CADT claim and the legal doctrine established by the Supreme
Court in this PICOP case.85
We are not sure whether PICOP’s counsels are deliberately trying to mislead us, or are just plainly
ignorant of basic precepts of law. The term "claim" in the phrase "claim of ownership" is not a
document of any sort. It is an attitude towards something. The phrase "claim of ownership" means
"the possession of a piece of property with the intention of claiming it in hostility to the true
owner."86 It is also defined as "a party’s manifest intention to take over land, regardless of title or
right."87 Other than in Republic Act No. 8371, the phrase "claim of ownership" is thoroughly
discussed in issues relating to acquisitive prescription in Civil Law.
Before PICOP’s counsels could attribute to us an assertion that a mere attitude or intention would
stop the renewal or issuance of any concession, license or lease or any production-sharing
agreement, we should stress beforehand that this attitude or intention must be clearly shown by
overt acts and, as required by Section 3(a), should have been in existence "since time immemorial,
continuously to the present except when interrupted by war, force majeure or displacement by
force, deceit, stealth or as a consequence of government projects or any other voluntary dealings
entered into by government and private individuals/corporations."
Another argument of PICOP involves the claim itself that there was no overlapping:
Second, there could be no overlapping with any Ancestral Domain as proven by the evidence
presented and testimonies rendered during the hearings in the Regional Trial Court. x x x.
x x x x.
88. The DENR issued a total of 73 CADCs as of December 11, 1996. The DENR Undersecretary for
Field Operations had recommended another 11 applications for issuance of CADCs. None of the
CADCs overlap the TLA 43 area.
89. However former DENR Secretary Alvarez, in a memorandum dated 13 September, 2002
addressed to PGMA, insisted that PICOP had to comply with the requirement to secure a Free and
Prior Informed Concent because CADC 095 was issued covering 17,112 hectares of TLA 43.
90. This CADC 095 is a fake CADC and was not validly released by the DENR. While the Legal
Department of the DENR was still in the process of receiving the filings for applicants and the
oppositors to the CADC application, PICOP came across filed copies of a CADC 095 with the PENRO
of Davao Oriental as part of their application for a Community Based Forest Management
Agreement (CBFMA). Further research came across the same group filing copies of the alleged CADC
095 with the Mines and Geosciences Bureau in Davao City for a mining agreement application. The
two applications had two different versions of the CADCs second page. One had Mr. Romeo T. Acosta
signing as the Social reform Agenda Technical Action Officer, while the other had him signing as the
Head, Community-Based Forest Management Office. One had the word "Eight" crossed out and
"Seven" written to make it appear that the CADC was issued on September 25, 1997, the other made
it appear that there were no alterations and the date was supposed to be originally 25 September
1997.
What is required in Section 59 of Republic Act No. 8379 is a Certification from the NCIP that there
was no overlapping with any Ancestral Domain. PICOP cannot claim that the DENR gravely abused
its discretion for requiring this Certification, on the ground that there was no overlapping. We
reiterate that it is manifestly absurd to claim that the subject lands must first be proven to be part of
ancestral domains before a certification that they are not can be required. As discussed in the
assailed Decision, PICOP did not even seek any certification from the NCIP that the area covered by
TLA No. 43, subject of its IFMA conversion, did not overlap with any ancestral domain.88
Sanggunian Consultation and Approval
While PICOP did not seek any certification from the NCIP that the former’s concession area did not
overlap with any ancestral domain, 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 to
PICOP. Undaunted, PICOP nevertheless submitted to the DENR the purported resolution 89 of the
Province of Surigao del Sur indorsing the approval of PICOP’s application for IFMA conversion,
apparently hoping either that the disapproval of the other provinces would go unnoticed, or that the
Surigao del Sur approval would be treated as sufficient compliance.
Surprisingly, the disapproval by the other provinces did go unnoticed before the RTC and the Court
of Appeals, despite the repeated assertions thereof by the Solicitor General. When we pointed out in
the assailed Decision that the approval must be by all the Sanggunians concerned and not by only
one of them, PICOP changed its theory of the case in its Motion for Reconsideration, this time
claiming that they are not required at all to procure Sanggunian approval.
Sections 2(c), 26 and 27 of the Local Government Code provide:
SEC. 2. x x x.
xxxx
(c) It is likewise the policy of the State to require all national agencies and offices to conduct
periodic consultations with appropriate local government units, nongovernmental and people’s
organizations, and other concerned sectors of the community before any project or program is
implemented in their respective jurisdictions.
SEC. 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 authorizing 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,
nongovernmental 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.
SEC. 27. Prior Consultations Required. – No project or program shall be implemented by
government authorities unless the consultations mentioned in Sections 2(c) and 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.
As stated in the assailed Decision, the common evidence of the DENR Secretary and PICOP, namely,
the 31 July 2001 Memorandum of Regional Executive Director (RED) Elias D. Seraspi, Jr.,
enumerated the local government units and other groups which had expressed their opposition to
PICOP’s application for IFMA conversion:
7. During the conduct of the performance evaluation of TLA No. 43 issues complaints against PRI
were submitted thru Resolutions and letters. It is important that these are included in this report for
assessment of what are their worth, viz:
xxxx
7.2 Joint Resolution (unnumbered), dated March 19, 2001 of the Barangay Council and Barangay
Tribal Council of Simulao, Boston, Davao Oriental (ANNEX F) opposing the conversion of TLA No. 43
into IFMA over the 17,112 hectares allegedly covered with CADC No. 095.
7.3 Resolution Nos. 10, s-2001 and 05, s-2001 (ANNEXES G & H) of the Bunawan Tribal Council of
Elders (BBMTCE) strongly demanding none renewal of PICOP TLA. They claim to be the rightful
owner of the area it being their alleged ancestral land.
7.4 Resolution No. 4, S-2001 of Sitio Linao, San Jose, Bislig City (ANNEX I) requesting not to renew
TLA 43 over the 900 hectares occupied by them.
7.5 Resolution No. 22, S-2001 (ANNEX J) of the Sanguniang Bayan, Lingig, Surigao del Sur not to
grant the conversion of TLA 43 citing the plight of former employees of PRI who were forced to
enter and farm portion of TLA No. 43, after they were laid off.
7.6 SP Resolution No. 2001-113 and CDC Resolution Nos. 09-2001 of the Sanguniang Panglungsod of
Bislig City (ANNEXES K & L) requesting to exclude the area of TLA No. 43 for watershed purposes.
7.7 Resolution No. 2001-164, dated June 01, 2001 (ANNEX M) Sanguniang Panglungsod of Bislig City
opposing the conversion of TLA 43 to IFMA for the reason that IFMA do not give revenue benefits to
the City.90
PICOP had claimed that it complied with the Local Government Code requirement of obtaining prior
approval of the Sanggunian concerned by submitting a purported resolution 91 of the Province of
Surigao del Sur indorsing the approval of PICOP’s application for IFMA conversion. We ruled that
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. As even the Court of Appeals
found, PICOP’s TLA No. 43 traverses the length and breadth not only of Surigao del Sur but also of
Agusan del Sur, Compostela Valley and Davao Oriental.92
On Motion for Reconsideration, PICOP now argues that the requirement under Sections 26 and 27
does not apply to it:
97. PICOP is not a national agency. Neither is PICOP government owned or controlled. Thus Section
26 does not apply to PICOP.
98. It is very clear that Section 27 refers to projects or programs to be implemented by government
authorities or government-owned and controlled corporations. PICOP’s project or the automatic
conversion is a purely private endevour. First the PICOP project has been implemented since 1969.
Second, the project was being implemented by private investors and financial institutions.
99. The primary government participation is to warrant and ensure that the PICOP project shall
have peaceful tenure in the permanent forest allocated to provide raw materials for the project. To
rule now that a project whose foundations were commenced as early as 1969 shall now be
subjected to a 1991 law is to apply the law retrospectively in violation of Article 4 of the Civil Code
that laws shall not be applied retroactively.
100. In addition, under DAO 30, Series of 1992, TLA and IFMA operations were not among those
devolved function from the National Government / DENR to the local government unit. Under its
Section 03, the devolved function cover only:
a) Community Based forestry projects.
b) Communal forests of less than 5000 hectares
c) Small watershed areas which are sources of local water supply. 93
We have to remind PICOP again of the contents of Section 2, Article XII of the Constitution:
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 sixty per centum of whose capital is owned
by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable
for not more than twenty-five years, and under such terms and conditions as may be provided by
law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, beneficial use may be the measure and limit of the grant.
All projects relating to the exploration, development and utilization of natural resources are
projects of the State. While the State may enter into co-production, joint venture, or production-
sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum
of whose capital is owned by these citizens, such as PICOP, the projects nevertheless remain as State
projects and can never be purely private endeavors.
Also, despite entering into co-production, joint venture, or production-sharing agreements, the State
remains in full control and supervision over such projects. PICOP, thus, cannot limit government
participation in the project to being merely its bouncer, whose primary participation is only to
"warrant and ensure that the PICOP project shall have peaceful tenure in the permanent forest
allocated to provide raw materials for the project."
PICOP is indeed neither a national agency nor a government-owned or controlled corporation. The
DENR, however, is a national agency and is the national agency prohibited by Section 27 from
issuing an IFMA without the prior approval of the Sanggunian concerned. As previously discussed,
PICOP’s Petition for Mandamus can only be granted if the DENR Secretary is required by law to
issue an IFMA. We, however, see here the exact opposite: the DENR Secretary was actually
prohibited by law from issuing an IFMA, as there had been no prior approval by all the other
Sanggunians concerned.
As regards PICOP’s assertion that the application to them of a 1991 law is in violation of the
prohibition against the non-retroactivity provision in Article 4 of the Civil Code, we have to remind
PICOP that it is applying for an IFMA with a term of 2002 to 2027. Section 2, Article XII of the
Constitution allows exploitation agreements to last only "for a period not exceeding twenty-five
years, renewable for not more than twenty-five years." PICOP, thus, cannot legally claim that the
project’s term started in 1952 and extends all the way to the present.
Finally, the devolution of the project to local government units is not required before Sections 26
and 27 would be applicable. Neither Section 26 nor 27 mentions such a requirement. Moreover, it is
not only the letter, but more importantly the spirit of Sections 26 and 27, that shows that the
devolution of the project is not required. 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. If a project has been devolved to the local government, the local government itself would
be implementing the project. That the local government would need its own approval before
implementing its own project is patently silly.

EPILOGUE AND DISPOSITION

PICOP’c cause of action consists in the allegation that the DENR Secretary, in not issuing an IFMA,
violated its constitutional right against non-impairment of contracts. We have ruled, however, that
the 1969 Document is not a contract recognized under the non-impairment clause, much less a
contract specifically enjoining the DENR Secretary to issue the IFMA. The conclusion that the 1969
Document is not a contract recognized under the non-impairment clause has even been disposed of
in another case decided by another division of this Court, PICOP Resources, Inc. v. Base Metals
Mineral Resources Corporation,94 the Decision in which case has become final and executory.
PICOP’s Petition for Mandamus should, therefore, fail.

Furthermore, even if we assume for the sake of argument that the 1969 Document is a contract
recognized under the non-impairment clause, and even if we assume for the sake of argument that
the same is a contract specifically enjoining the DENR Secretary to issue an IFMA, PICOP’s Petition
for Mandamus must still fail. The 1969 Document expressly states that the warranty as to the tenure
of PICOP is "subject to compliance with constitutional and statutory requirements as well as with
existing policy on timber concessions." Thus, if PICOP proves the two above-mentioned matters, it
still has to prove compliance with statutory and administrative requirements for the conversion of
its TLA into an IFMA.

While we have withdrawn our pronouncements in the assailed Decision that (1) PICOP had not
submitted the required forest protection and reforestation plans, and that (2) PICOP had unpaid
forestry charges, thus effectively ruling in favor of PICOP on all factual issues in this case, PICOP still
insists that the requirements of an NCIP certification and Sanggunian consultation and approval do
not apply to it. To affirm PICOP’s position on these matters would entail nothing less than rewriting
the Indigenous Peoples’ Rights Act and the Local Government Code, an act simply beyond our
jurisdiction.

WHEREFORE, the Motion for Reconsideration of PICOP Resources, Inc. is DENIED.

SO ORDERED.