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Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 101083 July 30, 1993

Oposa v. Factoran

DAVIDE, JR., J.:

In a broader sense, this petition bears upon the right of Filipinos to a balanced and healthful ecology which the
petitioners dramatically associate with the twin concepts of "inter-generational responsibility" and "inter-
generational justice." Specifically, it touches on the issue of whether the said petitioners have a cause of action
to "prevent the misappropriation or impairment" of Philippine rainforests and "arrest the unabated hemorrhage
of the country's vital life support systems and continued rape of Mother Earth."

The controversy has its genesis in Civil Case No. 90-77 which was filed before Branch 66 (Makati, Metro Manila)
of the Regional Trial Court (RTC), National Capital Judicial Region. The principal plaintiffs therein, now the
principal petitioners, are all minors duly represented and joined by their respective parents. Impleaded as an
additional plaintiff is the Philippine Ecological Network, Inc. (PENI), a domestic, non-stock and non-profit
corporation organized for the purpose of, inter alia, engaging in concerted action geared for the protection of
our environment and natural resources. The original defendant was the Honorable Fulgencio S. Factoran, Jr.,
then Secretary of the Department of Environment and Natural Resources (DENR). His substitution in this petition
by the new Secretary, the Honorable Angel C. Alcala, was subsequently ordered upon proper motion by the
petitioners.1 The complaint2 was instituted as a taxpayers' class suit3 and alleges that the plaintiffs "are all
citizens of the Republic of the Philippines, taxpayers, and entitled to the full benefit, use and enjoyment of the
natural resource treasure that is the country's virgin tropical forests." The same was filed for themselves and
others who are equally concerned about the preservation of said resource but are "so numerous that it is
impracticable to bring them all before the Court." The minors further asseverate that they "represent their
generation as well as generations yet unborn."4 Consequently, it is prayed for that judgment be rendered:

. . . ordering defendant, his agents, representatives and other persons acting in his behalf to —

(1) Cancel all existing timber license agreements in the country;

(2) Cease and desist from receiving, accepting, processing, renewing or approving new timber
license agreements.

and granting the plaintiffs ". . . such other reliefs just and equitable under the premises." 5

The complaint starts off with the general averments that the Philippine archipelago of 7,100 islands has a land
area of thirty million (30,000,000) hectares and is endowed with rich, lush and verdant rainforests in which
varied, rare and unique species of flora and fauna may be found; these rainforests contain a genetic, biological
and chemical pool which is irreplaceable; they are also the habitat of indigenous Philippine cultures which have
existed, endured and flourished since time immemorial; scientific evidence reveals that in order to maintain a
balanced and healthful ecology, the country's land area should be utilized on the basis of a ratio of fifty-four per
cent (54%) for forest cover and forty-six per cent (46%) for agricultural, residential, industrial, commercial and
other uses; the distortion and disturbance of this balance as a consequence of deforestation have resulted in a
host of environmental tragedies, such as (a) water shortages resulting from drying up of the water table,
otherwise known as the "aquifer," as well as of rivers, brooks and streams, (b) salinization of the water table as
a result of the intrusion therein of salt water, incontrovertible examples of which may be found in the island of
Cebu and the Municipality of Bacoor, Cavite, (c) massive erosion and the consequential loss of soil fertility and
agricultural productivity, with the volume of soil eroded estimated at one billion (1,000,000,000) cubic meters
per annum — approximately the size of the entire island of Catanduanes, (d) the endangering and extinction of
the country's unique, rare and varied flora and fauna, (e) the disturbance and dislocation of cultural
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communities, including the disappearance of the Filipino's indigenous cultures, (f) the siltation of rivers and
seabeds and consequential destruction of corals and other aquatic life leading to a critical reduction in marine
resource productivity, (g) recurrent spells of drought as is presently experienced by the entire country, (h)
increasing velocity of typhoon winds which result from the absence of windbreakers, (i) the floodings of
lowlands and agricultural plains arising from the absence of the absorbent mechanism of forests, (j) the siltation
and shortening of the lifespan of multi-billion peso dams constructed and operated for the purpose of supplying
water for domestic uses, irrigation and the generation of electric power, and (k) the reduction of the earth's
capacity to process carbon dioxide gases which has led to perplexing and catastrophic climatic changes such as
the phenomenon of global warming, otherwise known as the "greenhouse effect."

Plaintiffs further assert that the adverse and detrimental consequences of continued and deforestation are so
capable of unquestionable demonstration that the same may be submitted as a matter of judicial notice. This
notwithstanding, they expressed their intention to present expert witnesses as well as documentary,
photographic and film evidence in the course of the trial.

As their cause of action, they specifically allege that:

CAUSE OF ACTION

7. Plaintiffs replead by reference the foregoing allegations.

8. Twenty-five (25) years ago, the Philippines had some sixteen (16) million hectares of rainforests
constituting roughly 53% of the country's land mass.

9. Satellite images taken in 1987 reveal that there remained no more than 1.2 million hectares of
said rainforests or four per cent (4.0%) of the country's land area.

10. More recent surveys reveal that a mere 850,000 hectares of virgin old-growth rainforests are
left, barely 2.8% of the entire land mass of the Philippine archipelago and about 3.0 million
hectares of immature and uneconomical secondary growth forests.

11. Public records reveal that the defendant's, predecessors have granted timber license
agreements ('TLA's') to various corporations to cut the aggregate area of 3.89 million hectares
for commercial logging purposes.

A copy of the TLA holders and the corresponding areas covered is hereto attached as Annex "A".

12. At the present rate of deforestation, i.e. about 200,000 hectares per annum or 25 hectares
per hour — nighttime, Saturdays, Sundays and holidays included — the Philippines will be bereft
of forest resources after the end of this ensuing decade, if not earlier.

13. The adverse effects, disastrous consequences, serious injury and irreparable damage of this
continued trend of deforestation to the plaintiff minor's generation and to generations yet
unborn are evident and incontrovertible. As a matter of fact, the environmental damages
enumerated in paragraph 6 hereof are already being felt, experienced and suffered by the
generation of plaintiff adults.

14. The continued allowance by defendant of TLA holders to cut and deforest the remaining
forest stands will work great damage and irreparable injury to plaintiffs — especially plaintiff
minors and their successors — who may never see, use, benefit from and enjoy this rare and
unique natural resource treasure.

This act of defendant constitutes a misappropriation and/or impairment of the natural resource
property he holds in trust for the benefit of plaintiff minors and succeeding generations.

15. Plaintiffs have a clear and constitutional right to a balanced and healthful ecology and are
entitled to protection by the State in its capacity as the parens patriae.

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16. Plaintiff have exhausted all administrative remedies with the defendant's office. On March 2,
1990, plaintiffs served upon defendant a final demand to cancel all logging permits in the country.

A copy of the plaintiffs' letter dated March 1, 1990 is hereto attached as Annex "B".

17. Defendant, however, fails and refuses to cancel the existing TLA's to the continuing serious
damage and extreme prejudice of plaintiffs.

18. The continued failure and refusal by defendant to cancel the TLA's is an act violative of the
rights of plaintiffs, especially plaintiff minors who may be left with a country that is desertified
(sic), bare, barren and devoid of the wonderful flora, fauna and indigenous cultures which the
Philippines had been abundantly blessed with.

19. Defendant's refusal to cancel the aforementioned TLA's is manifestly contrary to the public
policy enunciated in the Philippine Environmental Policy which, in pertinent part, states that it is
the policy of the State —

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

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

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

20. Furthermore, defendant's continued refusal to cancel the aforementioned TLA's is


contradictory to the Constitutional policy of the State to —

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

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

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

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

21. Finally, defendant's act is contrary to the highest law of humankind — the natural law — and
violative of plaintiffs' right to self-preservation and perpetuation.

22. There is no other plain, speedy and adequate remedy in law other than the instant action to
arrest the unabated hemorrhage of the country's vital life support systems and continued rape
of Mother Earth. 6

On 22 June 1990, the original defendant, Secretary Factoran, Jr., filed a Motion to Dismiss the complaint based
on two (2) grounds, namely: (1) the plaintiffs have no cause of action against him and (2) the issue raised by the
plaintiffs is a political question which properly pertains to the legislative or executive branches of Government.
In their 12 July 1990 Opposition to the Motion, the petitioners maintain that (1) the complaint shows a clear
and unmistakable cause of action, (2) the motion is dilatory and (3) the action presents a justiciable question as
it involves the defendant's abuse of discretion.

On 18 July 1991, respondent Judge issued an order granting the aforementioned motion to dismiss.7 In the said
order, not only was the defendant's claim — that the complaint states no cause of action against him and that

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it raises a political question — sustained, the respondent Judge further ruled that the granting of the relief
prayed for would result in the impairment of contracts which is prohibited by the fundamental law of the land.

Plaintiffs thus filed the instant special civil action for certiorari under Rule 65 of the Revised Rules of Court and
ask this Court to rescind and set aside the dismissal order on the ground that the respondent Judge gravely
abused his discretion in dismissing the action. Again, the parents of the plaintiffs-minors not only represent their
children, but have also joined the latter in this case.8

On 14 May 1992, We resolved to give due course to the petition and required the parties to submit their
respective Memoranda after the Office of the Solicitor General (OSG) filed a Comment in behalf of the
respondents and the petitioners filed a reply thereto.

Petitioners contend that the complaint clearly and unmistakably states a cause of action as it contains sufficient
allegations concerning their right to a sound environment based on Articles 19, 20 and 21 of the Civil Code
(Human Relations), Section 4 of Executive Order (E.O.) No. 192 creating the DENR, Section 3 of Presidential
Decree (P.D.) No. 1151 (Philippine Environmental Policy), Section 16, Article II of the 1987 Constitution
recognizing the right of the people to a balanced and healthful ecology, the concept of generational genocide
in Criminal Law and the concept of man's inalienable right to self-preservation and self-perpetuation embodied
in natural law. Petitioners likewise rely on the respondent's correlative obligation per Section 4 of E.O. No. 192,
to safeguard the people's right to a healthful environment.

It is further claimed that the issue of the respondent Secretary's alleged grave abuse of discretion in granting
Timber License Agreements (TLAs) to cover more areas for logging than what is available involves a judicial
question.

Anent the invocation by the respondent Judge of the Constitution's non-impairment clause, petitioners maintain
that the same does not apply in this case because TLAs are not contracts. They likewise submit that even if TLAs
may be considered protected by the said clause, it is well settled that they may still be revoked by the State
when the public interest so requires.

On the other hand, the respondents aver that the petitioners failed to allege in their complaint a specific legal
right violated by the respondent Secretary for which any relief is provided by law. They see nothing in the
complaint but vague and nebulous allegations concerning an "environmental right" which supposedly entitles
the petitioners to the "protection by the state in its capacity as parens patriae." Such allegations, according to
them, do not reveal a valid cause of action. They then reiterate the theory that the question of whether logging
should be permitted in the country is a political question which should be properly addressed to the executive
or legislative branches of Government. They therefore assert that the petitioners' resources is not to file an
action to court, but to lobby before Congress for the passage of a bill that would ban logging totally.

As to the matter of the cancellation of the TLAs, respondents submit that the same cannot be done by the State
without due process of law. Once issued, a TLA remains effective for a certain period of time — usually for
twenty-five (25) years. During its effectivity, the same can neither be revised nor cancelled unless the holder
has been found, after due notice and hearing, to have violated the terms of the agreement or other forestry
laws and regulations. Petitioners' proposition to have all the TLAs indiscriminately cancelled without the
requisite hearing would be violative of the requirements of due process.

Before going any further, We must first focus on some procedural matters. Petitioners instituted Civil Case No.
90-777 as a class suit. The original defendant and the present respondents did not take issue with this matter.
Nevertheless, We hereby rule that the said civil case is indeed a class suit. The subject matter of the complaint
is of common and general interest not just to several, but to all citizens of the Philippines. Consequently, since
the parties are so numerous, it, becomes impracticable, if not totally impossible, to bring all of them before the
court. We likewise declare that the plaintiffs therein are numerous and representative enough to ensure the
full protection of all concerned interests. Hence, all the requisites for the filing of a valid class suit under Section
12, Rule 3 of the Revised Rules of Court are present both in the said civil case and in the instant petition, the
latter being but an incident to the former.

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This case, however, has a special and novel element. Petitioners minors assert that they represent their
generation as well as generations yet unborn. We find no difficulty in ruling that they can, for themselves, for
others of their generation and for the succeeding generations, file a class suit. Their personality to sue in behalf
of the succeeding generations can only be based on the concept of intergenerational responsibility insofar as
the right to a balanced and healthful ecology is concerned. Such a right, as hereinafter expounded, considers
the "rhythm and harmony of nature." Nature means the created world in its entirety. 9 Such rhythm and
harmony indispensably include, inter alia, the judicious disposition, utilization, management, renewal and
conservation of the country's forest, mineral, land, waters, fisheries, wildlife, off-shore areas and other natural
resources to the end that their exploration, development and utilization be equitably accessible to the present
as well as future generations. 10Needless to say, every generation has a responsibility to the next to preserve
that rhythm and harmony for the full enjoyment of a balanced and healthful ecology. Put a little differently, the
minors' assertion of their right to a sound environment constitutes, at the same time, the performance of their
obligation to ensure the protection of that right for the generations to come.

The locus standi of the petitioners having thus been addressed, We shall now proceed to the merits of the
petition.

After a careful perusal of the complaint in question and a meticulous consideration and evaluation of the issues
raised and arguments adduced by the parties, We do not hesitate to find for the petitioners and rule against the
respondent Judge's challenged order for having been issued with grave abuse of discretion amounting to lack
of jurisdiction. The pertinent portions of the said order reads as follows:

xxx xxx xxx

After a careful and circumspect evaluation of the Complaint, the Court cannot help but agree
with the defendant. For although we believe that plaintiffs have but the noblest of all intentions,
it (sic) fell short of alleging, with sufficient definiteness, a specific legal right they are seeking to
enforce and protect, or a specific legal wrong they are seeking to prevent and redress (Sec. 1,
Rule 2, RRC). Furthermore, the Court notes that the Complaint is replete with vague assumptions
and vague conclusions based on unverified data. In fine, plaintiffs fail to state a cause of action
in its Complaint against the herein defendant.

Furthermore, the Court firmly believes that the matter before it, being impressed with political
color and involving a matter of public policy, may not be taken cognizance of by this Court without
doing violence to the sacred principle of "Separation of Powers" of the three (3) co-equal
branches of the Government.

The Court is likewise of the impression that it cannot, no matter how we stretch our jurisdiction,
grant the reliefs prayed for by the plaintiffs, i.e., to cancel all existing timber license agreements
in the country and to cease and desist from receiving, accepting, processing, renewing or
approving new timber license agreements. For to do otherwise would amount to "impairment of
contracts" abhored (sic) by the fundamental law. 11

We do not agree with the trial court's conclusions that the plaintiffs failed to allege with sufficient definiteness
a specific legal right involved or a specific legal wrong committed, and that the complaint is replete with vague
assumptions and conclusions based on unverified data. A reading of the complaint itself belies these
conclusions.

The complaint focuses on one specific fundamental legal right — the right to a balanced and healthful ecology
which, for the first time in our nation's constitutional history, is solemnly incorporated in the fundamental law.
Section 16, Article II of the 1987 Constitution explicitly provides:

Sec. 16. The State shall protect and advance the right of the people to a balanced and healthful
ecology in accord with the rhythm and harmony of nature.

This right unites with the right to health which is provided for in the preceding section of the
same article:
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Sec. 15. The State shall protect and promote the right to health of the people and instill health
consciousness among them.

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

The right to a balanced and healthful ecology carries with it the correlative duty to refrain from impairing the
environment. During the debates on this right in one of the plenary sessions of the 1986 Constitutional
Commission, the following exchange transpired between Commissioner Wilfrido Villacorta and Commissioner
Adolfo Azcuna who sponsored the section in question:

MR. VILLACORTA:

Does this section mandate the State to provide sanctions against all forms of
pollution — air, water and noise pollution?

MR. AZCUNA:

Yes, Madam President. The right to healthful (sic) environment necessarily carries
with it the correlative duty of not impairing the same and, therefore, sanctions
may be provided for impairment of environmental balance. 12

The said right implies, among many other things, the judicious management and conservation of the country's
forests.

Without such forests, the ecological or environmental balance would be irreversiby disrupted.

Conformably with the enunciated right to a balanced and healthful ecology and the right to health, as well as
the other related provisions of the Constitution concerning the conservation, development and utilization of
the country's natural resources, 13 then President Corazon C. Aquino promulgated on 10 June 1987 E.O. No.
192, 14 Section 4 of which expressly mandates that the Department of Environment and Natural Resources "shall
be the primary government agency responsible for the conservation, management, development and proper
use of the country's environment and natural resources, specifically forest and grazing lands, mineral, resources,
including those in reservation and watershed areas, and lands of the public domain, as well as the licensing and
regulation of all natural resources as may be provided for by law in order to ensure equitable sharing of the
benefits derived therefrom for the welfare of the present and future generations of Filipinos." Section 3 thereof
makes the following statement of policy:

Sec. 3. Declaration of Policy. — It is hereby declared the policy of the State to ensure the
sustainable use, development, management, renewal, and conservation of the country's forest,
mineral, land, off-shore areas and other natural resources, including the protection and
enhancement of the quality of the environment, and equitable access of the different segments
of the population to the development and the use of the country's natural resources, not only
for the present generation but for future generations as well. It is also the policy of the state to
recognize and apply a true value system including social and environmental cost implications
relative to their utilization, development and conservation of our natural resources.

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This policy declaration is substantially re-stated it Title XIV, Book IV of the Administrative Code of
1987,15 specifically in Section 1 thereof which reads:

Sec. 1. Declaration of Policy. — (1) The State shall ensure, for the benefit of the Filipino people,
the full exploration and development as well as the judicious disposition, utilization,
management, renewal and conservation of the country's forest, mineral, land, waters, fisheries,
wildlife, off-shore areas and other natural resources, consistent with the necessity of maintaining
a sound ecological balance and protecting and enhancing the quality of the environment and the
objective of making the exploration, development and utilization of such natural resources
equitably accessible to the different segments of the present as well as future generations.

(2) The State shall likewise recognize and apply a true value system that takes into account social
and environmental cost implications relative to the utilization, development and conservation of
our natural resources.

The above provision stresses "the necessity of maintaining a sound ecological balance and protecting and
enhancing the quality of the environment." Section 2 of the same Title, on the other hand, specifically speaks of
the mandate of the DENR; however, it makes particular reference to the fact of the agency's being subject to
law and higher authority. Said section provides:

Sec. 2. Mandate. — (1) The Department of Environment and Natural Resources shall be primarily
responsible for the implementation of the foregoing policy.

(2) It shall, subject to law and higher authority, be in charge of carrying out the State's
constitutional mandate to control and supervise the exploration, development, utilization, and
conservation of the country's natural resources.

Both E.O. NO. 192 and the Administrative Code of 1987 have set the objectives which will serve as the bases for
policy formulation, and have defined the powers and functions of the DENR.

It may, however, be recalled that even before the ratification of the 1987 Constitution, specific statutes already
paid special attention to the "environmental right" of the present and future generations. On 6 June 1977, P.D.
No. 1151 (Philippine Environmental Policy) and P.D. No. 1152 (Philippine Environment Code) were issued. The
former "declared a continuing policy of the State (a) to create, develop, maintain and improve conditions under
which man and nature can thrive in productive and enjoyable harmony with each other, (b) to fulfill the social,
economic and other requirements of present and future generations of Filipinos, and (c) to insure the
attainment of an environmental quality that is conducive to a life of dignity and well-being." 16 As its goal, it
speaks of the "responsibilities of each generation as trustee and guardian of the environment for succeeding
generations." 17 The latter statute, on the other hand, gave flesh to the said policy.

Thus, the right of the petitioners (and all those they represent) to a balanced and healthful ecology is as clear
as the DENR's duty — under its mandate and by virtue of its powers and functions under E.O. No. 192 and the
Administrative Code of 1987 — to protect and advance the said right.

A denial or violation of that right by the other who has the corelative duty or obligation to respect or protect
the same gives rise to a cause of action. Petitioners maintain that the granting of the TLAs, which they claim was
done with grave abuse of discretion, violated their right to a balanced and healthful ecology; hence, the full
protection thereof requires that no further TLAs should be renewed or granted.

A cause of action is defined as:

. . . an act or omission of one party in violation of the legal right or rights of the other; and its
essential elements are legal right of the plaintiff, correlative obligation of the defendant, and act
or omission of the defendant in violation of said legal right. 18

It is settled in this jurisdiction that in a motion to dismiss based on the ground that the complaint fails to state
a cause of action, 19 the question submitted to the court for resolution involves the sufficiency of the facts

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alleged in the complaint itself. No other matter should be considered; furthermore, the truth of falsity of the
said allegations is beside the point for the truth thereof is deemed hypothetically admitted. The only issue to be
resolved in such a case is: admitting such alleged facts to be true, may the court render a valid judgment in
accordance with the prayer in the complaint? 20 In Militante vs. Edrosolano, 21 this Court laid down the rule that
the judiciary should "exercise the utmost care and circumspection in passing upon a motion to dismiss on the
ground of the absence thereof [cause of action] lest, by its failure to manifest a correct appreciation of the facts
alleged and deemed hypothetically admitted, what the law grants or recognizes is effectively nullified. If that
happens, there is a blot on the legal order. The law itself stands in disrepute."

After careful examination of the petitioners' complaint, We find the statements under the introductory
affirmative allegations, as well as the specific averments under the sub-heading CAUSE OF ACTION, to be
adequate enough to show, prima facie, the claimed violation of their rights. On the basis thereof, they may thus
be granted, wholly or partly, the reliefs prayed for. It bears stressing, however, that insofar as the cancellation
of the TLAs is concerned, there is the need to implead, as party defendants, the grantees thereof for they are
indispensable parties.

The foregoing considered, Civil Case No. 90-777 be said to raise a political question. Policy formulation or
determination by the executive or legislative branches of Government is not squarely put in issue. What is
principally involved is the enforcement of a right vis-a-vis policies already formulated and expressed in
legislation. It must, nonetheless, be emphasized that the political question doctrine is no longer, the
insurmountable obstacle to the exercise of judicial power or the impenetrable shield that protects executive
and legislative actions from judicial inquiry or review. The second paragraph of section 1, Article VIII of the
Constitution states that:

Judicial power includes the duty of the courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable, and to determine whether or not there has
been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the Government.

Commenting on this provision in his book, Philippine Political Law, 22 Mr. Justice Isagani A. Cruz, a distinguished
member of this Court, says:

The first part of the authority represents the traditional concept of judicial power, involving the
settlement of conflicting rights as conferred as law. The second part of the authority represents
a broadening of judicial power to enable the courts of justice to review what was before
forbidden territory, to wit, the discretion of the political departments of the government.

As worded, the new provision vests in the judiciary, and particularly the Supreme Court, the
power to rule upon even the wisdom of the decisions of the executive and the legislature and to
declare their acts invalid for lack or excess of jurisdiction because tainted with grave abuse of
discretion. The catch, of course, is the meaning of "grave abuse of discretion," which is a very
elastic phrase that can expand or contract according to the disposition of the judiciary.

In Daza vs. Singson, 23 Mr. Justice Cruz, now speaking for this Court, noted:

In the case now before us, the jurisdictional objection becomes even less tenable and decisive.
The reason is that, even if we were to assume that the issue presented before us was political in
nature, we would still not be precluded from revolving it under the expanded jurisdiction
conferred upon us that now covers, in proper cases, even the political question. Article VII,
Section 1, of the Constitution clearly provides: . . .

The last ground invoked by the trial court in dismissing the complaint is the non-impairment of contracts clause
found in the Constitution. The court a quo declared that:

The Court is likewise of the impression that it cannot, no matter how we stretch our jurisdiction,
grant the reliefs prayed for by the plaintiffs, i.e., to cancel all existing timber license agreements
in the country and to cease and desist from receiving, accepting, processing, renewing or
8
approving new timber license agreements. For to do otherwise would amount to "impairment of
contracts" abhored (sic) by the fundamental law. 24

We are not persuaded at all; on the contrary, We are amazed, if not shocked, by such a sweeping
pronouncement. In the first place, the respondent Secretary did not, for obvious reasons, even invoke in his
motion to dismiss the non-impairment clause. If he had done so, he would have acted with utmost infidelity to
the Government by providing undue and unwarranted benefits and advantages to the timber license holders
because he would have forever bound the Government to strictly respect the said licenses according to their
terms and conditions regardless of changes in policy and the demands of public interest and welfare. He was
aware that as correctly pointed out by the petitioners, into every timber license must be read Section 20 of the
Forestry Reform Code (P.D. No. 705) which provides:

. . . Provided, That when the national interest so requires, the President may amend, modify,
replace or rescind any contract, concession, permit, licenses or any other form of privilege
granted herein . . .

Needless to say, all licenses may thus be revoked or rescinded by executive action. It is not a contract,
property or a property right protested by the due process clause of the Constitution. In Tan vs. Director
of Forestry, 25 this Court held:

. . . A timber license is an instrument by which the State regulates the utilization and disposition
of forest resources to the end that public welfare is promoted. A timber license is not a contract
within the purview of the due process clause; it is only a license or privilege, which can be validly
withdrawn whenever dictated by public interest or public welfare as in this case.

A license is merely a permit or privilege to do what otherwise would be unlawful, and is not a
contract between the authority, federal, state, or municipal, granting it and the person to whom
it is granted; neither is it property or a property right, nor does it create a vested right; nor is it
taxation (37 C.J. 168). Thus, this Court held that the granting of license does not create
irrevocable rights, neither is it property or property rights (People vs. Ong Tin, 54 O.G. 7576).

We reiterated this pronouncement in Felipe Ysmael, Jr. & Co., Inc. vs. Deputy Executive Secretary: 26

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

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

Sec. 10. No law impairing, the obligation of contracts shall be passed. 27

cannot be invoked.

In the second place, even if it is to be assumed that the same are contracts, the instant case does not involve a
law or even an executive issuance declaring the cancellation or modification of existing timber licenses. Hence,
the non-impairment clause cannot as yet be invoked. Nevertheless, granting further thaat a law has actually
been passed mandating cancellations or modifications, the same cannot still be stigmatized as a violation of the
non-impairment clause. This is because by its very nature and purpose, such as law could have only been passed
in the exercise of the police power of the state for the purpose of advancing the right of the people to a balanced
and healthful ecology, promoting their health and enhancing the general welfare. In Abe vs. Foster Wheeler
Corp. 28 this Court stated:
9
The freedom of contract, under our system of government, is not meant to be absolute. The same
is understood to be subject to reasonable legislative regulation aimed at the promotion of public
health, moral, safety and welfare. In other words, the constitutional guaranty of non-impairment
of obligations of contract is limited by the exercise of the police power of the State, in the interest
of public health, safety, moral and general welfare.

The reason for this is emphatically set forth in Nebia vs. New York, 29 quoted in Philippine American Life
Insurance Co. vs. Auditor General,30 to wit:

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

In short, the non-impairment clause must yield to the police power of the state. 31

Finally, it is difficult to imagine, as the trial court did, how the non-impairment clause could apply with respect
to the prayer to enjoin the respondent Secretary from receiving, accepting, processing, renewing or approving
new timber licenses for, save in cases of renewal, no contract would have as of yet existed in the other instances.
Moreover, with respect to renewal, the holder is not entitled to it as a matter of right.

WHEREFORE, being impressed with merit, the instant Petition is hereby GRANTED, and the challenged Order of
respondent Judge of 18 July 1991 dismissing Civil Case No. 90-777 is hereby set aside. The petitioners may
therefore amend their complaint to implead as defendants the holders or grantees of the questioned timber
license agreements.

No pronouncement as to costs.

SO ORDERED.

Cruz, Padilla, Bidin, Griño-Aquino, Regalado, Romero, Nocon, Bellosillo, Melo and Quiason, JJ., concur.

Narvasa, C.J., Puno and Vitug, JJ., took no part.

10
Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

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

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,


vs.
COURT OF APPEALS; HON. JUDGE HERCULANO TECH, PRESIDING JUDGE, BRANCH 70, REGIONAL TRIAL
COURT OF BINANGONAN RIZAL; FLEET DEVELOPMENT, INC. and CARLITO ARROYO; THE MUNICIPALITY OF
BINANGONAN and/or MAYOR ISIDRO B. PACIS, respondents.

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,


vs.
COURT OF APPEALS; HON. JUDGE AURELIO C. TRAMPE, PRESIDING JUDGE, BRANCH 163, REGIONAL TRIAL
COURT OF PASIG; MANILA MARINE LIFE BUSINESS RESOURCES, INC. represented by, MR. TOBIAS REYNALD
M. TIANGCO; MUNICIPALITY OF TAGUIG, METRO MANILA and/or MAYOR RICARDO D. PAPA,
JR., respondents.

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,


vs.
COURT OF APPEALS; HON. JUDGE ALEJANDRO A. MARQUEZ, PRESIDING JUDGE, BRANCH 79, REGIONAL
TRIAL COURT OF MORONG, RIZAL; GREENFIELD VENTURES INDUSTRIAL DEVELOPMENT CORPORATION and
R. J. ORION DEVELOPMENT CORPORATION; MUNICIPALITY OF JALA-JALA and/or MAYOR WALFREDO M. DE
LA VEGA, respondents.

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,


vs.
COURT OF APPEALS; HON. JUDGE MANUEL S. PADOLINA, PRESIDING JUDGE, BRANCH 162, REGIONAL TRIAL
COURT OF PASIG, METRO MANILA; IRMA FISHING & TRADING CORP.; ARTM FISHING CORP.; BDR
CORPORATION, MIRT CORPORATION and TRIM CORPORATION; MUNICIPALITY OF BINANGONAN and/or
MAYOR ISIDRO B. PACIS, respondents.

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,


vs.
COURT OF APPEALS; HON. JUDGE ARTURO A. MARAVE, PRESIDING JUDGE, BRANCH 78, REGIONAL TRIAL
COURT OF MORONG, RIZAL; BLUE LAGOON FISHING CORP. and ALCRIS CHICKEN GROWERS, INC.;
MUNICIPALITY OF JALA-JALA and/or MAYOR WALFREDO M. DE LA VEGA, respondents.

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,


vs.
COURT OF APPEALS; HON. JUDGE ARTURO A. MARAVE, PRESIDING JUDGE, BRANCH 78, REGIONAL TRIAL
COURT OF MORONG, RIZAL; AGP FISH VENTURES, INC., represented by its PRESIDENT ALFONSO PUYAT;
MUNICIPALITY OF JALA-JALA and/or MAYOR WALFREDO M. DE LA VEGA, respondents.

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,


vs.
COURT OF APPEALS; HON. JUDGE EUGENIO S. LABITORIA, PRESIDING JUDGE, BRANCH 161, REGIONAL TRIAL
COURT OF PASIG, METRO MANILA; SEA MAR TRADING CO. INC.; EASTERN LAGOON FISHING CORP.;
MINAMAR FISHING CORP.; MUNICIPALITY OF BINANGONAN and/or MAYOR ISIDRO B. PACIS, respondents.

11
HERMOSISIMA, JR., J.:

It is difficult for a man, scavenging on the garbage dump created by affluence and profligate consumption and
extravagance of the rich or fishing in the murky waters of the Pasig River and the Laguna Lake or making a
clearing in the forest so that he can produce food for his family, to understand why protecting birds, fish, and
trees is more important than protecting him and keeping his family alive.

How do we strike a balance between environmental protection, on the one hand, and the individual personal
interests of people, on the other?

Towards environmental protection and ecology, navigational safety, and sustainable development, Republic Act
No. 4850 created the "Laguna Lake Development Authority." This Government Agency is supposed to carry out
and effectuate the aforesaid declared policy, so as to accelerate the development and balanced growth of the
Laguna Lake area and the surrounding provinces, cities and towns, in the act clearly named, within the context
of the national and regional plans and policies for social and economic development.

Presidential Decree No. 813 of former President Ferdinand E. Marcos amended certain sections of Republic Act
No. 4850 because of the concern for the rapid expansion of Metropolitan Manila, the suburbs and the lakeshore
towns of Laguna de Bay, combined with current and prospective uses of the lake for municipal-industrial water
supply, irrigation, fisheries, and the like. Concern on the part of the Government and the general public over: —
the environment impact of development on the water quality and ecology of the lake and its related river
systems; the inflow of polluted water from the Pasig River, industrial, domestic and agricultural wastes from
developed areas around the lake; the increasing urbanization which induced the deterioration of the lake, since
water quality studies have shown that the lake will deteriorate further if steps are not taken to check the same;
and the floods in Metropolitan Manila area and the lakeshore towns which will influence the hydraulic system
of Laguna de Bay, since any scheme of controlling the floods will necessarily involve the lake and its river
systems, — likewise gave impetus to the creation of the Authority.

Section 1 of Republic Act No. 4850 was amended to read as follows:

Sec. 1. Declaration of Policy. It is hereby declared to be the national policy to promote, and
accelerate the development and balanced growth of the Laguna Lake area and the surrounding
provinces, cities and towns hereinafter referred to as the region, within the context of the
national and regional plans and policies for social and economic development and to carry out
the development of the Laguna Lake region with due regard and adequate provisions for
environmental management and control, preservation of the quality of human life and ecological
systems, and the prevention of undue ecological disturbances, deterioration and pollution.1

Special powers of the Authority, pertinent to the issues in this case, include:

Sec. 3. Section 4 of the same Act is hereby further amended by adding thereto seven new
paragraphs to be known as paragraphs (j), (k), (l), (m), (n), (o), and (p) which shall read as follows:

xxx xxx xxx

(j) The provisions of existing laws to the contrary notwithstanding, to engage in


fish production and other aqua-culture projects in Laguna de Bay and other bodies
of water within its jurisdiction and in pursuance thereof to conduct studies and
make experiments, whenever necessary, with the collaboration and assistance of
the Bureau of Fisheries and Aquatic Resources, with the end in view of improving
present techniques and practices. Provided, that until modified, altered or
amended by the procedure provided in the following sub-paragraph, the present
laws, rules and permits or authorizations remain in force;

(k) For the purpose of effectively regulating and monitoring activities in Laguna de
Bay, the Authority shall have exclusive jurisdiction to issue new permit for the use
of the lake waters for any projects or activities in or affecting the said lake including
12
navigation, construction, and operation of fishpens, fish enclosures, fish corrals
and the like, and to impose necessary safeguards for lake quality control and
management and to collect necessary fees for said activities and
projects: Provided, That the fees collected for fisheries may be shared between
the Authority and other government agencies and political sub-divisions in such
proportion as may be determined by the President of the Philippines upon
recommendation of the Authority's Board: Provided, further, That the Authority's
Board may determine new areas of fishery development or activities which it may
place under the supervision of the Bureau of Fisheries and Aquatic Resources
taking into account the overall development plans and programs for Laguna de
Bay and related bodies of water: Provided, finally, That the Authority shall subject
to the approval of the President of the Philippines promulgate such rules and
regulations which shall govern fisheries development activities in Laguna de Bay
which shall take into consideration among others the following: socio-economic
amelioration of bonafide resident fishermen whether individually or collectively
in the form of cooperatives, lakeshore town development, a master plan for
fishpen construction and operation, communal fishing ground for lake shore town
residents, and preference to lake shore town residents in hiring laborer for fishery
projects;

(l) To require the cities and municipalities embraced within the region to pass
appropriate zoning ordinances and other regulatory measures necessary to carry
out the objectives of the Authority and enforce the same with the assistance of
the Authority;

(m) The provisions of existing laws to the contrary notwithstanding, to exercise


water rights over public waters within the Laguna de Bay region whenever
necessary to carry out the Authority's projects;

(n) To act in coordination with existing governmental agencies in establishing


water quality standards for industrial, agricultural and municipal waste discharges
into the lake and to cooperate with said existing agencies of the government of
the Philippines in enforcing such standards, or to separately pursue enforcement
and penalty actions as provided for in Section 4 (d) and Section 39-A of this
Act: Provided, That in case of conflict on the appropriate water quality standard
to be enforced such conflict shall be resolved thru the NEDA Board. 2

To more effectively perform the role of the Authority under Republic Act No. 4850, as though Presidential
Decree No. 813 were not thought to be completely effective, the Chief Executive, feeling that the land and
waters of the Laguna Lake Region are limited natural resources requiring judicious management to their optimal
utilization to insure renewability and to preserve the ecological balance, the competing options for the use of
such resources and conflicting jurisdictions over such uses having created undue constraints on the institutional
capabilities of the Authority in the light of the limited powers vested in it by its charter, Executive Order No. 927
further defined and enlarged the functions and powers of the Authority and named and enumerated the towns,
cities and provinces encompassed by the term "Laguna de Bay Region".

Also, pertinent to the issues in this case are the following provisions of Executive Order No. 927 which include
in particular the sharing of fees:

Sec 2. Water Rights Over Laguna de Bay and Other Bodies of Water within the Lake Region: To
effectively regulate and monitor activities in the Laguna de Bay region, the Authority shall have
exclusive jurisdiction to issue permit for the use of all surface water for any projects or activities
in or affecting the said region including navigation, construction, and operation of fishpens, fish
enclosures, fish corrals and the like.

For the purpose of this Executive Order, the term "Laguna de Bay Region" shall refer to the
Provinces of Rizal and Laguna; the Cities of San Pablo, Pasay, Caloocan, Quezon, Manila and
13
Tagaytay; the towns of Tanauan, Sto. Tomas and Malvar in Batangas Province; the towns of Silang
and Carmona in Cavite Province; the town of Lucban in Quezon Province; and the towns of
Marikina, Pasig, Taguig, Muntinlupa, and Pateros in Metro Manila.

Sec 3. Collection of Fees. The Authority is hereby empowered to collect fees for the use of the
lake water and its tributaries for all beneficial purposes including but not limited to fisheries,
recreation, municipal, industrial, agricultural, navigation, irrigation, and waste disposal
purpose; Provided, that the rates of the fees to be collected, and the sharing with other
government agencies and political subdivisions, if necessary, shall be subject to the approval of
the President of the Philippines upon recommendation of the Authority's Board, except fishpen
fee, which will be shared in the following manner; 20 percent of the fee shall go to the lakeshore
local governments, 5 percent shall go to the Project Development Fund which shall be
administered by a Council and the remaining 75 percent shall constitute the share of LLDA.
However, after the implementation within the three-year period of the Laguna Lake Fishery
Zoning and Management Plan, the sharing will be modified as follows: 35 percent of the fishpen
fee goes to the lakeshore local governments, 5 percent goes to the Project Development Fund
and the remaining 60 percent shall be retained by LLDA; Provided, however, that the share of
LLDA shall form part of its corporate funds and shall not be remitted to the National Treasury as
an exception to the provisions of Presidential Decree No. 1234. (Emphasis supplied)

It is important to note that Section 29 of Presidential Decree No. 813 defined the term "Laguna Lake" in this
manner:

Sec 41. Definition of Terms.

(11) Laguna Lake or Lake. Whenever Laguna Lake or lake is used in this Act, the same shall refer
to Laguna de Bay which is that area covered by the lake water when it is at the average annual
maximum lake level of elevation 12.50 meters, as referred to a datum 10.00 meters below mean
lower low water (M.L.L.W). Lands located at and below such elevation are public lands which
form part of the bed of said lake.

Then came Republic Act No. 7160, the Local Government Code of 1991. The municipalities in the Laguna Lake
Region interpreted the provisions of this law to mean that the newly passed law gave municipal governments
the exclusive jurisdiction to issue fishing privileges within their municipal waters because R.A. 7160 provides:

Sec. 149. Fishery Rentals, Fees and Charges.

(a) Municipalities shall have the exclusive authority to grant fishery privileges in the municipal
waters and impose rental fees or charges therefor in accordance with the provisions of this
Section.

(b) The Sangguniang Bayan may:

(1) Grant fishing privileges to erect fish corrals, oyster, mussel or other aquatic
beds or bangus fry areas, within a definite zone of the municipal waters, as
determined by it; . . . .

(2) Grant privilege to gather, take or catch bangus fry, prawn fry or kawag-
kawag or fry of other species and fish from the municipal waters by nets, traps or
other fishing gears to marginal fishermen free from any rental fee, charges or any
other imposition whatsoever.

xxx xxx xxx

Sec. 447. Power, Duties, Functions and Compensation. . . . .

xxx xxx xxx

14
(XI) Subject to the provisions of Book II of this Code, grant exclusive privileges of
constructing fish corrals or fishpens, or the taking or catching of bangus fry, prawn
fry or kawag-kawag or fry of any species or fish within the municipal waters.

xxx xxx xxx

Municipal governments thereupon assumed the authority to issue fishing privileges and fishpen permits. Big
fishpen operators took advantage of the occasion to establish fishpens and fishcages to the consternation of
the Authority. Unregulated fishpens and fishcages, as of July, 1995, occupied almost one-third of the entire lake
water surface area, increasing the occupation drastically from 7,000 hectares in 1990 to almost 21,000 hectares
in 1995. The Mayor's permit to construct fishpens and fishcages were all undertaken in violation of the policies
adopted by the Authority on fishpen zoning and the Laguna Lake carrying capacity.

To be sure, the implementation by the lakeshore municipalities of separate independent policies in the
operation of fishpens and fishcages within their claimed territorial municipal waters in the lake and their
indiscriminate grant of fishpen permits have already saturated the lake area with fishpens, thereby aggravating
the current environmental problems and ecological stress of Laguna Lake.

In view of the foregoing circumstances, the Authority served notice to the general public that:

In compliance with the instructions of His Excellency PRESIDENT FIDEL V. RAMOS given on June
23, 1993 at Pila, Laguna pursuant to Republic Act 4850 as amended by Presidential Decree 813
and Executive Order 927 series of 1983 and in line with the policies and programs of the
Presidential Task Force on Illegal Fishpens and Illegal Fishing, the general public is hereby notified
that:

1. All fishpens, fishcages and other aqua-culture structures in the Laguna de Bay Region, which
were not registered or to which no application for registration and/or permit has been filed with
Laguna Lake Development Authority as of March 31, 1993 are hereby declared outrightly as
illegal.

2. All fishpens, fishcages and other aqua-culture structures so declared as illegal shall be subject
to demolition which shall be undertaken by the Presidential Task Force for Illegal Fishpen and
Illegal Fishing.

3. Owners of fishpens, fishcages and other aqua-culture structures declared as illegal shall,
without prejudice to demolition of their structures be criminally charged in accordance with
Section 39-A of Republic Act 4850 as amended by P.D. 813 for violation of the same laws.
Violations of these laws carries a penalty of imprisonment of not exceeding 3 years or a fine not
exceeding Five Thousand Pesos or both at the discretion of the court.

All operators of fishpens, fishcages and other aqua-culture structures declared as illegal in
accordance with the foregoing Notice shall have one (1) month on or before 27 October 1993 to
show cause before the LLDA why their said fishpens, fishcages and other aqua-culture structures
should not be demolished/dismantled.

One month, thereafter, the Authority sent notices to the concerned owners of the illegally constructed fishpens,
fishcages and other aqua-culture structures advising them to dismantle their respective structures within 10
days from receipt thereof, otherwise, demolition shall be effected.

Reacting thereto, the affected fishpen owners filed injunction cases against the Authority before various
regional trial courts, to wit: (a) Civil Case No. 759-B, for Prohibition, Injunction and Damages, Regional Trial
Court, Branch 70, Binangonan, Rizal, filed by Fleet Development, Inc. and Carlito Arroyo; (b) Civil Case No. 64049,
for Injunction, Regional Trial Court, Branch 162, Pasig, filed by IRMA Fishing and Trading Corp., ARTM Fishing
Corp., BDR Corp., MIRT Corp. and TRIM Corp.; (c) Civil Case No. 566, for Declaratory Relief and Injunction,
Regional Trial Court, Branch 163, Pasig, filed by Manila Marine Life Business Resources, Inc. and Tobias Reynaldo
M. Tianco; (d) Civil Case No. 556-M, for Prohibition, Injunction and Damages, Regional Trial Court, Branch 78,
15
Morong, Rizal, filed by AGP Fishing Ventures, Inc.; (e) Civil Case No. 522-M, for Prohibition, Injunction and
Damages, Regional Trial Court, Branch 78, Morong, Rizal, filed by Blue Lagoon and Alcris Chicken Growers, Inc.;
(f) Civil Case No. 554-, for Certiorari and Prohibition, Regional Trial Court, Branch 79, Morong, Rizal, filed by
Greenfields Ventures Industrial Corp. and R.J. Orion Development Corp.; and (g) Civil Case No. 64124, for
Injunction, Regional Trial Court, Branch 15, Pasig, filed by SEA-MAR Trading Co., Inc. and Eastern Lagoon Fishing
Corp. and Minamar Fishing Corporation.

The Authority filed motions to dismiss the cases against it on jurisdictional grounds. The motions to dismiss were
invariably denied. Meanwhile, temporary restraining order/writs of preliminary mandatory injunction were
issued in Civil Cases Nos. 64124, 759 and 566 enjoining the Authority from demolishing the fishpens and similar
structures in question.

Hence, the herein petition for certiorari, prohibition and injunction, G.R. Nos. 120865-71, were filed by the
Authority with this court. Impleaded as parties-respondents are concerned regional trial courts and respective
private parties, and the municipalities and/or respective Mayors of Binangonan, Taguig and Jala-jala, who issued
permits for the construction and operation of fishpens in Laguna de Bay. The Authority sought the following
reliefs, viz.:

(A) Nullification of the temporary restraining order/writs of preliminary injunction issued in Civil
Cases Nos. 64125, 759 and 566;

(B) Permanent prohibition against the regional trial courts from exercising jurisdiction over cases
involving the Authority which is a co-equal body;

(C) Judicial pronouncement that R.A. 7610 (Local Government Code of 1991) did not repeal, alter
or modify the provisions of R.A. 4850, as amended, empowering the Authority to issue permits
for fishpens, fishcages and other aqua-culture structures in Laguna de Bay and that, the Authority
the government agency vested with exclusive authority to issue said permits.

By this Court's resolution of May 2, 1994, the Authority's consolidated petitions were referred to the Court of
Appeals.

In a Decision, dated June 29, 1995, the Court of Appeals dismissed the Authority's consolidated petitions, the
Court of Appeals holding that: (A) LLDA is not among those quasi-judicial agencies of government whose decision
or order are appealable only to the Court of Appeals; (B) the LLDA charter does vest LLDA with quasi-judicial
functions insofar as fishpens are concerned; (C) the provisions of the LLDA charter insofar as fishing privileges
in Laguna de Bay are concerned had been repealed by the Local Government Code of 1991; (D) in view of the
aforesaid repeal, the power to grant permits devolved to and is now vested with their respective local
government units concerned.

Not satisfied with the Court of Appeals decision, the Authority has returned to this Court charging the following
errors:

1. THE HONORABLE COURT OF APPEALS PROBABLY COMMITTED AN ERROR WHEN IT RULED


THAT THE LAGUNA LAKE DEVELOPMENT AUTHORITY IS NOT A QUASI-JUDICIAL AGENCY.

2. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT RULED THAT R.A.
4850 AS AMENDED BY P.D. 813 AND E.O. 927 SERIES OF 1983 HAS BEEN REPEALED BY REPUBLIC
ACT 7160. THE SAID RULING IS CONTRARY TO ESTABLISHED PRINCIPLES AND JURISPRUDENCE OF
STATUTORY CONSTRUCTION.

3. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT RULED THAT THE
POWER TO ISSUE FISHPEN PERMITS IN LAGUNA DE BAY HAS BEEN DEVOLVED TO CONCERNED
(LAKESHORE) LOCAL GOVERNMENT UNITS.

We take a simplistic view of the controversy. Actually, the main and only issue posed is: Which agency of the
Government — the Laguna Lake Development Authority or the towns and municipalities comprising the region

16
— should exercise jurisdiction over the Laguna Lake and its environs insofar as the issuance of permits for fishery
privileges is concerned?

Section 4 (k) of the charter of the Laguna Lake Development Authority, Republic Act No. 4850, the provisions of
Presidential Decree No. 813, and Section 2 of Executive Order No. 927, cited above, specifically provide that the
Laguna Lake Development Authority shall have exclusive jurisdiction to issue permits for the use of all surface
water for any projects or activities in or affecting the said region, including navigation, construction, and
operation of fishpens, fish enclosures, fish corrals and the like. On the other hand, Republic Act No. 7160, the
Local Government Code of 1991, has granted to the municipalities the exclusive authority to grant fishery
privileges in municipal waters. The Sangguniang Bayan may grant fishery privileges to erect fish corrals, oyster,
mussels or other aquatic beds or bangus fry area within a definite zone of the municipal waters.

We hold that the provisions of Republic Act No. 7160 do not necessarily repeal the aforementioned laws creating
the Laguna Lake Development Authority and granting the latter water rights authority over Laguna de Bay and
the lake region.

The Local Government Code of 1991 does not contain any express provision which categorically expressly repeal
the charter of the Authority. It has to be conceded that there was no intent on the part of the legislature to
repeal Republic Act No. 4850 and its amendments. The repeal of laws should be made clear and expressed.

It has to be conceded that the charter of the Laguna Lake Development Authority constitutes a special law.
Republic Act No. 7160, the Local Government Code of 1991, is a general law. It is basic in statutory construction
that the enactment of a later legislation which is a general law cannot be construed to have repealed a special
law. It is a well-settled rule in this jurisdiction that "a special statute, provided for a particular case or class of
cases, is not repealed by a subsequent statute, general in its terms, provisions and application, unless the intent
to repeal or alter is manifest, although the terms of the general law are broad enough to include the cases
embraced in the special law."3

Where there is a conflict between a general law and a special statute, the special statute should prevail since it
evinces the legislative intent more clearly than the general statute. The special law is to be taken as an exception
to the general law in the absence of special circumstances forcing a contrary conclusion. This is because implied
repeals are not favored and as much as possible, effect must be given to all enactments of the legislature. A
special law cannot be repealed, amended or altered by a subsequent general law by mere implication.4

Thus, it has to be concluded that the charter of the Authority should prevail over the Local Government Code of
1991.

Considering the reasons behind the establishment of the Authority, which are environmental protection,
navigational safety, and sustainable development, there is every indication that the legislative intent is for the
Authority to proceed with its mission.

We are on all fours with the manifestation of petitioner Laguna Lake Development Authority that "Laguna de
Bay, like any other single body of water has its own unique natural ecosystem. The 900 km² lake surface water,
the eight (8) major river tributaries and several other smaller rivers that drain into the lake, the 2,920 km² basin
or watershed transcending the boundaries of Laguna and Rizal provinces, greater portion of Metro Manila, parts
of Cavite, Batangas, and Quezon provinces, constitute one integrated delicate natural ecosystem that needs to
be protected with uniform set of policies; if we are to be serious in our aims of attaining sustainable
development. This is an exhaustible natural resource — a very limited one — which requires judicious
management and optimal utilization to ensure renewability and preserve its ecological integrity and balance."

"Managing the lake resources would mean the implementation of a national policy geared towards the
protection, conservation, balanced growth and sustainable development of the region with due regard to the
inter-generational use of its resources by the inhabitants in this part of the earth. The authors of Republic Act
4850 have foreseen this need when they passed this LLDA law — the special law designed to govern the
management of our Laguna de Bay lake resources."

17
"Laguna de Bay therefore cannot be subjected to fragmented concepts of management policies where lakeshore
local government units exercise exclusive dominion over specific portions of the lake water. The garbage thrown
or sewage discharged into the lake, abstraction of water therefrom or construction of fishpens by enclosing its
certain area, affect not only that specific portion but the entire 900 km² of lake water. The implementation of a
cohesive and integrated lake water resource management policy, therefore, is necessary to conserve, protect
and sustainably develop Laguna de Bay."5

The power of the local government units to issue fishing privileges was clearly granted for revenue purposes.
This is evident from the fact that Section 149 of the New Local Government Code empowering local
governments to issue fishing permits is embodied in Chapter 2, Book II, of Republic Act No. 7160 under the
heading, "Specific Provisions On The Taxing And Other Revenue Raising Power Of Local Government Units."

On the other hand, the power of the Authority to grant permits for fishpens, fishcages and other aqua-culture
structures is for the purpose of effectively regulating and monitoring activities in the Laguna de Bay region
(Section 2, Executive Order No. 927) and for lake quality control and management.6 It does partake of the nature
of police power which is the most pervasive, the least limitable and the most demanding of all State powers
including the power of taxation. Accordingly, the charter of the Authority which embodies a valid exercise of
police power should prevail over the Local Government Code of 1991 on matters affecting Laguna de Bay.

There should be no quarrel over permit fees for fishpens, fishcages and other aqua-culture structures in the
Laguna de Bay area. Section 3 of Executive Order No. 927 provides for the proper sharing of fees collected.

In respect to the question as to whether the Authority is a quasi-judicial agency or not, it is our holding that,
considering the provisions of Section 4 of Republic Act No. 4850 and Section 4 of Executive Order No. 927, series
of 1983, and the ruling of this Court in Laguna Lake Development Authority vs. Court of Appeals, 231 SCRA 304,
306, which we quote:

xxx xxx xxx

As a general rule, the adjudication of pollution cases generally pertains to the Pollution
Adjudication Board (PAB), except in cases where the special law provides for another forum. It
must be recognized in this regard that the LLDA, as a specialized administrative agency, is
specifically mandated under Republic Act No. 4850 and its amendatory laws to carry out and
make effective the declared national policy of promoting and accelerating the development and
balanced growth of the Laguna Lake area and the surrounding provinces of Rizal and Laguna and
the cities of San Pablo, Manila, Pasay, Quezon and Caloocan with due regard and adequate
provisions for environmental management and control, preservation of the quality of human life
and ecological systems, and the prevention of undue ecological disturbances, deterioration and
pollution. Under such a broad grant of power and authority, the LLDA, by virtue of its special
charter, obviously has the responsibility to protect the inhabitants of the Laguna Lake region from
the deleterious effects of pollutants emanating from the discharge of wastes from the
surrounding areas. In carrying out the aforementioned declared policy, the LLDA is mandated,
among others, to pass upon and approve or disapprove all plans, programs, and projects
proposed by local government offices/agencies within the region, public corporations, and
private persons or enterprises where such plans, programs and/or projects are related to those
of the LLDA for the development of the region.

xxx xxx xxx

. . . . While it is a fundamental rule that an administrative agency has only such powers as are
expressly granted to it by law, it is likewise a settled rule that an administrative agency has also
such powers as are necessarily implied in the exercise of its express powers. In the exercise,
therefore, of its express powers under its charter, as a regulatory and quasi-judicial body with
respect to pollution cases in the Laguna Lake region, the authority of the LLDA to issue a "cease
and desist order" is, perforce, implied. Otherwise, it may well be reduced to a "toothless" paper
agency.

18
there is no question that the Authority has express powers as a regulatory and quasi-judicial body in
respect to pollution cases with authority to issue a "cease and desist order" and on matters affecting the
construction of illegal fishpens, fishcages and other aqua-culture structures in Laguna de Bay. The
Authority's pretense, however, that it is co-equal to the Regional Trial Courts such that all actions against
it may only be instituted before the Court of Appeals cannot be sustained. On actions necessitating the
resolution of legal questions affecting the powers of the Authority as provided for in its charter, the
Regional Trial Courts have jurisdiction.

In view of the foregoing, this Court holds that Section 149 of Republic Act No. 7160, otherwise known as the
Local Government Code of 1991, has not repealed the provisions of the charter of the Laguna Lake Development
Authority, Republic Act No. 4850, as amended. Thus, the Authority has the exclusive jurisdiction to issue permits
for the enjoyment of fishery privileges in Laguna de Bay to the exclusion of municipalities situated therein and
the authority to exercise such powers as are by its charter vested on it.

Removal from the Authority of the aforesaid licensing authority will render nugatory its avowed purpose of
protecting and developing the Laguna Lake Region. Otherwise stated, the abrogation of this power would render
useless its reason for being and will in effect denigrate, if not abolish, the Laguna Lake Development Authority.
This, the Local Government Code of 1991 had never intended to do.

WHEREFORE, the petitions for prohibition, certiorari and injunction are hereby granted, insofar as they relate
to the authority of the Laguna Lake Development Authority to grant fishing privileges within the Laguna Lake
Region.

The restraining orders and/or writs of injunction issued by Judge Arturo Marave, RTC, Branch 78, Morong, Rizal;
Judge Herculano Tech, RTC, Branch 70, Binangonan, Rizal; and Judge Aurelio Trampe, RTC, Branch 163, Pasig,
Metro Manila, are hereby declared null and void and ordered set aside for having been issued with grave abuse
of discretion.

The Municipal Mayors of the Laguna Lake Region are hereby prohibited from issuing permits to construct and
operate fishpens, fishcages and other aqua-culture structures within the Laguna Lake Region, their previous
issuances being declared null and void. Thus, the fishing permits issued by Mayors Isidro B. Pacis, Municipality
of Binangonan; Ricardo D. Papa, Municipality of Taguig; and Walfredo M. de la Vega, Municipality of Jala-jala,
specifically, are likewise declared null and void and ordered cancelled.

The fishpens, fishcages and other aqua-culture structures put up by operators by virtue of permits issued by
Municipal Mayors within the Laguna Lake Region, specifically, permits issued to Fleet Development, Inc. and
Carlito Arroyo; Manila Marine Life Business Resources, Inc., represented by, Mr. Tobias Reynald M. Tiangco;
Greenfield Ventures Industrial Development Corporation and R.J. Orion Development Corporation; IRMA
Fishing And Trading Corporation, ARTM Fishing Corporation, BDR Corporation, Mirt Corporation and Trim
Corporation; Blue Lagoon Fishing Corporation and ALCRIS Chicken Growers, Inc.; AGP Fish Ventures, Inc.,
represented by its President Alfonso Puyat; SEA MAR Trading Co., Inc., Eastern Lagoon Fishing Corporation, and
MINAMAR Fishing Corporation, are hereby declared illegal structures subject to demolition by the Laguna Lake
Development Authority.

SO ORDERED.

Davide, Jr., Bellosillo and Kapunan, JJ., concur.

19
Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 73002 December 29, 1986

THE DIRECTOR OF LANDS, petitioner,


vs.
INTERMEDIATE APPELLATE COURT and ACME PLYWOOD & VENEER CO. INC., ETC., respondents.

D. Nacion Law Office for private respondent.

NARVASA, J.:

The Director of Lands has brought this appeal by certiorari from a judgment of the Intermediate Appellate Court
affirming a decision of the Court of First Instance of Isabela, which ordered registration in favor of Acme Plywood
& Veneer Co., Inc. of five parcels of land measuring 481, 390 square meters, more or less, acquired by it from
Mariano and Acer Infiel, members of the Dumagat tribe.

The registration proceedings were for confirmation of title under Section 48 of Commonwealth Act No. 141 (The
Public Land Act). as amended: and the appealed judgment sums up the findings of the trial court in said
proceedings in this wise:

1. That Acme Plywood & Veneer Co. Inc., represented by Mr. Rodolfo Nazario is a corporation duly
organized in accordance with the laws of the Republic of the Philippines and registered with the
Securities and Exchange Commission on December 23, 1959;

2. That Acme Plywood & Veneer Co. Inc., represented by Mr. Rodolfo Nazario can acquire real properties
pursuant to the provisions of the Articles of Incorporation particularly on the provision of its secondary
purposes (paragraph (9), Exhibit 'M-l');

3. That the land subject of the Land Registration proceeding was ancestrally acquired by Acme Plywood
& Veneer Co., Inc., on October 29, 1962, from Mariano Infiel and Acer Infiel, both members of the
Dumagat tribe and as such are cultural minorities;

4. That the constitution of the Republic of the Philippines of 1935 is applicable as the sale took place on
October 29, 1962;

5. That the possession of the Infiels over the land relinquished or sold to Acme Plywood & Veneer Co.,
Inc., dates back before the Philippines was discovered by Magellan as the ancestors of the Infiels have
possessed and occupied the land from generation to generation until the same came into the possession
of Mariano Infiel and Acer Infiel;

6. That the possession of the applicant Acme Plywood & Veneer Co., Inc., is continuous, adverse and
public from 1962 to the present and tacking the possession of the Infiels who were granted from whom
the applicant bought said land on October 29, 1962, hence the possession is already considered from
time immemorial.

7. That the land sought to be registered is a private land pursuant to the provisions of Republic Act No.
3872 granting absolute ownership to members of the non-Christian Tribes on land occupied by them or
their ancestral lands, whether with the alienable or disposable public land or within the public domain;

8. That applicant Acme Plywood & Veneer Co. Inc., has introduced more than Forty-Five Million
(P45,000,000.00) Pesos worth of improvements, said improvements were seen by the Court during its
ocular investigation of the land sought to be registered on September 18, 1982;

20
9. That the ownership and possession of the land sought to be registered by the applicant was duly
recognized by the government when the Municipal Officials of Maconacon, Isabela, have negotiated for
the donation of the townsite from Acme Plywood & Veneer Co., Inc., and this negotiation came to reality
when the Board of Directors of the Acme Plywood & Veneer Co., Inc., had donated a part of the land
bought by the Company from the Infiels for the townsite of Maconacon Isabela (Exh. 'N') on November
15, 1979, and which donation was accepted by the Municipal Government of Maconacon, Isabela (Exh.
'N-l'), during their special session on November 22, 1979.

The Director of Lands takes no issue with any of these findings except as to the applicability of the 1935
Constitution to the matter at hand. Concerning this, he asserts that, the registration proceedings have been
commenced only on July 17, 1981, or long after the 1973 Constitution had gone into effect, the latter is the
correctly applicable law; and since section 11 of its Article XIV prohibits private corporations or associations
from holding alienable lands of the public domain, except by lease not to exceed 1,000 hectares (a prohibition
not found in the 1935 Constitution which was in force in 1962 when Acme purchased the lands in question from
the Infiels), it was reversible error to decree registration in favor of Acme Section 48, paragraphs (b) and (c), of
Commonwealth Act No. 141, as amended, reads:

SEC. 48. The following described citizens of the Philippines, occupying lands of the public domain or
claiming to own any such lands or an interest therein, but whose titles have not been perfected or
completed, may apply to the Court of First Instance of the province where the land is located for
confirmation of their claims, and the issuance of a certificate of title therefor, under the Land
Registration Act, to wit:

xxx xxx xxx

(b) Those who by themselves or through their predecessors-in-interest have been in open, continuous,
exclusive and notorious possession and occupation of agricultural lands of the public domain, under a
bona fide claim of acquisition or ownership, for at least thirty years immediately preceding the filing of
the application for confirmation of title except when prevented by war or force majeure. These shall be
conclusively presumed to have performed all the conditions essential to a Government grant and shall
be entitled to a certificate of title under the provisions of this chapter.

(c) Members of the National Cultural minorities who by themselves or through their predecessors-in-
interest have been in open. continuous, exclusive and notorious possession and occupation of lands of
the public domain suitable to agriculture, whether disposable or not, under a bona fide claim of
ownership for at least 30 years shall be entitled to the rights granted in subsection (b) hereof.

The Petition for Review does not dispute-indeed, in view of the quoted findings of the trial court which were
cited and affirmed by the Intermediate Appellate Court, it can no longer controvert before this Court-the fact
that Mariano and Acer Infiel, from whom Acme purchased the lands in question on October 29, 1962, are
members of the national cultural minorities who had, by themselves and through their progenitors, possessed
and occupied those lands since time immemorial, or for more than the required 30-year period and were, by
reason thereof, entitled to exercise the right granted in Section 48 of the Public Land Act to have their title
judicially confirmed. Nor is there any pretension that Acme, as the successor-in-interest of the Infiels, is
disqualified to acquire and register ownership of said lands under any provisions of the 1973 Constitution other
than Section 11 of its Article XIV already referred to.

Given the foregoing, the question before this Court is whether or not the title that the Infiels had transferred to
Acme in 1962 could be confirmed in favor of the latter in proceedings instituted by it in 1981 when the 1973
Constitution was already in effect, having in mind the prohibition therein against private corporations holding
lands of the public domain except in lease not exceeding 1,000 hectares.

The question turns upon a determination of the character of the lands at the time of institution of the
registration proceedings in 1981. If they were then still part of the public domain, it must be answered in the
negative. If, on the other hand, they were then already private lands, the constitutional prohibition against their
acquisition by private corporations or associations obviously does not apply.

21
In this regard, attention has been invited to Manila Electric Company vs. Castro-Bartolome, et al, 1 where a
similar set of facts prevailed. In that case, Manila Electric Company, a domestic corporation more than 60% of
the capital stock of which is Filipino-owned, had purchased in 1947 two lots in Tanay, Rizal from the Piguing
spouses. The lots had been possessed by the vendors and, before them, by their predecessor-in-interest,
Olimpia Ramos, since prior to the outbreak of the Pacific War in 1941. On December 1, 1976, Meralco applied
to the Court of First Instance of Rizal, Makati Branch, for confirmation of title to said lots. The court, assuming
that the lots were public land, dismissed the application on the ground that Meralco, a juridical person, was not
qualified to apply for registration under Section 48(b) of the Public Land Act which allows only Filipino citizens
or natural persons to apply for judicial confirmation of imperfect titles to public land. Meralco appealed, and a
majority of this Court upheld the dismissal. It was held that:

..., the said land is still public land. It would cease to be public land only upon the issuance of the
certificate of title to any Filipino citizen claiming it under section 48(b). Because it is still public land and
the Meralco, as a juridical person, is disqualified to apply for its registration under section 48(b),
Meralco's application cannot be given due course or has to be dismissed.

Finally, it may be observed that the constitutional prohibition makes no distinction between (on the one
hand) alienable agricultural public lands as to which no occupant has an imperfect title and (on the other
hand) alienable lands of the public domain as to which an occupant has on imperfect title subject to
judicial confirmation.

Since section 11 of Article XIV does not distinguish, we should not make any distinction or qualification.
The prohibition applies to alienable public lands as to which a Torrens title may be secured under section
48(b). The proceeding under section 48(b) 'presupposes that the land is public' (Mindanao vs. Director
of Lands, L-19535, July 30, 1967, 20 SCRA 641, 644).

The present Chief Justice entered a vigorous dissent, tracing the line of cases beginning with Carino in
1909 2 thru Susi in 1925 3 down to Herico in 1980, 4 which developed, affirmed and reaffirmed the doctrine that
open, exclusive and undisputed possession of alienable public land for the period prescribed by law creates the
legal fiction whereby the land, upon completion of the requisite period ipso jure and without the need of judicial
or other sanction, ceases to be public land and becomes private property. That said dissent expressed what is
the better — and, indeed, the correct, view-becomes evident from a consideration of some of the principal
rulings cited therein,

The main theme was given birth, so to speak, in Carino involving the Decree/Regulations of June 25, 1880 for
adjustment of royal lands wrongfully occupied by private individuals in the Philippine Islands. It was ruled that:

It is true that the language of articles 4 and 5 5 attributes title to those 'who may prove' possession for
the necessary time and we do not overlook the argument that this means may prove in registration
proceedings. It may be that an English conveyancer would have recommended an application under the
foregoing decree, but certainly it was not calculated to convey to the mind of an Igorot chief the notion
that ancient family possessions were in danger, if he had read every word of it. The words 'may prove'
(acrediten) as well or better, in view of the other provisions, might be taken to mean when called upon
to do so in any litigation. There are indications that registration was expected from all but none sufficient
to show that, for want of it, ownership actually gained would be lost. The effect of the proof, wherever
made, was not to confer title, but simply to establish it, as already conferred by the decree, if not by
earlier law. ...

That ruling assumed a more doctrinal character because expressed in more categorical language, in Susi:

.... In favor of Valentin Susi, there is, moreover, the presumption juris et de jure established in paragraph
(b) of section 45 of Act No. 2874, amending Act No. 926, that all the necessary requirements for a grant
by the Government were complied with, for he has been in actual and physical possession, personally
and through his predecessors, of an agricultural land of the public domain openly, continuously,
exclusively and publicly since July 26, 1984, with a right to a certificate of title to said land under the
provisions of Chapter VIII of said Act. So that when Angela Razon applied for the grant in her favor,
Valentin Susi had already acquired, by operation of law not only a right to a grant, but a grant of the
22
Government, for it is not necessary that a certificate of title should be issued in order that said grant may
be sanctioned by the courts, an application therefore is sufficient, under the provisions of section 47 of
Act No. 2874. If by a legal fiction, Valentin Susi had acquired the land in question by a grant of the State, it
had already ceased to be of the public domain and had become private property, at least by
presumption, of Valentin Susi, beyond the control of the Director of Lands. Consequently, in selling the
land in question of Angela Razon, the Director of Lands disposed of a land over which he had no longer
any title or control, and the sale thus made was void and of no effect, and Angela Razon did not thereby
acquire any right. 6

Succeeding cases, of which only some need be mentioned, likeof Lacaste vs. Director of Lands, 7 Mesina vs. Vda.
de Sonza, 8 Manarpac vs. Cabanatuan, 9 Miguel vs. Court of Appeals 10 and Herico vs. Dar, supra, by invoking and
affirming the Susi doctrine have firmly rooted it in jurisprudence.

Herico, in particular, appears to be squarely affirmative: 11

.... Secondly, under the provisions of Republic Act No. 1942, which the respondent Court held to be
inapplicable to the petitioner's case, with the latter's proven occupation and cultivation for more than
30 years since 1914, by himself and by his predecessors-in-interest, title over the land has vested on
petitioner so as to segregate the land from the mass of public land. Thereafter, it is no longer disposable
under the Public Land Act as by free patent. ....

xxx xxx xxx

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

Nothing can more clearly demonstrate the logical inevitability of considering possession of public land which is
of the character and duration prescribed by statute as the equivalent of an express grant from the State than
the dictum of the statute itself 13 that the possessor(s) "... shall be conclusively presumed to have performed all
the conditions essential to a Government grant and shall be entitled to a certificate of title .... " No proof being
admissible to overcome a conclusive presumption, confirmation proceedings would, in truth be little more than
a formality, at the most limited to ascertaining whether the possession claimed is of the required character and
length of time; and registration thereunder would not confer title, but simply recognize a title already vested.
The proceedings would not originally convert the land from public to private land, but only confirm such a
conversion already affected by operation of law from the moment the required period of possession became
complete. As was so well put in Carino, "... (T)here are indications that registration was expected from all, but
none sufficient to show that, for want of it, ownership actually gained would be lost. The effect of the proof,
wherever made, was not to confer title, but simply to establish it, as already conferred by the decree, if not by
earlier law."

If it is accepted-as it must be-that the land was already private land to which the Infiels had a legally sufficient
and transferable title on October 29, 1962 when Acme acquired it from said owners, it must also be conceded
that Acme had a perfect right to make such acquisition, there being nothing in the 1935 Constitution then in
force (or, for that matter, in the 1973 Constitution which came into effect later) prohibiting corporations from
acquiring and owning private lands.

Even on the proposition that the land remained technically "public" land, despite immemorial possession of the
Infiels and their ancestors, until title in their favor was actually confirmed in appropriate proceedings under the
Public Land Act, there can be no serious question of Acmes right to acquire the land at the time it did, there also
being nothing in the 1935 Constitution that might be construed to prohibit corporations from purchasing or
acquiring interests in public land to which the vendor had already acquired that type of so-called "incomplete"
or "imperfect" title. The only limitation then extant was that corporations could not acquire, hold or lease public
agricultural lands in excess of 1,024 hectares. The purely accidental circumstance that confirmation proceedings
23
were brought under the aegis of the 1973 Constitution which forbids corporations from owning lands of the
public domain cannot defeat a right already vested before that law came into effect, or invalidate transactions
then perfectly valid and proper. This Court has already held, in analogous circumstances, that the Constitution
cannot impair vested rights.

We hold that the said constitutional prohibition 14 has no retroactive application to the sales application
of Binan Development Co., Inc. because it had already acquired a vested right to the land applied for at
the time the 1973 Constitution took effect.

That vested right has to be respected. It could not be abrogated by the new Constitution. Section 2,
Article XIII of the 1935 Constitution allows private corporations to purchase public agricultural lands not
exceeding one thousand and twenty-four hectares. Petitioner' prohibition action is barred by the
doctrine of vested rights in constitutional law.

xxx xxx xxx

The due process clause prohibits the annihilation of vested rights. 'A state may not impair vested rights
by legislative enactment, by the enactment or by the subsequent repeal of a municipal ordinance, or by
a change in the constitution of the State, except in a legitimate exercise of the police power'(16 C.J.S.
1177-78).

xxx xxx xxx

In the instant case, it is incontestable that prior to the effectivity of the 1973 Constitution the right of
the corporation to purchase the land in question had become fixed and established and was no longer
open to doubt or controversy.

Its compliance with the requirements of the Public Land Law for the issuance of a patent had the effect
of segregating the said land from the public domain. The corporation's right to obtain a patent for the
land is protected by law. It cannot be deprived of that right without due process (Director of Lands vs.
CA, 123 Phil. 919).<äre||anº•1àw> 15

The fact, therefore, that the confirmation proceedings were instituted by Acme in its own name must be
regarded as simply another accidental circumstance, productive of a defect hardly more than procedural and in
nowise affecting the substance and merits of the right of ownership sought to be confirmed in said proceedings,
there being no doubt of Acme's entitlement to the land. As it is unquestionable that in the light of the undisputed
facts, the Infiels, under either the 1935 or the 1973 Constitution, could have had title in themselves confirmed
and registered, only a rigid subservience to the letter of the law would deny the same benefit to their lawful
successor-in-interest by valid conveyance which violates no constitutional mandate.

The Court, in the light of the foregoing, is of the view, and so holds, that the majority ruling in Meralco must be
reconsidered and no longer deemed to be binding precedent. The correct rule, as enunciated in the line of cases
already referred to, is that alienable public land held by a possessor, personally or through his predecessors-in-
interest, openly, continuously and exclusively for the prescribed statutory period (30 years under The Public
Land Act, as amended) is converted to private property by the mere lapse or completion of said period, ipso
jure. Following that rule and on the basis of the undisputed facts, the land subject of this appeal was already
private property at the time it was acquired from the Infiels by Acme. Acme thereby acquired a registrable title,
there being at the time no prohibition against said corporation's holding or owning private land. The objection
that, as a juridical person, Acme is not qualified to apply for judicial confirmation of title under section 48(b) of
the Public Land Act is technical, rather than substantial and, again, finds its answer in the dissent in Meralco:

6. To uphold respondent judge's denial of Meralco's application on the technicality that the Public Land
Act allows only citizens of the Philippines who are natural persons to apply for confirmation of their title
would be impractical and would just give rise to multiplicity of court actions. Assuming that there was a
technical error not having filed the application for registration in the name of the Piguing spouses as the
original owners and vendors, still it is conceded that there is no prohibition against their sale of the land
to the applicant Meralco and neither is there any prohibition against the application being refiled with
24
retroactive effect in the name of the original owners and vendors (as such natural persons) with the end
result of their application being granted, because of their indisputable acquisition of ownership by
operation of law and the conclusive presumption therein provided in their favor. It should not be
necessary to go through all the rituals at the great cost of refiling of all such applications in their names
and adding to the overcrowded court dockets when the Court can after all these years dispose of it here
and now. (See Francisco vs. City of Davao)

The ends of justice would best be served, therefore, by considering the applications for confirmation as
amended to conform to the evidence, i.e. as filed in the names of the original persons who as natural
persons are duly qualified to apply for formal confirmation of the title that they had acquired by
conclusive presumption and mandate of the Public Land Act and who thereafter duly sold to the herein
corporations (both admittedly Filipino corporations duly qualified to hold and own private lands) and
granting the applications for confirmation of title to the private lands so acquired and sold or exchanged.

There is also nothing to prevent Acme from reconveying the lands to the Infiels and the latter from themselves
applying for confirmation of title and, after issuance of the certificate/s of title in their names, deeding the lands
back to Acme. But this would be merely indulging in empty charades, whereas the same result is more
efficaciously and speedily obtained, with no prejudice to anyone, by a liberal application of the rule on
amendment to conform to the evidence suggested in the dissent in Meralco.

While this opinion seemingly reverses an earlier ruling of comparatively recent vintage, in a real sense, it breaks
no precedent, but only reaffirms and re-established, as it were, doctrines the soundness of which has passed
the test of searching examination and inquiry in many past cases. Indeed, it is worth noting that the majority
opinion, as well as the concurring opinions of Chief Justice Fernando and Justice Abad Santos, in Meralco rested
chiefly on the proposition that the petitioner therein, a juridical person, was disqualified from applying for
confirmation of an imperfect title to public land under Section 48(b) of the Public Land Act. Reference to the
1973 Constitution and its Article XIV, Section 11, was only tangential limited to a brief paragraph in the main
opinion, and may, in that context, be considered as essentially obiter. Meralco, in short, decided no
constitutional question.

WHEREFORE, there being no reversible error in the appealed judgment of the Intermediate Appellate Court, the
same is hereby affirmed, without costs in this instance.

SO ORDERED.

25
Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-630 November 15, 1947

ALEXANDER A. KRIVENKO, petitioner-appellant,


vs.
THE REGISTER OF DEEDS, CITY OF MANILA, respondent and appellee.

Gibbs, Gibbs, Chuidian and Quasha of petitioner-appellant.


First Assistant Solicitor General Reyes and Solicitor Carreon for respondent-appellee.
Marcelino Lontok appeared as amicus curies.

MORAN, C.J.:

Alenxander A. Kriventor alien, bought a residential lot from the Magdalena Estate, Inc., in December of 1941,
the registration of which was interrupted by the war. In May, 1945, he sought to accomplish said registration
but was denied by the register of deeds of Manila on the ground that, being an alien, he cannot acquire land in
this jurisdiction. Krivenko then brought the case to the fourth branch of the Court of First Instance of Manila by
means of a consulta, and that court rendered judgment sustaining the refusal of the register of deeds, from
which Krivenko appealed to this Court.

There is no dispute as to these facts. The real point in issue is whether or not an alien under our Constitution
may acquire residential land.

It is said that the decision of the case on the merits is unnecessary, there being a motion to withdraw the appeal
which should have been granted outright, and reference is made to the ruling laid down by this Court in another
case to the effect that a court should not pass upon a constitutional question if its judgment may be made to
rest upon other grounds. There is, we believe, a confusion of ideas in this reasoning. It cannot be denied that
the constitutional question is unavoidable if we choose to decide this case upon the merits. Our judgment
cannot to be made to rest upon other grounds if we have to render any judgment at all. And we cannot avoid
our judgment simply because we have to avoid a constitutional question. We cannot, for instance, grant the
motion withdrawing the appeal only because we wish to evade the constitutional; issue. Whether the motion
should be, or should not be, granted, is a question involving different considerations now to be stated.

According to Rule 52, section 4, of the Rules of Court, it is discretionary upon this Court to grant a withdrawal
of appeal after the briefs have been presented. At the time the motion for withdrawal was filed in this case, not
only had the briefs been prensented, but the case had already been voted and the majority decision was being
prepared. The motion for withdrawal stated no reason whatsoever, and the Solicitor General was agreeable to
it. While the motion was pending in this Court, came the new circular of the Department of Justice, instructing
all register of deeds to accept for registration all transfers of residential lots to aliens. The herein respondent-
appellee was naturally one of the registers of deeds to obey the new circular, as against his own stand in this
case which had been maintained by the trial court and firmly defended in this Court by the Solicitor General. If
we grant the withdrawal, the the result would be that petitioner-appellant Alexander A. Krivenko wins his case,
not by a decision of this Court, but by the decision or circular of the Department of Justice, issued while this
case was pending before this Court. Whether or not this is the reason why appellant seeks the withdrawal of his
appeal and why the Solicitor General readily agrees to that withdrawal, is now immaterial. What is material and
indeed very important, is whether or not we should allow interference with the regular and complete exercise
by this Court of its constitutional functions, and whether or not after having held long deliberations and after
having reached a clear and positive conviction as to what the constitutional mandate is, we may still allow our
conviction to be silenced, and the constitutional mandate to be ignored or misconceived, with all the harmful
consequences that might be brought upon the national patromony. For it is but natural that the new circular be
taken full advantage of by many, with the circumstance that perhaps the constitutional question may never
come up again before this court, because both vendors and vendees will have no interest but to uphold the
26
validity of their transactions, and very unlikely will the register of deeds venture to disobey the orders of their
superior. Thus, the possibility for this court to voice its conviction in a future case may be remote, with the result
that our indifference of today might signify a permanent offense to the Constitution.

All thse circumstances were thoroughly considered and weighted by this Court for a number of days and the
legal result of the last vote was a denial of the motion withdrawing the appeal. We are thus confronted, at this
stage of the proceedings, with our duty, the constitutional question becomes unavoidable. We shall then
proceed to decide that question.

Article XIII, section 1, of the Constitutional is as follows:

Article XIII. — Conservation and utilization of natural resources.

SECTION 1. All agricultural, timber, and mineral lands of the public domain, water, minerals, coal,
petroleum, and other mineral oils, all forces of potential energy, and other natural resources of the
Philippines belong to the State, and their disposition, exploitation, development, or utilization shall be
limited to citizens of the Philippines, or to corporations or associations at least sixty per centum of the
capital of which is owned by such citizens, subject to any existing right, grant, lease, or concession at the
time of the inaguration of the Government established uunder this Constitution. Natural resources, with
the exception of public agricultural land, shall not be alienated, and no licence, 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 the limit of the grant.

The scope of this constitutional provision, according to its heading and its language, embraces all lands of any
kind of the public domain, its purpose being to establish a permanent and fundamental policy for the
conservation and utilization of all natural resources of the Nation. When, therefore, this provision, with
reference to lands of the public domain, makes mention of only agricultural, timber and mineral lands, it means
that all lands of the public domain are classified into said three groups, namely, agricultural, timber and mineral.
And this classification finds corroboration in the circumstance that at the time of the adoption of the
Constitution, that was the basic classification existing in the public laws and judicial decisions in the Philippines,
and the term "public agricultural lands" under said classification had then acquired a technical meaning that
was well-known to the members of the Constitutional Convention who were mostly members of the legal
profession.

As early as 1908, in the case of Mapa vs. Insular Government (10 Phil., 175, 182), this Court said that the phrase
"agricultural public lands" as defined in the Act of Congress of July 1, 1902, which phrase is also to be found in
several sections of the Public Land Act (No. 926), means "those public lands acquired from Spain which are
neither mineral for timber lands." This definition has been followed in long line of decisions of this Court.
(See Montano vs.Insular Government, 12 Phil., 593; Ibañez de Aldecoa vs. Insular Government, 13 Phil., 159;
Ramos vs. Director of Lands, 39 Phil., 175; Jocson vs. Director of Forestry, 39 Phil., 560; Ankron vs. Government
of the Philippines, 40 Phil., 10.) And with respect to residential lands, it has been held that since they are neither
mineral nor timber lands, of necessity they must be classified as agricultural. In Ibañez de Aldecoa vs. Insular
Government (13 Phil., 159, 163), this Court said:

Hence, any parcel of land or building lot is susceptible of cultivation, and may be converted into a field,
and planted with all kinds of vegetation; for this reason, where land is not mining or forestal in its nature,
it must necessarily be included within the classification of agricultural land, not because it is actually
used for the purposes of agriculture, but because it was originally agricultural and may again become so
under other circumstances; besides, the Act of Congress contains only three classification, and makes no
special provision with respect to building lots or urban lands that have ceased to be agricultural land.

In other words, the Court ruled that in determining whether a parcel of land is agricultural, the test is not only
whether it is actually agricultural, but also its susceptibility to cultivation for agricultural purposes. But whatever
the test might be, the fact remains that at the time the Constitution was adopted, lands of the public domain
were classified in our laws and jurisprudence into agricultural, mineral, and timber, and that the term "public
27
agricultural lands" was construed as referring to those lands that were not timber or mineral, and as including
residential lands. It may safely be presumed, therefore, that what the members of the Constitutional Convention
had in mind when they drafted the Constitution was this well-known classification and its technical meaning
then prevailing.

Certain expressions which appear in Constitutions, . . . are obviously technical; and where such words
have been in use prior to the adoption of a Constitution, it is presumed that its framers and the people
who ratified it have used such expressions in accordance with their technical meaning. (11 Am. Jur., sec.
66, p. 683.) AlsoCalder vs. Bull, 3 Dall. [U.S.], 386; 1 Law. ed., 648; Bronson vs. Syverson, 88 Wash., 264;
152 P., 1039.)

It is a fundamental rule that, in construing constitutions, terms employed therein shall be given the
meaning which had been put upon them, and which they possessed, at the time of the framing and
adoption of the instrument. If a word has acquired a fixed, technical meaning in legal and constitutional
history, it will be presumed to have been employed in that sense in a written Constitution.
(McKinney vs. Barker, 180 Ky., 526; 203 S.W., 303; L.R.A., 1918 E, 581.)

Where words have been long used in a technical sense and have been judicially construed to have a
certain meaning, and have been adopted by the legislature as having a certain meaning prior to a
particular statute in which they are used, the rule of construction requires that the words used in such
statute should be construed according to the sense in which they have been so previously used, although
the sense may vary from strict literal meaning of the words. (II Sutherland, Statutory Construction, p.
758.)

Therefore, the phrase "public agricultural lands" appearing in section 1 of Article XIII of the Constitution must
be construed as including residential lands, and this is in conformity with a legislative interpretation given after
the adoption of the Constitution. Well known is the rule that "where the Legislature has revised a statute after
a Constitution has been adopted, such a revision is to be regarded as a legislative construction that the statute
so revised conforms to the Constitution." (59 C.J., 1102.) Soon after the Constitution was adopted, the National
Assembly revised the Public Land Law and passed Commonwealth Act No. 141, and sections 58, 59 and 60
thereof permit the sale of residential lots to Filipino citizens or to associations or corporations controlled by
such citizens, which is equivalent to a solemn declaration that residential lots are considered as agricultural
lands, for, under the Constitution, only agricultural lands may be alienated.

It is true that in section 9 of said Commonwealth Act No. 141, "alienable or disposable public lands" which are
the same "public agriculture lands" under the Constitution, are classified into agricultural, residential,
commercial, industrial and for other puposes. This simply means that the term "public agricultural lands" has
both a broad and a particular meaning. Under its broad or general meaning, as used in the Constitution, it
embraces all lands that are neither timber nor mineral. This broad meaning is particularized in section 9 of
Commonwealth Act No. 141 which classifies "public agricultural lands" for purposes of alienation or disposition,
into lands that are stricly agricultural or actually devoted to cultivation for agricultural puposes; lands that are
residential; commercial; industrial; or lands for other purposes. The fact that these lands are made alienable or
disposable under Commonwealth Act No. 141, in favor of Filipino citizens, is a conclusive indication of their
character as public agricultural lands under said statute and under the Constitution.

It must be observed, in this connection that prior to the Constitution, under section 24 of Public Land Act No.
2874, aliens could acquire public agricultural lands used for industrial or residential puposes, but after the
Constitution and under section 23 of Commonwealth Act No. 141, the right of aliens to acquire such kind of
lands is completely stricken out, undoubtedly in pursuance of the constitutional limitation. And, again, prior to
the Constitution, under section 57 of Public Land Act No. 2874, land of the public domain suitable for residence
or industrial purposes could be sold or leased to aliens, but after the Constitution and under section 60 of
Commonwealth Act No. 141, such land may only be leased, but not sold, to aliens, and the lease granted shall
only be valid while the land is used for the purposes referred to. The exclusion of sale in the new Act is
undoubtedly in pursuance of the constitutional limitation, and this again is another legislative construction that
the term "public agricultural land" includes land for residence purposes.

28
Such legislative interpretation is also in harmony with the interpretation given by the Executive Department of
the Government. Way back in 1939, Secretary of Justice Jose Abad Santos, in answer to a query as to "whether
or not the phrase 'public agricultural lands' in section 1 of Article XII (now XIII) of the Constitution may be
interpreted to include residential, commercial, and industrial lands for purposes of their disposition," rendered
the following short, sharp and crystal-clear opinion:

Section 1, Article XII (now XIII) of the Constitution classifies lands of the public domain in the Philippines
into agricultural, timber and mineral. This is the basic classification adopted since the enactment of the
Act of Congress of July 1, 1902, known as the Philippine Bill. At the time of the adoption of the
Constitution of the Philippines, the term 'agricultural public lands' and, therefore, acquired a technical
meaning in our public laws. The Supreme Court of the Philippines in the leading case of Mapa vs. Insular
Government, 10 Phil., 175, held that the phrase 'agricultural public lands' means those public lands
acquired from Spain which are neither timber nor mineral lands. This definition has been followed by our
Supreme Court in many subsequent case. . . .

Residential commercial, or industrial lots forming part of the public domain must have to be included in
one or more of these classes. Clearly, they are neither timber nor mineral, of necessity, therefore, they
must be classified as agricultural.

Viewed from another angle, it has been held that in determining whether lands are agricultural or not,
the character of the land is the test (Odell vs. Durant, 62 N.W., 524; Lorch vs. Missoula Brick and Tile Co.,
123 p.25). In other words, it is the susceptibility of the land to cultivation for agricultural purposes by
ordinary farming methods which determines whether it is agricultural or not (State vs. Stewart, 190 p.
129).

Furthermore, as said by the Director of Lands, no reason is seen why a piece of land, which may be sold
to a person if he is to devote it to agricultural, cannot be sold to him if he intends to use it as a site for
his home.

This opinion is important not alone because it comes from a Secratary of Justice who later became the Chief
Justice of this Court, but also because it was rendered by a member of the cabinet of the late President Quezon
who actively participated in the drafting of the constitutional provision under consideration. (2 Aruego, Framing
of the Philippine Constitution, p. 598.) And the opinion of the Quezon administration was reiterated by the
Secretary of Justice under the Osmeña administration, and it was firmly maintained in this Court by the Solicitor
General of both administrations.

It is thus clear that the three great departments of the Government — judicial, legislative and executive — have
always maintained that lands of the public domain are classified into agricultural, mineral and timber, and that
agricultural lands include residential lots.

Under section 1 of Article XIII of the Constitution, "natural resources, with the exception of public agricultural
land, shall not be aliented," and with respect to public agricultural lands, their alienation is limited to Filipino
citizens. But this constitutional purpose conserving agricultural resources in the hands of Filipino citizens may
easily be defeated by the Filipino citizens themselves who may alienate their agricultural lands in favor of aliens.
It is partly to prevent this result that section 5 is included in Article XIII, and it reads as follows:

Sec. 5. Save in cases of hereditary succession, no private agricultural land will be transferred or assigned
except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain
in the Philippines.

This constitutional provision closes the only remaining avenue through which agricultural resources may leak
into aliens' hands. It would certainly be futile to prohibit the alienation of public agricultural lands to aliens if,
after all, they may be freely so alienated upon their becoming private agricultural lands in the hands of Filipino
citizens. Undoubtedly, as above indicated, section 5 is intended to insure the policy of nationalization contained
in section 1. Both sections must, therefore, be read together for they have the same purpose and the same
subject matter. It must be noticed that the persons against whom the prohibition is directed in section 5 are the
very same persons who under section 1 are disqualified "to acquire or hold lands of the public domain in the
29
Philippines." And the subject matter of both sections is the same, namely, the non-transferability of "agricultural
land" to aliens. Since "agricultural land" under section 1 includes residential lots, the same technical meaning
should be attached to "agricultural land under section 5. It is a rule of statutory construction that "a word or
phrase repeated in a statute will bear the same meaning throughout the statute, unless a different intention
appears." (II Sutherland, Statutory Construction, p. 758.) The only difference between "agricultural land" under
section 5, is that the former is public and the latter private. But such difference refers to ownership and not to
the class of land. The lands are the same in both sections, and, for the conservation of the national patrimony,
what is important is the nature or class of the property regardless of whether it is owned by the State or by its
citizens.

Reference is made to an opinion rendered on September 19, 1941, by the Hon. Teofilo Sison, then Secretary of
Justice, to the effect that residential lands of the public domain may be considered as agricultural lands, whereas
residential lands of private ownership cannot be so considered. No reason whatsoever is given in the opinion
for such a distinction, and no valid reason can be adduced for such a discriminatory view, particularly having in
mind that the purpose of the constitutional provision is the conservation of the national patrimony, and private
residential lands are as much an integral part of the national patrimony as the residential lands of the public
domain. Specially is this so where, as indicated above, the prohibition as to the alienable of public residential
lots would become superflous if the same prohibition is not equally applied to private residential lots. Indeed,
the prohibition as to private residential lands will eventually become more important, for time will come when,
in view of the constant disposition of public lands in favor of private individuals, almost all, if not all, the
residential lands of the public domain shall have become private residential lands.

It is maintained that in the first draft of section 5, the words "no land of private ownership" were used and later
changed into "no agricultural land of private ownership," and lastly into "no private agricultural land" and from
these changes it is argued that the word "agricultural" introduced in the second and final drafts was intended
to limit the meaning of the word "land" to land actually used for agricultural purposes. The implication is not
accurate. The wording of the first draft was amended for no other purpose than to clarify concepts and avoid
uncertainties. The words "no land" of the first draft, unqualified by the word "agricultural," may be mistaken to
include timber and mineral lands, and since under section 1, this kind of lands can never be private, the
prohibition to transfer the same would be superfluous. Upon the other hand, section 5 had to be drafted in
harmony with section 1 to which it is supplementary, as above indicated. Inasmuch as under section 1, timber
and mineral lands can never be private, and the only lands that may become private are agricultural lands, the
words "no land of private ownership" of the first draft can have no other meaning than "private agricultural
land." And thus the change in the final draft is merely one of words in order to make its subject matter more
specific with a view to avoiding the possible confusion of ideas that could have arisen from the first draft.

If the term "private agricultural lands" is to be construed as not including residential lots or lands not strictly
agricultural, the result would be that "aliens may freely acquire and possess not only residential lots and houses
for themselves but entire subdivisions, and whole towns and cities," and that "they may validly buy and hold in
their names lands of any area for building homes, factories, industrial plants, fisheries, hatcheries, schools,
health and vacation resorts, markets, golf courses, playgrounds, airfields, and a host of other uses and purposes
that are not, in appellant's words, strictly agricultural." (Solicitor General's Brief, p. 6.) That this is obnoxious to
the conservative spirit of the Constitution is beyond question.

One of the fundamental principles underlying the provision of Article XIII of the Constitution and which was
embodied in the report of the Committee on Nationalization and Preservation of Lands and other Natural
Resources of the Constitutional Convention, is "that lands, minerals, forests, and other natural resources
constitute the exclusive heritage of the Filipino nation. They should, therefore, be preserved for those under
the sovereign authority of that nation and for their posterity." (2 Aruego, Framing of the Filipino Constitution,
p. 595.) Delegate Ledesma, Chairman of the Committee on Agricultural Development of the Constitutional
Convention, in a speech delivered in connection with the national policy on agricultural lands, said: "The
exclusion of aliens from the privilege of acquiring public agricultural lands and of owning real estate is a
necessary part of the Public Land Laws of the Philippines to keep pace with the idea of preserving the Philippines
for the Filipinos." (Emphasis ours.) And, of the same tenor was the speech of Delegate Montilla who said: "With
the complete nationalization of our lands and natural resources it is to be understood that our God-given
birthright should be one hundred per cent in Filipino hands . . .. Lands and natural resources are immovables
and as such can be compared to the vital organs of a person's body, the lack of possession of which may cause
30
instant death or the shortening of life. If we do not completely antionalize these two of our most important
belongings, I am afraid that the time will come when we shall be sorry for the time we were born. Our
independence will be just a mockery, for what kind of independence are we going to have if a part of our country
is not in our hands but in those of foreigners?" (Emphasis ours.) Professor Aruego says that since the opening
days of the Constitutional Convention one of its fixed and dominating objectives was the conservation and
nationalization of the natural resources of the country. (2 Aruego, Framing of the Philippine Constitution, p 592.)
This is ratified by the members of the Constitutional Convention who are now members of this Court, namely,
Mr. Justice Perfecto, Mr. Justice Briones, and Mr. Justice Hontiveros. And, indeed, if under Article XIV, section
8, of the Constitution, an alien may not even operate a small jitney for hire, it is certainly not hard to understand
that neither is he allowed to own a pieace of land.

This constitutional intent is made more patent and is strongly implemented by an act of the National Assembly
passed soon after the Constitution was approved. We are referring again to Commonwealth Act No. 141. Prior
to the Constitution, there were in the Public Land Act No. 2874 sections 120 and 121 which granted aliens the
right to acquire private only by way of reciprocity. Said section reads as follows:

SEC. 120. No land originally acquired in any manner under the provisions of this Act, nor any permanent
improvement on such land, shall be encumbered, alienated, or transferred, except to persons,
corporations, associations, or partnerships who may acquire lands of the public domain under this Act;
to corporations organized in the Philippine Islands authorized therefor by their charters, and, upon
express authorization by the Philippine Legislature, to citizens of countries the laws of which grant to
citizens of the Philippine Islands the same right to acquire, hold, lease, encumber, dispose of, or alienate
land, or permanent improvements thereon, or any interest therein, as to their own citizens, only in the
manner and to the extent specified in such laws, and while the same are in force but not thereafter.

SEC. 121. No land originally acquired in any manner under the provisions of the former Public Land Act
or of any other Act, ordinance, royal order, royal decree, or any other provision of law formerly in force
in the Philippine Islands with regard to public lands, terrenos baldios y realengos, or lands of any other
denomination that were actually or presumptively of the public domain or by royal grant or in any other
form, nor any permanent improvement on such land, shall be encumbered, alienated, or conveyed,
except to persons, corporations, or associations who may acquire land of the public domain under this
Act; to corporate bodies organized in the Philippine Islands whose charters may authorize them to do
so, and, upon express authorization by the Philippine Legislature, to citizens of the countries the laws of
which grant to citizens of the Philippine Islands the same right to acquire, hold, lease, encumber, dispose
of, or alienate land or pemanent improvements thereon or any interest therein, as to their own citizens,
and only in the manner and to the extent specified in such laws, and while the same are in force, but not
thereafter: Provided, however, That this prohibition shall not be applicable to the conveyance or
acquisition by reason of hereditary succession duly acknowledged and legalized by competent courts,
nor to lands and improvements acquired or held for industrial or residence purposes, while used for such
purposes: Provided, further, That in the event of the ownership of the lands and improvements
mentioned in this section and in the last preceding section being transferred by judicial decree to
persons,corporations or associations not legally capacitated to acquire the same under the provisions of
this Act, such persons, corporations, or associations shall be obliged to alienate said lands or
improvements to others so capacitated within the precise period of five years, under the penalty of such
property reverting to the Government in the contrary case." (Public Land Act, No. 2874.)

It is to be observed that the pharase "no land" used in these section refers to all private lands, whether strictly
agricultural, residential or otherwise, there being practically no private land which had not been acquired by
any of the means provided in said two sections. Therefore, the prohibition contained in these two provisions
was, in effect, that no private land could be transferred to aliens except "upon express authorization by the
Philippine Legislature, to citizens of Philippine Islands the same right to acquire, hold, lease, encumber, dispose
of, or alienate land." In other words, aliens were granted the right to acquire private land merely by way of
reciprocity. Then came the Constitution and Commonwealth Act No. 141 was passed, sections 122 and 123 of
which read as follows:

SEC. 122. No land originally acquired in any manner under the provisions of this Act, nor any permanent
improvement on such land, shall be encumbered, alienated, or transferred, except to persons,
31
corporations, associations, or partnerships who may acquire lands of the public domain under this Act
or to corporations organized in the Philippines authorized thereof by their charters.

SEC. 123. No land originally acquired in any manner under the provisions of any previous Act, ordinance,
royal order, royal decree, or any other provision of law formerly in force in the Philippines with regard
to public lands terrenos baldios y realengos, or lands of any other denomination that were actually or
presumptively of the public domain, or by royal grant or in any other form, nor any permanent
improvement on such land, shall be encumbered, alienated, or conveyed, except to persons,
corporations or associations who may acquire land of the public domain under this Act or to corporate
bodies organized in the Philippines whose charters authorize them to do so: Provided, however, That this
prohibition shall not be applicable to the conveyance or acquisition by reason of hereditary succession
duly acknowledged and legalized by competent courts: Provided, further, That in the event of the
ownership of the lands and improvements mentioned in this section and in the last preceding section
being transferred by judicial decree to persons, corporations or associations not legally capacitated to
acquire the same under the provisions of this Act, such persons, corporations, or associations shall be
obliged to alienate said lands or improvements to others so capacitated within the precise period of five
years; otherwise, such property shall revert to the Government.

These two sections are almost literally the same as sections 120 and 121 of Act No. 2874, the only difference
being that in the new provisions, the right to reciprocity granted to aliens is completely stricken out. This,
undoubtedly, is to conform to the absolute policy contained in section 5 of Article XIII of the Constitution which,
in prohibiting the alienation of private agricultural lands to aliens, grants them no right of reciprocity. This
legislative construction carries exceptional weight, for prominent members of the National Assembly who
approved the new Act had been members of the Constitutional Convention.

It is said that the lot question does not come within the purview of sections 122 and 123 of Commonwealth Act
No. 141, there being no proof that the same had been acquired by one of the means provided in said provisions.
We are not, however, diciding the instant case under the provisions of the Public Land Act, which have to refer
to land that had been formerly of the public domain, otherwise their constitutionality may be doubtful. We are
deciding the instant case under section 5 of Article XIII of the Constitution which is more comprehensive and
more absolute in the sense that it prohibits the transfer to alien of any private agricultural land including
residential land whatever its origin might have been.

And, finally, on June 14, 1947, the Congress approved Republic Act No. 133 which allows mortgage of "private
real property" of any kind in favor of aliens but with a qualification consisting of expressly prohibiting aliens to
bid or take part in any sale of such real property as a consequence of the mortgage. This prohibition makes no
distinction between private lands that are strictly agricultural and private lands that are residental or
commercial. The prohibition embraces the sale of private lands of any kind in favor of aliens, which is again a
clear implementation and a legislative interpretation of the constitutional prohibition. Had the Congress been
of opinion that private residential lands may be sold to aliens under the Constitution, no legislative measure
would have been found necessary to authorize mortgage which would have been deemed also permissible
under the Constitution. But clearly it was the opinion of the Congress that such sale is forbidden by the
Constitution and it was such opinion that prompted the legislative measure intended to clarify that mortgage is
not within the constitutional prohibition.

It is well to note at this juncture that in the present case we have no choice. We are construing the Constitution
as it is and not as we may desire it to be. Perhaps the effect of our construction is to preclude aliens, admitted
freely into the Philippines from owning sites where they may build their homes. But if this is the solemn mandate
of the Constitution, we will not attempt to compromise it even in the name of amity or equity. We are satisfied,
however, that aliens are not completely excluded by the Constitution from the use of lands for residential
purposes. Since their residence in the Philippines is temporary, they may be granted temporary rights such as a
lease contract which is not forbidden by the Constitution. Should they desire to remain here forever and share
our fortunes and misfortunes, Filipino citizenship is not impossible to acquire.

For all the foregoing, we hold that under the Constitution aliens may not acquire private or public agricultural
lands, including residential lands, and, accordingly, judgment is affirmed, without costs.

32
Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

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

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


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

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

BENGUET CONSOLIDATED, INC., petitioner,


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

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

ATOK-BIG WEDGE MINING COMPANY, petitioner,


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

CRUZ, J.:

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

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

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

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

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

33
assessment, its geological mappings, geological samplings and trench side cuts, and its payment of taxes on the
land. 8

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

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

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

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

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

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

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

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

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

The June Bug mineral claim of Benguet and the Fredia and Emma mineral claims of Atok having
been perfected prior to the approval of the Constitution of the Philippines of 1935, they were
removed from the public domain and had become private properties of Benguet and Atok.

34
It is not disputed that the location of the mining claim under consideration was
perfected prior to November 15, 1935, when the Government of the
Commonwealth was inaugurated; and according to the laws existing at that time,
as construed and applied by this court in McDaniel v. Apacible and Cuisia (42 Phil.
749), a valid location of a mining claim segregated the area from the public
domain. Said the court in that case: The moment the locator discovered a valuable
mineral deposit on the lands located, and perfected his location in accordance
with law, the power of the United States Government to deprive him of the
exclusive right to the possession and enjoyment of the located claim was gone,
the lands had become mineral lands and they were exempted from lands that
could be granted to any other person. The reservations of public lands cannot be
made so as to include prior mineral perfected locations; and, of course, if a valid
mining location is made upon public lands afterwards included in a reservation,
such inclusion or reservation does not affect the validity of the former location. By
such location and perfection, the land located is segregated from the public
domain even as against the Government. (Union Oil Co. v. Smith, 249 U.S. 337;
Van Mess v. Roonet, 160 Cal. 131; 27 Cyc. 546).

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

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

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

Such rights were not affected either by the stricture in the Commonwealth Constitution against the alienation
of all lands of the public domain except those agricultural in nature for this was made subject to existing rights.
Thus, in its Article XIII, Section 1, it was categorically provided that:

SEC. 1. All agricultural, timber and mineral lands of the public domain, waters, minerals, coal,
petroleum and other mineral oils, all forces of potential energy and other natural resources of
the Philipppines belong to the State, and their disposition, exploitation, development, or
utilization shall be limited to citizens of the Philippines or to corporations or associations at least
60% of the capital of which is owned by such citizens, subject to any existing right, grant, lease or
concession at the time of the inauguration of the government established under this
Constitution. Natural resources with the exception of public agricultural lands, shall not be
35
alienated, and no license, concession, or lease for the exploitation, development or utilization of
any of the natural resources shall be granted for a period exceeding 25 years, except as to water
rights for irrigation, water supply, fisheries, or industrial uses other than the development of
water power, in which case beneficial use may be the measure and the limit of the grant.

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

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

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

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

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

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

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

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

The Court feels that the rights over the land are indivisible and that the land itself cannot be half agricultural
and half mineral. The classification must be categorical; the land must be either completely mineral or
completely agricultural. In the instant case, as already observed, the land which was originally classified as forest
land ceased to be so and became mineral — and completely mineral — once the mining claims were
perfected. 20 As long as mining operations were being undertaken thereon, or underneath, it did not cease to
36
be so and become agricultural, even if only partly so, because it was enclosed with a fence and was cultivated
by those who were unlawfully occupying the surface.

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

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

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

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

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

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

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

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

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

SO ORDERED.

37
EN BANC

[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.

38
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]

39
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

40
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.

41
SPECIAL FIRST DIVISION

[G.R. No. 124293. January 31, 2005]

J.G. SUMMIT HOLDINGS, INC., petitioner, vs. COURT OF APPEALS; COMMITTEE ON PRIVATIZATION, its
Chairman and Members; ASSET PRIVATIZATION TRUST; and PHILYARDS HOLDINGS, INC., respondents.

RESOLUTION
PUNO, J.:

For resolution before this Court are two motions filed by the petitioner, J.G. Summit Holdings, Inc. for
reconsideration of our Resolution dated September 24, 2003 and to elevate this case to the Court En Banc. The
petitioner questions the Resolution which reversed our Decision of November 20, 2000, which in turn reversed
and set aside a Decision of the Court of Appeals promulgated on July 18, 1995.

I. Facts

The undisputed facts of the case, as set forth in our Resolution of September 24, 2003, are as follows:

On January 27, 1997, the National Investment and Development Corporation (NIDC), a government corporation,
entered into a Joint Venture Agreement (JVA) with Kawasaki Heavy Industries, Ltd. of Kobe, Japan (KAWASAKI)
for the construction, operation and management of the Subic National Shipyard, Inc. (SNS) which subsequently
became the Philippine Shipyard and Engineering Corporation (PHILSECO). Under the JVA, the NIDC and
KAWASAKI will contribute P330 million for the capitalization of PHILSECO in the proportion of 60%-40%
respectively. One of its salient features is the grant to the parties of the right of first refusal should either of
them decide to sell, assign or transfer its interest in the joint venture, viz:

1.4 Neither party shall sell, transfer or assign all or any part of its interest in SNS [PHILSECO] to any third party
without giving the other under the same terms the right of first refusal. This provision shall not apply if the
transferee is a corporation owned or controlled by the GOVERNMENT or by a KAWASAKI affiliate.

On November 25, 1986, NIDC transferred all its rights, title and interest in PHILSECO to the Philippine National
Bank (PNB). Such interests were subsequently transferred to the National Government pursuant to
Administrative Order No. 14. On December 8, 1986, President Corazon C. Aquino issued Proclamation No. 50
establishing the Committee on Privatization (COP) and the Asset Privatization Trust (APT) to take title to, and
possession of, conserve, manage and dispose of non-performing assets of the National Government. Thereafter,
on February 27, 1987, a trust agreement was entered into between the National Government and the APT
wherein the latter was named the trustee of the National Government's share in PHILSECO. In 1989, as a result
of a quasi-reorganization of PHILSECO to settle its huge obligations to PNB, the National Government's
shareholdings in PHILSECO increased to 97.41% thereby reducing KAWASAKI's shareholdings to 2.59%.

In the interest of the national economy and the government, the COP and the APT deemed it best to sell the
National Government's share in PHILSECO to private entities. After a series of negotiations between the APT
and KAWASAKI, they agreed that the latter's right of first refusal under the JVA be "exchanged" for the right to
top by five percent (5%) the highest bid for the said shares. They further agreed that KAWASAKI would be
entitled to name a company in which it was a stockholder, which could exercise the right to top. On September
7, 1990, KAWASAKI informed APT that Philyards Holdings, Inc. (PHI)[1] would exercise its right to top.

At the pre-bidding conference held on September 18, 1993, interested bidders were given copies of the JVA
between NIDC and KAWASAKI, and of the Asset Specific Bidding Rules (ASBR) drafted for the National
Government's 87.6% equity share in PHILSECO. The provisions of the ASBR were explained to the interested
bidders who were notified that the bidding would be held on December 2, 1993. A portion of the ASBR reads:
42
1.0 The subject of this Asset Privatization Trust (APT) sale through public bidding is the National Government's
equity in PHILSECO consisting of 896,869,942 shares of stock (representing 87.67% of PHILSECO's outstanding
capital stock), which will be sold as a whole block in accordance with the rules herein enumerated.

xxx xxx xxx

2.0 The highest bid, as well as the buyer, shall be subject to the final approval of both the APT Board of Trustees
and the Committee on Privatization (COP).

2.1 APT reserves the right in its sole discretion, to reject any or all bids.

3.0 This public bidding shall be on an Indicative Price Bidding basis. The Indicative price set for the National
Government's 87.67% equity in PHILSECO is PESOS: ONE BILLION THREE HUNDRED MILLION
(P1,300,000,000.00).

xxx xxx xxx

6.0 The highest qualified bid will be submitted to the APT Board of Trustees at its regular meeting following the
bidding, for the purpose of determining whether or not it should be endorsed by the APT Board of Trustees to
the COP, and the latter approves the same. The APT shall advise Kawasaki Heavy Industries, Inc. and/or its
nominee, [PHILYARDS] Holdings, Inc., that the highest bid is acceptable to the National Government. Kawasaki
Heavy Industries, Inc. and/or [PHILYARDS] Holdings, Inc. shall then have a period of thirty (30) calendar days
from the date of receipt of such advice from APT within which to exercise their "Option to Top the Highest Bid"
by offering a bid equivalent to the highest bid plus five (5%) percent thereof.

6.1 Should Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings, Inc. exercise their "Option to Top the
Highest Bid," they shall so notify the APT about such exercise of their option and deposit with APT the amount
equivalent to ten percent (10%) of the highest bid plus five percent (5%) thereof within the thirty (30)-day period
mentioned in paragraph 6.0 above. APT will then serve notice upon Kawasaki Heavy Industries, Inc. and/or
[PHILYARDS] Holdings, Inc. declaring them as the preferred bidder and they shall have a period of ninety (90)
days from the receipt of the APT's notice within which to pay the balance of their bid price.

6.2 Should Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings, Inc. fail to exercise their "Option to
Top the Highest Bid" within the thirty (30)-day period, APT will declare the highest bidder as the winning bidder.

xxx xxx xxx

12.0 The bidder shall be solely responsible for examining with appropriate care these rules, the official bid forms,
including any addenda or amendments thereto issued during the bidding period. The bidder shall likewise be
responsible for informing itself with respect to any and all conditions concerning the PHILSECO Shares which
may, in any manner, affect the bidder's proposal. Failure on the part of the bidder to so examine and inform
itself shall be its sole risk and no relief for error or omission will be given by APT or COP. . . .

At the public bidding on the said date, petitioner J.G. Summit Holdings, Inc.[2] submitted a bid of Two Billion and
Thirty Million Pesos (P2,030,000,000.00) with an acknowledgment of KAWASAKI/[PHILYARDS'] right to top, viz:

4. I/We understand that the Committee on Privatization (COP) has up to thirty (30) days to act on APT's
recommendation based on the result of this bidding. Should the COP approve the highest bid, APT shall advise
Kawasaki Heavy Industries, Inc. and/or its nominee, [PHILYARDS] Holdings, Inc. that the highest bid is acceptable
to the National Government. Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings, Inc. shall then have
a period of thirty (30) calendar days from the date of receipt of such advice from APT within which to exercise
their "Option to Top the Highest Bid" by offering a bid equivalent to the highest bid plus five (5%) percent
thereof.

As petitioner was declared the highest bidder, the COP approved the sale on December 3, 1993 "subject to the
right of Kawasaki Heavy Industries, Inc./[PHILYARDS] Holdings, Inc. to top JGSMI's bid by 5% as specified in the
bidding rules."

43
On December 29, 1993, petitioner informed APT that it was protesting the offer of PHI to top its bid on the
grounds that: (a) the KAWASAKI/PHI consortium composed of KAWASAKI, [PHILYARDS], Mitsui, Keppel, SM
Group, ICTSI and Insular Life violated the ASBR because the last four (4) companies were the losing bidders
thereby circumventing the law and prejudicing the weak winning bidder; (b) only KAWASAKI could exercise the
right to top; (c) giving the same option to top to PHI constituted unwarranted benefit to a third party; (d) no
right of first refusal can be exercised in a public bidding or auction sale; and (e) the JG Summit consortium was
not estopped from questioning the proceedings.

On February 2, 1994, petitioner was notified that PHI had fully paid the balance of the purchase price of the
subject bidding. On February 7, 1994, the APT notified petitioner that PHI had exercised its option to top the
highest bid and that the COP had approved the same on January 6, 1994. On February 24, 1994, the APT and
PHI executed a Stock Purchase Agreement. Consequently, petitioner filed with this Court a Petition for
Mandamus under G.R. No. 114057. On May 11, 1994, said petition was referred to the Court of Appeals. On July
18, 1995, the Court of Appeals denied the same for lack of merit. It ruled that the petition for mandamus was
not the proper remedy to question the constitutionality or legality of the right of first refusal and the right to
top that was exercised by KAWASAKI/PHI, and that the matter must be brought "by the proper party in the
proper forum at the proper time and threshed out in a full blown trial." The Court of Appeals further ruled that
the right of first refusal and the right to top are prima facie legal and that the petitioner, "by participating in the
public bidding, with full knowledge of the right to top granted to KAWASAKI/[PHILYARDS] isestopped from
questioning the validity of the award given to [PHILYARDS] after the latter exercised the right to top and had
paid in full the purchase price of the subject shares, pursuant to the ASBR." Petitioner filed a Motion for
Reconsideration of said Decision which was denied on March 15, 1996. Petitioner thus filed a Petition for
Certiorari with this Court alleging grave abuse of discretion on the part of the appellate court.

On November 20, 2000, this Court rendered x x x [a] Decision ruling among others that the Court of Appeals
erred when it dismissed the petition on the sole ground of the impropriety of the special civil action of
mandamus because the petition was also one of certiorari. It further ruled that a shipyard like PHILSECO is a
public utility whose capitalization must be sixty percent (60%) Filipino-owned. Consequently, the right to top
granted to KAWASAKI under the Asset Specific Bidding Rules (ASBR) drafted for the sale of the 87.67% equity of
the National Government in PHILSECO is illegal not only because it violates the rules on competitive bidding but
more so, because it allows foreign corporations to own more than 40% equity in the shipyard. It also held that
"although the petitioner had the opportunity to examine the ASBR before it participated in the bidding, it cannot
be estopped from questioning the unconstitutional, illegal and inequitable provisions thereof." Thus, this Court
voided the transfer of the national government's 87.67% share in PHILSECO to Philyard[s] Holdings, Inc., and
upheld the right of JG Summit, as the highest bidder, to take title to the said shares, viz:

WHEREFORE, the instant petition for review on certiorari is GRANTED. The assailed Decision and Resolution of
the Court of Appeals are REVERSED and SET ASIDE. Petitioner is ordered to pay to APT its bid price of Two Billion
Thirty Million Pesos (P2,030,000,000.00), less its bid deposit plus interests upon the finality of this Decision. In
turn, APT is ordered to:

(a) accept the said amount of P2,030,000,000.00 less bid deposit and interests from petitioner;

(b) execute a Stock Purchase Agreement with petitioner;

(c) cause the issuance in favor of petitioner of the certificates of stocks representing 87.6% of
PHILSECO's total capitalization;

(d) return to private respondent PHGI the amount of Two Billion One Hundred Thirty-One Million Five
Hundred Thousand Pesos (P2,131,500,000.00); and

(e) cause the cancellation of the stock certificates issued to PHI.

SO ORDERED.

In separate Motions for Reconsideration, respondents submit[ted] three basic issues for x x x resolution: (1)
Whether PHILSECO is a public utility; (2) Whether under the 1977 JVA, KAWASAKI can exercise its right of first
44
refusal only up to 40% of the total capitalization of PHILSECO; and (3) Whether the right to top granted to
KAWASAKI violates the principles of competitive bidding.[3] (citations omitted)

In a Resolution dated September 24, 2003, this Court ruled in favor of the respondents. On the first issue,
we held that Philippine Shipyard and Engineering Corporation (PHILSECO) is not a public utility, as by nature, a
shipyard is not a public utility[4] and that no law declares a shipyard to be a public utility.[5] On the second issue,
we found nothing in the 1977 Joint Venture Agreement (JVA) which prevents Kawasaki Heavy Industries, Ltd. of
Kobe, Japan (KAWASAKI) from acquiring more than 40% of PHILSECOs total capitalization. [6] On the final issue,
we held that the right to top granted to KAWASAKI in exchange for its right of first refusal did not violate the
principles of competitive bidding.[7]
On October 20, 2003, the petitioner filed a Motion for Reconsideration[8] and a Motion to Elevate This Case
to the Court En Banc.[9] Public respondents Committee on Privatization (COP) and Asset Privatization Trust
(APT), and private respondent Philyards Holdings, Inc. (PHILYARDS) filed their Comments on J.G. Summit
Holdings, Inc.s (JG Summits) Motion for Reconsideration and Motion to Elevate This Case to the Court En
Banc on January 29, 2004 and February 3, 2004, respectively.

II. Issues

Based on the foregoing, the relevant issues to resolve to end this litigation are the following:
1. Whether there are sufficient bases to elevate the case at bar to the Court en banc.
2. Whether the motion for reconsideration raises any new matter or cogent reason to warrant a
reconsideration of this Courts Resolution of September 24, 2003.

Motion to Elevate this Case to the


Court En Banc

The petitioner prays for the elevation of the case to the Court en banc on the following grounds:
1. The main issue of the propriety of the bidding process involved in the present case has been confused
with the policy issue of the supposed fate of the shipping industry which has never been an issue that is
determinative of this case.[10]
2. The present case may be considered under the Supreme Court Resolution dated February 23, 1984 which
included among en banc cases those involving a novel question of law and those where a doctrine or principle
laid down by the Court en banc or in division may be modified or reversed.[11]
3. There was clear executive interference in the judicial functions of the Court when the Honorable Jose
Isidro Camacho, Secretary of Finance, forwarded to Chief Justice Davide, a memorandum dated November 5,
2001, attaching a copy of the Foreign Chambers Report dated October 17, 2001, which matter was placed in the
agenda of the Court and noted by it in a formal resolution dated November 28, 2001. [12]
Opposing J.G. Summits motion to elevate the case en banc, PHILYARDS points out the petitioners
inconsistency in previously opposing PHILYARDS Motion to Refer the Case to the Court En Banc. PHILYARDS
contends that J.G. Summit should now be estopped from asking that the case be referred to the Court en banc.
PHILYARDS further contends that the Supreme Court en banc is not an appellate court to which decisions or
resolutions of its divisions may be appealed citing Supreme Court Circular No. 2-89 dated February 7,
1989.[13] PHILYARDS also alleges that there is no novel question of law involved in the present case as the
assailed Resolution was based on well-settled jurisprudence. Likewise, PHILYARDS stresses that the Resolution
was merely an outcome of the motions for reconsideration filed by it and the COP and APT and is consistent
with the inherent power of courts to amend and control its process and orders so as to make them conformable
to law and justice. (Rule 135, sec. 5)[14] Private respondent belittles the petitioners allegations regarding the
change in ponente and the alleged executive interference as shown by former Secretary of Finance Jose Isidro
Camachos memorandum dated November 5, 2001 arguing that these do not justify a referral of the present
case to the Court en banc.

45
In insisting that its Motion to Elevate This Case to the Court En Banc should be granted, J.G. Summit further
argued that: its Opposition to the Office of the Solicitor Generals Motion to Refer is different from its own
Motion to Elevate; different grounds are invoked by the two motions; there was unwarranted executive
interference; and the change in ponente is merely noted in asserting that this case should be decided by the
Court en banc.[15]
We find no merit in petitioners contention that the propriety of the bidding process involved in the present
case has been confused with the policy issue of the fate of the shipping industry which, petitioner maintains,
has never been an issue that is determinative of this case. The Courts Resolution of September 24, 2003 reveals
a clear and definitive ruling on the propriety of the bidding process. In discussing whether the right to top
granted to KAWASAKI in exchange for its right of first refusal violates the principles of competitive bidding, we
made an exhaustive discourse on the rules and principles of public bidding and whether they were complied
with in the case at bar.[16] This Court categorically ruled on the petitioners argument that PHILSECO, as a
shipyard, is a public utility which should maintain a 60%-40% Filipino-foreign equity ratio, as it was a pivotal
issue. In doing so, we recognized the impact of our ruling on the shipbuilding industry which was beyond
avoidance.[17]
We reject petitioners argument that the present case may be considered under the Supreme Court
Resolution dated February 23, 1984 which included among en banc cases those involving a novel question of
law and those where a doctrine or principle laid down by the court en banc or in division may be modified or
reversed. The case was resolved based on basic principles of the right of first refusal in commercial law and
estoppel in civil law. Contractual obligations arising from rights of first refusal are not new in this jurisdiction
and have been recognized in numerous cases.[18] Estoppel is too known a civil law concept to require an
elongated discussion. Fundamental principles on public bidding were likewise used to resolve the issues raised
by the petitioner. To be sure, petitioner leans on the right to top in a public bidding in arguing that the case at
bar involves a novel issue. We are not swayed. The right to top was merely a condition or a reservation made in
the bidding rules which was fully disclosed to all bidding parties. In Bureau Veritas, represented by Theodor H.
Hunermann v. Office of the President, et al., [19]we dealt with this conditionality, viz:

x x x It must be stressed, as held in the case of A.C. Esguerra & Sons v. Aytona, et al., (L-18751, 28 April 1962, 4
SCRA 1245), that in an "invitation to bid, there is a condition imposed upon the bidders to the effect that the
bidding shall be subject to the right of the government to reject any and all bids subject to its discretion. In
the case at bar, the government has made its choice and unless an unfairness or injustice is shown, the losing
bidders have no cause to complain nor right to dispute that choice. This is a well-settled doctrine in this
jurisdiction and elsewhere."

The discretion to accept or reject a bid and award contracts is vested in the Government agencies entrusted
with that function. The discretion given to the authorities on this matter is of such wide latitude that the Courts
will not interfere therewith, unless it is apparent that it is used as a shield to a fraudulent award (Jalandoni v.
NARRA, 108 Phil. 486 [1960]). x x x The exercise of this discretion is a policy decision that necessitates prior
inquiry, investigation, comparison, evaluation, and deliberation. This task can best be discharged by the
Government agencies concerned, not by the Courts. The role of the Courts is to ascertain whether a branch or
instrumentality of the Government has transgressed its constitutional boundaries. But the Courts will not
interfere with executive or legislative discretion exercised within those boundaries. Otherwise, it strays into the
realm of policy decision-making.

It is only upon a clear showing of grave abuse of discretion that the Courts will set aside the award of a contract
made by a government entity. Grave abuse of discretion implies a capricious, arbitrary and whimsical exercise
of power (Filinvest Credit Corp. v. Intermediate Appellate Court, No. 65935, 30 September 1988, 166 SCRA 155).
The abuse of discretion must be so patent and gross as to amount to an evasion of positive duty or to a virtual
refusal to perform a duty enjoined by law, as to act at all in contemplation of law, where the power is exercised
in an arbitrary and despotic manner by reason of passion or hostility (Litton Mills, Inc. v. Galleon Trader, Inc., et
al[.], L-40867, 26 July 1988, 163 SCRA 489).

The facts in this case do not indicate any such grave abuse of discretion on the part of public respondents when
they awarded the CISS contract to Respondent SGS. In the "Invitation to Prequalify and Bid" (Annex "C," supra),
the CISS Committee made an express reservation of the right of the Government to "reject any or all bids or
any part thereof or waive any defects contained thereon and accept an offer most advantageous to the
46
Government." It is a well-settled rule that where such reservation is made in an Invitation to Bid, the highest
or lowest bidder, as the case may be, is not entitled to an award as a matter of right (C & C Commercial Corp.
v. Menor, L-28360, 27 January 1983, 120 SCRA 112). Even the lowest Bid or any Bid may be rejected or, in the
exercise of sound discretion, the award may be made to another than the lowest bidder (A.C. Esguerra & Sons
v. Aytona, supra, citing 43 Am. Jur., 788). (emphases supplied)

Like the condition in the Bureau Veritas case, the right to top was a condition imposed by the government in
the bidding rules which was made known to all parties. It was a condition imposed on all bidders equally, based
on the APTs exercise of its discretion in deciding on how best to privatize the governments shares in PHILSECO.
It was not a whimsical or arbitrary condition plucked from the ether and inserted in the bidding rules but a
condition which the APT approved as the best way the government could comply with its contractual obligations
to KAWASAKI under the JVA and its mandate of getting the most advantageous deal for the government. The
right to top had its history in the mutual right of first refusal in the JVA and was reached by agreement of the
government and KAWASAKI.
Further, there is no executive interference in the functions of this Court by the mere filing of a
memorandum by Secretary of Finance Jose Isidro Camacho. The memorandum was merely noted to
acknowledge its filing. It had no further legal significance. Notably too, the assailed Resolution dated
September 24, 2003 was decided unanimously by the Special First Division in favor of the respondents.
Again, we emphasize that a decision or resolution of a Division is that of the Supreme Court [20] and the
Court en banc is not an appellate court to which decisions or resolutions of a Division may be appealed. [21]
For all the foregoing reasons, we find no basis to elevate this case to the Court en banc.

Motion for Reconsideration

Three principal arguments were raised in the petitioners Motion for Reconsideration. First, that a fair
resolution of the case should be based on contract law, not on policy considerations; the contracts do not
authorize the right to top to be derived from the right of first refusal.[22] Second, that neither the right of first
refusal nor the right to top can be legally exercised by the consortium which is not the proper party granted
such right under either the JVA or the Asset Specific Bidding Rules (ASBR).[23] Third, that the maintenance of the
60%-40% relationship between the National Investment and Development Corporation (NIDC) and KAWASAKI
arises from contract and from the Constitution because PHILSECO is a landholding corporation and need not be
a public utility to be bound by the 60%-40% constitutional limitation.[24]
On the other hand, private respondent PHILYARDS asserts that J.G. Summit has not been able to show
compelling reasons to warrant a reconsideration of the Decision of the Court. [25] PHILYARDS denies that the
Decision is based mainly on policy considerations and points out that it is premised on principles governing
obligations and contracts and corporate law such as the rule requiring respect for contractual stipulations,
upholding rights of first refusal, and recognizing the assignable nature of contracts rights.[26] Also, the ruling that
shipyards are not public utilities relies on established case law and fundamental rules of statutory construction.
PHILYARDS stresses that KAWASAKIs right of first refusal or even the right to top is not limited to the 40% equity
of the latter.[27] On the landholding issue raised by J.G. Summit, PHILYARDS emphasizes that this is a non-issue
and even involves a question of fact. Even assuming that this Court can take cognizance of such question of fact
even without the benefit of a trial, PHILYARDS opines that landholding by PHILSECO at the time of the bidding
is irrelevant because what is essential is that ultimately a qualified entity would eventually hold PHILSECOs real
estate properties.[28] Further, given the assignable nature of the right of first refusal, any applicable nationality
restrictions, including landholding limitations, would not affect the right of first refusal itself, but only the
manner of its exercise.[29] Also, PHILYARDS argues that if this Court takes cognizance of J.G. Summits allegations
of fact regarding PHILSECOs landholding, it must also recognize PHILYARDS assertions that PHILSECOs
landholdings were sold to another corporation.[30] As regards the right of first refusal, private respondent
explains that KAWASAKIs reduced shareholdings (from 40% to 2.59%) did not translate to a deprivation or loss
of its contractually granted right of first refusal.[31] Also, the bidding was valid because PHILYARDS exercised the
right to top and it was of no moment that losing bidders later joined PHILYARDS in raising the purchase price. [32]
In cadence with the private respondent PHILYARDS, public respondents COP and APT contend:

47
1. The conversion of the right of first refusal into a right to top by 5% does not violate any provision in the
JVA between NIDC and KAWASAKI.
2. PHILSECO is not a public utility and therefore not governed by the constitutional restriction on foreign
ownership.
3. The petitioner is legally estopped from assailing the validity of the proceedings of the public bidding as it
voluntarily submitted itself to the terms of the ASBR which included the provision on the right to top.
4. The right to top was exercised by PHILYARDS as the nominee of KAWASAKI and the fact that PHILYARDS
formed a consortium to raise the required amount to exercise the right to top the highest bid by 5% does not
violate the JVA or the ASBR.
5. The 60%-40% Filipino-foreign constitutional requirement for the acquisition of lands does not apply to
PHILSECO because as admitted by petitioner itself, PHILSECO no longer owns real property.
6. Petitioners motion to elevate the case to the Court en banc is baseless and would only delay the
termination of this case.[33]
In a Consolidated Comment dated March 8, 2004, J.G. Summit countered the arguments of the public and
private respondents in this wise:

1. The award by the APT of 87.67% shares of PHILSECO to PHILYARDS with losing bidders through the
exercise of a right to top, which is contrary to law and the constitution is null and void for being violative
of substantive due process and the abuse of right provision in the Civil Code.

a. The bidders[] right to top was actually exercised by losing bidders.

b. The right to top or the right of first refusal cannot co-exist with a genuine competitive bidding.

c. The benefits derived from the right to top were unwarranted.

2. The landholding issue has been a legitimate issue since the start of this case but is shamelessly ignored
by the respondents.

a. The landholding issue is not a non-issue.

b. The landholding issue does not pose questions of fact.

c. That PHILSECO owned land at the time that the right of first refusal was agreed upon and at the time
of the bidding are most relevant.

d. Whether a shipyard is a public utility is not the core issue in this case.

3. Fraud and bad faith attend the alleged conversion of an inexistent right of first refusal to the right to top.

a. The history behind the birth of the right to top shows fraud and bad faith.

b. The right of first refusal was, indeed, effectively useless.

4. Petitioner is not legally estopped to challenge the right to top in this case.

a. Estoppel is unavailing as it would stamp validity to an act that is prohibited by law or against public
policy.

b. Deception was patent; the right to top was an attractive nuisance.

c. The 10% bid deposit was placed in escrow.

J.G. Summits insistence that the right to top cannot be sourced from the right of first refusal is not new and
we have already ruled on the issue in our Resolution of September 24, 2003. We upheld the mutual right of first
48
refusal in the JVA.[34] We also ruled that nothing in the JVA prevents KAWASAKI from acquiring more than 40%
of PHILSECOs total capitalization.[35]Likewise, nothing in the JVA or ASBR bars the conversion of the right of first
refusal to the right to top. In sum, nothing new and of significance in the petitioners pleading warrants a
reconsideration of our ruling.
Likewise, we already disposed of the argument that neither the right of first refusal nor the right to top can
legally be exercised by the consortium which is not the proper party granted such right under either the JVA or
the ASBR. Thus, we held:

The fact that the losing bidder, Keppel Consortium (composed of Keppel, SM Group, Insular Life Assurance,
Mitsui and ICTSI), has joined PHILYARDS in the latter's effort to raise P2.131 billion necessary in exercising the
right to top is not contrary to law, public policy or public morals. There is nothing in the ASBR that bars the losing
bidders from joining either the winning bidder (should the right to top is not exercised) or KAWASAKI/PHI
(should it exercise its right to top as it did), to raise the purchase price. The petitioner did not allege, nor was it
shown by competent evidence, that the participation of the losing bidders in the public bidding was done with
fraudulent intent. Absent any proof of fraud, the formation by [PHILYARDS] of a consortium is legitimate in a
free enterprise system. The appellate court is thus correct in holding the petitioner estopped from questioning
the validity of the transfer of the National Government's shares in PHILSECO to respondent. [36]

Further, we see no inherent illegality on PHILYARDS act in seeking funding from parties who were losing
bidders. This is a purely commercial decision over which the State should not interfere absent any legal infirmity.
It is emphasized that the case at bar involves the disposition of shares in a corporation which the government
sought to privatize. As such, the persons with whom PHILYARDS desired to enter into business with in order to
raise funds to purchase the shares are basically its business. This is in contrast to a case involving a contract for
the operation of or construction of a government infrastructure where the identity of the buyer/bidder or
financier constitutes an important consideration. In such cases, the government would have to take utmost
precaution to protect public interest by ensuring that the parties with which it is contracting have the ability to
satisfactorily construct or operate the infrastructure.
On the landholding issue, J.G. Summit submits that since PHILSECO is a landholding company, KAWASAKI
could exercise its right of first refusal only up to 40% of the shares of PHILSECO due to the constitutional
prohibition on landholding by corporations with more than 40% foreign-owned equity. It further argues that
since KAWASAKI already held at least 40% equity in PHILSECO, the right of first refusal was inutile and as such,
could not subsequently be converted into the right to top. [37] Petitioner also asserts that, at present, PHILSECO
continues to violate the constitutional provision on landholdings as its shares are more than 40% foreign-
owned.[38] PHILYARDS admits that it may have previously held land but had already divested such
landholdings.[39] It contends, however, that even if PHILSECO owned land, this would not affect the right of first
refusal but only the exercise thereof. If the land is retained, the right of first refusal, being a property right, could
be assigned to a qualified party. In the alternative, the land could be divested before the exercise of the right of
first refusal. In the case at bar, respondents assert that since the right of first refusal was validly converted into
a right to top, which was exercised not by KAWASAKI, but by PHILYARDS which is a Filipino corporation (i.e., 60%
of its shares are owned by Filipinos), then there is no violation of the Constitution.[40] At first, it would seem that
questions of fact beyond cognizance by this Court were involved in the issue. However, the records show
that PHILYARDS admits it had owned land up until the time of the bidding.[41] Hence, the only issue is whether
KAWASAKI had a valid right of first refusal over PHILSECO shares under the JVA considering that PHILSECO
owned land until the time of the bidding and KAWASAKI already held 40% of PHILSECOs equity.
We uphold the validity of the mutual rights of first refusal under the JVA between KAWASAKI and NIDC.
First of all, the right of first refusal is a property right of PHILSECO shareholders, KAWASAKI and NIDC, under the
terms of their JVA. This right allows them to purchase the shares of their co-shareholder before they are offered
to a third party. The agreement of co-shareholders to mutually grant this right to each other, by itself, does
not constitute a violation of the provisions of the Constitution limiting land ownership to Filipinos and Filipino
corporations. As PHILYARDS correctly puts it, if PHILSECO still owns land, the right of first refusal can be validly
assigned to a qualified Filipino entity in order to maintain the 60%-40% ratio. This transfer, by itself, does not
amount to a violation of the Anti-Dummy Laws, absent proof of any fraudulent intent. The transfer could be
made either to a nominee or such other party which the holder of the right of first refusal feels it can comfortably
do business with. Alternatively, PHILSECO may divest of its landholdings, in which case KAWASAKI, in exercising
its right of first refusal, can exceed 40% of PHILSECOs equity. In fact, it can even be said that if the foreign

49
shareholdings of a landholding corporation exceeds 40%, it is not the foreign stockholders ownership of the
shares which is adversely affected but the capacity of the corporation to own land that is, the corporation
becomes disqualified to own land. This finds support under the basic corporate law principle that the
corporation and its stockholders are separate juridical entities. In this vein, the right of first refusal over shares
pertains to the shareholders whereas the capacity to own land pertains to the corporation. Hence, the fact that
PHILSECO owns land cannot deprive stockholders of their right of first refusal. No law disqualifies a person from
purchasing shares in a landholding corporation even if the latter will exceed the allowed foreign equity, what
the law disqualifies is the corporation from owning land. This is the clear import of the following provisions in
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.

xxx xxx xxx

Section 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to
individuals, corporations, or associations qualified to acquire or hold lands of the public domain.[42] (emphases
supplied)

The petitioner further argues that an option to buy land is void in itself (Philippine Banking Corporation v.
Lui She, 21 SCRA 52 [1967]). The right of first refusal granted to KAWASAKI, a Japanese corporation, is similarly
void. Hence, the right to top, sourced from the right of first refusal, is also void. [43] Contrary to the contention
of petitioner, the case of Lui She did not that say an option to buy land is void in itself, for we ruled as follows:

x x x To be sure, a lease to an alien for a reasonable period is valid. So is an option giving an alien the right to
buy real property on condition that he is granted Philippine citizenship. As this Court said in Krivenko vs.
Register of Deeds:

[A]liens are not completely excluded by the Constitution from the use of lands for residential purposes. Since
their residence in the Philippines is temporary, they may be granted temporary rights such as a lease contract
which is not forbidden by the Constitution. Should they desire to remain here forever and share our fortunes
and misfortunes, Filipino citizenship is not impossible to acquire.

But if an alien is given not only a lease of, but also an option to buy, a piece of land, by virtue of which the
Filipino owner cannot sell or otherwise dispose of his property, this to last for 50 years, then it becomes clear
that the arrangement is a virtual transfer of ownership whereby the owner divests himself in stages not only
of the right to enjoy the land (jus possidendi, jus utendi, jus fruendi and jus abutendi) but also of the right to
dispose of it (jus disponendi) rights the sum total of which make up ownership. It is just as if today the
possession is transferred, tomorrow, the use, the next day, the disposition, and so on, until ultimately all the
rights of which ownership is made up are consolidated in an alien. And yet this is just exactly what the parties
in this case did within this pace of one year, with the result that Justina Santos'[s] ownership of her property
was reduced to a hollow concept. If this can be done, then the Constitutional ban against alien landholding in
the Philippines, as announced in Krivenko vs. Register of Deeds, is indeed in grave peril.[44] (emphases supplied;
Citations omitted)

In Lui She, the option to buy was invalidated because it amounted to a virtual transfer of ownership as the
owner could not sell or dispose of his properties. The contract in Lui Sheprohibited the owner of the land from
selling, donating, mortgaging, or encumbering the property during the 50-year period of the option to buy. This
is not so in the case at bar where the mutual right of first refusal in favor of NIDC and KAWASAKI does not
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amount to a virtual transfer of land to a non-Filipino. In fact, the case at bar involves a right of first refusal over
shares of stock while the Lui She case involves an option to buy the land itself. As discussed earlier, there is a
distinction between the shareholders ownership of shares and the corporations ownership of land arising from
the separate juridical personalities of the corporation and its shareholders.
We note that in its Motion for Reconsideration, J.G. Summit alleges that PHILSECO continues to violate the
Constitution as its foreign equity is above 40% and yet owns long-term leasehold rights which are real
rights.[45] It cites Article 415 of the Civil Code which includes in the definition of immovable property, contracts
for public works, and servitudes and other real rights over immovable property.[46] Any existing landholding,
however, is denied by PHILYARDS citing its recent financial statements.[47] First, these are questions of fact, the
veracity of which would require introduction of evidence. The Court needs to validate these factual allegations
based on competent and reliable evidence. As such, the Court cannot resolve the questions they pose. Second,
J.G. Summit misreads the provisions of the Constitution cited in its own pleadings, to wit:

29.2 Petitioner has consistently pointed out in the past that private respondent is not a 60%-40% corporation,
and this violates the Constitution x x x The violation continues to this day because under the law, it continues
to own real property

xxx xxx xxx

32. To review the constitutional provisions involved, Section 14, Article XIV of the 1973 Constitution (the JVA
was signed in 1977), provided:

Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals,
corporations, or associations qualified to acquire or hold lands of the public domain.

32.1 This provision is the same as Section 7, Article XII of the 1987 Constitution.

32.2 Under the Public Land Act, corporations qualified to acquire or hold lands of the public domain are
corporations at least 60% of which is owned by Filipino citizens (Sec. 22, Commonwealth Act 141, as amended).
(emphases supplied)

As correctly observed by the public respondents, the prohibition in the Constitution applies only to ownership
of land.[48] It does not extend to immovable or real property as defined under Article 415 of the Civil
Code. Otherwise, we would have a strange situation where the ownership of immovable property such as trees,
plants and growing fruit attached to the land[49] would be limited to Filipinos and Filipino corporations only.

III.

WHEREFORE, in view of the foregoing, the petitioners Motion for Reconsideration is DENIED WITH FINALITY
and the decision appealed from is AFFIRMED. The Motion to Elevate This Case to the Court En Banc is likewise
DENIED for lack of merit.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Ynares-Santiago, Corona, and Tinga, JJ., concur.

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