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1987 Philippine Constitution - The LawPhil Project

1987 CONSTITUTION OF THE REPUBLIC OF THE PHILIPPINES

PREAMBLE We, the sovereign Filipino people, imploring the aid of Almighty God, in order to build a just and humane society, and establish a Government that shall embody our ideals and aspirations, promote the common good, conserve and develop our patrimony, and secure to ourselves and our posterity, the blessings of independence and democracy under the rule of law and a regime of truth, justice, freedom, love, equality, and peace, do ordain and promulgate this Constitution.

ARTICLE I NATIONAL TERRITORY The national territory comprises the Philippine archipelago, with all the islands and waters embraced therein, and all other territories over which the Philippines has sovereignty or jurisdiction, consisting of its terrestrial, fluvial and aerial domains, including its territorial sea, the seabed, the subsoil, the insular shelves, and other submarine areas. The waters around, between, and connecting the islands of the archipelago, regardless of their breadth and dimensions, form part of the internal waters of the Philippines. ARTICLE II DECLARATION OF PRINCIPLES AND STATE POLICIES PRINCIPLES Section 1. The Philippines is a democratic and republican State. Sovereignty resides in the people and all government authority emanates from them. Section 2. The Philippines renounces war as an instrument of national policy, adopts the generally accepted principles of international law as part of the law of the land and adheres to the policy of peace, equality, justice, freedom, cooperation, and amity with all nations. Section 3. Civilian authority is, at all times, supreme over the military. The Armed Forces of the Philippines is the protector of the people and the State. Its goal is to secure the sovereignty of the State and the integrity of the national territory. Section 4. The prime duty of the Government is to serve and protect the people. The Government may call upon the people to defend the State and, in the fulfillment thereof, all citizens may be required, under conditions provided by law, to render personal, military or civil service. Section 5. The maintenance of peace and order, the protection of life, liberty, and property, and promotion of the general welfare are essential for the enjoyment by all the people of the blessings of democracy. Section 6. The separation of Church and State shall be inviolable.

STATE POLICIES Section 7. The State shall pursue an independent foreign policy. In its relations with other states, the paramount consideration shall be national sovereignty, territorial integrity, national interest, and the right to self-determination. Section 8. The Philippines, consistent with the national interest, adopts and pursues a policy of freedom from nuclear weapons in its territory.

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1987 Philippine Constitution - The LawPhil Project

Section 9. The State shall promote a just and dynamic social order that will ensure the prosperity and independence of the nation and free the people from poverty through policies that provide adequate social services, promote full employment, a rising standard of living, and an improved quality of life for all. Section 10. The State shall promote social justice in all phases of national development. Section 11. The State values the dignity of every human person and guarantees full respect for human rights. Section 12. The State recognizes the sanctity of family life and shall protect and strengthen the family as a basic autonomous social institution. It shall equally protect the life of the mother and the life of the unborn from conception. The natural and primary right and duty of parents in the rearing of the youth for civic efficiency and the development of moral character shall receive the support of the Government. Section 13. The State recognizes the vital role of the youth in nation-building and shall promote and protect their physical, moral, spiritual, intellectual, and social well-being. It shall inculcate in the youth patriotism and nationalism, and encourage their involvement in public and civic affairs. Section 14. The State recognizes the role of women in nation-building, and shall ensure the fundamental equality before the law of women and men. Section 15. The State shall protect and promote the right to health of the people and instill health consciousness among them. Section 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. Section 17. The State shall give priority to education, science and technology, arts, culture, and sports to foster patriotism and nationalism, accelerate social progress, and promote total human liberation and development. Section 18. The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare. Section 19. The State shall develop a self-reliant and independent national economy effectively controlled by Filipinos. Section 20. The State recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to needed investments. Section 21. The State shall promote comprehensive rural development and agrarian reform. Section 22. The State recognizes and promotes the rights of indigenous cultural communities within the framework of national unity and development. Section 23. The State shall encourage non-governmental, community-based, or sectoral organizations that promote the welfare of the nation. Section 24. The State recognizes the vital role of communication and information in nation-building. Section 25. The State shall ensure the autonomy of local governments. Section 26. The State shall guarantee equal access to opportunities for public service and prohibit political dynasties as may be defined by law. Section 27. The State shall maintain honesty and integrity in the public service and take positive and effective measures against graft and corruption. Section 28. Subject to reasonable conditions prescribed by law, the State adopts and implements a policy of full public disclosure of all its transactions involving public interest.

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1987 Philippine Constitution - The LawPhil Project

ARTICLE III BILL OF RIGHTS

Section 1. No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws. Section 2. The right of the people to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures of whatever nature and for any purpose shall be inviolable, and no search warrant or warrant of arrest shall issue except upon probable cause to be determined personally by the judge after examination under oath or affirmation of the complainant and the witnesses he may produce, and particularly describing the place to be searched and the persons or things to be seized. <="" p=""> Section 3. 1. The privacy of communication and correspondence shall be inviolable except upon lawful order of the court, or when public safety or order requires otherwise, as prescribed by law. 2. Any evidence obtained in violation of this or the preceding section shall be inadmissible for any purpose in any proceeding. Section 4. No law shall be passed abridging the freedom of speech, of expression, or of the press, or the right of the people peaceably to assemble and petition the government for redress of grievances. Section 5. No law shall be made respecting an establishment of religion, or prohibiting the free exercise thereof. The free exercise and enjoyment of religious profession and worship, without discrimination or preference, shall forever be allowed. No religious test shall be required for the exercise of civil or political rights. Section 6. The liberty of abode and of changing the same within the limits prescribed by law shall not be impaired except upon lawful order of the court. Neither shall the right to travel be impaired except in the interest of national security, public safety, or public health, as may be provided by law. Section 7. The right of the people to information on matters of public concern shall be recognized. Access to official records, and to documents and papers pertaining to official acts, transactions, or decisions, as well as to government research data used as basis for policy development, shall be afforded the citizen, subject to such limitations as may be provided by law. Section 8. The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged. Section 9. Private property shall not be taken for public use without just compensation. Section 10. No law impairing the obligation of contracts shall be passed. Section 11. Free access to the courts and quasi-judicial bodies and adequate legal assistance shall not be denied to any person by reason of poverty. Section 12. 1. Any person under investigation for the commission of an offense shall have the right to be informed of his right to remain silent and to have competent and independent counsel preferably of his own choice. If the person cannot afford the services of counsel, he must be provided with one. These rights cannot be waived except in writing and in the presence of counsel. 2. No torture, force, violence, threat, intimidation, or any other means which vitiate the free will shall be used against him. Secret detention places, solitary, incommunicado, or other similar forms of detention are prohibited.

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1987 Philippine Constitution - The LawPhil Project

3. Any confession or admission obtained in violation of this or Section 17 hereof shall be inadmissible in evidence against him. 4. The law shall provide for penal and civil sanctions for violations of this Section as well as compensation to the rehabilitation of victims of torture or similar practices, and their families. Section 13. All persons, except those charged with offenses punishable by reclusion perpetua when evidence of guilt is strong, shall, before conviction, be bailable by sufficient sureties, or be released on recognizance as may be provided by law. The right to bail shall not be impaired even when the privilege of the writ of habeas corpus is suspended. Excessive bail shall not be required. Section 14. 1. No person shall be held to answer for a criminal offense without due process of law. 2. In all criminal prosecutions, the accused shall be presumed innocent until the contrary is proved, and shall enjoy the right to be heard by himself and counsel, to be informed of the nature and cause of the accusation against him, to have a speedy, impartial, and public trial, to meet the witnesses face to face, and to have compulsory process to secure the attendance of witnesses and the production of evidence in his behalf. However, after arraignment, trial may proceed notwithstanding the absence of the accused: Provided, that he has been duly notified and his failure to appear is unjustifiable. Section 15. The privilege of the writ of habeas corpus shall not be suspended except in cases of invasion or rebellion, when the public safety requires it. Section 16. All persons shall have the right to a speedy disposition of their cases before all judicial, quasijudicial, or administrative bodies. Section 17. No person shall be compelled to be a witness against himself. Section 18. 1. No person shall be detained solely by reason of his political beliefs and aspirations. 2. No involuntary servitude in any form shall exist except as a punishment for a crime whereof the party shall have been duly convicted. Section 19. 1. Excessive fines shall not be imposed, nor cruel, degrading or inhuman punishment inflicted. Neither shall death penalty be imposed, unless, for compelling reasons involving heinous crimes, the Congress hereafter provides for it. Any death penalty already imposed shall be reduced to reclusion perpetua. 2. The employment of physical, psychological, or degrading punishment against any prisoner or detainee or the use of substandard or inadequate penal facilities under subhuman conditions shall be dealt with by law. Section 20. No person shall be imprisoned for debt or non-payment of a poll tax. Section 21. No person shall be twice put in jeopardy of punishment for the same offense. If an act is punished by a law and an ordinance, conviction or acquittal under either shall constitute a bar to another prosecution for the same act. Section 22. No ex post facto law or bill of attainder shall be enacted.

ARTICLE IV CITIZENSHIP

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1987 Philippine Constitution - The LawPhil Project

Section 1. The following are citizens of the Philippines: 1. Those who are citizens of the Philippines at the time of the adoption of this Constitution; 2. Those whose fathers or mothers are citizens of the Philippines; 3. Those born before January 17, 1973, of Filipino mothers, who elect Philippine Citizenship upon reaching the age of majority; and 4. Those who are naturalized in the accordance with law. Section 2. Natural-born citizens are those who are citizens of the Philippines from birth without having to perform any act to acquire or perfect their Philippine citizenship. Those who elect Philippine citizenship in accordance with paragraph (3), Section 1 hereof shall be deemed natural-born citizens. Section 3. Philippine citizenship may be lost or reacquired in the manner provided by law. Section 4. Citizens of the Philippines who marry aliens shall retain their citizenship, unless by their act or omission they are deemed, under the law to have renounced it. Section 5. Dual allegiance of citizens is inimical to the national interest and shall be dealt with by law.

ARTICLE V SUFFRAGE Section 1. Suffrage may be exercised by all citizens of the Philippines, not otherwise disqualified by law, who are at least eighteen years of age, and who shall have resided in the Philippines for at least one year and in the place wherein they propose to vote, for at least six months immediately preceding the election. No literacy, property, or other substantive requirement shall be imposed on the exercise of suffrage. Section 2. The Congress shall provide a system for securing the secrecy and sanctity of the ballot as well as a system for absentee voting by qualified Filipinos abroad. The Congress shall also design a procedure for the disabled and the illiterates to vote without the assistance of other persons. Until then, they shall be allowed to vote under existing laws and such rules as the Commission on Elections may promulgate to protect the secrecy of the ballot.

ARTICLE VI THE LEGISLATIVE DEPARTMENT Section 1. The legislative power shall be vested in the Congress of the Philippines which shall consist of a Senate and a House of Representatives, except to the extent reserved to the people by the provision on initiative and referendum. Section 2. The Senate shall be composed of twenty-four Senators who shall be elected at large by the qualified voters of the Philippines, as may be provided by law. Section 3. No person shall be a Senator unless he is a natural-born citizen of the Philippines and, on the day of the election, is at least thirty-five years of age, able to read and write, a registered voter, and a resident of the Philippines for not less than two years immediately preceding the day of the election. Section 4. The term of office of the Senators shall be six years and shall commence, unless otherwise provided by law, at noon on the thirtieth day of June next following their election. No Senator shall serve for more than two consecutive terms. Voluntary renunciation of the office for any length of time shall not be considered as an interruption in the continuity of his service for the full term of which he was elected.

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1987 Philippine Constitution - The LawPhil Project

Section 5. 1. The House of Representatives shall be composed of not more than two hundred and fifty members, unless otherwise fixed by law, who shall be elected from legislative districts apportioned among the provinces, cities, and the Metropolitan Manila area in accordance with the number of their respective inhabitants, and on the basis of a uniform and progressive ratio, and those who, as provided by law, shall be elected through a party-list system of registered national, regional, and sectoral parties or organizations. 2. The party-list representatives shall constitute twenty per centum of the total number of representatives including those under the party list. For three consecutive terms after the ratification of this Constitution, onehalf of the seats allocated to party-list representatives shall be filled, as provided by law, by selection or election from the labor, peasant, urban poor, indigenous cultural communities, women, youth, and such other sectors as may be provided by law, except the religious sector. 3. Each legislative district shall comprise, as far as practicable, contiguous, compact, and adjacent territory. Each city with a population of at least two hundred fifty thousand, or each province, shall have at least one representative. 4. Within three years following the return of every census, the Congress shall make a reapportionment of legislative districts based on the standards provided in this section. Section 6. No person shall be a Member of the House of Representatives unless he is a natural-born citizen of the Philippines and, on the day of the election, is at least twenty-five years of age, able to read and write, and, except the party-list representatives, a registered voter in the district in which he shall be elected, and a resident thereof for a period of not less than one year immediately preceding the day of the election. Section 7. The Members of the House of Representatives shall be elected for a term of three years which shall begin, unless otherwise provided by law, at noon on the thirtieth day of June next following their election. No Member of the House of Representatives shall serve for more than three consecutive terms. Voluntary renunciation of the office for any length of time shall not be considered as an interruption in the continuity of his service for the full term for which he was elected. Section 8. Unless otherwise provided by law, the regular election of the Senators and the Members of the House of Representatives shall be held on the second Monday of May. Section 9. In case of vacancy in the Senate or in the House of Representatives, a special election may be called to fill such vacancy in the manner prescribed by law, but the Senator or Member of the House of Representatives thus elected shall serve only for the unexpired term. Section 10. The salaries of Senators and Members of the House of Representatives shall be determined by law. No increase in said compensation shall take effect until after the expiration of the full term of all the Members of the Senate and the House of Representatives approving such increase. Section 11. A Senator or Member of the House of Representatives shall, in all offenses punishable by not more than six years imprisonment, be privileged from arrest while the Congress is in session. No Member shall be questioned nor be held liable in any other place for any speech or debate in the Congress or in any committee thereof. Section 12. All Members of the Senate and the House of Representatives shall, upon assumption of office, make a full disclosure of their financial and business interests. They shall notify the House concerned of a potential conflict of interest that may arise from the filing of a proposed legislation of which they are authors. Section 13. No Senator or Member of the House of Representatives may hold any other office or employment in the Government, or any subdivision, agency, or instrumentality thereof, including government-owned or controlled corporations or their subsidiaries, during his term without forfeiting his seat. Neither shall he be appointed to any office which may have been created or the emoluments thereof increased during the term for which he was elected. Section 14. No Senator or Member of the House of Representatives may personally appear as counsel before

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1987 Philippine Constitution - The LawPhil Project

any court of justice or before the Electoral Tribunals, or quasi-judicial and other administrative bodies. Neither shall he, directly or indirectly, be interested financially in any contract with, or in any franchise or special privilege granted by the Government, or any subdivision, agency, or instrumentality thereof, including any governmentowned or controlled corporation, or its subsidiary, during his term of office. He shall not intervene in any matter before any office of the Government for his pecuniary benefit or where he may be called upon to act on account of his office. Section 15. The Congress shall convene once every year on the fourth Monday of July for its regular session, unless a different date is fixed by law, and shall continue to be in session for such number of days as it may determine until thirty days before the opening of its next regular session, exclusive of Saturdays, Sundays, and legal holidays. The President may call a special session at any time. Section 16. 1. The Senate shall elect its President and the House of Representatives, its Speaker, by a majority vote of all its respective Members. Each House shall choose such other officers as it may deem necessary. 2. A majority of each House shall constitute a quorum to do business, but a smaller number may adjourn from day to day and may compel the attendance of absent Members in such manner, and under such penalties, as such House may provide. 3. Each House may determine the rules of its proceedings, punish its Members for disorderly behavior, and, with the concurrence of two-thirds of all its Members, suspend or expel a Member. A penalty of suspension, when imposed, shall not exceed sixty days. 4. Each House shall keep a Journal of its proceedings, and from time to time publish the same, excepting such parts as may, in its judgment, affect national security; and the yeas and nays on any question shall, at the request of one-fifth of the Members present, be entered in the Journal. Each House shall also keep a Record of its proceedings. 5. Neither House during the sessions of the Congress shall, without the consent of the other, adjourn for more than three days, nor to any other place than that in which the two Houses shall be sitting. Section 17. The Senate and the House of Representatives shall each have an Electoral Tribunal which shall be the sole judge of all contests relating to the election, returns, and qualifications of their respective Members. Each Electoral Tribunal shall be composed of nine Members, three of whom shall be Justices of the Supreme Court to be designated by the Chief Justice, and the remaining six shall be Members of the Senate or the House of Representatives, as the case may be, who shall be chosen on the basis of proportional representation from the political parties and the parties or organizations registered under the party-list system represented therein. The senior Justice in the Electoral Tribunal shall be its Chairman. Section 18. There shall be a Commission on Appointments consisting of the President of the Senate, as ex officio Chairman, twelve Senators, and twelve Members of the House of Representatives, elected by each House on the basis of proportional representation from the political parties and parties or organizations registered under the party-list system represented therein. The chairman of the Commission shall not vote, except in case of a tie. The Commission shall act on all appointments submitted to it within thirty session days of the Congress from their submission. The Commission shall rule by a majority vote of all the Members. Section 19. The Electoral Tribunals and the Commission on Appointments shall be constituted within thirty days after the Senate and the House of Representatives shall have been organized with the election of the President and the Speaker. The Commission on Appointments shall meet only while the Congress is in session, at the call of its Chairman or a majority of all its Members, to discharge such powers and functions as are herein conferred upon it. Section 20. The records and books of accounts of the Congress shall be preserved and be open to the public in accordance with law, and such books shall be audited by the Commission on Audit which shall publish annually an itemized list of amounts paid to and expenses for each Member. Section 21. The Senate or the House of Representatives or any of its respective committees may conduct inquiries in aid of legislation in accordance with its duly published rules of procedure. The rights of persons

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1987 Philippine Constitution - The LawPhil Project

appearing in, or affected by, such inquiries shall be respected. Section 22. The heads of departments may, upon their own initiative, with the consent of the President, or upon the request of either House, as the rules of each House shall provide, appear before and be heard by such House on any matter pertaining to their departments. Written questions shall be submitted to the President of the Senate or the Speaker of the House of Representatives at least three days before their scheduled appearance. Interpellations shall not be limited to written questions, but may cover matters related thereto. When the security of the State or the public interest so requires and the President so states in writing, the appearance shall be conducted in executive session. Section 23. 1. The Congress, by a vote of two-thirds of both Houses in joint session assembled, voting separately, shall have the sole power to declare the existence of a state of war. 2. In times of war or other national emergency, the Congress may, by law, authorize the President, for a limited period and subject to such restrictions as it may prescribe, to exercise powers necessary and proper to carry out a declared national policy. Unless sooner withdrawn by resolution of the Congress, such powers shall cease upon the next adjournment thereof. Section 24. All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills, shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments. Section 25. 1. The Congress may not increase the appropriations recommended by the President for the operation of the Government as specified in the budget. The form, content, and manner of preparation of the budget shall be prescribed by law. 2. No provision or enactment shall be embraced in the general appropriations bill unless it relates specifically to some particular appropriation therein. Any such provision or enactment shall be limited in its operation to the appropriation to which it relates. 3. The procedure in approving appropriations for the Congress shall strictly follow the procedure for approving appropriations for other departments and agencies. 4. A special appropriations bill shall specify the purpose for which it is intended, and shall be supported by funds actually available as certified by the National Treasurer, or to be raised by a corresponding revenue proposal therein. 5. No law shall be passed authorizing any transfer of appropriations; however, the President, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the heads of Constitutional Commissions may, by law, be authorized to augment any item in the general appropriations law for their respective offices from savings in other items of their respective appropriations. 6. Discretionary funds appropriated for particular officials shall be disbursed only for public purposes to be supported by appropriate vouchers and subject to such guidelines as may be prescribed by law. 7. If, by the end of any fiscal year, the Congress shall have failed to pass the general appropriations bill for the ensuing fiscal year, the general appropriations law for the preceding fiscal year shall be deemed re-enacted and shall remain in force and effect until the general appropriations bill is passed by the Congress. Section 26. 1. Every bill passed by the Congress shall embrace only one subject which shall be expressed in the title thereof. 2. No bill passed by either House shall become a law unless it has passed three readings on separate days, and printed copies thereof in its final form have been distributed to its Members three days before its

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1987 Philippine Constitution - The LawPhil Project

passage, except when the President certifies to the necessity of its immediate enactment to meet a public calamity or emergency. Upon the last reading of a bill, no amendment thereto shall be allowed, and the vote thereon shall be taken immediately thereafter, and the yeas and nays entered in the Journal. Section 27. 1. Every bill passed by the Congress shall, before it becomes a law, be presented to the President. If he approves the same he shall sign it; otherwise, he shall veto it and return the same with his objections to the House where it originated, which shall enter the objections at large in its Journal and proceed to reconsider it. If, after such reconsideration, two-thirds of all the Members of such House shall agree to pass the bill, it shall be sent, together with the objections, to the other House by which it shall likewise be reconsidered, and if approved by two-thirds of all the Members of that House, it shall become a law. In all such cases, the votes of each House shall be determined by yeas or nays, and the names of the Members voting for or against shall be entered in its Journal. The President shall communicate his veto of any bill to the House where it originated within thirty days after the date of receipt thereof, otherwise, it shall become a law as if he had signed it. 2. The President shall have the power to veto any particular item or items in an appropriation, revenue, or tariff bill, but the veto shall not affect the item or items to which he does not object. Section 28. 1. The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive system of taxation. 2. The Congress may, by law, authorize the President to fix within specified limits, and subject to such limitations and restrictions as it may impose, tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the national development program of the Government. 3. Charitable institutions, churches and personages or convents appurtenant thereto, mosques, non-profit cemeteries, and all lands, buildings, and improvements, actually, directly, and exclusively used for religious, charitable, or educational purposes shall be exempt from taxation. 4. No law granting any tax exemption shall be passed without the concurrence of a majority of all the Members of the Congress. Section 29. 1. No money shall be paid out of the Treasury except in pursuance of an appropriation made by law. 2. No public money or property shall be appropriated, applied, paid, or employed, directly or indirectly, for the use, benefit, or support of any sect, church, denomination, sectarian institution, or system of religion, or of any priest, preacher, minister, other religious teacher, or dignitary as such, except when such priest, preacher, minister, or dignitary is assigned to the armed forces, or to any penal institution, or government orphanage or leprosarium. 3. All money collected on any tax levied for a special purpose shall be treated as a special fund and paid out for such purpose only. If the purpose for which a special fund was created has been fulfilled or abandoned, the balance, if any, shall be transferred to the general funds of the Government. Section 30. No law shall be passed increasing the appellate jurisdiction of the Supreme Court as provided in this Constitution without its advice and concurrence. Section 31. No law granting a title of royalty or nobility shall be enacted. Section 32. The Congress shall, as early as possible, provide for a system of initiative and referendum, and the exceptions therefrom, whereby the people can directly propose and enact laws or approve or reject any act or law or part thereof passed by the Congress or local legislative body after the registration of a petition therefor signed by at least ten per centum of the total number of registered voters, of which every legislative district must be

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1987 Philippine Constitution - The LawPhil Project

represented by at least three per centum of the registered voters thereof.

ARTICLE VII EXECUTIVE DEPARTMENT Section 1. The executive power shall be vested in the President of the Philippines. Section 2. No person may be elected President unless he is a natural-born citizen of the Philippines, a registered voter, able to read and write, at least forty years of age on the day of the election, and a resident of the Philippines for at least ten years immediately preceding such election. Section 3. There shall be a Vice-President who shall have the same qualifications and term of office and be elected with, and in the same manner, as the President. He may be removed from office in the same manner as the President. The Vice-President may be appointed as a Member of the Cabinet. Such appointment requires no confirmation. Section 4. The President and the Vice-President shall be elected by direct vote of the people for a term of six years which shall begin at noon on the thirtieth day of June next following the day of the election and shall end at noon of the same date, six years thereafter. The President shall not be eligible for any re-election. No person who has succeeded as President and has served as such for more than four years shall be qualified for election to the same office at any time. No Vice-President shall serve for more than two successive terms. Voluntary renunciation of the office for any length of time shall not be considered as an interruption in the continuity of the service for the full term for which he was elected. Unless otherwise provided by law, the regular election for President and Vice-President shall be held on the second Monday of May. The returns of every election for President and Vice-President, duly certified by the board of canvassers of each province or city, shall be transmitted to the Congress, directed to the President of the Senate. Upon receipt of the certificates of canvass, the President of the Senate shall, not later than thirty days after the day of the election, open all the certificates in the presence of the Senate and the House of Representatives in joint public session, and the Congress, upon determination of the authenticity and due execution thereof in the manner provided by law, canvass the votes. The person having the highest number of votes shall be proclaimed elected, but in case two or more shall have an equal and highest number of votes, one of them shall forthwith be chosen by the vote of a majority of all the Members of both Houses of the Congress, voting separately. The Congress shall promulgate its rules for the canvassing of the certificates. The Supreme Court, sitting en banc, shall be the sole judge of all contests relating to the election, returns, and qualifications of the President or Vice-President, and may promulgate its rules for the purpose. Section 5. Before they enter on the execution of their office, the President, the Vice-President, or the Acting President shall take the following oath or affirmation: "I do solemnly swear (or affirm) that I will faithfully and conscientiously fulfill my duties as President (or Vice-President or Acting President) of the Philippines, preserve and defend its Constitution, execute its laws, do justice to every man, and consecrate myself to the service of the Nation. So help me God." (In case of affirmation, last sentence will be omitted.) Section 6. The President shall have an official residence. The salaries of the President and Vice-President shall be determined by law and shall not be decreased during their tenure. No increase in said compensation shall take effect until after the expiration of the term of the incumbent during which such increase was approved. They shall

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1987 Philippine Constitution - The LawPhil Project

not receive during their tenure any other emolument from the Government or any other source. Section 7. The President-elect and the Vice President-elect shall assume office at the beginning of their terms. If the President-elect fails to qualify, the Vice President-elect shall act as President until the President-elect shall have qualified. If a President shall not have been chosen, the Vice President-elect shall act as President until a President shall have been chosen and qualified. If at the beginning of the term of the President, the President-elect shall have died or shall have become permanently disabled, the Vice President-elect shall become President. Where no President and Vice-President shall have been chosen or shall have qualified, or where both shall have died or become permanently disabled, the President of the Senate or, in case of his inability, the Speaker of the House of Representatives, shall act as President until a President or a Vice-President shall have been chosen and qualified. The Congress shall, by law, provide for the manner in which one who is to act as President shall be selected until a President or a Vice-President shall have qualified, in case of death, permanent disability, or inability of the officials mentioned in the next preceding paragraph. Section 8. In case of death, permanent disability, removal from office, or resignation of the President, the VicePresident shall become the President to serve the unexpired term. In case of death, permanent disability, removal from office, or resignation of both the President and Vice-President, the President of the Senate or, in case of his inability, the Speaker of the House of Representatives, shall then act as President until the President or VicePresident shall have been elected and qualified. The Congress shall, by law, provide who shall serve as President in case of death, permanent disability, or resignation of the Acting President. He shall serve until the President or the Vice-President shall have been elected and qualified, and be subject to the same restrictions of powers and disqualifications as the Acting President. Section 9. Whenever there is a vacancy in the Office of the Vice-President during the term for which he was elected, the President shall nominate a Vice-President from among the Members of the Senate and the House of Representatives who shall assume office upon confirmation by a majority vote of all the Members of both Houses of the Congress, voting separately. Section 10. The Congress shall, at ten o'clock in the morning of the third day after the vacancy in the offices of the President and Vice-President occurs, convene in accordance with its rules without need of a call and within seven days, enact a law calling for a special election to elect a President and a Vice-President to be held not earlier than forty-five days nor later than sixty days from the time of such call. The bill calling such special election shall be deemed certified under paragraph 2, Section 26, Article V1 of this Constitution and shall become law upon its approval on third reading by the Congress. Appropriations for the special election shall be charged against any current appropriations and shall be exempt from the requirements of paragraph 4, Section 25, Article V1 of this Constitution. The convening of the Congress cannot be suspended nor the special election postponed. No special election shall be called if the vacancy occurs within eighteen months before the date of the next presidential election. Section 11. Whenever the President transmits to the President of the Senate and the Speaker of the House of Representatives his written declaration that he is unable to discharge the powers and duties of his office, and until he transmits to them a written declaration to the contrary, such powers and duties shall be discharged by the VicePresident as Acting President. Whenever a majority of all the Members of the Cabinet transmit to the President of the Senate and to the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office, the Vice-President shall immediately assume the powers and duties of the office as Acting President. Thereafter, when the President transmits to the President of the Senate and to the Speaker of the House of

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1987 Philippine Constitution - The LawPhil Project

Representatives his written declaration that no inability exists, he shall reassume the powers and duties of his office. Meanwhile, should a majority of all the Members of the Cabinet transmit within five days to the President of the Senate and to the Speaker of the House of Representatives, their written declaration that the President is unable to discharge the powers and duties of his office, the Congress shall decide the issue. For that purpose, the Congress shall convene, if it is not in session, within forty-eight hours, in accordance with its rules and without need of call. If the Congress, within ten days after receipt of the last written declaration, or, if not in session, within twelve days after it is required to assemble, determines by a two-thirds vote of both Houses, voting separately, that the President is unable to discharge the powers and duties of his office, the Vice-President shall act as President; otherwise, the President shall continue exercising the powers and duties of his office. Section 12. In case of serious illness of the President, the public shall be informed of the state of his health. The members of the Cabinet in charge of national security and foreign relations and the Chief of Staff of the Armed Forces of the Philippines, shall not be denied access to the President during such illness. Section 13. The President, Vice-President, the Members of the Cabinet, and their deputies or assistants shall not, unless otherwise provided in this Constitution, hold any other office or employment during their tenure. They shall not, during said tenure, directly or indirectly, practice any other profession, participate in any business, or be financially interested in any contract with, or in any franchise, or special privilege granted by the Government or any subdivision, agency, or instrumentality thereof, including government-owned or controlled corporations or their subsidiaries. They shall strictly avoid conflict of interest in the conduct of their office. The spouse and relatives by consanguinity or affinity within the fourth civil degree of the President shall not, during his tenure, be appointed as Members of the Constitutional Commissions, or the Office of the Ombudsman, or as Secretaries, Undersecretaries, chairmen or heads of bureaus or offices, including government-owned or controlled corporations and their subsidiaries. Section 14. Appointments extended by an Acting President shall remain effective, unless revoked by the elected President, within ninety days from his assumption or reassumption of office. Section 15. Two months immediately before the next presidential elections and up to the end of his term, a President or Acting President shall not make appointments, except temporary appointments to executive positions when continued vacancies therein will prejudice public service or endanger public safety. Section 16. The President shall nominate and, with the consent of the Commission on Appointments, appoint the heads of the executive departments, ambassadors, other public ministers and consuls, or officers of the armed forces from the rank of colonel or naval captain, and other officers whose appointments are vested in him in this Constitution. He shall also appoint all other officers of the Government whose appointments are not otherwise provided for by law, and those whom he may be authorized by law to appoint. The Congress may, by law, vest the appointment of other officers lower in rank in the President alone, in the courts, or in the heads of departments, agencies, commissions, or boards. The President shall have the power to make appointments during the recess of the Congress, whether voluntary or compulsory, but such appointments shall be effective only until disapproved by the Commission on Appointments or until the next adjournment of the Congress. Section 17. The President shall have control of all the executive departments, bureaus, and offices. He shall ensure that the laws be faithfully executed. Section 18. The President shall be the Commander-in-Chief of all armed forces of the Philippines and whenever it becomes necessary, he may call out such armed forces to prevent or suppress lawless violence, invasion or rebellion. In case of invasion or rebellion, when the public safety requires it, he may, for a period not exceeding sixty days, suspend the privilege of the writ of habeas corpus or place the Philippines or any part thereof under martial law. Within forty-eight hours from the proclamation of martial law or the suspension of the privilege of the writ of habeas corpus, the President shall submit a report in person or in writing to the Congress. The Congress, voting jointly, by a vote of at least a majority of all its Members in regular or special session, may revoke such proclamation or suspension, which revocation shall not be set aside by the President. Upon the initiative of the President, the Congress may, in the same manner, extend such proclamation or suspension for a

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1987 Philippine Constitution - The LawPhil Project

period to be determined by the Congress, if the invasion or rebellion shall persist and public safety requires it. The Congress, if not in session, shall, within twenty-four hours following such proclamation or suspension, convene in accordance with its rules without need of a call. The Supreme Court may review, in an appropriate proceeding filed by any citizen, the sufficiency of the factual basis of the proclamation of martial law or the suspension of the privilege of the writ or the extension thereof, and must promulgate its decision thereon within thirty days from its filing. A state of martial law does not suspend the operation of the Constitution, nor supplant the functioning of the civil courts or legislative assemblies, nor authorize the conferment of jurisdiction on military courts and agencies over civilians where civil courts are able to function, nor automatically suspend the privilege of the writ. The suspension of the privilege of the writ shall apply only to persons judicially charged for rebellion or offenses inherent in or directly connected with invasion. During the suspension of the privilege of the writ, any person thus arrested or detained shall be judicially charged within three days, otherwise he shall be released. Section 19. Except in cases of impeachment, or as otherwise provided in this Constitution, the President may grant reprieves, commutations, and pardons, and remit fines and forfeitures, after conviction by final judgment. He shall also have the power to grant amnesty with the concurrence of a majority of all the Members of the Congress. Section 20. The President may contract or guarantee foreign loans on behalf of the Republic of the Philippines with the prior concurrence of the Monetary Board, and subject to such limitations as may be provided by law. The Monetary Board shall, within thirty days from the end of every quarter of the calendar year, submit to the Congress a complete report of its decision on applications for loans to be contracted or guaranteed by the Government or government-owned and controlled corporations which would have the effect of increasing the foreign debt, and containing other matters as may be provided by law. Section 21. No treaty or international agreement shall be valid and effective unless concurred in by at least twothirds of all the Members of the Senate. Section 22. The President shall submit to the Congress, within thirty days from the opening of every regular session as the basis of the general appropriations bill, a budget of expenditures and sources of financing, including receipts from existing and proposed revenue measures. Section 23. The President shall address the Congress at the opening of its regular session. He may also appear before it at any other time.

ARTICLE VIII JUDICIAL DEPARTMENT Section 1. The judicial power shall be vested in one Supreme Court and in such lower courts as may be established by law. 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. Section 2. The Congress shall have the power to define, prescribe, and apportion the jurisdiction of the various courts but may not deprive the Supreme Court of its jurisdiction over cases enumerated in Section 5 hereof. No law shall be passed reorganizing the Judiciary when it undermines the security of tenure of its Members. Section 3. The Judiciary shall enjoy fiscal autonomy. Appropriations for the Judiciary may not be reduced by the

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1987 Philippine Constitution - The LawPhil Project

legislature below the amount appropriated for the previous year and, after approval, shall be automatically and regularly released. Section 4. 1. The Supreme Court shall be composed of a Chief Justice and fourteen Associate Justices. It may sit en banc or in its discretion, in division of three, five, or seven Members. Any vacancy shall be filled within ninety days from the occurrence thereof. 2. All cases involving the constitutionality of a treaty, international or executive agreement, or law, which shall be heard by the Supreme Court en banc, and all other cases which under the Rules of Court are required to be heard en banc, including those involving the constitutionality, application, or operation of presidential decrees, proclamations, orders, instructions, ordinances, and other regulations, shall be decided with the concurrence of a majority of the Members who actually took part in the deliberations on the issues in the case and voted thereon. 3. Cases or matters heard by a division shall be decided or resolved with the concurrence of a majority of the Members who actually took part in the deliberations on the issues in the case and voted thereon, and in no case without the concurrence of at least three of such Members. When the required number is not obtained, the case shall be decided en banc: Provided, that no doctrine or principle of law laid down by the court in a decision rendered en banc or in division may be modified or reversed except by the court sitting en banc. Section 5. The Supreme Court shall have the following powers: 1. Exercise original jurisdiction over cases affecting ambassadors, other public ministers and consuls, and over petitions for certiorari, prohibition, mandamus, quo warranto, and habeas corpus. 2. Review, revise, reverse, modify, or affirm on appeal or certiorari, as the law or the Rules of Court may provide, final judgments and orders of lower courts in: a. All cases in which the constitutionality or validity of any treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in question. b. All cases involving the legality of any tax, impost, assessment, or toll, or any penalty imposed in relation thereto. c. All cases in which the jurisdiction of any lower court is in issue. d. All criminal cases in which the penalty imposed is reclusion perpetua or higher. e. All cases in which only an error or question of law is involved. 3. Assign temporarily judges of lower courts to other stations as public interest may require. Such temporary assignment shall not exceed six months without the consent of the judge concerned. 4. Order a change of venue or place of trial to avoid a miscarriage of justice. 5. Promulgate rules concerning the protection and enforcement of constitutional rights, pleading, practice, and procedure in all courts, the admission to the practice of law, the integrated bar, and legal assistance to the under-privileged. Such rules shall provide a simplified and inexpensive procedure for the speedy disposition of cases, shall be uniform for all courts of the same grade, and shall not diminish, increase, or modify substantive rights. Rules of procedure of special courts and quasi-judicial bodies shall remain effective unless disapproved by the Supreme Court. 6. Appoint all officials and employees of the Judiciary in accordance with the Civil Service Law. Section 6. The Supreme Court shall have administrative supervision over all courts and the personnel thereof. Section 7. 1. No person shall be appointed Member of the Supreme Court or any lower collegiate court unless he is a

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1987 Philippine Constitution - The LawPhil Project

natural-born citizen of the Philippines. A Member of the Supreme Court must be at least forty years of age, and must have been for fifteen years or more, a judge of a lower court or engaged in the practice of law in the Philippines. 2. The Congress shall prescribe the qualifications of judges of lower courts, but no person may be appointed judge thereof unless he is a citizen of the Philippines and a member of the Philippine Bar. 3. A Member of the Judiciary must be a person of proven competence, integrity, probity, and independence. Section 8. 1. A Judicial and Bar Council is hereby created under the supervision of the Supreme Court composed of the Chief Justice as ex officio Chairman, the Secretary of Justice, and a representative of the Congress as ex officio Members, a representative of the Integrated Bar, a professor of law, a retired Member of the Supreme Court, and a representative of the private sector. 2. The regular members of the Council shall be appointed by the President for a term of four years with the consent of the Commission on Appointments. Of the Members first appointed, the representative of the Integrated Bar shall serve for four years, the professor of law for three years, the retired Justice for two years, and the representative of the private sector for one year. 3. The Clerk of the Supreme Court shall be the Secretary ex officio of the Council and shall keep a record of its proceedings. 4. The regular Members of the Council shall receive such emoluments as may be determined by the Supreme Court. The Supreme Court shall provide in its annual budget the appropriations for the Council. 5. The Council shall have the principal function of recommending appointees to the judiciary. It may exercise such other functions and duties as the Supreme Court may assign to it. Section 9. The Members of the Supreme Court and judges of lower courts shall be appointed by the President from a list of at least three nominees preferred by the Judicial and Bar Council for every vacancy. Such appointments need no confirmation. For the lower courts, the President shall issued the appointment within ninety days from the submission of the list. Section 10. The salary of the Chief Justice and of the Associate Justices of the Supreme Court, and of judges of lower courts shall be fixed by law. During the continuance in office, their salary shall not be decreased. Section 11. The Members of the Supreme Court and judges of the lower court shall hold office during good behavior until they reach the age of seventy years or become incapacitated to discharge the duties of their office. The Supreme Court en banc shall have the power to discipline judges of lower courts, or order their dismissal by a vote of majority of the Members who actually took part in the deliberations on the issues in the case and voted in thereon. Section 12. The Members of the Supreme Court and of other courts established by law shall not be designated to any agency performing quasi-judicial or administrative function. Section 13. The conclusions of the Supreme Court in any case submitted to it for the decision en banc or in division shall be reached in consultation before the case the case assigned to a Member for the writing of the opinion of the Court. A certification to this effect signed by the Chief Justice shall be issued and a copy thereof attached to the record of the case and served upon the parties. Any Member who took no part, or dissented, or abstained from a decision or resolution must state the reason therefor. The same requirements shall be observed by all lower collegiate court. Section 14. No decision shall be rendered by any court without expressing therein clearly and distinctly the facts and the law on which it is based. No petition for review or motion for reconsideration of a decision of the court shall be refused due course or denied without stating the legal basis therefor.

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1987 Philippine Constitution - The LawPhil Project

Section 15. 1. All cases or matters filed after the effectivity of this Constitution must be decided or resolved within twentyfour months from date of submission for the Supreme Court, and, unless reduced by the Supreme Court, twelve months for all lower collegiate courts, and three months for all other lower courts. 2. A case or matter shall be deemed submitted for decision or resolution upon the filing of the last pleading, brief, or memorandum required by the Rules of Court or by the court itself. 3. Upon the expiration of the corresponding period, a certification to this effect signed by the Chief Justice or the presiding judge shall forthwith be issued and a copy thereof attached to the record of the case or matter, and served upon the parties. The certification shall state why a decision or resolution has not been rendered or issued within said period. 4. Despite the expiration of the applicable mandatory period, the court, without prejudice to such responsibility as may have been incurred in consequence thereof, shall decide or resolve the case or matter submitted thereto for determination, without further delay. Section 16. The Supreme Court shall, within thirty days from the opening of each regular session of the Congress, submit to the President and the Congress an annual report on the operations and activities of the Judiciary.

ARTICLE IX CONSTITUTIONAL COMMISSION A. COMMON PROVISIONS Section 1. The Constitutional Commissions, which shall be independent, are the Civil Service Commission, the Commission on Elections, and the Commission on Audit. Section 2. No member of a Constitutional Commission shall, during his tenure, hold any other office or employment. Neither shall he engage in the practice of any profession or in the active management or control of any business which, in any way, may be affected by the functions of his office, nor shall he be financially interested, directly or indirectly, in any contract with, or in any franchise or privilege granted by the Government, any of its subdivisions, agencies, or instrumentalities, including government-owned or controlled corporations or their subsidiaries. Section 3. The salary of the Chairman and the Commissioners shall be fixed by law and shall not be decreased during their tenure. Section 4. The Constitutional Commissions shall appoint their officials and employees in accordance with law. Section 5. The Commission shall enjoy fiscal autonomy. Their approved annual appropriations shall be automatically and regularly released. Section 6. Each Commission en banc may promulgate its own rules concerning pleadings and practice before it or before any of its offices. Such rules, however, shall not diminish, increase, or modify substantive rights. Section 7. Each Commission shall decide by a majority vote of all its Members, any case or matter brought before it within sixty days from the date of its submission for decision or resolution. A case or matter is deemed submitted for decision or resolution upon the filing of the last pleading, brief, or memorandum required by the rules of the Commission or by the Commission itself. Unless otherwise provided by this Constitution or by law, any decision, order, or ruling of each Commission may be brought to the Supreme Court on certiorari by the aggrieved party within thirty days from receipt of a copy thereof. Section 8. Each Commission shall perform such other functions as may be provided by law. B. THE CIVIL SERVICE COMMISSION
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1987 Philippine Constitution - The LawPhil Project

Section 1. 1. The civil service shall be administered by the Civil Service Commission composed of a Chairman and two Commissioners who shall be natural-born citizens of the Philippines and, at the time of their appointment, at least thirty-five years of age, with proven capacity for public administration, and must not have been candidates for any elective position in the elections immediately preceding their appointment. 2. The Chairman and the Commissioners shall be appointed by the President with the consent of the Commission on Appointments for a term of seven years without reappointment. Of those first appointed, the Chairman shall hold office for seven years, a Commissioner for five years, and another Commissioner for three years, without reappointment. Appointment to any vacancy shall be only for the unexpired term of the predecessor. In no case shall any Member be appointed or designated in a temporary or acting capacity. Section 2. 1. The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charters. 2. Appointments in the civil service shall be made only according to merit and fitness to be determined, as far as practicable, and, except to positions which are policy-determining, primarily confidential, or highly technical, by competitive examination. 3. No officer or employee of the civil service shall be removed or suspended except for cause provided by law. 4. No officer or employee in the civil service shall engage, directly or indirectly, in any electioneering or partisan political campaign. 5. The right to self-organization shall not be denied to government employees. 6. Temporary employees of the Government shall be given such protection as may be provided by law. Section 3. The Civil Service Commission, as the central personnel agency of the Government, shall establish a career service and adopt measures to promote morale, efficiency, integrity, responsiveness, progressiveness, and courtesy in the civil service. It shall strengthen the merit and rewards system, integrate all human resources development programs for all levels and ranks, and institutionalize a management climate conducive to public accountability. It shall submit to the President and the Congress an annual report on its personnel programs. Section 4. All public officers and employees shall take an oath or affirmation to uphold and defend this Constitution. Section 5. The Congress shall provide for the standardization of compensation of government officials and employees, including those in government-owned or controlled corporations with original charters, taking into account the nature of the responsibilities pertaining to, and the qualifications required for, their positions. Section 6. No candidate who has lost in any election, shall within one year after such election, be appointed to any office in the Government or any Government-owned or controlled corporations or in any of their subsidiaries. Section 7. No elective official shall be eligible for appointment or designation in any capacity to any public office or position during his tenure. Unless otherwise allowed by law or by the primary functions of his position, no appointive official shall hold any other office or employment in the Government or any subdivision, agency or instrumentality thereof, including Government-owned or controlled corporations or their subsidiaries. Section 8. No elective or appointive public officer or employee shall receive additional, double, or indirect compensation, unless specifically authorized by law, nor accept without the consent of the Congress, any present, emolument, office, or title of any kind from any foreign government. Pensions or gratuities shall not be considered as additional, double, or indirect compensation.

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1987 Philippine Constitution - The LawPhil Project

C. THE COMMISSION ON ELECTIONS Section 1. 1. There shall be a Commission on Elections composed of a Chairman and six Commissioners who shall be natural-born citizens of the Philippines and, at the time of their appointment, at least thirty-five years of age, holders of a college degree, and must not have been candidates for any elective positions in the immediately preceding elections. However, a majority thereof, including the Chairman, shall be members of the Philippine Bar who have been engaged in the practice of law for at least ten years. 2. The Chairman and the Commissioners shall be appointed by the President with the consent of the Commission on Appointments for a term of seven years without reappointment. Of those first appointed, three Members shall hold office for seven years, two Members for five years, and the last Members for three years, without reappointment. Appointment to any vacancy shall be only for the unexpired term of the predecessor. In no case shall any Member be appointed or designated in a temporary or acting capacity. Section 2. The Commission on Elections shall exercise the following powers and functions: 1. Enforce and administer all laws and regulations relative to the conduct of an election, plebiscite, initiative, referendum, and recall. 2. Exercise exclusive original jurisdiction over all contests relating to the elections, returns, and qualifications of all elective regional, provincial, and city officials, and appellate jurisdiction over all contests involving elective municipal officials decided by trial courts of general jurisdiction, or involving elective barangay officials decided by trial courts of limited jurisdiction. Decisions, final orders, or rulings of the Commission on election contests involving elective municipal and barangay offices shall be final, executory, and not appealable. 3. Decide, except those involving the right to vote, all questions affecting elections, including determination of the number and location of polling places, appointment of election officials and inspectors, and registration of voters. 4. Deputize, with the concurrence of the President, law enforcement agencies and instrumentalities of the Government, including the Armed Forces of the Philippines, for the exclusive purpose of ensuring free, orderly, honest, peaceful, and credible elections. 5. Register, after sufficient publication, political parties, organizations, or coalitions which, in addition to other requirements, must present their platform or program of government; and accredit citizens' arms of the Commission on Elections. Religious denominations and sects shall not be registered. Those which seek to achieve their goals through violence or unlawful means, or refuse to uphold and adhere to this Constitution, or which are supported by any foreign government shall likewise be refused registration. Financial contributions from foreign governments and their agencies to political parties, organizations, coalitions, or candidates related to elections, constitute interference in national affairs, and, when accepted, shall be an additional ground for the cancellation of their registration with the Commission, in addition to other penalties that may be prescribed by law. 6. File, upon a verified complaint, or on its own initiative, petitions in court for inclusion or exclusion of voters; investigate and, where appropriate, prosecute cases of violations of election laws, including acts or omissions constituting election frauds, offenses, and malpractices. 7. Recommend to the Congress effective measures to minimize election spending, including limitation of places where propaganda materials shall be posted, and to prevent and penalize all forms of election frauds, offenses, malpractices, and nuisance candidacies. 8. Recommend to the President the removal of any officer or employee it has deputized, or the imposition of any other disciplinary action, for violation or disregard of, or disobedience to, its directive, order, or decision. 9. Submit to the President and the Congress, a comprehensive report on the conduct of each election,

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1987 Philippine Constitution - The LawPhil Project

plebiscite, initiative, referendum, or recall. Section 3. The Commission on Elections may sit en banc or in two divisions, and shall promulgate its rules of procedure in order to expedite disposition of election cases, including pre- proclamation controversies. All such election cases shall be heard and decided in division, provided that motions for reconsideration of decisions shall be decided by the Commission en banc. Section 4. The Commission may, during the election period, supervise or regulate the enjoyment or utilization of all franchises or permits for the operation of transportation and other public utilities, media of communication or information, all grants, special privileges, or concessions granted by the Government or any subdivision, agency, or instrumentality thereof, including any government-owned or controlled corporation or its subsidiary. Such supervision or regulation shall aim to ensure equal opportunity, time, and space ,and the right to reply, including reasonable, equal rates therefor, for public information campaigns and forums among candidates in connection with the objective of holding free, orderly, honest, peaceful, and credible elections. Section 5. No pardon, amnesty, parole, or suspension of sentence for violation of election laws, rules, and regulations shall be granted by the President without the favorable recommendation of the Commission. Section 6. A free and open party system shall be allowed to evolve according to the free choice of the people, subject to the provisions of this Article. Section 7. No votes cast in favor of a political party, organization, or coalition shall be valid, except for those registered under the party-list system as provided in this Constitution. Section 8. Political parties, or organizations or coalitions registered under the party-list system, shall not be represented in the voters' registration boards, boards of election inspectors, boards of canvassers, or other similar bodies. However, they shall be entitled to appoint poll watchers in accordance with law. Section 9. Unless otherwise fixed by the Commission in special cases, the election period shall commence ninety days before the day of election and shall end thirty days thereafter. Section 10. Bona fide candidates for any public office shall be free from any form of harassment and discrimination. Section 11. Funds certified by the Commission as necessary to defray the expenses for holding regular and special elections, plebiscites, initiatives, referenda, and recalls, shall be provided in the regular or special appropriations and, once approved, shall be released automatically upon certification by the Chairman of the Commission D. THE COMMISSION ON AUDIT Section 1. 1. There shall be a Commission on Audit composed of a Chairman and two Commissioners, who shall be natural-born citizens of the Philippines and, at the time of their appointment, at least thirty-five years of age, Certified Public Accountants with not less than ten years of auditing experience, or members of the Philippine Bar who have been engaged in the practice of law for at least ten years, and must not have been candidates for any elective position in the elections immediately preceding their appointment. At no time shall all Members of the Commission belong to the same profession. 2. The Chairman and the Commissioners shall be appointed by the President with the consent of the Commission on Appointments for a term of seven years without reappointment. Of those first appointed, the Chairman shall hold office for seven years, one Commissioner for five years, and the other Commissioner for three years, without reappointment. Appointment to any vacancy shall be only for the unexpired portion of the term of the predecessor. In no case shall any Member be appointed or designated in a temporary or acting capacity. Section 2. 1. The Commission on Audit shall have the power, authority, and duty to examine, audit, and settle all

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1987 Philippine Constitution - The LawPhil Project

accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property, owned or held in trust by, or pertaining to, the Government, or any of its subdivisions, agencies, or instrumentalities, including government-owned or controlled corporations with original charters, and on a post- audit basis: a. constitutional bodies, commissions and offices that have been granted fiscal autonomy under this Constitution; b. autonomous state colleges and universities; c. other government-owned or controlled corporations and their subsidiaries; and d. such non-governmental entities receiving subsidy or equity, directly or indirectly, from or through the Government, which are required by law or the granting institution to submit to such audit as a condition of subsidy or equity. However, where the internal control system of the audited agencies is inadequate, the Commission may adopt such measures, including temporary or special pre-audit, as are necessary and appropriate to correct the deficiencies. It shall keep the general accounts of the Government and, for such period as may be provided by law, preserve the vouchers and other supporting papers pertaining thereto. 2. The Commission shall have exclusive authority, subject to the limitations in this Article, to define the scope of its audit and examination, establish the techniques and methods required therefor, and promulgate accounting and auditing rules and regulations, including those for the prevention and disallowance of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures or uses of government funds and properties. Section 3. No law shall be passed exempting any entity of the Government or its subsidiaries in any guise whatever, or any investment of public funds, from the jurisdiction of the Commission on Audit. Section 4. The Commission shall submit to the President and the Congress, within the time fixed by law, an annual report covering the financial condition and operation of the Government, its subdivisions, agencies, and instrumentalities, including government-owned or controlled corporations, and non-governmental entities subject to its audit, and recommend measures necessary to improve their effectiveness and efficiency. It shall submit such other reports as may be required by law.

ARTICLE X LOCAL GOVERNMENT

GENERAL PROVISIONS Section 1. The territorial and political subdivisions of the Republic of the Philippines are the provinces, cities, municipalities, and barangays. There shall be autonomous regions in Muslim Mindanao and the Cordilleras as hereinafter provided. Section 2. The territorial and political subdivisions shall enjoy local autonomy. Section 3. The Congress shall enact a local government code which shall provide for a more responsive and accountable local government structure instituted through a system of decentralization with effective mechanisms of recall, initiative, and referendum, allocate among the different local government units their powers, responsibilities, and resources, and provide for the qualifications, election, appointment and removal, term, salaries, powers and functions and duties of local officials, and all other matters relating to the organization and operation of the local units. Section 4. The President of the Philippines shall exercise general supervision over local governments. Provinces with respect to component cities and municipalities, and cities and municipalities with respect to component

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1987 Philippine Constitution - The LawPhil Project

barangays, shall ensure that the acts of their component units are within the scope of their prescribed powers and functions. Section 5. Each local government unit shall have the power to create its own sources of revenues and to levy taxes, fees and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local governments. Section 6. Local government units shall have a just share, as determined by law, in the national taxes which shall be automatically released to them. Section 7. Local governments shall be entitled to an equitable share in the proceeds of the utilization and development of the national wealth within their respective areas, in the manner provided by law, including sharing the same with the inhabitants by way of direct benefits. Section 8. The term of office of elective local officials, except barangay officials, which shall be determined by law, shall be three years and no such official shall serve for more than three consecutive terms. Voluntary renunciation of the office for any length of time shall not be considered as an interruption in the continuity of his service for the full term for which he was elected. Section 9. Legislative bodies of local governments shall have sectoral representation as may be prescribed by law. Section 10. No province, city, municipality, or barangay may be created, divided, merged, abolished, or its boundary substantially altered, except in accordance with the criteria established in the local government code and subject to approval by a majority of the votes cast in a plebiscite in the political units directly affected. Section 11. The Congress may, by law, create special metropolitan political subdivisions, subject to a plebiscite as set forth in Section 10 hereof. The component cities and municipalities shall retain their basic autonomy and shall be entitled to their own local executive and legislative assemblies. The jurisdiction of the metropolitan authority that will thereby be created shall be limited to basic services requiring coordination. Section 12. Cities that are highly urbanized, as determined by law, and component cities whose charters prohibit their voters from voting for provincial elective officials, shall be independent of the province. The voters of component cities within a province, whose charters contain no such prohibition, shall not be deprived of their right to vote for elective provincial officials. Section 13. Local government units may group themselves, consolidate or coordinate their efforts, services, and resources for purposes commonly beneficial to them in accordance with law. Section 14. The President shall provide for regional development councils or other similar bodies composed of local government officials, regional heads of departments and other government offices, and representatives from non-governmental organizations within the regions for purposes of administrative decentralization to strengthen the autonomy of the units therein and to accelerate the economic and social growth and development of the units in the region. AUTONOMOUS REGIONS Section 15. There shall be created autonomous regions in Muslim Mindanao and in the Cordilleras consisting of provinces, cities, municipalities, and geographical areas sharing common and distinctive historical and cultural heritage, economic and social structures, and other relevant characteristics within the framework of this Constitution and the national sovereignty as well as territorial integrity of the Republic of the Philippines. Section 16. The President shall exercise general supervision over autonomous regions to ensure that laws are faithfully executed. Section 17. All powers, functions, and responsibilities not granted by this Constitution or by law to the autonomous regions shall be vested in the National Government. Section 18. The Congress shall enact an organic act for each autonomous region with the assistance and

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1987 Philippine Constitution - The LawPhil Project

participation of the regional consultative commission composed of representatives appointed by the President from a list of nominees from multi-sectoral bodies. The organic act shall define the basic structure of government for the region consisting of the executive department and legislative assembly, both of which shall be elective and representative of the constituent political units. The organic acts shall likewise provide for special courts with personal, family, and property law jurisdiction consistent with the provisions of this Constitution and national laws. The creation of the autonomous region shall be effective when approved by majority of the votes cast by the constituent units in a plebiscite called for the purpose, provided that only provinces, cities, and geographic areas voting favorably in such plebiscite shall be included in the autonomous region. Section 19. The first Congress elected under this Constitution shall, within eighteen months from the time of organization of both Houses, pass the organic acts for the autonomous regions in Muslim Mindanao and the Cordilleras. Section 20. Within its territorial jurisdiction and subject to the provisions of this Constitution and national laws, the organic act of autonomous regions shall provide for legislative powers over:

1. 2. 3. 4. 5. 6. 7. 8. 9.

Administrative organization; Creation of sources of revenues; Ancestral domain and natural resources; Personal, family, and property relations; Regional urban and rural planning development; Economic, social, and tourism development; Educational policies; Preservation and development of the cultural heritage; and Such other matters as may be authorized by law for the promotion of the general welfare of the people of the region.

Section 21. The preservation of peace and order within the regions shall be the responsibility of the local police agencies which shall be organized, maintained, supervised, and utilized in accordance with applicable laws. The defense and security of the regions shall be the responsibility of the National Government.

ARTICLE XI ACCOUNTABILITY OF PUBLIC OFFICERS Section 1. Public office is a public trust. Public officers and employees must, at all times, be accountable to the people, serve them with utmost responsibility, integrity, loyalty, and efficiency; act with patriotism and justice, and lead modest lives. Section 2. The President, the Vice-President, the Members of the Supreme Court, the Members of the Constitutional Commissions, and the Ombudsman may be removed from office on impeachment for, and conviction of, culpable violation of the Constitution, treason, bribery, graft and corruption, other high crimes, or betrayal of public trust. All other public officers and employees may be removed from office as provided by law, but not by impeachment. Section 3. 1. The House of Representatives shall have the exclusive power to initiate all cases of impeachment. 2. A verified complaint for impeachment may be filed by any Member of the House of Representatives or by any citizen upon a resolution or endorsement by any Member thereof, which shall be included in the Order of Business within ten session days, and referred to the proper Committee within three session days thereafter. The Committee, after hearing, and by a majority vote of all its Members, shall submit its report to the House within sixty session days from such referral, together with the corresponding resolution. The resolution shall be calendared for consideration by the House within ten session days from receipt thereof.

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1987 Philippine Constitution - The LawPhil Project

3. A vote of at least one-third of all the Members of the House shall be necessary either to affirm a favorable resolution with the Articles of Impeachment of the Committee, or override its contrary resolution. The vote of each Member shall be recorded. 4. In case the verified complaint or resolution of impeachment is filed by at least one-third of all the Members of the House, the same shall constitute the Articles of Impeachment, and trial by the Senate shall forthwith proceed. 5. No impeachment proceedings shall be initiated against the same official more than once within a period of one year. 6. The Senate shall have the sole power to try and decide all cases of impeachment. When sitting for that purpose, the Senators shall be on oath or affirmation. When the President of the Philippines is on trial, the Chief Justice of the Supreme Court shall preside, but shall not vote. No person shall be convicted without the concurrence of two-thirds of all the Members of the Senate. 7. Judgment in cases of impeachment shall not extend further than removal from office and disqualification to hold any office under the Republic of the Philippines, but the party convicted shall nevertheless be liable and subject to prosecution, trial, and punishment, according to law. 8. The Congress shall promulgate its rules on impeachment to effectively carry out the purpose of this section. Section 4. The present anti-graft court known as the Sandiganbayan shall continue to function and exercise its jurisdiction as now or hereafter may be provided by law. Section 5. There is hereby created the independent Office of the Ombudsman, composed of the Ombudsman to be known as Tanodbayan, one overall Deputy and at least one Deputy each for Luzon, Visayas, and Mindanao. A separate Deputy for the military establishment may likewise be appointed. Section 6. The officials and employees of the Office of the Ombudsman, other than the Deputies, shall be appointed by the Ombudsman, according to the Civil Service Law. Section 7. The existing Tanodbayan shall hereafter be known as the Office of the Special Prosecutor. It shall continue to function and exercise its powers as now or hereafter may be provided by law, except those conferred on the Office of the Ombudsman created under this Constitution. Section 8. The Ombudsman and his Deputies shall be natural-born citizens of the Philippines, and at the time of their appointment, at least forty years old, of recognized probity and independence, and members of the Philippine Bar, and must not have been candidates for any elective office in the immediately preceding election. The Ombudsman must have, for ten years or more, been a judge or engaged in the practice of law in the Philippines. During their tenure, they shall be subject to the same disqualifications and prohibitions as provided for in Section 2 of Article 1X-A of this Constitution. Section 9. The Ombudsman and his Deputies shall be appointed by the President from a list of at least six nominees prepared by the Judicial and Bar Council, and from a list of three nominees for every vacancy thereafter. Such appointments shall require no confirmation. All vacancies shall be filled within three months after they occur. Section 10. The Ombudsman and his Deputies shall have the rank of Chairman and Members, respectively, of the Constitutional Commissions, and they shall receive the same salary which shall not be decreased during their term of office. Section 11. The Ombudsman and his Deputies shall serve for a term of seven years without reappointment. They shall not be qualified to run for any office in the election immediately succeeding their cessation from office. Section 12. The Ombudsman and his Deputies, as protectors of the people, shall act promptly on complaints filed in any form or manner against public officials or employees of the Government, or any subdivision, agency or instrumentality thereof, including government-owned or controlled corporations, and shall, in appropriate cases, notify the complainants of the action taken and the result thereof.

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1987 Philippine Constitution - The LawPhil Project

Section 13. The Office of the Ombudsman shall have the following powers, functions, and duties: 1. Investigate on its own, or on complaint by any person, any act or omission of any public official, employee, office or agency, when such act or omission appears to be illegal, unjust, improper, or inefficient. 2. Direct, upon complaint or at its own instance, any public official or employee of the Government, or any subdivision, agency or instrumentality thereof, as well as of any government-owned or controlled corporation with original charter, to perform and expedite any act or duty required by law, or to stop, prevent, and correct any abuse or impropriety in the performance of duties. 3. Direct the officer concerned to take appropriate action against a public official or employee at fault, and recommend his removal, suspension, demotion, fine, censure, or prosecution, and ensure compliance therewith. 4. Direct the officer concerned, in any appropriate case, and subject to such limitations as may be provided by law, to furnish it with copies of documents relating to contracts or transactions entered into by his office involving the disbursement or use of public funds or properties, and report any irregularity to the Commission on Audit for appropriate action. 5. Request any government agency for assistance and information necessary in the discharge of its responsibilities, and to examine, if necessary, pertinent records and documents. 6. Publicize matters covered by its investigation when circumstances so warrant and with due prudence. 7. Determine the causes of inefficiency, red tape, mismanagement, fraud, and corruption in the Government and make recommendations for their elimination and the observance of high standards of ethics and efficiency. 8. Promulgate its rules of procedure and exercise such other powers or perform such functions or duties as may be provided by law. Section 14. The Office of the Ombudsman shall enjoy fiscal autonomy. Its approved annual appropriations shall be automatically and regularly released. Section 15. The right of the State to recover properties unlawfully acquired by public officials or employees, from them or from their nominees or transferees, shall not be barred by prescription, laches, or estoppel. Section 16. No loan, guaranty, or other form of financial accommodation for any business purpose may be granted, directly or indirectly, by any government-owned or controlled bank or financial institution to the President, the Vice-President, the Members of the Cabinet, the Congress, the Supreme Court, and the Constitutional Commissions, the Ombudsman, or to any firm or entity in which they have controlling interest, during their tenure. Section 17. A public officer or employee shall, upon assumption of office and as often thereafter as may be required by law, submit a declaration under oath of his assets, liabilities, and net worth. In the case of the President, the Vice-President, the Members of the Cabinet, the Congress, the Supreme Court, the Constitutional Commissions and other constitutional offices, and officers of the armed forces with general or flag rank, the declaration shall be disclosed to the public in the manner provided by law. Section 18. Public officers and employees owe the State and this Constitution allegiance at all times and any public officer or employee who seeks to change his citizenship or acquire the status of an immigrant of another country during his tenure shall be dealt with by law.

ARTICLE XII NATIONAL ECONOMY AND PATRIMONY Section 1. The goals of the national economy are a more equitable distribution of opportunities, income, and wealth; a sustained increase in the amount of goods and services produced by the nation for the benefit of the

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1987 Philippine Constitution - The LawPhil Project

people; and an expanding productivity as the key to raising the quality of life for all, especially the underprivileged. The State shall promote industrialization and full employment based on sound agricultural development and agrarian reform, through industries that make full of efficient use of human and natural resources, and which are competitive in both domestic and foreign markets. However, the State shall protect Filipino enterprises against unfair foreign competition and trade practices. In the pursuit of these goals, all sectors of the economy and all region s of the country shall be given optimum opportunity to develop. Private enterprises, including corporations, cooperatives, and similar collective organizations, shall be encouraged to broaden the base of their ownership. Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least 60 per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the development of waterpower, beneficial use may be the measure and limit of the grant. The State shall protect the nations marine wealth in its archipelagic waters, territorial sea, and exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens. The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as cooperative fish farming, with priority to subsistence fishermen and fish workers in rivers, lakes, bays, and lagoons. The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of local scientific and technical resources. The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution. Section 3. Lands of the public domain are classified into agricultural, forest or timber, mineral lands and national parks. Agricultural lands of the public domain may be further classified by law according to the uses to which they may be devoted. Alienable lands of the public domain shall be limited to agricultural lands. Private corporations or associations may not hold such alienable lands of the public domain except by lease, for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and not to exceed one thousand hectares in area. Citizens of the Philippines may lease not more than five hundred hectares, or acquire not more than twelve hectares thereof, by purchase, homestead, or grant. Taking into account the requirements of conservation, ecology, and development, and subject to the requirements of agrarian reform, the Congress shall determine, by law, the size of lands of the public domain which may be acquired, developed, held, or leased and the conditions therefor. Section 4. The Congress shall, as soon as possible, determine, by law, the specific limits of forest lands and national parks, marking clearly their boundaries on the ground. Thereafter, such forest lands and national parks shall be conserved and may not be increased nor diminished, except by law. The Congress shall provide for such period as it may determine, measures to prohibit logging in endangered forests and watershed areas. Section 5. The State, subject to the provisions of this Constitution and national development policies and programs, shall protect the rights of indigenous cultural communities to their ancestral lands to ensure their economic, social, and cultural well-being. The Congress may provide for the applicability of customary laws governing property rights or relations in determining the ownership and extent of ancestral domain.

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1987 Philippine Constitution - The LawPhil Project

Section 6. The use of property bears a social function, and all economic agents shall contribute to the common good. Individuals and private groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own, establish, and operate economic enterprises, subject to the duty of the State to promote distributive justice and to intervene when the common good so demands. 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. Section 8. Notwithstanding the provisions of Section 7 of this Article, a natural-born citizen of the Philippines who has lost his Philippine citizenship may be a transferee of private lands, subject to limitations provided by law. Section 9. The Congress may establish an independent economic and planning agency headed by the President, which shall, after consultations with the appropriate public agencies, various private sectors, and local government units, recommend to Congress, and implement continuing integrated and coordinated programs and policies for national development. Until the Congress provides otherwise, the National Economic and Development Authority shall function as the independent planning agency of the government. Section 10. The Congress shall, upon recommendation of the economic and planning agency, when the national interest dictates, reserve to citizens of the Philippines or to corporations or associations at least sixty per centum of whose capital is owned by such citizens, or such higher percentage as Congress may prescribe, certain areas of investments. The Congress shall enact measures that will encourage the formation and operation of enterprises whose capital is wholly owned by Filipinos. In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos. The State shall regulate and exercise authority over foreign investments within its national jurisdiction and in accordance with its national goals and priorities. Section 11. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by such citizens; nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires. The State shall encourage equity participation in public utilities by the general public. The participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in its capital, and all the executive and managing officers of such corporation or association must be citizens of the Philippines. Section 12. The State shall promote the preferential use of Filipino labor, domestic materials and locally produced goods, and adopt measures that help make them competitive. Section 13. The State shall pursue a trade policy that serves the general welfare and utilizes all forms and arrangements of exchange on the basis of equality and reciprocity. Section 14. The sustained development of a reservoir of national talents consisting of Filipino scientists, entrepreneurs, professionals, managers, high-level technical manpower and skilled workers and craftsmen in all fields shall be promoted by the State. The State shall encourage appropriate technology and regulate its transfer for the national benefit. The practice of all professions in the Philippines shall be limited to Filipino citizens, save in cases prescribed by law. Section 15. The Congress shall create an agency to promote the viability and growth of cooperatives as instruments for social justice and economic development. Section 16. The Congress shall not, except by general law, provide for the formation, organization, or regulation of private corporations. Government-owned or controlled corporations may be created or established by special charters in the interest of the common good and subject to the test of economic viability.

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1987 Philippine Constitution - The LawPhil Project

Section 17. In times of national emergency, when the public interest so requires, the State may, during the emergency and under reasonable terms prescribed by it, temporarily take over or direct the operation of any privately-owned public utility or business affected with public interest. Section 18. The State may, in the interest of national welfare or defense, establish and operate vital industries and, upon payment of just compensation, transfer to public ownership utilities and other private enterprises to be operated by the Government. Section 19. The State shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or unfair competition shall be allowed. Section 20. The Congress shall establish an independent central monetary authority, the members of whose governing board must be natural-born Filipino citizens, of known probity, integrity, and patriotism, the majority of whom shall come from the private sector. They shall also be subject to such other qualifications and disabilities as may be prescribed by law. The authority shall provide policy direction in the areas of money, banking, and credit. It shall have supervision over the operations of banks and exercise such regulatory powers as may be provided by law over the operations of finance companies and other institutions performing similar functions. Until the Congress otherwise provides, the Central Bank of the Philippines operating under existing laws, shall function as the central monetary authority. Section 21. Foreign loans may only be incurred in accordance with law and the regulation of the monetary authority. Information on foreign loans obtained or guaranteed by the Government shall be made available to the public. Section 22. Acts which circumvent or negate any of the provisions of this Article shall be considered inimical to the national interest and subject to criminal and civil sanctions, as may be provided by law.

ARTICLE XIII SOCIAL JUSTICE AND HUMAN RIGHTS Section 1. The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, reduce social, economic, and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good. To this end, the State shall regulate the acquisition, ownership, use, and disposition of property and its increments. Section 2. The promotion of social justice shall include the commitment to create economic opportunities based on freedom of initiative and self-reliance. LABOR Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns to investments, and to expansion and growth.

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1987 Philippine Constitution - The LawPhil Project

AGRARIAN AND NATURAL RESOURCES REFORM Section 4. The State shall, by law, undertake an agrarian reform program founded on the right of farmers and regular farmworkers who are landless, to own directly or collectively the lands they till or, in the case of other farmworkers, to receive a just share of the fruits thereof. To this end, the State shall encourage and undertake the just distribution of all agricultural lands, subject to such priorities and reasonable retention limits as the Congress may prescribe, taking into account ecological, developmental, or equity considerations, and subject to the payment of just compensation. In determining retention limits, the State shall respect the right of small landowners. The State shall further provide incentives for voluntary land-sharing. Section 5. The State shall recognize the right of farmers, farmworkers, and landowners, as well as cooperatives, and other independent farmers' organizations to participate in the planning, organization, and management of the program, and shall provide support to agriculture through appropriate technology and research, and adequate financial, production, marketing, and other support services. Section 6. The State shall apply the principles of agrarian reform or stewardship, whenever applicable in accordance with law, in the disposition or utilization of other natural resources, including lands of the public domain under lease or concession suitable to agriculture, subject to prior rights, homestead rights of small settlers, and the rights of indigenous communities to their ancestral lands. The State may resettle landless farmers and farmworkers in its own agricultural estates which shall be distributed to them in the manner provided by law. Section 7. The State shall protect the rights of subsistence fishermen, especially of local communities, to the preferential use of the communal marine and fishing resources, both inland and offshore. It shall provide support to such fishermen through appropriate technology and research, adequate financial, production, and marketing assistance, and other services. The State shall also protect, develop, and conserve such resources. The protection shall extend to offshore fishing grounds of subsistence fishermen against foreign intrusion. Fishworkers shall receive a just share from their labor in the utilization of marine and fishing resources. Section 8. The State shall provide incentives to landowners to invest the proceeds of the agrarian reform program to promote industrialization, employment creation, and privatization of public sector enterprises. Financial instruments used as payment for their lands shall be honored as equity in enterprises of their choice. URBAN LAND REFORM AND HOUSING Section 9. The State shall, by law, and for the common good, undertake, in cooperation with the private sector, a continuing program of urban land reform and housing which will make available at affordable cost, decent housing and basic services to under-privileged and homeless citizens in urban centers and resettlement areas. It shall also promote adequate employment opportunities to such citizens. In the implementation of such program the State shall respect the rights of small property owners. Section 10. Urban or rural poor dwellers shall not be evicted nor their dwelling demolished, except in accordance with law and in a just and humane manner. No resettlement of urban or rural dwellers shall be undertaken without adequate consultation with them and the communities where they are to be relocated. HEALTH Section 11. The State shall adopt an integrated and comprehensive approach to health development which shall endeavor to make essential goods, health and other social services available to all the people at affordable cost. There shall be priority for the needs of the under-privileged, sick, elderly, disabled, women, and children. The State shall endeavor to provide free medical care to paupers. Section 12. The State shall establish and maintain an effective food and drug regulatory system and undertake appropriate health, manpower development, and research, responsive to the country's health needs and problems. Section 13. The State shall establish a special agency for disabled person for their rehabilitation, selfdevelopment, and self-reliance, and their integration into the mainstream of society. WOMEN

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1987 Philippine Constitution - The LawPhil Project

Section 14. The State shall protect working women by providing safe and healthful working conditions, taking into account their maternal functions, and such facilities and opportunities that will enhance their welfare and enable them to realize their full potential in the service of the nation. ROLE AND RIGHTS OF PEOPLE'S ORGANIZATIONS Section 15. The State shall respect the role of independent people's organizations to enable the people to pursue and protect, within the democratic framework, their legitimate and collective interests and aspirations through peaceful and lawful means. People's organizations are bona fide associations of citizens with demonstrated capacity to promote the public interest and with identifiable leadership, membership, and structure. Section 16. The right of the people and their organizations to effective and reasonable participation at all levels of social, political, and economic decision-making shall not be abridged. The State shall, by law, facilitate the establishment of adequate consultation mechanisms. HUMAN RIGHTS Section 17. 1. There is hereby created an independent office called the Commission on Human Rights. 2. The Commission shall be composed of a Chairman and four Members who must be natural-born citizens of the Philippines and a majority of whom shall be members of the Bar. The term of office and other qualifications and disabilities of the Members of the Commission shall be provided by law. 3. Until this Commission is constituted, the existing Presidential Committee on Human Rights shall continue to exercise its present functions and powers. 4. The approved annual appropriations of the Commission shall be automatically and regularly released. Section 18. The Commission on Human Rights shall have the following powers and functions: 1. Investigate, on its own or on complaint by any party, all forms of human rights violations involving civil and political rights; 2. Adopt its operational guidelines and rules of procedure, and cite for contempt for violations thereof in accordance with the Rules of Court; 3. Provide appropriate legal measures for the protection of human rights of all persons within the Philippines, as well as Filipinos residing abroad, and provide for preventive measures and legal aid services to the under-privileged whose human rights have been violated or need protection; 4. Exercise visitorial powers over jails, prisons, or detention facilities; 5. Establish a continuing program of research, education, and information to enhance respect for the primacy of human rights; 6. Recommend to Congress effective measures to promote human rights and to provide for compensation to victims of violations of human rights, or their families; 7. Monitor the Philippine Government's compliance with international treaty obligations on human rights; 8. Grant immunity from prosecution to any person whose testimony or whose possession of documents or other evidence is necessary or convenient to determine the truth in any investigation conducted by it or under its authority; 9. Request the assistance of any department, bureau, office, or agency in the performance of its functions; 10. Appoint its officers and employees in accordance with law; and

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1987 Philippine Constitution - The LawPhil Project

11. Perform such other duties and functions as may be provided by law. Section 19. The Congress may provide for other cases of violations of human rights that should fall within the authority of the Commission, taking into account its recommendations.

ARTICLE XIV EDUCATION, SCIENCE AND TECHNOLOGY, ARTS, CULTURE AND SPORTS

EDUCATION Section 1. The State shall protect and promote the right of all citizens to quality education at all levels, and shall take appropriate steps to make such education accessible to all. Section 2. The State shall: 1. Establish, maintain, and support a complete, adequate, and integrated system of education relevant to the needs of the people and society; 2. Establish and maintain, a system of free public education in the elementary and high school levels. Without limiting the natural rights of parents to rear their children, elementary education is compulsory for all children of school age; 3. Establish and maintain a system of scholarship grants, student loan programs, subsidies, and other incentives which shall be available to deserving students in both public and private schools, especially to the under-privileged; 4. Encourage non-formal, informal, and indigenous learning systems, as well as self-learning, independent, and out-of-school study programs particularly those that respond to community needs; and 5. Provide adult citizens, the disabled, and out-of-school youth with training in civics, vocational efficiency, and other skills. Section 3. 1. All educational institutions shall include the study of the Constitution as part of the curricula. 2. They shall inculcate patriotism and nationalism, foster love of humanity, respect for human rights, appreciation of the role of national heroes in the historical development of the country, teach the rights and duties of citizenship, strengthen ethical and spiritual values, develop moral character and personal discipline, encourage critical and creative thinking, broaden scientific and technological knowledge, and promote vocational efficiency. 3. At the option expressed in writing by the parents or guardians, religion shall be allowed to be taught to their children or wards in public elementary and high schools within the regular class hours by instructors designated or approved by the religious authorities of the religion to which the children or wards belong, without additional cost to the Government. Section 4. 1. The State recognizes the complementary roles of public and private institutions in the educational system and shall exercise reasonable supervision and regulation of all educational institutions. 2. Educational institutions, other than those established by religious groups and mission boards, shall be owned solely by citizens of the Philippines or corporations or associations at least sixty per centum of the

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1987 Philippine Constitution - The LawPhil Project

capital of which is owned by such citizens. The Congress may, however, require increased Filipino equity participation in all educational institutions. The control and administration of educational institutions shall be vested in citizens of the Philippines. No educational institution shall be established exclusively for aliens and no group of aliens shall comprise more than one-third of the enrollment in any school. The provisions of this sub section shall not apply to schools established for foreign diplomatic personnel and their dependents and, unless otherwise provided by law, for other foreign temporary residents. 3. All revenues and assets of non-stock, non-profit educational institutions used actually, directly, and exclusively for educational purposes shall be exempt from taxes and duties. Upon the dissolution or cessation of the corporate existence of such institutions, their assets shall be disposed of in the manner provided by law. Proprietary educational institutions, including those cooperatively owned, may likewise be entitled to such exemptions, subject to the limitations provided by law, including restrictions on dividends and provisions for reinvestment. 4. Subject to conditions prescribed by law, all grants, endowments, donations, or contributions used actually, directly, and exclusively for educational purposes shall be exempt from tax. Section 5. 1. the State shall take into account regional and sectoral needs and conditions and shall encourage local planning in the development of educational policies and programs. 2. Academic freedom shall be enjoyed in all institutions of higher learning. 3. Every citizen has a right to select a profession or course of study, subject to fair, reasonable, and equitable admission and academic requirements. 4. The State shall enhance the right of teachers to professional advancement. Non-teaching academic and non-academic personnel shall enjoy the protection of the State. 5. The State shall assign the highest budgetary priority to education and ensure that teaching will attract and retain its rightful share of the best available talents through adequate remuneration and other means of job satisfaction and fulfillment. LANGUAGE Section 6. The national language of the Philippines is Filipino. As it evolves, it shall be further developed and enriched on the basis of existing Philippine and other languages. Subject to provisions of law and as the Congress may deem appropriate, the Government shall take steps to initiate and sustain the use of Filipino as a medium of official communication and as language of instruction in the educational system. Section 7. For purposes of communication and instruction, the official languages of the Philippines are Filipino and, until otherwise provided by law, English. The regional languages are the auxiliary official languages in the regions and shall serve as auxiliary media of instruction therein. Spanish and Arabic shall be promoted on a voluntary and optional basis. Section 8. This Constitution shall be promulgated in Filipino and English and shall be translated into major regional languages, Arabic, and Spanish. Section 9. The Congress shall establish a national language commission composed of representatives of various regions and disciplines which shall undertake, coordinate, and promote researches for the development, propagation, and preservation of Filipino and other languages.

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1987 Philippine Constitution - The LawPhil Project

SCIENCE AND TECHNOLOGY Section 10. Science and technology are essential for national development and progress. The State shall give priority to research and development, invention, innovation, and their utilization; and to science and technology education, training, and services. It shall support indigenous, appropriate, and self-reliant scientific and technological capabilities, and their application to the country's productive systems and national life. Section 11. The Congress may provide for incentives, including tax deductions, to encourage private participation in programs of basic and applied scientific research. Scholarships, grants-in-aid, or other forms of incentives shall be provided to deserving science students, researchers, scientists, inventors, technologists, and specially gifted citizens. Section 12. The State shall regulate the transfer and promote the adaptation of technology from all sources for the national benefit. It shall encourage the widest participation of private groups, local governments, and community-based organizations in the generation and utilization of science and technology. Section 13. The State shall protect and secure the exclusive rights of scientists, inventors, artists, and other gifted citizens to their intellectual property and creations, particularly when beneficial to the people, for such period as may be provided by law. ARTS AND CULTURE Section 14. The State shall foster the preservation, enrichment, and dynamic evolution of a Filipino national culture based on the principle of unity in diversity in a climate of free artistic and intellectual expression. Section 15. Arts and letters shall enjoy the patronage of the State. The State shall conserve, promote, and popularize the nation's historical and cultural heritage and resources, as well as artistic creations. Section 16. All the country's artistic and historic wealth constitutes the cultural treasure of the nation and shall be under the protection of the State which may regulate its disposition. Section 17. The State shall recognize, respect, and protect the rights of indigenous cultural communities to preserve and develop their cultures, traditions, and institutions. It shall consider these rights in the formulation of national plans and policies. Section 18. 1. The State shall ensure equal access to cultural opportunities through the educational system, public or private cultural entities, scholarships, grants and other incentives, and community cultural centers, and other public venues. 2. The State shall encourage and support researches and studies on the arts and culture. SPORTS Section 19. 1. The State shall promote physical education and encourage sports programs, league competitions, and amateur sports, including training for international competitions, to foster self-discipline, teamwork, and excellence for the development of a healthy and alert citizenry. 2. All educational institutions shall undertake regular sports activities throughout the country in cooperation with athletic clubs and other sectors.

ARTICLE XV THE FAMILY

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1987 Philippine Constitution - The LawPhil Project

Section 1. The State recognizes the Filipino family as the foundation of the nation. Accordingly, it shall strengthen its solidarity and actively promote its total development. Section 2. Marriage, as an inviolable social institution, is the foundation of the family and shall be protected by the State. Section 3. The State shall defend: 1. The right of spouses to found a family in accordance with their religious convictions and the demands of responsible parenthood; 2. The right of children to assistance, including proper care and nutrition, and special protection from all forms of neglect, abuse, cruelty, exploitation and other conditions prejudicial to their development; The right of the family to a family living wage and income; and 3. The right of families or family associations to participate in the planning and implementation of policies and programs that affect them. Section 4. The family has the duty to care for its elderly members but the State may also do so through just programs of social security.

ARTICLE XVI GENERAL PROVISIONS Section 1. The flag of the Philippines shall be red, white, and blue, with a sun and three stars, as consecrated and honored by the people and recognized by law. Section 2. The Congress may, by law, adopt a new name for the country, a national anthem, or a national seal, which shall all be truly reflective and symbolic of the ideals, history, and traditions of the people. Such law shall take effect only upon its ratification by the people in a national referendum. Section 3. The State may not be sued without its consent. Section 4. The Armed Forces of the Philippines shall be composed of a citizen armed force which shall undergo military training and serve as may be provided by law. It shall keep a regular force necessary for the security of the State. Section 5. 1. All members of the armed forces shall take an oath or affirmation to uphold and defend this Constitution. 2. The State shall strengthen the patriotic spirit and nationalist consciousness of the military, and respect for people's rights in the performance of their duty. 3. Professionalism in the armed forces and adequate remuneration and benefits of its members shall be a prime concern of the State. The armed forces shall be insulated from partisan politics. No member of the military shall engage, directly or indirectly, in any partisan political activity, except to vote. 4. No member of the armed forces in the active service shall, at any time, be appointed or designated in any capacity to a civilian position in the Government, including government-owned or controlled corporations or any of their subsidiaries. 5. Laws on retirement of military officers shall not allow extension of their service. 6. The officers and men of the regular force of the armed forces shall be recruited proportionately from all provinces and cities as far as practicable.

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1987 Philippine Constitution - The LawPhil Project

7. The tour of duty of the Chief of Staff of the armed forces shall not exceed three years. However, in times of war or other national emergency declared by the Congress, the President may extend such tour of duty. Section 6. The State shall establish and maintain one police force, which shall be national in scope and civilian in character, to be administered and controlled by a national police commission. The authority of local executives over the police units in their jurisdiction shall be provided by law. Section 7. The State shall provide immediate and adequate care, benefits, and other forms of assistance to war veterans and veterans of military campaigns, their surviving spouses and orphans. Funds shall be provided therefor and due consideration shall be given them in the disposition of agricultural lands of the public domain and, in appropriate cases, in the utilization of natural resources. Section 8. The State shall, from time to time, review to increase the pensions and other benefits due to retirees of both the government and the private sectors. Section 9. The State shall protect consumers from trade malpractices and from substandard or hazardous products. Section 10. The State shall provide the policy environment for the full development of Filipino capability and the emergence of communication structures suitable to the needs and aspirations of the nation and the balanced flow of information into, out of, and across the country, in accordance with a policy that respects the freedom of speech and of the press. Section 11. 1. The ownership and management of mass media shall be limited to citizens of the Philippines, or to corporations, cooperatives or associations, wholly-owned and managed by such citizens. The Congress shall regulate or prohibit monopolies in commercial mass media when the public interest so requires. No combinations in restraint of trade or unfair competition therein shall be allowed. 2. The advertising industry is impressed with public interest, and shall be regulated by law for the protection of consumers and the promotion of the general welfare. Only Filipino citizens or corporations or associations at least seventy per centum of the capital of which is owned by such citizens shall be allowed to engage in the advertising industry. The participation of foreign investors in the governing body of entities in such industry shall be limited to their proportionate share in the capital thereof, and all the executive and managing officers of such entities must be citizens of the Philippines. Section 12. The Congress may create a consultative body to advise the President on policies affecting indigenous cultural communities, the majority of the members of which shall come from such communities.

ARTICLE XVII AMENDMENTS OR REVISIONS Section 1. Any amendment to, or revision of, this Constitution may be proposed by: 1. The Congress, upon a vote of three-fourths of all its Members; or 2. A constitutional convention. Section 2. Amendments to this Constitution may likewise be directly proposed by the people through initiative upon a petition of at least twelve per centum of the total number of registered voters, of which every legislative district must be represented by at least three per centum of the registered voters therein. No amendment under this section shall be authorized within five years following the ratification of this Constitution nor oftener than once every five years thereafter.

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1987 Philippine Constitution - The LawPhil Project

The Congress shall provide for the implementation of the exercise of this right. Section 3. The Congress may, by a vote of two-thirds of all its Members, call a constitutional convention, or by a majority vote of all its Members, submit to the electorate the question of calling such a convention. Section 4.Any amendment to, or revision of, this Constitution under Section 1 hereof shall be valid when ratified by a majority of the votes cast in a plebiscite which shall be held not earlier than sixty days nor later than ninety days after the approval of such amendment or revision. Any amendment under Section 2 hereof shall be valid when ratified by a majority of the votes cast in a plebiscite which shall be held not earlier than sixty days nor later than ninety days after the certification by the Commission on Elections of the sufficiency of the petition.

ARTICLE XVIII TRANSITORY PROVISIONS Section 1. The first elections of Members of the Congress under this Constitution shall be held on the second Monday of May, 1987. The first local elections shall be held on a date to be determined by the President, which may be simultaneous with the election of the Members of the Congress. It shall include the election of all Members of the city or municipal councils in the Metropolitan Manila area. Section 2. The Senators, Members of the House of Representatives, and the local officials first elected under this Constitution shall serve until noon of June 30, 1992. Of the Senators elected in the elections in 1992, the first twelve obtaining the highest number of votes shall serve for six years and the remaining twelve for three years. Section 3. All existing laws, decrees, executive orders, proclamations, letters of instructions, and other executive issuances not inconsistent with this Constitution shall remain operative until amended, repealed, or revoked. Section 4. All existing treaties or international agreements which have not been ratified shall not be renewed or extended without the concurrence of at least two-thirds of all the Members of the Senate. Section 5. The six-year term of the incumbent President and Vice-President elected in the February 7, 1986 election is, for purposes of synchronization of elections, hereby extended to noon of June 30, 1992. The first regular elections for the President and Vice-President under this Constitution shall be held on the second Monday of May, 1992. Section 6. The incumbent President shall continue to exercise legislative powers until the first Congress is convened. Section 7. Until a law is passed, the President may fill by appointment from a list of nominees by the respective sectors, the seats reserved for sectoral representation in paragraph (2), Section 5 of Article V1 of this Constitution. Section 8. Until otherwise provided by the Congress, the President may constitute the Metropolitan Manila Authority to be composed of the heads of all local government units comprising the Metropolitan Manila area. Section 9. A sub-province shall continue to exist and operate until it is converted into a regular province or until its component municipalities are reverted to the mother province. Section 10. All courts existing at the time of the ratification of this Constitution shall continue to exercise their jurisdiction, until otherwise provided by law. The provisions of the existing Rules of Court, judiciary acts, and procedural laws not inconsistent with this Constitution shall remain operative unless amended or repealed by the Supreme Court or the Congress.

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1987 Philippine Constitution - The LawPhil Project

Section 11. The incumbent Members of the Judiciary shall continue in office until they reach the age of seventy years or become incapacitated to discharge the duties of their office or are removed for cause. Section 12. The Supreme Court shall, within one year after the ratification of this Constitution, adopt a systematic plan to expedite the decision or resolution of cases or matters pending in the Supreme Court or the lower courts prior to the effectivity of this Constitution. A similar plan shall be adopted for all special courts and quasi-judicial bodies. Section 13. The legal effect of the lapse, before the ratification of this Constitution, of the applicable period for the decision or resolution of the cases or matters submitted for adjudication by the courts, shall be determined by the Supreme Court as soon as practicable. Section 14. The provisions of paragraphs (3) and (4), Section 15 of Article VIII of this Constitution shall apply to cases or matters filed before the ratification of this Constitution, when the applicable period lapses after such ratification. Section 15. The incumbent Members of the Civil Service Commission, the Commission on Elections, and the Commission on Audit shall continue in office for one year after the ratification of this Constitution, unless they are sooner removed for cause or become incapacitated to discharge the duties of their office or appointed to a new term thereunder. In no case shall any Member serve longer than seven years including service before the ratification of this Constitution. Section 16. Career civil service employees separated from the service not for cause but as a result of the reorganization pursuant to Proclamation No. 3 dated March 25, 1986 and the reorganization following the ratification of this Constitution shall be entitled to appropriate separation pay and to retirement and other benefits accruing to them under the laws of general application in force at the time of their separation. In lieu thereof, at the option of the employees, they may be considered for employment in the Government or in any of its subdivisions, instrumentalities, or agencies, including government-owned or controlled corporations and their subsidiaries. This provision also applies to career officers whose resignation, tendered in line with the existing policy, had been accepted. Section 17. Until the Congress provides otherwise, the President shall receive an annual salary of three hundred thousand pesos; the Vice-President, the President of the Senate, the Speaker of the House of Representatives, and the Chief Justice of the Supreme Court, two hundred forty thousand pesos each; the Senators, the Members of the House of Representatives, the Associate Justices of the Supreme Court, and the Chairmen of the Constitutional Commissions, two hundred four thousand pesos each; and the Members of the Constitutional Commissions, one hundred eighty thousand pesos each. Section 18. At the earliest possible time, the Government shall increase the salary scales of the other officials and employees of the National Government. Section 19. All properties, records, equipment, buildings, facilities, and other assets of any office or body abolished or reorganized under Proclamation No. 3 dated March 25, 1986 or this Constitution shall be transferred to the office or body to which its powers, functions, and responsibilities substantially pertain. Section 20. The first Congress shall give priority to the determination of the period for the full implementation of free public secondary education. Section 21. The Congress shall provide efficacious procedures and adequate remedies for the reversion to the State of all lands of the public domain and real rights connected therewith which were acquired in violation of the Constitution or the public land laws, or through corrupt practices. No transfer or disposition of such lands or real rights shall be allowed until after the lapse of one year from the ratification of this Constitution. Section 22. At the earliest possible time, the Government shall expropriate idle or abandoned agricultural lands as may be defined by law, for distribution to the beneficiaries of the agrarian reform program. Section 23. Advertising entities affected by paragraph (2), Section 11 of Article XV1 of this Constitution shall have five years from its ratification to comply on a graduated and proportionate basis with the minimum Filipino ownership requirement therein.

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1987 Philippine Constitution - The LawPhil Project

Section 24. Private armies and other armed groups not recognized by duly constituted authority shall be dismantled. All paramilitary forces including Civilian Home Defense Forces not consistent with the citizen armed force established in this Constitution, shall be dissolved or, where appropriate, converted into the regular force. Section 25. After the expiration in 1991 of the Agreement between the Republic of the Philippines and the United States of America concerning military bases, foreign military bases, troops, or facilities shall not be allowed in the Philippines except under a treaty duly concurred in by the Senate and, when the Congress so requires, ratified by a majority of the votes cast by the people in a national referendum held for that purpose, and recognized as a treaty by the other contracting State. Section 26. The authority to issue sequestration or freeze orders under Proclamation No. 3 dated March 25, 1986 in relation to the recovery of ill-gotten wealth shall remain operative for not more than eighteen months after the ratification of this Constitution. However, in the national interest, as certified by the President, the Congress may extend such period. A sequestration or freeze order shall be issued only upon showing of a prima facie case. The order and the list of the sequestered or frozen properties shall forthwith be registered with the proper court. For orders issued before the ratification of this Constitution, the corresponding judicial action or proceeding shall be filed within six months from its ratification. For those issued after such ratification, the judicial action or proceeding shall be commenced within six months from the issuance thereof. The sequestration or freeze order is deemed automatically lifted if no judicial action or proceeding is commenced as herein provided. Section 27. This Constitution shall take effect immediately upon its ratification by a majority of the votes cast in a plebiscite held for the purpose and shall supersede all previous Constitutions. The foregoing proposed Constitution of the Republic of the Philippines was approved by the Constitutional Commission of 1986 on the twelfth day of October, Nineteen hundred and eighty-six, and accordingly signed on the fifteenth day of October, Nineteen hundred and eighty-six at the Plenary Hall, National Government Center, Quezon City, by the Commissioners whose signatures are hereunder affixed. Adopted: President VicePresident Floor Leader Assistant Floor Leaders : Cecilia Munoz Palma : Ambrosio B. Padilla : Napoleon G. Rama : Ahmad Domocao Alonto : Jose D. Calderon Yusuf R. Abubakar Adolfo S. Azcuna Jose F. S. Bengzon, Jr. Joaquin G. Bernas Crispino M. de Castro Roberto R. Concepcion Vicente B. Foz Jose Luis Martin C. Gascon Alberto M. K. Jamir Eulogio R. Lerum Christian S. Monsod Felicitas S. Aquino Teodoro C. Bacani Ponciano L. Bennagen Florangel Rosario Braid Jose C. Colayco Hilario G. Davide, Jr. Edmundo G. Garcia Serafin V.C. Guingona Jose B. Laurel, Jr. Regalado E. Maambong Teodulo C. Natividad

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1987 Philippine Constitution - The LawPhil Project

Ma. Teresa F. Nieva Blas F. Ople Florenz D. Regalado Cirilo A. Rigos Ricardo J. Romulo Rene V. Sarmiento Lorenzo M. Sumulong Christine O. Tan Efrain B. Trenas Wilfrido V. Villacorta

Jose N. Nolledo Minda Luz M. Quesada Rustico F. de los Reyes, Jr. Francisco A. Rodrigo Decoroso R. Rosales Jose E. Suarez Jaime S. L. Tadeo Gregorio J. Tingson Lugum L. Uka Bernardo M. Villegas

Attested by : Flerida Ruth P. Romero Secretary-General ORDINANCE APPORTIONING THE SEATS OF THE HOUSE OF REPRESENTATIVES OF THE CONGRESS OF THE PHILIPPINES TO THE DIFFERENT LEGISLATIVE DISTRICTS IN PROVINCES AND CITIES AND THE METROPOLITAN MANILA AREA

Section 1. For purposes of the election of Members of the House of Representatives of the First Congress of the Philippines under the Constitution proposed by the 1986 Constitutional Commission and subsequent elections, and until otherwise provided by law, the Members thereof shall be elected from legislative districts apportioned among the provinces, cities, and the Metropolitan Manila Area as follows: Metropolitan Manila Area MANILA, six (6) First District: Barangays Nos.1-146, N-City Boundary between Manila and Caloocan; E - From Estero de Sunog Apog going South to Estero de Vitas up to the bridge spanning Juan Luna Street, eastward to Tayuman Street up to the Railroad Tracks along Dagupan Street,thence southward to Claro M. Recto Avenue; SE - From point Claro M. Recto Avenue extending westward to Manila Bay; W - Manila Bay northward to City boundary between Manila and Caloocan. Second District: Barangays Nos. 147-267, N - City boundary between Manila and Caloocan; E - From end of Rizal Avenue Extension extending southward to Railroad Tracks at Antipolo Street; from corner Antipolo Street and Rizal Avenue on southern side of Railroad Tracks extending westward to Estero de San Lazaro, southward along Estero de San Lazaro up to corner of C. M. Recto Avenue westward to bridge spanning Claro M. Recto at Estero de la Reina; W - Estero de la Reina to Estero de Vitas to Estero Sunog Apog to City boundary between Manila and Caloocan;
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1987 Philippine Constitution - The LawPhil Project

Third District: Barangays Nos. 268-394, N - City boundary between Manila and Caloocan; E - A. Bonifacio Street extending southward to Dimasalang, to Anda-lucia, Claro M. Recto Avenue eastward to Estero de San Miguel ending at Pasig River; S - Mouth of Estero de San Miguel at Pasig River, westward to Del Pan Bridge, thence to Del Pan Street; W - Del Pan Street northward up to Claro M. Recto Extension to Estero de San Lazaro, northward to Antipolo Street, eastward to Rizal Avenue Extension, northward to boundary between Manila and Caloocan; Fourth District: Barangays Nos. 395 - 586, SW - Estero de San Miguel up to Mendiola Bridge, thence to C. M. Recto Avenue to Quezon Boulevard; W - Quezon Boulevard, Andalucia, Dimasalang up to boundary between Manila and Quezon City; NE - City boundary between Manila and Quezon City up to Ramon Magsaysay Boulevard; SE Ramon Magsaysay Boulevard up to V. Mapa Street; S - Ramon Magsaysay Boulevard up to point Estero de San Miguel where Ramon Magsaysay Boulevard spans Estero de San Miguel; Fifth District: Barangays Nos. 649-828, N - Mouth of Pasig River inland to point Paz M. Guanzon Street extending to Estero de Pandacan; NE - Estero de Pandacan up to Pedro Gil Street to Tejeron Street up to boundary of Manila and Makati; SE - City boundary between Manila and Makati up to Estero de Tripa de Gallina; S - City boundary between Pasay and Manila down to Roxas Boulevard up to edge of reclaimed areas westward to Manila Bay; W - Manila Bay up to mouth of Pasig River, Sixth District: Barangays Nos. 587-648; and 829-905 N - Starting from point which is mouth of Estero de San Miguel going eastward to Mendiola Bridge, following line along Estero de San Miguel up to point where Ramon Magsaysay Boulevard eastward to City boundary between Manila and Quezon Cityl; NE - City boundary up to point city boundary of Manila, San Juan and Quezon City; E - Manila-San Juan-Mandaluyong-Makati boundaries up to Tejeron Street; SE - Tejeron Street to Pedro Gil Street up to bridge spanning Estero de Pandacan; SW & W - Estero de Pandacan going northward to Paz M. Guanzon Street, then northward on Paz M. Guazon Street up to Pasig River to mouth of Estero de San Miguel on Pasig River. QUEZON CITY, four (4) First District : Barangays Del Monte,

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1987 Philippine Constitution - The LawPhil Project

Paltok, Bungad, San Antonio, Katipunan, Veterans Village, Talayan, Damayan, Mariblo, Paraiso, Sta. Cruz, Nayong Kanluran, Philam, West Triangle, N.S. Amoranto, San Isidro Labrador, Sta. Teresita, Salvacion, Maharlika, St. Peter, Lourdes, Sto. Domingo, Sienna, San Jose, Manresa, Pag-ibig sa Nayon, Balingasa, Masambong, Damar, Bahay Toro, St. Cristo, Ramon Magsaysay, Project 6, Vasra, Alicia, and Bagong Pag-asa; Second District: Barangays Fairview, New Era, Holy Spirit, Batasan Hills, Commonwealth, Payatas, Bagong Silangan, Sauyo, Talipapa, Bagbag, San Bartolome, Sta. Lucia, Gulod, Novaliches Proper, San Agustin, Nagkaisang Nayon, Sta. Monica, Kaligayahan, Pasong Putik, Apolonio Samson, Unang Sigaw,

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1987 Philippine Constitution - The LawPhil Project

Tandang Sora, Pasong Tamo, Culiat, Baesa, Capri, Balumbato, and Sangandaan: Third District : Barangays E. Rodriguez, Silangan, Quirino 3-A, Duyan-Duyan, Quirino 3-B, Amihan, Socorro, San Roque, Manga, Zobel Dioquino, Tagumpay, Aguinaldo, Escopa 1, Escopa 2, Escopa 3, Escopa 4, West Kamias, East Kamias, Quirino 2 A, Quririno 2 B, Quirino 2 C, Ugong Norte, Bagumbayan, Libis, Villa Maria Clara, Masagana, Milagrosa, Marilag, Bagumbayan, Loyola Heights, Pansol, and Matandang Balara; Fourth District: Barangays Bagong Lipunan, Kaunlaran, San Martin, Immaculate Concepcion, South Triangle, Sacred Heart, Laging Handa, Paligsahan, Obrero, Roxas, Kamuning, Kanluran, Kamuning Silangan, Tatalon, Don Manuel, Dona Josefa,

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1987 Philippine Constitution - The LawPhil Project

San Isidro, Dona Aurora, Santo Nino, Santol, Dona Imelda, Kristong Hari, Kalusugan, Damayang Lagi, Mariana, Valencia, Horseshoe, Pinagkaisahan, San Vicente, U.P. Campus, Krus Na Ligas, Central, Old Capital Site, U.P. Village, Teacher's East, Teacher's West, Sikatuna, Malaya, Pinahan, and Botocan CALOOCAN CITY, two (2) First District : 70 Barangays; All of Caloocan North EDSA; Second District: 118 Barangays; All of Caloocan South EDSA. PASAY CITY, one (1) MALABON and NAVOTAS, one (1) SAN JUAN and MANDALUYONG, one (1) MARIKINA, one (1) MAKATI, one (1) PASIG, one (1) PARANAQUE, one (1) LAS PINAS and MUNTINGLUPA, one (1) PATEROS and TAGUIG, one (1) VALENZUELA, one (1) MEMBERS OF THE CONSTITUTIONAL COMMISSION [CON COM] WHICH DRAFTED THE 1987 CONSTITUTION OF THE PHILIPPINES

President

: Cecilia Munoz Palma

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1987 Philippine Constitution - The LawPhil Project

VicePresident Floor Leader Assistant Floor Leaders

: Ambrosio B. Padilla : Napoleon G. Rama : Ahmad Domocao Alonto : Jose D. Calderon

Yusuf R. Abubakar Adolfo S. Azcuna Jose F. S. Bengzon, Jr. Joaquin G. Bernas Crispino M. de Castro Roberto R. Concepcion Vicente B. Foz Jose Luis Martin C. Gascon Alberto M. K. Jamir Eulogio R. Lerum Christian S. Monsod Ma. Teresa F. Nieva Blas F. Ople Florenz D. Regalado Cirilo A. Rigos Ricardo J. Romulo Rene V. Sarmiento Lorenzo M. Sumulong Christine O. Tan Efrain B. Trenas Wilfrido V. Villacorta

Felicitas S. Aquino Teodoro C. Bacani Ponciano L. Bennagen Florangel Rosario Braid Jose C. Colayco Hilario G. Davide, Jr. Edmundo G. Garcia Serafin V.C. Guingona Jose B. Laurel, Jr. Regalado E. Maambong Teodulo C. Natividad Jose N. Nolledo Minda Luz M. Quesada Rustico F. de los Reyes, Jr. Francisco A. Rodrigo Decoroso R. Rosales Jose E. Suarez Jaime S. L. Tadeo Gregorio J. Tingson Lugum L. Uka Bernardo M. Villegas

Attested by : Flerida Ruth P. Romero Secretary-General


The Lawphil Project - Arellano Law Foundation

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ENVIRONMENT AND NATURAL RESOURCES LAW OUTLINE Atty. Rean Mayo D.V. Javier

PRELIMINARY Republic vs Pagadian City Timber Co., Inc. 565 SCRA 260 DENR vs Yap 568 SCRA 164 MMDA vs Concerned Residents of Manila Bay 574 SCRA 661 THE CONSTITUTION ON THE ENVIRONMENT AND NATURAL RESOURCES i. The Regalian Doctrine, definition Carino vs Insular Government, 1909 Lee Hong Kok vs David 48 SCRA 372 Sunbeam Convenience Food vs CA, 181 SCRA 443 Republic vs Sayo 191 SCRA 71 Director of Lands vs IAC 219 SCRA 339 Republic vs Register of Deeds of Quezon 244 SCRA 537 Ituralde vs Falcasantos, G.R. No. 128017, 20 January 1999

ii. Ownership , use and enjoyment of natural resources Section 2, Article XII, 1987 Constiution Section 7, Article XII, 1987 Constitution Section 10, Article XII, 1987 Constitution Alvarez vs PICOP Resources, Inc. 606 SCRA 444 Miners Association of the Phils. Vs Factoran G.R. No. 98332 16 January 1995 Patrimony, defined Manila Prince Hotel vs GSIS, 267 SCRA 408 iii. Lands of the public domain Section 3, Article XII, 1987 Constitution Republic vs Medida G.R. No. 195097 13 August 2012 Director of Lands vs CA G.R. No. L-588867 22 June 1984 Republic vs Imperial, G.R. No. 130906, 11 February 1999 Palomo vs CA 266 SCRA 392 Manalo vs IAC 26 April 1989 Meralco vs Castro-Bartolome 114 SCRA 799 Director of Land vs Acme Plywood 146 SCRA 509 Ramos vs Director of Lands 19 November 1918 Section 5, Article XII, 1987 Constitution Chavez vs PEA and AMARI G.R. No. 133250 9 July 2002 Republic vs Naguiat G.R. No. 134209 24 January 2006

iv. Private Lands Section 7, Article XII Ong Ching Po vs CA, 239 SCRA 341 Register of Deeds of Rizal vs Ung Sui Si Temple, 1955 Philippine Banking Corporation vs Lui She, 21 SCRA 52 Ramirez vs Vda de Ramirez 111 SCRA 704 Krivenko vs Register of Deeds G.R. No. L-630 15 November 1947 Section 8, Article XII, 1987 Constitution Republic Act No. 8179 STATUTES ON THE ENVIRONMENT AND ON NATURAL RESOURCES v. General Province of Rizal vs Executive Secretary G.R. No. 129546 Oposa vs Factoran G.R. No. 101083 30 July 1993 Boracay Foundation vs Aklan G.R. No. 196870 Phil. Environmental Code Presidential Decree No. 1152 Technology Developers, Inc. vs CA G.R. No. 94759 21 January 1991 Ecological Solid Waste Management Act of 2000 Republic Act No. 9003 Nuclear Wastes Control Act of 1990 Republic Act No. 6969 Sanitation Code of the Philippines Presidential Decree No. 856 Animal Welfare Act of 1998 Republic Act No. 8485 Environmental Impact Statement System Presidential Decree No. 1586 Special People vs Canda, et al. G. R. No. 160932 14 January 2013 Agriculture and Fisheries Modernization Act of 1997 Republic Act No. 8435 vi. Ancestral lands Indigenous Peoples Rights Act Republic Act No. 8371 Cruz vs Secretary G. R. No. 135385 6 December 2000 Alcantara vs DENR 560 SCRA 753 vii. Water Philippine Fisheries Code of 1998 Republic Act No. 1998 Water Code of the Philippines Presidential Decree No. 1067 Water Crisis Act of 1995 Republic Act No. 8041 Tan vs Socrates 278 SCRA 154 viii. Mining Philippine Mining Act of 1995 Republic Act No. 7942 Executive Order No. 79 Peoples Small Scale Mining Act of 1991 Republic Act No. 7076 La Bugal Blaan Tribal Association vs Ramos G.R. No. 127882 27 January 2004 Apex Mining vs Southeast Mindanao Gold Mining Corp 605 SCRA 100

Olympic Mines and Development Corp. vs Platinum Group Metals Corp. 587 SCRA 624 Director of Lands vs Kalahi Investments G.R. No. L-48066 31 January 1989 Sta. Rosa Mining vs Minister of Natural Resources G.R. No. L-49109 1 December 1987 Miners Association of the Phils. V s Factoran G.R. No. 98332 16 January 1995 United Paracale Mining Co. vs Dela Rosa g. r. No. 63786-87 7 April 1993 Manuel vs IAC G.R. No. 69203 21 April 1995 Didipio Earthsavers Multipurpose Association vs Gozun G.R. No. 157802 30 March 2006 ix. Air Philippine Clean Air Act of 1999 Republic Act No. 8749 Implementing Rules and Regulations of RA 8749 Henares vs LTFRB G.R. No. 1582907 x. Forest National Integrated Protected Areas System Act of 1992 Republic Act No. 7586 Revised Forestry Code Batas Pambansa Blg. 701 Heherson Alvarez vs PICOP Resources, Inc. G.R. No. 162243 3 December 2009 Apex Mining vs Garcia G.R. No. 92605 16 July 1991 Ysmael, Jr. vs Secretary G.R. No. 79538 18 October 1990 Mustang Lumber vs CA C&M Timber Corporation G.R. No. 111088 13 June 1997 xi. Special Laws on Agencies and Rules of Procedure Rules of Procedure for Environmental Cases A.M. No. 09-6-8-SC West Tower vs FPIC G.R. No. 194239 31 May 2011 Republic Act No. 4850 Laguna Lake Development Authority vs CA G.R. No. 110120 16 March 1994 The Alexandra Condominium Corp. vs LLDA 599 SCRA 452

G.R. No. 159308

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION REPUBLIC OF THE PHILIPPINES, represented G.R. No. 159308 by the Department of Environment and Natural Present: Resources (DENR), Petitioner, - versus PAGADIAN CITY TIMBER CO., INC., Respondent. YNARES-SANTIAGO, J., Chairperson, AUSTRIA-MARTINEZ, CHICO-NAZARIO, NACHURA, and REYES, JJ. Promulgated: September 16, 2008 x------------------------------------------------------------------------------------x DECISION NACHURA, J.: This is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court seeking to nullify and set aside the Decision 2 dated October 18, 2001 and the Resolution3 dated July 24, 2003 of the Court of Appeals in CA-G.R. SP No. 59194 entitled "Pagadian City Timber Co., Inc. v. Antonio Cerilles, as Secretary of the Department of Environment and Natural Resources (DENR) and Antonio Mendoza, as Regional Executive Director, DENR, Region IX." The antecedent facts are as follows: On October 14, 1994, petitioner, through the DENR, and respondent Pagadian City Timber Co., Inc. executed Industrial Forest Management Agreement (IFMA) No. R-9-0404 whereby petitioner, represented by then Regional Executive Director (RED) for Region IX, Leonito C. Umali, authorized respondent, represented by its President Filomena San Juan, to develop, utilize, and manage a specified forest area covering 1,999.14 hectares located in Barangays Langapod, Cogonan, and Datagan, Municipality of Labangan, Zamboanga del Sur, for the production of timber and other forest products subject to a production-sharing scheme. Respondent later submitted the required Comprehensive Development and Management Plan (CDMP) which the DENR approved on August 17, 1995.

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On October 8, 1998, in response to the numerous complaints filed by members of the Subanen tribe regarding respondents alleged failure to implement the CDMP, disrespect of their rights as an indigenous people, and the constant threats and harassment by armed men employed by respondent, RED Antonio Mendoza, DENR Region IX, issued Regional Special Order No. 217 creating a regional team to evaluate and assess IFMA No. R-9-040. Thus, the DENR sent a letter dated October 22, 1998 to respondent, giving notice of the evaluation and assessment to be conducted on the area from October 22-30, 1998 covering the years 1997 and 1998. In the notice, the DENR requested any representative of the company to appear at the CENRO Office, Pagadian City, and bring with him documents and maps concerning its IFMA operations. On October 23, 1998, a DENR Evaluation Team composed of Aniceto Wenceslao (Forester, DENR, Zamboanga del Sur), Isabelo Mangaya-ay (Intern Chief, RCBF/MCO), Philidor Lluisma (Forester II, Regional Office), Chanito Paul Siton (C. Forester, CENRO-Pagadian City), Adelberto Roullo (Forester, CENRO, Pagadian City), and Francisco Martin (Carto LEP, CENRO, Pagadian City) went to the IFMA site. After a briefing conference between the Evaluation Team and respondents Operations Manager, Inocencio Santiago, actual field evaluation and assessment followed. On October 29, 1998, an exit conference and dialogue on post evaluation and assessment of IFMA R-9-04 was held between DENR officials, namely, CENR Officer Maximo O. Dichoso, IFMA Regional Team Leader, Forester Isabelo C. Mangaya-ay, and IFMA Regional Team Member, Forester Philidor O. Lluisma, and IFMA Representative and Operations Manager Inocencio Santiago at the CENRO, Pagadian City.5 The exit conference was called to order at 1:30 p.m. and was concluded at 3:00 p.m. Forester Mangaya-ay presented the representative results and findings of the Evaluation Team, to wit: The presiding officer started with the mango plantation in the Noran, Langapod side. That out of the estimated number of seedlings planted of about 2,008 hills, within an equivalent area of 20 hectares, the result or finding of the inventory conducted at 100% intensity is only 98 hills of seedlings survived including the doubtful and badly deformed. The species planted along trails are Gmelina and Mahogany species. The said foot trail planted with the aforementioned species starts from the entrance of the IFMA are where the notice billboard is posted up to the only existing look-out tower. The estimated average of percent survival for Gmelina is more or less 30%. There are also portions where higher percentage of survival is recorded at 56% and lower at 14%. There are areas planted declared by Kagawad Cerning Becagas of Barangay Cogonan now covered by CSC. The areas covered by CSC, a waiver is needed to be issued by the IFMA holder. CENR Officer Maximo O. Dichoso commented that during a meeting held before, the IFMA holder was willing to give up the said areas. The presiding officer continued that on the courtesy call made to the Barangay Chairman of Barangay Cogonan, Mr. Roberto Palaran recounted the assistance extended by the IFMA holder to his barangay as Community Assistance/service which includes electric generator, handheld radio and laborers for the repair of Noburan Cogonan road and the repair of the hanging bridge at Sitio Tialaic to which the said Barangay Chairman issued a duly signed certification to this effect. With regards, the seedling stock within the nursery, there are approximately a total number of about 44,460 seedlings of Gmelina species. That the infrastructure implemented or constructed, there exist only one look-out tower of the reported 4 look-out towers constructed. Moreover, the team had also noted only 1 bunkhouse and 1 stockroom or shedhouse. There is also 1 Multi-purpose shed and 1 dilapidated or neglected notice billboard poster at the entrance trail leading to the IFMA area. That with regards the concrete monument, there are only 2 recorded. The other corners visible are those

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located at junctions of creeks and rivers. But the others cannot be visibly or never planted for the same cannot be pinpointed or shown to the team allegedly for lack of knowledge by the representative of the IFMA holder. Finally, the presiding officer reminded the herein IFMA representative Mr. Inocencio Santiago that per actual survey, inspection and ground verification, the team believes that the other reported areas planted are located outside the designated IFMA area particularly the Noburan and Langapod sides.6 After the presentation, Mangaya-ay asked Santiago if he had comments, suggestions, or questions regarding the matter and the manner of the conduct of the evaluation and assessment by the Evaluation Team. Santiago said he had none, but requested a copy of the report of the Evaluation Team. Mangaya-ay informed him that it was only RED Mendoza who may furnish him a copy of the report. Later, the Evaluation Team submitted a report through a Memorandum7 dated November 6, 1998 to the DENR-RED of Region 9, Zamboanga City, on the evaluation and assessment of respondent under IFMA No. R-9-040. The said Memorandum stated In compliance with Regional Special Order No. 217, Series of 1998, please be informed that the herein information is the result or findings of the team for the conduct of evaluation and assessment following the guidelines setforth under Department Administrative Order (DAO) No. 11, Series of 1995 of Pagadian Timber Co., Inc. under IFMA No. R9-040 against their actual accomplishment as mandated under the terms and conditions of the IFMA including other applicable laws, rules and regulations of the department on the matter. At the onset, the team conducted a briefing conference and dialogue with the IFMA holder, the CENR Officer of Pagadian City and personnel concerned for the proper and orderly implementation and conduct of the evaluation and assessment (please see attached). The team was composed of the Regional Evaluating Team, the CENRO and PENRO representatives and the representatives of the IFMA holder. The team proceeded to the western portion of the area of the herein IFMA particularly Barangay Cogonan, Labangan, Zamboanga del Sur. The evaluation and assessment was then conducted on the main nursery, the established plantation, the look-out towers, the boundary of ISF and claimed or occupied areas, natural or residual forest, the IFMA boundary, monuments planted, foot trails, other improvements introduced and the billboard and signboard posted. The inspection, evaluation and assessment conducted were all undertaken in the presence of the IFMA holder, representatives, laborers and other personnel on the area. (please see attached report, tall sheets, pictorials and map). In the conduct of the same, the IFMA representatives or laborers that assisted the team could only show the subject area under evaluation but the other areas alluded to as accomplished or undertaken by the company appeared upon actual verification and inspection to be negative and non-existent thus dispelling their allegation. With regard the information and dissemination conducted by the IFMA holder including other services extended to the communities within the IFMA area and vicinities, it is noteworthy for recognition the donations made by the company. (Please see attached minutes of the dialogue with the barangay officials of Barangay Cogonan and pictorials). The evaluation conducted on the nursery operations show that the facilities and other necessary implements were generally below par. An inventory of the seedlings stock of pure Gmelina species have already lapsed its plantability or have overgrown in the seedbed with an average grand total of about 44,460 within the established 2-hectare main nursery area. There was no other subsidiary

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nursery established in the area. Also noted is the enrichment planting conducted along both sides of the foot-trail which extends approximately 18 kms. From the entrance of the IFMA area going to the lookout tower of the four (4) lookout towers reported, only one (1) has been noted remaining in the area and the rest were destroyed or burned (pls. see attached pictorials). The signboard posted was unattended and in the state of disrepair. There were no monument planted or any marking along the IFMA boundary and in residual forest except the monuments found in the ISF boundaries within the IFMA area (please see attached pictorials). The plantation established is composed of Gmelina species with 4 x 4 spacing over a total of about 10.18 hectares. Basing on 5% estimate inventory, the result is 43% seedling survival. Thereafter, the team also conducted evaluation and assessment at the eastern portion particularly at Langapod, Labangan, Zamboanga del Sur. The team inspected and verified on the ground the reported 20 hectares mango plantation with a spacing of 10 x 10 meters at 100% intensity inventory. The accounted number of mango seedlings planted of about 2,008 hills, only 98 seedlings survived. Wherefore, it generally represents 5% seedling survival. (Please see attached) Finally, the team conducted an exit conference with the CENR Officer, and the IFMA holder where the tentative and general findings of the evaluation and assessment was laid-out and presented to the body. (Please see attached)8 On the basis of such findings, the Evaluation Team made the following recommendations 1. The lessee should be required to explain why they failed to develop their IFMA area (Plantation Development) in accordance with the approved Comprehensive Development and Management Plan (CDMP); 2. The boundary and area coverage of IFMA No. R9-040 should be amended to exclude areas covered by Certificates of Stewardship Contracts (CSC) under the ISF Program with an area of 226.17 hectares, other areas previously identified as "occupied/claimed" and other conflict areas; 3. The amended boundary should be delineated/surveyed on the ground with a precise instrument and all corners appropriately marked/monumented; 4. The company should hire a full time forester.9 Acting on the Memorandum dated November 6, 1998, RED Antonio M. Mendoza, DENR-IX, Zamboanga City, submitted to the DENR Secretary a Memorandum10 dated April 7, 1999 regarding the performance evaluation of IFMA No. R-9-040. The RED Memorandum reads This has reference with the instruction to validate the performance/accomplishment of IFMAs of Region IX, Western Mindanao. Validation of IFMAs is in accordance with the existing policy of the DENR, to determine the capabilities of the holders to develop their Lease areas in consonance with their submitted and approved Comprehensive Development Management Plan. xxxx On 6 November 1998, Foresters Isabelo C. Mangaya-ay and Philidor Lluisma, pursuant to Regional Special Order No. 217, Series of 1998, conducted the evaluation of the performance of IFMA No. R9040 of Pagadian City Timber Company, Inc. located at Langapod and Cogonan, Municipality of Labangan and Datagan, Municipality of Sominot, all of Zamboanga del Sur. Result of the evaluation reveals that the holder violated the following DENR existing Rules and Regulations particularly Section 26 of DAO 97-04 GROUNDS FOR CANCELLATION of IFMA which provides that, "any of the following violations shall be sufficient grounds for the cancellation of IFMA."
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1. Paragraph 26.5, Section 26, DAO 97-04, Series of 1997, provides that failure to implement the approved Comprehensive Development and Management Plan. As of 1998, the 4th year of existence of IFMA No. R9-040, the holder must have developed a total of 1,597.0 hectares as per approved CDMP. However, based on the report submitted by the Evaluation Team only 365.2 hectares was planted which are about 22.8%. During the evaluation, however, the IFMA representative could not even pinpoint the planted areas. Per report of the Pagadian CENRO Composite Monitoring Team conducted on 21 August 1998 the plantation area was burned resulting to the damage of about 300 hectares leaving only about 20.0 hectares undamaged. No report had been submitted/received since then. In infrastructure, the holder managed to put up one (1) out of four (4) programmed look-out towers; developed one (1) out of two (2) forest nurseries and constructed only 6 km. foot trail which is only about 27% accomplishment of the whole infrastructure. 2. Paragraph 26.8 of Section 26, DAO 97-04, specifically provides that failure to implement or adopt agreements made with communities and other relevant sectors. Attached herewith, please find several petitions, sworn statements, affidavits and resolutions from various sectors particularly the Subanen Communities (IPs) within the area. The existence and approval of IFMA No. R9-040 contract is being protested and is demanding for its cancellation. The primary complaint was a blatant disrespect to their rights as an Indigenous People and the nonpeaceful co-existence between them and the holder of the IFMA R9-040. Accordingly, they were constantly threatened/harassed by armed men employed by the holder. In the same Memorandum, RED Mendoza recommended to the DENR Secretary the cancellation of IFMA No. R-9-040. 11 It appears that RED Mendoza issued a subsequent but similar Memorandum12 dated April 21, 1999 to the DENR Secretary relative to IFMA No. R-9-040. It stated This has reference with the instruction to validate the performance/accomplishment of IFMAs of Region IX, Western Mindanao. Validation of IFMAs is in accordance with the existing policy of the DENR to determine the capabilities of the holders to develop their Lease areas in consonance with their approved Comprehensive Development and Management Plan. In furtherance thereto, Foresters Isabelo C. Mangaya-ay and Philidor Lluisma, pursuant to Regional Special Order No. 217, Series of 1998, conducted the evaluation of the performance of IFMA No. R9040 of Pagadian City Timber Company, Inc. located at the Municipalities of Labangan, Datagan and Sominot, all of Zamboanga del Sur, on November 6, 1998. Result of the evaluation revealed that the holder violated Rules and Regulations which are sufficient ground for cancellation as stipulated under Section 26 of DAO 97-04, they are as follows 1. FAILURE TO IMPLEMENT THE APPROVED COMPREHENSIVE DEVELOPMENT AND MANAGEMENT PLAN. Under the approved comprehensive and development plan, 1,597.0 ha of plantation should have been established from the Approval of the CDMP. However, only 365.2 ha were reportedly planted from CY 1995 to 1997. This represents only 28% of the targeted goal on plantation establishment. Field validation of the reported established plantation revealed otherwise. The findings of the team
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are: A. Portion of the area reported as established plantation by the IFMA holder is an ISF project with an area of 226.17 ha. These are covered with Certificate of Stewardship; B. Locations and boundaries of reported plantations established from 1995 to 1997 cannot be located on the ground by the team neither by the representative of the IFMA holder who accompanied the validating team; and C. No plantation was established during CY 1998. On Infrastructure, the holder constructed only one (1) lookout tower as against the goal of 4 towers; established one (1) nursery as against the goal of two (2); and constructed only 6km foot trail. These represent only 27% of the total infrastructure to be undertaken by the holder over the area. 2. FAILURE TO IMPLEMENT OR ADOPT AGREEMENT WITH COMMUNITIES AND OTHER RELEVANT SECTORS. Attached herewith are copies of petitions, sworn statements, affidavit and resolutions from Subanen Communities (IPs) and other sectors in the area demanding the cancellation of IFMA R9-040. The complaints and demand for cancellation by the people where the IFMA is located is a manifestation and proof of non-social acceptance of the project by the residents in the locality. In view of the above findings, IFMA No. R9-040 is hereby recommended for cancellation.13 Acting on the latter Memorandum from RED Mendoza, then DENR Secretary Antonio H. Cerilles, on June 7, 1999, issued an Order14 canceling IFMA No. R-9-040 for failure to implement the approved CDMP and for failure of the lessee to protect the area from forest fires. The dispositive portion of the Order reads: WHEREFORE, premises considered, IFMA No. R9-040 issued to Pagadian City Timber Co., Inc. is hereby ordered cancelled. The IFMA holder is hereby ordered to immediately vacate the area and to surrender/return copy of the Agreement to the Regional Executive Director, DENR Region 9, Zamboanga City. The RED concerned or his duly authorized representative is hereby directed to serve this Order; determine best end use of the land; take appropriate measures to protect the same and inform this Office immediately of his compliance. SO ORDERED. 15 On July 2, 1999, respondents President, Filomena S. San Juan, wrote DENR Secretary Cerilles that the company was surprised to receive the Order of the cancellation of IFMA No. R-9-040 on June 22, 1999. She claimed that The DENR regional office is fully aware that the company is doing its best to manage and develop the area by continually planting trees and protecting the area from forest fires and illegalities. No company would ever set fire on its own plantation for obvious reasons. The company observed precautionary measures especially during the time of the El Nio phenomenon. If there have been mistakes and miscommunications in the reports of the DENR field officers, these could have been threshed out by a conference between DENR and the Pagadian Timber Company Inc.

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The company was not accorded due process before the order of cancellation was issued. The company was not furnished copy of the evaluation and recommendation of the DENR Regional Executive Director of Region IX. Had the company been given the opportunity to contest the findings, evaluation and recommendation of the said office, the result would be otherwise.16 She appealed for the reconsideration of the Order asking that a re-investigation be conducted to comply with due process. Even as the said letter for reconsideration was not yet acted upon, respondent appealed to the Office of the President (OP). In the Resolution17 dated January 12, 2000, the OP affirmed the cancellation order based on the results of the actual evaluation and assessment of the DENR team. It ruled that the cancellation of IFMA No. R-9-040 was primarily and specifically governed by Section 26 of Department Administrative Order (DAO) 97-04. Relative to respondents invocation of due process, the OP held that respondent was afforded the right to be heard when it filed its motion for reconsideration and its subsequent appeal to the OP. The motion for reconsideration filed by respondent of the January 12, 2000 Resolution was denied by the OP in the Resolution18 dated May 8, 2000. Respondent went up to the Court of Appeals (CA) via a petition for review with a prayer for the issuance of a writ of preliminary injunction against the implementation of the assailed Order dated June 7, 1999. In its Resolution dated January 17, 2001, the CA issued the writ of preliminary injunction prayed for, "directing and ordering respondents (petitioner) and/or any other person acting under their command, authority and/or for and in their behalf, to DESIST from implementing the assailed Order of cancellation dated June 7, 1999, and/or taking over the IFMA premises of [respondent], pending the termination of this proceeding." In its Decision 19 dated October 18, 2001, the CA ruled in favor of respondents. In striking down the rulings of the OP and the Order dated June 7, 1999, the CA declared that IFMA No. R-9-040 was a contract that could not be unilaterally cancelled without infringing on the rights of respondent to due process and against impairment of contracts. The appellate court agreed with respondent when the latter argued that it was entitled to the benefits of Sections 3520 and 3621 of IFMA No. R-9-040 such that respondent should have been given 30 days, after due notice, to remedy any breach or default of the provisions of the IFMA and/or that the dispute regarding the bases for the cancellation of the IFMA should have first been submitted to arbitration. Petitioner moved to reconsider the CA Decision. In the Resolution 22 dated July 24, 2003, the motion was denied for lack of merit. Hence, this petition based on the following grounds: I. The Court of Appeals gravely erred in ruling that IFMA No. R9-040 is a contract and not a mere privilege granted by the State to respondent. II. The Court of Appeals seriously erred in ordaining that respondent can rightfully invoke prior resort to arbitration or the option to mend its violations under IFMA No. R9-040. 23 In essence, petitioner argues that an IFMA is not an ordinary contract which is protected by the Constitution against impairment 24 but a mere privilege granted by the State to qualified persons by means of a permit, license, franchise, agreement, or other similar concessions, which in this case is

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the exploration, development and utilization of the forest lands belonging to the State under its full control and supervision. Thus, the cancellation of the IFMA does not amount to a rescission of a contract but a mere withdrawal of this privilege. As such, the due process clause under the Constitution 25 does not likewise apply since the IFMA area cannot be considered as property of respondent. According to petitioner, IFMA No. R-9-040, with the forest lands covered by it, is imbued with paramount considerations of public interest and public welfare such that whatever rights respondent may have under it must yield to the police power of the State. In this sense, respondent cannot take refuge in Sections 35 and 36 of IFMA No. R-9-040 to prevent the IFMAs cancellation. Inasmuch as the grounds cited by petitioner are interrelated, they shall be jointly discussed hereunder. The petition is impressed with merit. IFMA No. R-9-040 is a license agreement under Presidential Decree (P.D.) No. 705 (Revised Forestry Code), the law which is the very basis for its existence. 26 Under Section 3, paragraph (dd) thereof, a license agreement is defined as "a privilege 27 granted by the State to a person to utilize forest resources within any forest land with the right of possession and occupation thereof to the exclusion of others, except the government, but with the corresponding obligation to develop, protect and rehabilitate the same in accordance with the terms and conditions set forth in said agreement." This is evident in the following features, among others, of IFMA No. R-9-040, to wit: 1. The State agreed to devolve to the holder of IFMA No. R-9-040 the responsibility to manage the specified IFMA area for a period of 25 years, specifically until October 14, 2019, which period is automatically renewable for another 25 years thereafter; 2. The State imposed upon respondent, as holder of IFMA No. R-9-040, the conditions, the means, and the manner by which the IFMA area shall be managed, developed, and protected; 3. The State, through the DENR Secretary, shall not collect any rental within the first five (5) years of the IFMA, after which it shall be entitled to annual rental of fifty centavos (P0.50) per hectare from the sixth to the tenth year thereof, and one peso (P1.00) per hectare thereafter; 4. The IFMA area, except only the trees and other crops planted and the permanent improvements constructed by the IFMA holder, remains the property of the State; and 5. Upon cancellation of the IFMA through the fault of the holder, all improvements including forest plantations existing within the IFMA area shall revert to and become the property of the State. An IFMA has for its precursor the Timber License Agreement (TLA), one of the tenurial instruments issued by the State to its grantees for the efficient management of the countrys dwindling forest resources. Jurisprudence has been consistent in holding that license agreements are not contracts within the purview of the due process and the non-impairment of contracts clauses enshrined in the Constitution. Our pronouncement in Alvarez v. PICOP Resources, Inc.28 is enlightening In unequivocal terms, we have consistently held that such licenses concerning the harvesting of timber in the countrys forests cannot be considered contracts that would bind the Government regardless of changes in policy and the demands of public interest and welfare. (citing Oposa v. Factoran, Jr., G.R. No. 101083, July 30, 1993, 224 SCRA 792, 811) Such unswerving verdict is synthesized in Oposa v. Factoran, Jr., (id., at pp. 811, 812) where we held: In the first place, the respondent Secretary did not, for obvious reasons, even invoke in his motion to dismiss the non-impairment clause. If he had done so, he would have acted with utmost infidelity to
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the Government by providing undue and unwarranted benefits and advantages to the timber license holders because he would have forever bound the Government to strictly respect the said licenses according to their terms and conditions regardless of changes in policy and the demands of public interest and welfare. He was aware that as correctly pointed out by petitioners, into every timber license must be read Section 20 of the Forestry Reform Code (P.D. No. 705) which provides: "x x x Provided, that when the national interest so requires, the President may amend, modify, replace or rescind any contract, concession, permit, licenses or any other form of privilege granted herein x x x." Needless to say, all licenses may thus be revoked or rescinded by executive action. It is not a contract, property or a property right protected by the due process clause of the constitution. In Tan vs. Director of Forestry, [125 SCRA 302, 325 (1983)] this Court held: "x x x A timber license is an instrument by which the State regulates the utilization and disposition of forest resources to the end that public welfare is promoted. A timber license is not a contract within the purview of the due process clause; it is only a license or privilege, which can be validly withdrawn whenever dictated by public interest or public welfare as in this case. "A license is merely a permit or privilege to do what otherwise would be unlawful, and is not a contract between the authority, federal, state, or municipal, granting it and the person to whom it is granted; neither is it property or a property right, nor does it create a vested right; nor is it taxation (37 C.J. 168). Thus, this Court held that the granting of license does not create irrevocable rights, neither is it property or property rights. (People vs. Ong Tin, 54 O.G. 7576). x x x" We reiterated this pronouncement in Felipe Ysmael, Jr. & Co., Inc. vs. Deputy Executive Secretary [190 SCRA 673, 684 (1990): "x x x Timber licenses, permits and license agreements are the principal instruments by which the State regulates the utilization and disposition of forest resources to the end that public welfare is promoted. And it can hardly be gainsaid that they merely evidence a privilege granted by the State to qualified entities, and do not vest in the latter a permanent or irrevocable right to the particular concession area and the forest products therein. They may be validly amended, modified, replaced or rescinded by the Chief Executive when national interests so require. Thus, they are not deemed contracts within the purview of the due process of law clause. [See Sections 3(ee) and 20 of Pres. Decree No. 705, as amended. Also, Tan v. Director of Forestry, G.R. No. L-24548, October 27, 1983, 125 SCRA 302]." Since timber licenses are not contracts, the non-impairment clause, which reads: "SEC. 10. No law impairing, the obligation of contracts shall be passed." cannot be invoked. Even assuming arguendo that an IFMA can be considered a contract or an agreement, we agree with the Office of the Solicitor General that the alleged property rights that may have arisen from it are not absolute. All Filipino citizens are entitled, by right, to a balanced and healthful ecology as declared under Section 16, 29 Article II of the Constitution. This right carries with it the correlative duty to refrain from impairing the environment, 30 particularly our diminishing forest resources. To uphold and protect this right is an express policy of the State.31 The DENR is the instrumentality of the State mandated to actualize this policy. It is "the primary government agency responsible for the conservation,
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management, development and proper use of the countrys environment and natural resources, including those in reservation and watershed areas, and lands of the public domain, as well as the licensing and regulation of all natural resources as may be provided for by law in order to ensure equitable sharing of the benefits derived therefrom for the welfare of the present and future generations of Filipinos."32 Thus, private rights must yield when they come in conflict with this public policy and common interest. They must give way to the police or regulatory power of the State, in this case through the DENR, to ensure that the terms and conditions of existing laws, rules and regulations, and the IFMA itself are strictly and faithfully complied with. Respondent was not able to overturn by sufficient evidence the presumption of regularity in the performance of official functions of the Evaluation Team when the latter inspected, assessed, and reported the violations respondent committed under DAO No. 97-04 which eventually led to the cancellation of IFMA No. R-9-040. It is worthy to note that petitioner followed regular procedure regarding the assessment of IFMA No. R-9-040. It gave notice of the evaluation on October 22, 1998 to be held within the period October 22-30, 1998. Respondent admitted through the affidavits of its President, 33 Operations Manager,34 and workers 35 that an Evaluation Team arrived at the IFMA area on October 23, 1998. On October 23, 1998, prior to the actual assessment, a briefing was held on the conduct thereof in the presence of the IFMA representatives. On October 29, 1998, an exit conference with IFMA Operations Manager Inocencio Santiago was held at the CENRO Office, Pagadian City, where the results of the assessment were presented. That day, the DENR officials asked Santiago if he had any questions or comments on the assessment results and on the manner the evaluation was conducted, but the latter replied that he had none. We do not understand why Santiago did not lift a finger or raise an objection to the assessment results, and only much later in his Affidavit executed almost ten months thereafter, or on August 12, 1999, to claim so belatedly that there was no notice given on October 22, 1998, that the Evaluation Team did not actually extensively inspect the IFMA area on October 23, 1998, and that there was no proper exit conference held on October 29, 1998. The same observation applies to respondents President herself, who instead claimed that she vehemently opposed the appointment of then DENR Secretary Cerilles because he was bent on canceling the IFMA at all costs, prior to the cancellation of IFMA No. R-9-040. Besides, the detailed findings on the failure of respondent to implement its CDMP under its IFMA, as shown by the November 6, 1998 Report of the Evaluation Team and the Memoranda dated April 7, 1999 and April 21, 1999, together with all its attachments, belie respondents claim that there was no actual evaluation and assessment that took place on October 23, 1998. That the Evaluation Report was dated November 6, 1998 does not conclusively show that the evaluation was actually held on that date. Neither was this properly proven by the Memoranda of RED Mendoza which stated that the evaluation was conducted on November 6, 1998, since RED Mendoza could have been merely misled into such an assumption because of the date of the Evaluation Report. The sweeping denials made by the IFMA representatives and their self-serving accomplishment reports cannot prevail over the actual inspection conducted, the results of which are shown by documentary proof. Respondent, likewise, cannot insist that, pursuant to Section 35 of IFMA No. R-9-040, it should have been given notice of its breach of the IFMA and should have been given 30 days therefrom to remedy the breach. It is worthy to note that Section 35 uses the word "may" which must be interpreted as granting petitioner the discretion whether or not to give such notice and allow the option to remedy the breach. In this case, despite the lack of any specific recommendation from the Evaluation Team

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G.R. No. 159308

for the cancellation of the IFMA, DENR Secretary Cerilles deemed it proper to cancel the IFMA due to the extent and the gravity of respondents violations. It is also futile for respondent to claim that it is entitled to an arbitration under Section 36 of IFMA No. R-9-040 before the license agreement may be canceled. A reading of the said Section shows that the dispute should be based on the provisions of the IFMA to warrant a referral to arbitration of an irreconcilable conflict between the IFMA holder and the DENR Secretary. In this case, the cancellation was grounded on Section 26 of DAO No. 97-04, particularly respondents failure to implement the approved CDMP and its failure to implement or adopt agreements made with communities and other relevant sectors. The contrary notwithstanding, what remains is that respondent never refuted the findings of the Evaluation Team when given the opportunity to do so but waited until IFMA No. R-9-040 was already cancelled before it made its vigorous objections as to the conduct of the evaluation, harping only on its alleged right to due process. Indeed, respondent was given the opportunity to contest the findings that caused the cancellation of its IFMA when it moved to reconsider the Order of cancellation and when it filed its appeal and motion for reconsideration before the OP. The essence of due process is simply an opportunity to be heard, or as applied to administrative proceedings, an opportunity to explain ones side or an opportunity to seek a reconsideration of the action or ruling complained of. What the law prohibits is the absolute absence of the opportunity to be heard; hence, a party cannot feign denial of due process where he had been afforded the opportunity to present his side.36 WHEREFORE, the Decision dated October 18, 2001 and the Resolution dated July 24, 2003 of the Court of Appeals in CA-G.R. SP No. 59194 are REVERSED and SET ASIDE, and the Order dated June 7, 1999 of then DENR Secretary Antonio Cerilles, and the Resolutions of the Office of the President dated January 12, 2000 and May 8, 2000 affirming the said Order, are REINSTATED and AFFIRMED. No pronouncement as to costs. SO ORDERED. ANTONIO EDUARDO B. NACHURA Associate Justice WE CONCUR: CONSUELO YNARES-SANTIAGO Associate Justice Chairperson MA. ALICIA AUSTRIA-MARTINEZ Associate Justice MINITA V. CHICO-NAZARIO Associate Justice

RUBEN T. REYES Associate Justice ATTESTATION I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. CONSUELO YNARES-SANTIAGO

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Associate Justice Chairperson, Third Division CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. REYNATO S. PUNO Chief Justice
1 2 3 4 5 6 7 8 9

Rollo, pp. 10-37. Id. at 42-55. Id. at 56. Id. at 57-66; also referred to as IFMA No. R9-040 and IFMA No. R-9-04. Per Excerpts, id. at 67-68. Id. CA rollo, pp. 277-279. Id. at 277-278. Id. at 278-279. Rollo, pp. 69-70. Id. at 70. CA rollo, pp. 282-283. Id. Rollo, pp. 71-72. Id. Id. at 73. CA rollo, pp. 44-49. Id. at 50.

10 11 12 13 14 15 16 17 18 19

Penned by Associate Justice Teodoro P. Regino, with Associate Justices Delilah Vidallon-Magtolis and Josefina Guevara-Salonga, concurring; rollo, pp. 42-55.

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20

35. In the event of any default or breach of any provisions of this AGREEMENT by either party, the other party may, by notice to the party in default or breach, specify such default or breach and require the same to be remedied within thirty (30) days after service of notice. 36. Except for issues covering compensation addressed in paragraph 29 above, in the event of any dispute between the SECRETARY and the IFMA HOLDER which cannot be settled by mutual accord, such dispute shall be referred to arbitration which shall be held at a mutually acceptable location. Supra note 3. Id. at 19. CONSTITUTION, Art. III, Sec. 10. "No law impairing the obligation of contracts shall be passed."

21

22 23 24 25

Id., Section 1. "No person shall be deprived of life, liberty or property without due process of law x x x." PICOP Resources, Inc. v. Calo, G.R. No. 161798, October 20, 2004, 441 SCRA 46. Emphasis supplied. G.R. Nos. 162243, 164516, 171875, November 29, 2006, 508 SCRA 498, 532-535.

26 27 28 29

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. Oposa v. Factoran, Jr., G.R. No. 101083, July 30, 1993, 224 SCRA 792, 805. C&M Timber Corporation v. Alcala, 339 Phil. 589, 603 (1997).

30 31 32

Section 4, Executive Order No. 192 (The Reorganization Act of the Department of Environment and Natural Resources). CA rollo, pp. 121-122. Id. at 146. Id. at 117-120.

33 34 35 36

Sarapat v. Salanga, G.R. No. 154110, November 23, 2007, 538 SCRA 324, 333; Audion Electric Co., Inc. v. NLRC, 367 Phil. 620, 633 (1999).

The Lawphil Project - Arellano Law Foundation

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G.R. No. 167707

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 167707 October 8, 2008

THE SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, THE REGIONAL EXECUTIVE DIRECTOR, DENR-REGION VI, REGIONAL TECHNICAL DIRECTOR FOR LANDS, LANDS MANAGEMENT BUREAU, REGION VI PROVINCIAL ENVIRONMENT AND NATURAL RESOURCES OFFICER OF KALIBO, AKLAN, REGISTER OF DEEDS, DIRECTOR OF LAND REGISTRATION AUTHORITY, DEPARTMENT OF TOURISM SECRETARY, DIRECTOR OF PHILIPPINE TOURISM AUTHORITY, petitioners, vs. MAYOR JOSE S. YAP, LIBERTAD TALAPIAN, MILA Y. SUMNDAD, and ANICETO YAP, in their behalf and in behalf of all those similarly situated, respondents. x--------------------------------------------------x G.R. No. G.R. No. 173775 October 8, 2008

DR. ORLANDO SACAY and WILFREDO GELITO, joined by THE LANDOWNERS OF BORACAY SIMILARLY SITUATED NAMED IN A LIST, ANNEX "A" OF THIS PETITION, petitioners, vs. THE SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, THE REGIONAL TECHNICAL DIRECTOR FOR LANDS, LANDS MANAGEMENT BUREAU, REGION VI, PROVINCIAL ENVIRONMENT AND NATURAL RESOURCES OFFICER, KALIBO, AKLAN, respondents. DECISION REYES, R.T., J.: AT stake in these consolidated cases is the right of the present occupants of Boracay Island to secure titles over their occupied lands. There are two consolidated petitions. The first is G.R. No. 167707, a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) affirming that 2 of the Regional Trial Court (RTC) in Kalibo, Aklan, which granted the petition for declaratory relief filed by respondents-claimants Mayor Jose Yap, et al. and ordered the survey of Boracay for titling purposes. The second is G.R. No. 173775, a petition for prohibition, mandamus, and nullification of Proclamation No. 10645">[3] issued by President Gloria Macapagal-Arroyo classifying Boracay into reserved forest and agricultural land. The Antecedents G.R. No. 167707 Boracay Island in the Municipality of Malay, Aklan, with its powdery white sand beaches and warm crystalline waters, is reputedly a premier Philippine tourist destination. The island is also home to 12,003 inhabitants4 who live in the bone-shaped islands three barangays .5 On April 14, 1976, the Department of Environment and Natural Resources (DENR) approved the National Reservation Survey of Boracay Island, 6 which identified several lots as being occupied or claimed by named persons.7
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G.R. No. 167707

On November 10, 1978 , then President Ferdinand Marcos issued Proclamation No. 1801 8 declaring Boracay Island, among other islands, caves and peninsulas in the Philippines, as tourist zones and marine reserves under the administration of the Philippine Tourism Authority (PTA). President Marcos later approved the issuance of PTA Circular 3-829 dated September 3, 1982, to implement Proclamation No. 1801. Claiming that Proclamation No. 1801 and PTA Circular No 3-82 precluded them from filing an application for judicial confirmation of imperfect title or survey of land for titling purposes, respondents-claimants Mayor Jose S. Yap, Jr., Libertad Talapian, Mila Y. Sumndad, and Aniceto Yap filed a petition for declaratory relief with the RTC in Kalibo, Aklan. In their petition, respondents-claimants alleged that Proclamation No. 1801 and PTA Circular No. 3-82 raised doubts on their right to secure titles over their occupied lands. They declared that they themselves, or through their predecessors-in-interest, had been in open, continuous, exclusive, and notorious possession and occupation in Boracay since June 12, 1945, or earlier since time immemorial. They declared their lands for tax purposes and paid realty taxes on them. 10 Respondents-claimants posited that Proclamation No. 1801 and its implementing Circular did not place Boracay beyond the commerce of man. Since the Island was classified as a tourist zone, it was susceptible of private ownership. Under Section 48(b) of Commonwealth Act (CA) No. 141, otherwise known as the Public Land Act, they had the right to have the lots registered in their names through judicial confirmation of imperfect titles. The Republic, through the Office of the Solicitor General (OSG), opposed the petition for declaratory relief. The OSG countered that Boracay Island was an unclassified land of the public domain. It formed part of the mass of lands classified as "public forest," which was not available for disposition pursuant to Section 3(a) of Presidential Decree (PD) No. 705 or the Revised Forestry Code, 11 as amended. The OSG maintained that respondents-claimants reliance on PD No. 1801 and PTA Circular No. 3-82 was misplaced. Their right to judicial confirmation of title was governed by CA No. 141 and PD No. 705. Since Boracay Island had not been classified as alienable and disposable, whatever possession they had cannot ripen into ownership. During pre-trial, respondents-claimants and the OSG stipulated on the following facts: (1) respondents-claimants were presently in possession of parcels of land in Boracay Island; (2) these parcels of land were planted with coconut trees and other natural growing trees; (3) the coconut trees had heights of more or less twenty (20) meters and were planted more or less fifty (50) years ago; and (4) respondents-claimants declared the land they were occupying for tax purposes. 12 The parties also agreed that the principal issue for resolution was purely legal: whether Proclamation No. 1801 posed any legal hindrance or impediment to the titling of the lands in Boracay. They decided to forego with the trial and to submit the case for resolution upon submission of their respective memoranda.13 The RTC took judicial notice 14 that certain parcels of land in Boracay Island, more particularly Lots 1 and 30, Plan PSU-5344, were covered by Original Certificate of Title No. 19502 (RO 2222) in the name of the Heirs of Ciriaco S. Tirol. These lots were involved in Civil Case Nos. 5222 and 5262 filed before the RTC of Kalibo, Aklan.15 The titles were issued on August 7, 1933. 16 RTC and CA Dispositions On July 14, 1999, the RTC rendered a decision in favor of respondents-claimants, with a fallo reading: WHEREFORE, in view of the foregoing, the Court declares that Proclamation No. 1801 and PTA Circular No. 3-82 pose no legal obstacle to the petitioners and those similarly situated to acquire title to their lands in Boracay, in accordance with the applicable laws and in the manner prescribed therein; and to have their lands surveyed and approved by respondent Regional Technical Director of Lands as the approved survey does not in itself constitute a title to the land.

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G.R. No. 167707

SO ORDERED.17 The RTC upheld respondents-claimants right to have their occupied lands titled in their name. It ruled that neither Proclamation No. 1801 nor PTA Circular No. 3-82 mentioned that lands in Boracay were inalienable or could not be the subject of disposition. 18 The Circular itself recognized private ownership of lands. 19 The trial court cited Sections 87 20 and 53 21 of the Public Land Act as basis for acknowledging private ownership of lands in Boracay and that only those forested areas in public lands were declared as part of the forest reserve.22 The OSG moved for reconsideration but its motion was denied.23 The Republic then appealed to the CA. On December 9, 2004, the appellate court affirmed in toto the RTC decision, disposing as follows: WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us DENYING the appeal filed in this case and AFFIRMING the decision of the lower court. 24 The CA held that respondents-claimants could not be prejudiced by a declaration that the lands they occupied since time immemorial were part of a forest reserve. Again, the OSG sought reconsideration but it was similarly denied.25 Hence, the present petition under Rule 45. G.R. No. 173775 On May 22, 2006, during the pendency of G.R. No. 167707, President Gloria Macapagal-Arroyo issued Proclamation No. 1064 26 classifying Boracay Island into four hundred (400) hectares of reserved forest land (protection purposes) and six hundred twenty-eight and 96/100 (628.96) hectares of agricultural land (alienable and disposable). The Proclamation likewise provided for a fifteen-meter buffer zone on each side of the centerline of roads and trails, reserved for right-of-way and which shall form part of the area reserved for forest land protection purposes. On August 10, 2006, petitioners-claimants Dr. Orlando Sacay,27 Wilfredo Gelito, 28 and other landowners29 in Boracay filed with this Court an original petition for prohibition, mandamus, and nullification of Proclamation No. 1064. 30 They allege that the Proclamation infringed on their "prior vested rights" over portions of Boracay. They have been in continued possession of their respective lots in Boracay since time immemorial. They have also invested billions of pesos in developing their lands and building internationally renowned first class resorts on their lots.31 Petitioners-claimants contended that there is no need for a proclamation reclassifying Boracay into agricultural land. Being classified as neither mineral nor timber land, the island is deemed agricultural pursuant to the Philippine Bill of 1902 and Act No. 926, known as the first Public Land Act. 32 Thus, their possession in the concept of owner for the required period entitled them to judicial confirmation of imperfect title. Opposing the petition, the OSG argued that petitioners-claimants do not have a vested right over their occupied portions in the island. Boracay is an unclassified public forest land pursuant to Section 3(a) of PD No. 705. Being public forest, the claimed portions of the island are inalienable and cannot be the subject of judicial confirmation of imperfect title. It is only the executive department, not the courts, which has authority to reclassify lands of the public domain into alienable and disposable lands. There is a need for a positive government act in order to release the lots for disposition. On November 21, 2006, this Court ordered the consolidation of the two petitions as they principally involve the same issues on the land classification of Boracay Island. 33 Issues G.R. No. 167707 The OSG raises the lone issue of whether Proclamation No. 1801 and PTA Circular No. 3-82 pose any legal obstacle for respondents, and all those similarly situated, to acquire title to their occupied lands in Boracay
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G.R. No. 167707

Island. 34 G.R. No. 173775 Petitioners-claimants hoist five (5) issues, namely: I. AT THE TIME OF THE ESTABLISHED POSSESSION OF PETITIONERS IN CONCEPT OF OWNER OVER THEIR RESPECTIVE AREAS IN BORACAY, SINCE TIME IMMEMORIAL OR AT THE LATEST SINCE 30 YRS. PRIOR TO THE FILING OF THE PETITION FOR DECLARATORY RELIEF ON NOV. 19, 1997, WERE THE AREAS OCCUPIED BY THEM PUBLIC AGRICULTURAL LANDS AS DEFINED BY LAWS THEN ON JUDICIAL CONFIRMATION OF IMPERFECT TITLES OR PUBLIC FOREST AS DEFINED BY SEC. 3a, PD 705? II. HAVE PETITIONERS OCCUPANTS ACQUIRED PRIOR VESTED RIGHT OF PRIVATE OWNERSHIP OVER THEIR OCCUPIED PORTIONS OF BORACAY LAND, DESPITE THE FACT THAT THEY HAVE NOT APPLIED YET FOR JUDICIAL CONFIRMATION OF IMPERFECT TITLE? III. IS THE EXECUTIVE DECLARATION OF THEIR AREAS AS ALIENABLE AND DISPOSABLE UNDER SEC 6, CA 141 [AN] INDISPENSABLE PRE-REQUISITE FOR PETITIONERS TO OBTAIN TITLE UNDER THE TORRENS SYSTEM? IV. IS THE ISSUANCE OF PROCLAMATION 1064 ON MAY 22, 2006, VIOLATIVE OF THE PRIOR VESTED RIGHTS TO PRIVATE OWNERSHIP OF PETITIONERS OVER THEIR LANDS IN BORACAY, PROTECTED BY THE DUE PROCESS CLAUSE OF THE CONSTITUTION OR IS PROCLAMATION 1064 CONTRARY TO SEC. 8, CA 141, OR SEC. 4(a) OF RA 6657. V. CAN RESPONDENTS BE COMPELLED BY MANDAMUS TO ALLOW THE SURVEY AND TO APPROVE THE SURVEY PLANS FOR PURPOSES OF THE APPLICATION FOR TITLING OF THE LANDS OF PETITIONERS IN BORACAY?35 (Underscoring supplied) In capsule, the main issue is whether private claimants (respondents-claimants in G.R. No. 167707 and petitioners-claimants in G.R. No. 173775) have a right to secure titles over their occupied portions in Boracay. The twin petitions pertain to their right, if any, to judicial confirmation of imperfect title under CA No. 141, as amended. They do not involve their right to secure title under other pertinent laws. Our Ruling Regalian Doctrine and power of the executive to reclassify lands of the public domain Private claimants rely on three (3) laws and executive acts in their bid for judicial confirmation of imperfect title, namely: (a) Philippine Bill of 1902 36 in relation to Act No. 926, later amended and/or superseded by Act No. 2874 and CA No. 141; 37 (b) Proclamation No. 1801 38 issued by then President Marcos; and (c) Proclamation No. 1064 39 issued by President Gloria Macapagal-Arroyo. We shall proceed to determine their rights to apply for judicial confirmation of imperfect title under these laws and executive acts. But first, a peek at the Regalian principle and the power of the executive to reclassify lands of the public domain.
40

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G.R. No. 167707

The 1935 Constitution classified lands of the public domain into agricultural, forest or timber. Meanwhile, the 1973 Constitution provided the following divisions: agricultural, industrial or commercial, residential, resettlement, mineral, timber or forest and grazing lands, and such other classes as may be provided by law,41 giving the government great leeway for classification. 42 Then the 1987 Constitution reverted to the 1935 Constitution classification with one addition: national parks. 43 Of these, only agricultural lands may be alienated.44 Prior to Proclamation No. 1064 of May 22, 2006, Boracay Island had never been expressly and administratively classified under any of these grand divisions. Boracay was an unclassified land of the public domain. The Regalian Doctrine dictates that all lands of the public domain belong to the State, that the State is the source of any asserted right to ownership of land and charged with the conservation of such patrimony. 45 The doctrine has been consistently adopted under the 1935, 1973, and 1987 Constitutions.46 All lands not otherwise appearing to be clearly within private ownership are presumed to belong to the State.47 Thus, all lands that have not been acquired from the government, either by purchase or by grant, belong to the State as part of the inalienable public domain.48 Necessarily, it is up to the State to determine if lands of the public domain will be disposed of for private ownership. The government, as the agent of the state, is possessed of the plenary power as the persona in law to determine who shall be the favored recipients of public lands, as well as under what terms they may be granted such privilege, not excluding the placing of obstacles in the way of their exercise of what otherwise would be ordinary acts of ownership.49 Our present land law traces its roots to the Regalian Doctrine. Upon the Spanish conquest of the Philippines, ownership of all lands, territories and possessions in the Philippines passed to the Spanish Crown. 50 The Regalian doctrine was first introduced in the Philippines through the Laws of the Indies and the Royal Cedulas, which laid the foundation that "all lands that were not acquired from the Government, either by purchase or by grant, belong to the public domain."51 The Laws of the Indies was followed by the Ley Hipotecaria or the Mortgage Law of 1893. The Spanish Mortgage Law provided for the systematic registration of titles and deeds as well as possessory claims.52 The Royal Decree of 1894 or the Maura Law53 partly amended the Spanish Mortgage Law and the Laws of the Indies. It established possessory information as the method of legalizing possession of vacant Crown land, under certain conditions which were set forth in said decree.54 Under Section 393 of the Maura Law, an informacion posesoria or possessory information title,55 when duly inscribed in the Registry of Property, is converted into a title of ownership only after the lapse of twenty (20) years of uninterrupted possession which must be actual, public, and adverse,56 from the date of its inscription.57 However, possessory information title had to be perfected one year after the promulgation of the Maura Law, or until April 17, 1895. Otherwise, the lands would revert to the State. 58 In sum, private ownership of land under the Spanish regime could only be founded on royal concessions which took various forms, namely: (1) titulo real or royal grant; (2) concesion especial or special grant; (3) composicion con el estado or adjustment title; (4) titulo de compra or title by purchase; and (5) informacion posesoria or possessory information title.59 > The first law governing the disposition of public lands in the Philippines under American rule was embodied in the Philippine Bill of 1902 .60 By this law, lands of the public domain in the Philippine Islands were classified into three (3) grand divisions, to wit: agricultural, mineral, and timber or forest lands. 61 The act provided for, among others, the disposal of mineral lands by means of absolute grant (freehold system) and by lease (leasehold system).62 It also provided the definition by exclusion of "agricultural public lands." 63 Interpreting the meaning of "agricultural lands" under the Philippine Bill of 1902, the Court declared in Mapa v. Insular Government :64 x x x In other words, that the phrase "agricultural land" as used in Act No. 926 means those public lands acquired from Spain which are not timber or mineral lands. x x x65 (Emphasis Ours)

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On February 1, 1903 , the Philippine Legislature passed Act No. 496, otherwise known as the Land Registration Act. The act established a system of registration by which recorded title becomes absolute, indefeasible, and imprescriptible. This is known as the Torrens system. 66 Concurrently, on October 7, 1903, the Philippine Commission passed Act No. 926, which was the first Public Land Act. The Act introduced the homestead system and made provisions for judicial and administrative confirmation of imperfect titles and for the sale or lease of public lands. It permitted corporations regardless of the nationality of persons owning the controlling stock to lease or purchase lands of the public domain.67 Under the Act, open, continuous, exclusive, and notorious possession and occupation of agricultural lands for the next ten (10) years preceding July 26, 1904 was sufficient for judicial confirmation of imperfect title.68 On November 29, 1919, Act No. 926 was superseded by Act No. 2874, otherwise known as the second Public Land Act. This new, more comprehensive law limited the exploitation of agricultural lands to Filipinos and Americans and citizens of other countries which gave Filipinos the same privileges. For judicial confirmation of title, possession and occupation en concepto dueo since time immemorial, or since July 26, 1894, was required. 69 After the passage of the 1935 Constitution, CA No. 141 amended Act No. 2874 on December 1, 1936. To this day, CA No. 141, as amended, remains as the existing general law governing the classification and disposition of lands of the public domain other than timber and mineral lands, 70 and privately owned lands which reverted to the State. 71 Section 48(b) of CA No. 141 retained the requirement under Act No. 2874 of possession and occupation of lands of the public domain since time immemorial or since July 26, 1894. However, this provision was superseded by Republic Act (RA) No. 1942, 72 which provided for a simple thirty-year prescriptive period for judicial confirmation of imperfect title. The provision was last amended by PD No. 1073 ,73 which now provides for possession and occupation of the land applied for since June 12, 1945, or earlier. 74 The issuance of PD No. 892 75 on February 16, 1976 discontinued the use of Spanish titles as evidence in land registration proceedings. 76 Under the decree, all holders of Spanish titles or grants should apply for registration of their lands under Act No. 496 within six (6) months from the effectivity of the decree on February 16, 1976. Thereafter, the recording of all unregistered lands 77 shall be governed by Section 194 of the Revised Administrative Code, as amended by Act No. 3344. On June 11, 1978, Act No. 496 was amended and updated by PD No. 1529, known as the Property Registration Decree. It was enacted to codify the various laws relative to registration of property. 78 It governs registration of lands under the Torrens system as well as unregistered lands, including chattel mortgages. 79 A positive act declaring land as alienable and disposable is required. In keeping with the presumption of State ownership, the Court has time and again emphasized that there must be a positive act of the government , such as an official proclamation, 80 declassifying inalienable public land into disposable land for agricultural or other purposes. 81 In fact, Section 8 of CA No. 141 limits alienable or disposable lands only to those lands which have been "officially delimited and classified." 82 The burden of proof in overcoming the presumption of State ownership of the lands of the public domain is on the person applying for registration (or claiming ownership), who must prove that the land subject of the application is alienable or disposable.83 To overcome this presumption, incontrovertible evidence must be established that the land subject of the application (or claim) is alienable or disposable.84 There must still be a positive act declaring land of the public domain as alienable and disposable. To prove that the land subject of an application for registration is alienable, the applicant must establish the existence of a positive act of the government such as a presidential proclamation or an executive order; an administrative action; investigation reports of Bureau of Lands investigators; and a legislative act or a statute.85 The applicant may also secure a certification from the government that the land claimed to have been possessed for the required number of years is alienable and disposable.86

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In the case at bar, no such proclamation, executive order, administrative action, report, statute, or certification was presented to the Court. The records are bereft of evidence showing that, prior to 2006, the portions of Boracay occupied by private claimants were subject of a government proclamation that the land is alienable and disposable. Absent such well-nigh incontrovertible evidence, the Court cannot accept the submission that lands occupied by private claimants were already open to disposition before 2006. Matters of land classification or reclassification cannot be assumed. They call for proof.87 Ankron and De Aldecoa did not make the whole of Boracay Island, or portions of it, agricultural lands. Private claimants posit that Boracay was already an agricultural land pursuant to the old cases Ankron v. Government of the Philippine Islands (1919) 88 and De Aldecoa v. The Insular Government (1909). 89 These cases were decided under the provisions of the Philippine Bill of 1902 and Act No. 926. There is a statement in these old cases that "in the absence of evidence to the contrary, that in each case the lands are agricultural lands until the contrary is shown." 90 Private claimants reliance on Ankron and De Aldecoa is misplaced. These cases did not have the effect of converting the whole of Boracay Island or portions of it into agricultural lands. It should be stressed that the Philippine Bill of 1902 and Act No. 926 merely provided the manner through which land registration courts would classify lands of the public domain. Whether the land would be classified as timber, mineral, or agricultural depended on proof presented in each case. Ankron and De Aldecoa were decided at a time when the President of the Philippines had no power to classify lands of the public domain into mineral, timber, and agricultural. At that time, the courts were free to make corresponding classifications in justiciable cases, or were vested with implicit power to do so, depending upon the preponderance of the evidence.91 This was the Courts ruling in Heirs of the Late Spouses Pedro S. Palanca and Soterranea Rafols Vda. De Palanca v. Republic ,92 in which it stated, through Justice Adolfo Azcuna, viz.: x x x Petitioners furthermore insist that a particular land need not be formally released by an act of the Executive before it can be deemed open to private ownership, citing the cases of Ramos v. Director of Lands and Ankron v. Government of the Philippine Islands. xxxx Petitioners reliance upon Ramos v. Director of Lands and Ankron v. Government is misplaced. These cases were decided under the Philippine Bill of 1902 and the first Public Land Act No. 926 enacted by the Philippine Commission on October 7, 1926, under which there was no legal provision vesting in the Chief Executive or President of the Philippines the power to classify lands of the public domain into mineral, timber and agricultural so that the courts then were free to make corresponding classifications in justiciable cases, or were vested with implicit power to do so, depending upon the preponderance of the evidence.93 To aid the courts in resolving land registration cases under Act No. 926, it was then necessary to devise a presumption on land classification. Thus evolved the dictum in Ankron that "the courts have a right to presume, in the absence of evidence to the contrary, that in each case the lands are agricultural lands until the contrary is shown." 94 But We cannot unduly expand the presumption in Ankron and De Aldecoa to an argument that all lands of the public domain had been automatically reclassified as disposable and alienable agricultural lands. By no stretch of imagination did the presumption convert all lands of the public domain into agricultural lands. If We accept the position of private claimants, the Philippine Bill of 1902 and Act No. 926 would have automatically made all lands in the Philippines, except those already classified as timber or mineral land, alienable and disposable lands. That would take these lands out of State ownership and worse, would be utterly inconsistent with and totally repugnant to the long-entrenched Regalian doctrine. The presumption in Ankron and De Aldecoa attaches only to land registration cases brought under the provisions of Act No. 926, or more specifically those cases dealing with judicial and administrative confirmation of imperfect titles. The presumption applies to an applicant for judicial or administrative conformation of imperfect title under Act No. 926. It certainly cannot apply to landowners, such as private claimants or their predecessors-in-interest, who

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failed to avail themselves of the benefits of Act No. 926. As to them, their land remained unclassified and, by virtue of the Regalian doctrine, continued to be owned by the State. In any case, the assumption in Ankron and De Aldecoa was not absolute. Land classification was, in the end, dependent on proof. If there was proof that the land was better suited for non-agricultural uses, the courts could adjudge it as a mineral or timber land despite the presumption. In Ankron, this Court stated: In the case of Jocson vs. Director of Forestry (supra), the Attorney-General admitted in effect that whether the particular land in question belongs to one class or another is a question of fact. The mere fact that a tract of land has trees upon it or has mineral within it is not of itself sufficient to declare that one is forestry land and the other, mineral land. There must be some proof of the extent and present or future value of the forestry and of the minerals. While, as we have just said, many definitions have been given for "agriculture," "forestry," and "mineral" lands, and that in each case it is a question of fact, we think it is safe to say that in order to be forestry or mineral land the proof must show that it is more valuable for the forestry or the mineral which it contains than it is for agricultural purposes. (Sec. 7, Act No. 1148.) It is not sufficient to show that there exists some trees upon the land or that it bears some mineral. Land may be classified as forestry or mineral today, and, by reason of the exhaustion of the timber or mineral, be classified as agricultural land tomorrow. And vice-versa, by reason of the rapid growth of timber or the discovery of valuable minerals, lands classified as agricultural today may be differently classified tomorrow. Each case must be decided upon the proof in that particular case, having regard for its present or future value for one or the other purposes. We believe, however, considering the fact that it is a matter of public knowledge that a majority of the lands in the Philippine Islands are agricultural lands that the courts have a right to presume, in the absence of evidence to the contrary, that in each case the lands are agricultural lands until the contrary is shown. Whatever the land involved in a particular land registration case is forestry or mineral land must, therefore, be a matter of proof. Its superior value for one purpose or the other is a question of fact to be settled by the proof in each particular case. The fact that the land is a manglar [mangrove swamp] is not sufficient for the courts to decide whether it is agricultural, forestry, or mineral land. It may perchance belong to one or the other of said classes of land. The Government, in the first instance, under the provisions of Act No. 1148, may, by reservation, decide for itself what portions of public land shall be considered forestry land, unless private interests have intervened before such reservation is made. In the latter case, whether the land is agricultural, forestry, or mineral, is a question of proof. Until private interests have intervened, the Government, by virtue of the terms of said Act (No. 1148), may decide for itself what portions of the "public domain" shall be set aside and reserved as forestry or mineral land. (Ramos vs. Director of Lands, 39 Phil. 175; Jocson vs. Director of Forestry, supra)95 (Emphasis ours) Since 1919, courts were no longer free to determine the classification of lands from the facts of each case, except those that have already became private lands. 96 Act No. 2874, promulgated in 1919 and reproduced in Section 6 of CA No. 141, gave the Executive Department, through the President, the exclusive prerogative to classify or reclassify public lands into alienable or disposable, mineral or forest.96-a Since then, courts no longer had the authority, whether express or implied, to determine the classification of lands of the public domain.97 Here, private claimants, unlike the Heirs of Ciriaco Tirol who were issued their title in 1933, 98 did not present a justiciable case for determination by the land registration court of the propertys land classification. Simply put, there was no opportunity for the courts then to resolve if the land the Boracay occupants are now claiming were agricultural lands. When Act No. 926 was supplanted by Act No. 2874 in 1919, without an application for judicial confirmation having been filed by private claimants or their predecessors-in-interest, the courts were no longer authorized to determine the propertys land classification. Hence, private claimants cannot bank on Act No. 926. We note that the RTC decision 99 in G.R. No. 167707 mentioned Krivenko v. Register of Deeds of Manila, 100 which was decided in 1947 when CA No. 141, vesting the Executive with the sole power to classify lands of the public domain was already in effect. Krivenko cited the old cases Mapa v. Insular Government,101 De Aldecoa v. The Insular Government,102 and Ankron v. Government of the Philippine Islands. 103 Krivenko, however, is not controlling here because it involved a totally different issue. The pertinent issue in

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Krivenko was whether residential lots were included in the general classification of agricultural lands; and if so, whether an alien could acquire a residential lot. This Court ruled that as an alien, Krivenko was prohibited by the 1935 Constitution104 from acquiring agricultural land, which included residential lots. Here, the issue is whether unclassified lands of the public domain are automatically deemed agricultural. Notably, the definition of "agricultural public lands" mentioned in Krivenko relied on the old cases decided prior to the enactment of Act No. 2874, including Ankron and De Aldecoa .105 As We have already stated, those cases cannot apply here, since they were decided when the Executive did not have the authority to classify lands as agricultural, timber, or mineral. Private claimants continued possession under Act No. 926 does not create a presumption that the land is alienable. Private claimants also contend that their continued possession of portions of Boracay Island for the requisite period of ten (10) years under Act No. 926 106 ipso facto converted the island into private ownership. Hence, they may apply for a title in their name. A similar argument was squarely rejected by the Court in Collado v. Court of Appeals. 107 Collado, citing the separate opinion of now Chief Justice Reynato S. Puno in Cruz v. Secretary of Environment and Natural Resources,107-a ruled: "Act No. 926, the first Public Land Act, was passed in pursuance of the provisions of the Philippine Bill of 1902. The law governed the disposition of lands of the public domain. It prescribed rules and regulations for the homesteading, selling and leasing of portions of the public domain of the Philippine Islands, and prescribed the terms and conditions to enable persons to perfect their titles to public lands in the Islands. It also provided for the "issuance of patents to certain native settlers upon public lands," for the establishment of town sites and sale of lots therein, for the completion of imperfect titles, and for the cancellation or confirmation of Spanish concessions and grants in the Islands." In short, the Public Land Act operated on the assumption that title to public lands in the Philippine Islands remained in the government; and that the governments title to public land sprung from the Treaty of Paris and other subsequent treaties between Spain and the United States. The term "public land" referred to all lands of the public domain whose title still remained in the government and are thrown open to private appropriation and settlement, and excluded the patrimonial property of the government and the friar lands." Thus, it is plain error for petitioners to argue that under the Philippine Bill of 1902 and Public Land Act No. 926, mere possession by private individuals of lands creates the legal presumption that the lands are alienable and disposable .108 (Emphasis Ours) Except for lands already covered by existing titles, Boracay was an unclassified land of the public domain prior to Proclamation No. 1064. Such unclassified lands are considered public forest under PD No. 705. The DENR109 and the National Mapping and Resource Information Authority 110 certify that Boracay Island is an unclassified land of the public domain. PD No. 705 issued by President Marcos categorized all unclassified lands of the public domain as public forest. Section 3(a) of PD No. 705 defines a public forest as "a mass of lands of the public domain which has not been the subject of the present system of classification for the determination of which lands are needed for forest purpose and which are not." Applying PD No. 705, all unclassified lands, including those in Boracay Island, are ipso facto considered public forests. PD No. 705, however, respects titles already existing prior to its effectivity. The Court notes that the classification of Boracay as a forest land under PD No. 705 may seem to be out of touch with the present realities in the island. Boracay, no doubt, has been partly stripped of its forest cover to pave the way for commercial developments. As a premier tourist destination for local and foreign tourists, Boracay appears more of a commercial island resort, rather than a forest land. Nevertheless, that the occupants of Boracay have built multi-million peso beach resorts on the island; 111 that the island has already been stripped of its forest cover; or that the implementation of Proclamation No. 1064 will

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destroy the islands tourism industry, do not negate its character as public forest. Forests, in the context of both the Public Land Act and the Constitution112 classifying lands of the public domain into "agricultural, forest or timber, mineral lands, and national parks ," do not necessarily refer to large tracts of wooded land or expanses covered by dense growths of trees and underbrushes. 113 The discussion in Heirs of Amunategui v. Director of Forestry 114 is particularly instructive: A forested area classified as forest land of the public domain does not lose such classification simply because loggers or settlers may have stripped it of its forest cover. Parcels of land classified as forest land may actually be covered with grass or planted to crops by kaingin cultivators or other farmers. "Forest lands" do not have to be on mountains or in out of the way places. Swampy areas covered by mangrove trees, nipa palms, and other trees growing in brackish or sea water may also be classified as forest land. The classification is descriptive of its legal nature or status and does not have to be descriptive of what the land actually looks like. Unless and until the land classified as "forest" is released in an official proclamation to that effect so that it may form part of the disposable agricultural lands of the public domain, the rules on confirmation of imperfect title do not apply. 115 (Emphasis supplied) There is a big difference between "forest" as defined in a dictionary and "forest or timber land" as a classification of lands of the public domain as appearing in our statutes. One is descriptive of what appears on the land while the other is a legal status, a classification for legal purposes. 116 At any rate, the Court is tasked to determine the legal status of Boracay Island, and not look into its physical layout. Hence, even if its forest cover has been replaced by beach resorts, restaurants and other commercial establishments, it has not been automatically converted from public forest to alienable agricultural land. Private claimants cannot rely on Proclamation No. 1801 as basis for judicial confirmation of imperfect title. The proclamation did not convert Boracay into an agricultural land. However, private claimants argue that Proclamation No. 1801 issued by then President Marcos in 1978 entitles them to judicial confirmation of imperfect title. The Proclamation classified Boracay, among other islands, as a tourist zone. Private claimants assert that, as a tourist spot, the island is susceptible of private ownership. Proclamation No. 1801 or PTA Circular No. 3-82 did not convert the whole of Boracay into an agricultural land. There is nothing in the law or the Circular which made Boracay Island an agricultural land. The reference in Circular No. 3-82 to "private lands" 117 and "areas declared as alienable and disposable"118 does not by itself classify the entire island as agricultural. Notably, Circular No. 3-82 makes reference not only to private lands and areas but also to public forested lands. Rule VIII, Section 3 provides: No trees in forested private lands may be cut without prior authority from the PTA. All forested areas in public lands are declared forest reserves . (Emphasis supplied) Clearly, the reference in the Circular to both private and public lands merely recognizes that the island can be classified by the Executive department pursuant to its powers under CA No. 141. In fact, Section 5 of the Circular recognizes the then Bureau of Forest Developments authority to declare areas in the island as alienable and disposable when it provides: Subsistence farming, in areas declared as alienable and disposable by the Bureau of Forest Development. Therefore, Proclamation No. 1801 cannot be deemed the positive act needed to classify Boracay Island as alienable and disposable land. If President Marcos intended to classify the island as alienable and disposable or forest, or both, he would have identified the specific limits of each, as President Arroyo did in Proclamation No. 1064. This was not done in Proclamation No. 1801. The Whereas clauses of Proclamation No. 1801 also explain the rationale behind the declaration of Boracay Island, together with other islands, caves and peninsulas in the Philippines, as a tourist zone and marine reserve to be administered by the PTA to ensure the concentrated efforts of the public and private sectors in the development of the areas tourism potential with due regard for ecological balance in the marine environment. Simply put, the proclamation is aimed at administering the islands for tourism and ecological purposes. It

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does not address the areas alienability. 119 More importantly, Proclamation No. 1801 covers not only Boracay Island, but sixty-four (64) other islands, coves, and peninsulas in the Philippines, such as Fortune and Verde Islands in Batangas, Port Galera in Oriental Mindoro, Panglao and Balicasag Islands in Bohol, Coron Island, Puerto Princesa and surrounding areas in Palawan, Camiguin Island in Cagayan de Oro, and Misamis Oriental, to name a few. If the designation of Boracay Island as tourist zone makes it alienable and disposable by virtue of Proclamation No. 1801, all the other areas mentioned would likewise be declared wide open for private disposition. That could not have been, and is clearly beyond, the intent of the proclamation. It was Proclamation No. 1064 of 2006 which positively declared part of Boracay as alienable and opened the same to private ownership. Sections 6 and 7 of CA No. 141 120 provide that it is only the President, upon the recommendation of the proper department head, who has the authority to classify the lands of the public domain into alienable or disposable, timber and mineral lands. 121 In issuing Proclamation No. 1064, President Gloria Macapagal-Arroyo merely exercised the authority granted to her to classify lands of the public domain, presumably subject to existing vested rights. Classification of public lands is the exclusive prerogative of the Executive Department, through the Office of the President. Courts have no authority to do so.122 Absent such classification, the land remains unclassified until released and rendered open to disposition. 123 Proclamation No. 1064 classifies Boracay into 400 hectares of reserved forest land and 628.96 hectares of agricultural land. The Proclamation likewise provides for a 15-meter buffer zone on each side of the center line of roads and trails, which are reserved for right of way and which shall form part of the area reserved for forest land protection purposes. Contrary to private claimants argument, there was nothing invalid or irregular, much less unconstitutional, about the classification of Boracay Island made by the President through Proclamation No. 1064. It was within her authority to make such classification, subject to existing vested rights. Proclamation No. 1064 does not violate the Comprehensive Agrarian Reform Law. Private claimants further assert that Proclamation No. 1064 violates the provision of the Comprehensive Agrarian Reform Law (CARL) or RA No. 6657 barring conversion of public forests into agricultural lands. They claim that since Boracay is a public forest under PD No. 705, President Arroyo can no longer convert it into an agricultural land without running afoul of Section 4(a) of RA No. 6657, thus: SEC. 4. Scope. The Comprehensive Agrarian Reform Law of 1988 shall cover, regardless of tenurial arrangement and commodity produced, all public and private agricultural lands as provided in Proclamation No. 131 and Executive Order No. 229, including other lands of the public domain suitable for agriculture. More specifically, the following lands are covered by the Comprehensive Agrarian Reform Program: (a) All alienable and disposable lands of the public domain devoted to or suitable for agriculture. No reclassification of forest or mineral lands to agricultural lands shall be undertaken after the approval of this Act until Congress, taking into account ecological, developmental and equity considerations, shall have determined by law, the specific limits of the public domain. That Boracay Island was classified as a public forest under PD No. 705 did not bar the Executive from later converting it into agricultural land. Boracay Island still remained an unclassified land of the public domain despite PD No. 705. In Heirs of the Late Spouses Pedro S. Palanca and Soterranea Rafols v. Republic, 124 the Court stated that unclassified lands are public forests. While it is true that the land classification map does not categorically state that the islands are public forests, the fact that they were unclassified lands leads to

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the same result. In the absence of the classification as mineral or timber land, the land remains unclassified land until released and rendered open to disposition. 125 (Emphasis supplied) Moreover, the prohibition under the CARL applies only to a "reclassification" of land. If the land had never been previously classified, as in the case of Boracay, there can be no prohibited reclassification under the agrarian law. We agree with the opinion of the Department of Justice126 on this point: Indeed, the key word to the correct application of the prohibition in Section 4(a) is the word "reclassification." Where there has been no previous classification of public forest [referring, we repeat, to the mass of the public domain which has not been the subject of the present system of classification for purposes of determining which are needed for forest purposes and which are not] into permanent forest or forest reserves or some other forest uses under the Revised Forestry Code, there can be no "reclassification of forest lands" to speak of within the meaning of Section 4(a). Thus, obviously, the prohibition in Section 4(a) of the CARL against the reclassification of forest lands to agricultural lands without a prior law delimiting the limits of the public domain, does not, and cannot, apply to those lands of the public domain, denominated as "public forest" under the Revised Forestry Code, which have not been previously determined, or classified, as needed for forest purposes in accordance with the provisions of the Revised Forestry Code. 127 Private claimants are not entitled to apply for judicial confirmation of imperfect title under CA No. 141. Neither do they have vested rights over the occupied lands under the said law. There are two requisites for judicial confirmation of imperfect or incomplete title under CA No. 141, namely: (1) open, continuous, exclusive, and notorious possession and occupation of the subject land by himself or through his predecessors-in-interest under a bona fide claim of ownership since time immemorial or from June 12, 1945; and (2) the classification of the land as alienable and disposable land of the public domain.128 As discussed, the Philippine Bill of 1902, Act No. 926, and Proclamation No. 1801 did not convert portions of Boracay Island into an agricultural land. The island remained an unclassified land of the public domain and, applying the Regalian doctrine, is considered State property. Private claimants bid for judicial confirmation of imperfect title, relying on the Philippine Bill of 1902, Act No. 926, and Proclamation No. 1801, must fail because of the absence of the second element of alienable and disposable land. Their entitlement to a government grant under our present Public Land Act presupposes that the land possessed and applied for is already alienable and disposable. This is clear from the wording of the law itself.129 Where the land is not alienable and disposable, possession of the land, no matter how long, cannot confer ownership or possessory rights. 130 Neither may private claimants apply for judicial confirmation of imperfect title under Proclamation No. 1064, with respect to those lands which were classified as agricultural lands. Private claimants failed to prove the first element of open, continuous, exclusive, and notorious possession of their lands in Boracay since June 12, 1945. We cannot sustain the CA and RTC conclusion in the petition for declaratory relief that private claimants complied with the requisite period of possession. The tax declarations in the name of private claimants are insufficient to prove the first element of possession. We note that the earliest of the tax declarations in the name of private claimants were issued in 1993. Being of recent dates, the tax declarations are not sufficient to convince this Court that the period of possession and occupation commenced on June 12, 1945. Private claimants insist that they have a vested right in Boracay, having been in possession of the island for a long time. They have invested millions of pesos in developing the island into a tourist spot. They say their continued possession and investments give them a vested right which cannot be unilaterally rescinded by Proclamation No. 1064. The continued possession and considerable investment of private claimants do not automatically give them a vested right in Boracay. Nor do these give them a right to apply for a title to the land they are presently occupying. This Court is constitutionally bound to decide cases based on the evidence presented and the laws applicable. As

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the law and jurisprudence stand, private claimants are ineligible to apply for a judicial confirmation of title over their occupied portions in Boracay even with their continued possession and considerable investment in the island. One Last Note The Court is aware that millions of pesos have been invested for the development of Boracay Island, making it a by-word in the local and international tourism industry. The Court also notes that for a number of years, thousands of people have called the island their home. While the Court commiserates with private claimants plight, We are bound to apply the law strictly and judiciously. This is the law and it should prevail. Ito ang batas at ito ang dapat umiral. All is not lost, however, for private claimants. While they may not be eligible to apply for judicial confirmation of imperfect title under Section 48(b) of CA No. 141, as amended, this does not denote their automatic ouster from the residential, commercial, and other areas they possess now classified as agricultural. Neither will this mean the loss of their substantial investments on their occupied alienable lands. Lack of title does not necessarily mean lack of right to possess. For one thing, those with lawful possession may claim good faith as builders of improvements. They can take steps to preserve or protect their possession. For another, they may look into other modes of applying for original registration of title, such as by homestead 131 or sales patent,132 subject to the conditions imposed by law. More realistically, Congress may enact a law to entitle private claimants to acquire title to their occupied lots or to exempt them from certain requirements under the present land laws. There is one such bill 133 now pending in the House of Representatives. Whether that bill or a similar bill will become a law is for Congress to decide. In issuing Proclamation No. 1064, the government has taken the step necessary to open up the island to private ownership. This gesture may not be sufficient to appease some sectors which view the classification of the island partially into a forest reserve as absurd. That the island is no longer overrun by trees, however, does not becloud the vision to protect its remaining forest cover and to strike a healthy balance between progress and ecology. Ecological conservation is as important as economic progress. To be sure, forest lands are fundamental to our nations survival. Their promotion and protection are not just fancy rhetoric for politicians and activists. These are needs that become more urgent as destruction of our environment gets prevalent and difficult to control. As aptly observed by Justice Conrado Sanchez in 1968 in Director of Forestry v. Munoz:134 The view this Court takes of the cases at bar is but in adherence to public policy that should be followed with respect to forest lands. Many have written much, and many more have spoken, and quite often, about the pressing need for forest preservation, conservation, protection, development and reforestation. Not without justification. For, forests constitute a vital segment of any country's natural resources. It is of common knowledge by now that absence of the necessary green cover on our lands produces a number of adverse or ill effects of serious proportions. Without the trees, watersheds dry up; rivers and lakes which they supply are emptied of their contents. The fish disappear. Denuded areas become dust bowls. As waterfalls cease to function, so will hydroelectric plants. With the rains, the fertile topsoil is washed away; geological erosion results. With erosion come the dreaded floods that wreak havoc and destruction to property crops, livestock, houses, and highways not to mention precious human lives. Indeed, the foregoing observations should be written down in a lumbermans decalogue. 135 WHEREFORE, judgment is rendered as follows: 1. The petition for certiorari in G.R. No. 167707 is GRANTED and the Court of Appeals Decision in CA-G.R. CV No. 71118 REVERSED AND SET ASIDE . 2. The petition for certiorari in G.R. No. 173775 is DISMISSED for lack of merit. SO ORDERED. RUBEN T. REYES

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Associate Justice WE CONCUR:. REYNATO S. PUNO Chief Justice Chairperson LEONARDO A. QUISUMBING Associate Justice ANTONIO T. CARPIO Associate Justice (On official leave) RENATO C. CORONA* Associate Justice ADOLFO S. AZCUNA Associate Justice MINITA V. CHICO-NAZARIO Associate Justice ANTONIO EDUARDO B. NACHURA ** Associate Justice CONSUELO YNARES-SANTIAGO Associate Justice MA. ALICIA AUSTRIA-MARTINEZ Associate Justice CONCHITA CARPIO MORALES Associate Justice DANTE O. TINGA Associate Justice PRESBITERO J. VELASCO, JR. Associate Justice TERESITA J. LEONARDO-DE CASTRO Associate Justice

ARTURO D. BRION Associate Justice

CE RT IF ICAT ION Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court. REYNATO S. PUNO Chief Justice

Footnotes
* On official leave per Special Order No. 520 dated September 19, 2008. ** No part. Justice Nachura participated in the present case as Solicitor General. 1 Rollo (G.R. No. 167707), pp. 37-43. CA-G.R. CV No. 71118, promulgated on December 9, 2004. Penned

by Associate Justice Isaias P. Dicdican, with Associate Justices Sesinando E. Villon and Ramon M. Bato, Jr., concurring.
2 Id. at 47-54; Annex "C." Spl. Civil Case No. 5403. Penned by Judge Niovady M. Marin, RTC, Kalibo,

Branch 5.
3 Rollo (G.R. No. 173775), pp. 101-114. Annex "F." Classifying Boracay Island Situated in the Municipality

of Malay, Province of Aklan Into Forestland (Protection Purposes) and Into Agricultural Land (Alienable and
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Disposable) Pursuant to Presidential Decreee No. 705 (Revised Forestry Reform Code of the Philippines). Issued on May 22, 2006.
4 As of the year 2000. 5 Manoc-Manoc, Balabag, and Yapak. 6 Under Survey Plan No. NR-06-000001. 7 Rollo (G.R. No. 167707), p. 49. 8 Id. at 21-23; Annex "B." Declaring Certain Islands, Coves, and Peninsulas in the Philippines as Tourist

Zones and Marine Reserves Under the Administration and Control of the Philippine Tourism Authority.
9 Id. at 24-27. Rules and Regulations Governing Activities at Boracay Island Tourist Zone. 10 Records, pp. 13-32; Annexes "A" to "A-18." 11 Issued on May 19, 1975. 12 Records, p. 148. 13 Id. 14 Rules of Court, Rule 129, Sec. 2. 15 Records, p. 148. 16 Id. at 177, 178. 17 Rollo (G.R. No. 167707), p. 54. 18 Id. at 51. 19 Id.; PTA Circular No. 3-82, Rule VIII, Sec. 1(3) states:

No trees in forested private lands may be cut without prior authority from the PTA. All forested areas in public lands are declared forest reserves.
20 Sec. 87. If all the lands included in the proclamation of the President are not registered under the Land

Registration Act, the Solicitor-General, if requested to do so by the Secretary of Agriculture and Natural Resources, shall proceed in accordance with the provisions of section fifty-three of this Act.
21 Sec. 53. It shall be lawful for the Director of Lands, whenever in the opinion of the President the public

interests shall require it, to cause to be filed in the proper Court of First Instance, through the Solicitor General or the officer acting in his stead, a petition against the holder, claimant, possessor, or occupant of any land who shall not have voluntarily come in under the provisions of this chapter or of the Land Registration Act, stating in substance that the title of such holder, claimant, possessor, or occupant is open to discussion; or that the boundaries of any such land which has not been brought into court as aforesaid are open to question; or that it is advisable that the title to such land be settled and adjudicated, and praying that the title to any such land or the boundaries thereof or the right to occupancy thereof be settled and adjudicated. The judicial proceedings under this section shall be in accordance with the laws on adjudication of title in cadastral proceedings.
22 Rollo (G.R. No. 167707), p. 51. 23 Id. at 211-121.

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24 Id. at 42. 25 Id. at 45-46. 26 Supra note 3. 27 Owner of Waling-Waling Beach Resort and Chairman of the Board of Boracay Foundation, Inc. 28 Owner of Willys Beach Resort. 29 Rollo (G.R. No. 173775), p. 20; Annex "A." 30 Petitioners in G.R. No. 173775 claim that they are also petitioners in the declaratory case filed in

November 1997 before the RTC in Kalibo, Aklan, docketed as Sp. Civil Case No. 5403 and now before this Court as G.R. No. 167707.
31 Rollo (G.R No. 173775), pp. 4-5. 32 Id. at 4. 33 Id. at 143. 34 Rollo (G.R. No. 167707), p. 26. 35 Rollo (G.R. No. 173775), pp. 280-281. 36 An Act Temporarily to Provide for the Administration of the Affairs of Civil Government in the Philippine

Islands, and for Other Purposes. Issued on July 1, 1902.


37 An Act to Amend and Compile the Laws Relative to Lands of the Public Domain. Approved on December

1, 1936.
38 See note 8. 39 See note 3. 40 Constitution (1935), Art. XIII, Sec. 1. 41 Constitution (1973), Art. XIV, Sec. 10. 42 Bernas, S.J., The Intent of the 1986 Constitution Writers, 1995 ed., p. 830. 43 Constitution (1987), Art. XII, Sec. 3. 44 Id. 45 Zarate v. Director of Lands, G.R. No. 131501, July 14, 2004, 434 SCRA 322; Reyes v. Court of Appeals,

356 Phil. 606, 624 (1998).


46 Chavez v. Public Estates Authority, G.R. No. 133250, July 9, 2002, 384 SCRA 152. 47 Zarate v. Director of Lands, supra; Collado v. Court of Appeals, G.R. No. 107764, October 4, 2002, 390

SCRA 343; Director of Lands v. Intermediate Appellate Court, G.R. No. 73246, March 2, 1993, 219 SCRA 339.

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G.R. No. 167707 48 Republic v. Estonilo, G.R. No. 157306, November 25, 2005, 476 SCRA 265; Zarate v. Director of Lands,

supra.
49 De los Reyes v. Ramolete, G.R. No. L-47331, June 21, 1983, 122 SCRA 652, citing Gonzaga v. Court of

Appeals, G.R. No. L-27455, June 28, 1973, 51 SCRA 381.


50 Collado v. Court of Appeals , supra, citing Chavez v. Public Estates Authority, supra. 51 Id., citing separate opinion of then Justice Reynato S. Puno in Cruz v. Secretary of Environment and

Natural Resources, G.R. No. 135385, December 6, 2000, 347 SCRA 128, and Chavez v. Public Estates Authority, supra note 46.
52 Collado v. Court of Appeals, supra note 47. 53 Effective February 13, 1894. 54 De Aldecoa v. The Insular Government, 13 Phil. 159 (1909). 55 A valid title based upon adverse possession or a valid title based upon prescription. Noblejas, A.H. and

Noblejas, E.H., Registration of Land Titles and Deeds, 1986 ed., p. 39, citing Cruz v. De Leon, 21 Phil. 199 (1912).
56 Ten (10) years, according to Archbishop of Manila v. Arnedo, 30 Phil. 593 (1915). 57 Noblejas, A.H. and Noblejas, E.H., Registration of Land Titles and Deeds, supra at 8. 58 Id. at 9; Director of Forest Administration v. Fernandez, G.R. Nos. 36827, 56622 & 70076, December 10,

1990, 192 SCRA 121, 137.


59 Id. at 5-11. 60 See note 36. 61 Director of Forestry v. Villareal, G.R. No. L-32266, February 27, 1989, 170 SCRA 598, 601. 62 Noblejas, A.H. and Noblejas, E.H., Registration of Land Titles and Deeds, supra note 55, at 347. 63 The provisions relevant to the definition are:

Sec. 13. That the Government of the Philippine Islands, subject to the provisions of this Act and except as herein provided, shall classify according to its agricultural character and productiveness, and shall immediately make rules and regulations for the lease, sale, or other disposition of the public lands other than timber or mineral lands, but such rules and regulations shall not go into effect or have the force of law until they have received the approval of the President, and when approved by the President they shall be submitted by him to Congress at the beginning of the next ensuing session thereof and unless disapproved or amended by Congress at said session they shall at the close of such period have the force and effect of law in the Philippine Islands: Provided, That a single homestead entry shall not exceed sixteen hectares in extent. Sec. 14. That the Government of the Philippine Islands is hereby authorized and empowered to enact rules and regulations and to prescribe terms and conditions to enable persons to perfect their title to public lands in said Islands, who, prior to the transfer of sovereignty from Spain to the United States, had fulfilled all or some of the conditions required by the Spanish laws and royal decrees of the Kingdom of Spain for the acquisition of legal title thereto, yet failed to secure conveyance of title; and the Philippine Commission is authorized to issue patents, without compensation, to any native of said Islands, conveying title to any tract of land not more than sixteen hectares in extent, which were public lands and had been actually occupied by such native or his ancestors prior to and on the

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thirteenth of August, eighteen hundred and ninety-eight. Sec. 15. That the Government of the Philippine Islands is hereby authorized and empowered, on such terms as it may prescribe, by general legislation, to provide for the granting or sale and conveyance to actual occupants and settlers and other citizens of said Islands such parts and portions of the public domain, other than timber and mineral lands, of the United States in said Islands as it may deem wise, not exceeding sixteen hectares to any one person and for the sale and conveyance of not more than one thousand and twenty-four hectares to any corporation or association of persons: Provided, That the grant or sale of such lands, whether the purchase price be paid at once or in partial payments, shall be conditioned upon actual and continued occupancy, improvement, and cultivation of the premises sold for a period of not less than five years, during which time the purchaser or grantee can not alienate or encumber said land or the title thereto; but such restriction shall not apply to transfers of rights and title of inheritance under the laws for the distribution of the estates of decedents.
64 10 Phil. 175 (1908). 65 Id. at 182. 66 Collado v. Court of Appeals, supra note 47. 67 Noblejas, A.H. and Noblejas, E.H., Registration of Land Titles and Deeds, supra note 55. 68 Sec. 54, par. 6. 69 Sec. 45(b); Public Estates Authority v. Court of Appeals, G.R. No. 112172, November 20, 2000, 345

SCRA 96; Director of Lands v. Buyco, G.R. No. 91189, November 27, 1992, 216 SCRA 78.
70 Collado v. Court of Appeals, supra note 47, see separate opinion of Justice Puno in Cruz v. Secretary of

Environment and Natural Resources, supra note 51, and Chavez v. Public Estates Authority, supra note 46.
71 Sec. 2. 72 An Act to Amend Subsection (b) of Section Forty-Eight of Commonwealth Act Numbered One Hundred

Forty-One, Otherwise Known as the Public Land Act. Approved on June 22, 1957.
73 Extending the Period of Filing Applications for Administrative Legislation (Free Patent) and Judicial

Confirmation of Imperfect and Incomplete Titles to Alienable and Disposable Lands in the Public Domain Under Chapter VII and Chapter VIII of Commonwealth Act No. 141, As Amended, For Eleven (11) Years Commencing January 1, 1977. Approved on January 25, 1977.
74 Republic v. Doldol, G.R. No. 132963, September 10, 1998, 295 SCRA 359. 75 Discontinuance of the Spanish Mortgage System of Registration and of the Use of Spanish Titles as

Evidence in Land Registration Proceedings (Issued February 16, 1976).


76 Director of Forest Administration v. Fernandez, supra note 58, citing Director of Lands v. Rivas, G.R. No.

L-61539, February 14, 1986, 141 SCRA 329.


77 Lands which were not recorded under the Maura Law and were not yet covered by Torrens titles. 78 Presidential Decree No. 1529, Preamble; Director of Lands v. Intermediate Appellate Court, supra note

47.
79 Pea, N. and Pea, Jr., N., Registration of Land Titles and Deeds, 1988 ed., p. 9. 80 Republic v. Court of Appeals, G.R. No. 48227, August 21, 1991, 201 SCRA 1; Director of Lands v. Court

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of Appeals, G.R. No. 83609, October 26, 1989, 178 SCRA 708.
81 Heirs of the Late Spouses Pedro S. Palanca and Soterranea Rafols Vda. De Palanca v. Republic, G.R.

No. 151312, August 30, 2006, 500 SCRA 209; Director of Lands v. Intermediate Appellate Court, supra note 47, citing Director of Lands v. Aquino, G.R. No. 31688, December 17, 1990, 192 SCRA 296.
82 Chavez v. Public Estates Authority, supra note 46. 83 Republic v. Lao, G.R. No. 150413, July 1, 2003; 405 SCRA 291; Director of Lands v. Intermediate

Appellate Court, supra note 47, citing Director of Lands v. Aquino, supra.
84 Republic v. Lao, supra; Pagkatipunan v. Court of Appeals, 429 Phil. 377, 389-390 (2002). 85 Republic of the Philippines v. Muoz, G.R. No. 151910, October 15, 2007 . 86 Heirs of the Late Spouses Pedro S. Palanca and Soterranea Rafols Vda. De Palanca v. Republic, supra;

Gutierrez Hermanos v. Court of Appeals, G.R. Nos. 54472-77, September 28, 1989, 178 SCRA 37.
87 Republic v. Naguiat, G.R. No. 134209, January 24, 2006, 479 SCRA 585. 88 40 Phil. 10 (1919). 89 Supra note 54. 90 Ankron v. Government of the Philippine Islands, supra at 16. 91 Heirs of the Late Spouses Pedro S. Palanca and Soterranea Rafols Vda. De Palanca v. Republic, supra

note 81.
92 Id. at 76. 93 Id. at 219-223. 94 Ankron v. Government of the Philippine Islands, supra note 88, at 16. 95 Id. at 15-16. 96 Act No. 2874, Sec. 8; Republic v. Court of Appeals, G.R. No. 155450, August 6, 2008; Republic v. Court

of Appeals, G.R. No. 127245, January 30, 2001.


96-a Bureau of Forestry v. Court of Appeals, G.R. No. L-37995, August 31, 1987, 153 SCRA 351, 357. 97 Heirs of the Late Spouses Pedro S. Palanca and Soterranea Rafols Vda. De Palanca v. Republic, supra

note 81.
98 The records do not show the manner in which title was issued to the Heirs of Ciriaco Tirol. 99 Records, p. 179. 100 79 Phil. 461 (1947). 101 Supra note 64. 102 Supra note 54. 103 Supra note 88.

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G.R. No. 167707 104 Art. XIII, Sec. 1. 105 Krivenko v. Register of Deeds of Manila, supra note 100, at 468-469. 106 Act No. 926, Sec. 54, par. 6 states:

SEC. 54. The following described persons or their legal successors in right, occupying lands in the Philippines, or claiming to own any such land or interest therein but whose titles to such land have not been perfected may apply to the Court of Land Registration of the Philippine Islands for confirmation of their claims and the issuance of a certificate of title therefor to wit xxxx (6) All persons who by themselves or their predecessors in interest have been in the open, continuous exclusive, and notorious possession and occupation of agricultural public lands, as defined by said Act of Congress of July first, nineteen hundred and two, under a bona fide claim of ownership except as against the Government, for a period of ten years next preceding the taking effect of this act, except when prevented by war, or force majeure, shall be conclusively presumed to have performed all the conditions essential to a Government grant and to have received the same, and shall be entitled to a certificate of title to such land under the provisions of this chapter.
107 Supra note 47. 107-a G.R. No. 135385, December 6, 2000, 347 SCRA 128. 108 Collado v. Court of Appeals, id. at 356. 109 Records, p. 101; Annex "A." 110 Id. at 106; Exhibit "1-a." 111 Rollo (G.R. No. 173775), p. 5. 112 Constitution (1987), Art. XII, Sec. 3; Constitution (1973), Art. XIV, Sec. 10, as amended; and

Constitution (1935), Art. XIII, Sec. 1.


113 Republic v. Naguiat, supra note 87. 114 G.R. No. L-27873, November 29, 1983, 126 SCRA 69. 115 Heirs of Amunategui v. Director of Forestry, id. at 75. 116 Republic v. Court of Appeals, G.R. No. L-56948, September 30, 1987, 154 SCRA 476, 482-483. 117 Sec. 3 provides:

Establishment of or low-density human settlements in private lands, or subdivisions, if any, subject to prior approval by the Ministry of Human Settlements, PTA and local building officials; Provided, that no structures shall be constructed within 30 meters from the shorelines.
118 Sec. 5 states:

Subsistence farming, in areas declared as alienable and disposable by the Bureau of Forest Development.
119 Pars. 3-4. 120 SEC. 6. The President, upon recommendation of the Secretary of Agriculture and Commerce (now the

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Secretary of the Department of Environment and Natural Resources), shall from time to time classify lands of the public domain into (a) Alienable or disposable, (b) Timber, and (c) Mineral lands, And may at any time and in a like manner transfer such lands from one class to another, for the purposes of their administration and disposition. SEC. 7. For the purposes of administration and disposition of alienable or disposable public lands, the President, upon recommendation by the Secretary of Agriculture and Commerce (now the Secretary of the Department of Environment and Natural Resources), shall from time to time declare what lands are open to disposition or concession under this Act.
121 Director of Lands v. Intermediate Appellate Court, supra note 47; Manalo v. Intermediate Appellate

Court, G.R. No. 64753, April 26, 1989, 172 SCRA 795.
122 Republic v. Register of Deeds of Quezon, G.R. No. 73974, May 31, 1995, 244 SCRA 537; Director of

Lands v. Intermediate Appellate Court, supra note 47.


123 Director of Lands v. Intermediate Appellate Court, supra note 47, citing Yngson v. Secretary of

Agriculture and Natural Resources, G.R. No. L-36847, July 20, 1983, 123 SCRA 441; Republic v. Court of Appeals, G.R. No. L-45202, September 11, 1980, 99 SCRA 742.
124 Supra note 81. 125 Heirs of the Late Spouses Pedro S. Palanca and Soterranea Rafols Vda. De Palanca v. Republic, id. at

222-223.
126 Reconsideration of DOJ Opinion No. 169, s. 1993, on the DOJ affirmative stand on whether the

prohibition against the reclassification of forest lands applies to "unclassified public forest."
127 Rollo (G.R. No. 173775), p. 139. 128 Del Rosario-Igtiben v. Republic, G.R. No. 158449, October 22, 2004, 441 SCRA 188; Republic v. Lao,

supra note 83.


129 Public Land Act, Sec. 48(b). 130 Public Estates Authority v. Court of Appeals, supra note 69. 131 Commonwealth Act No. 141, Chapter IV. 132 Id., Chapter V. 133 House Bill No. 1109. Declaring Certain Parcels of the Public Domain Within Boracay Island, Malay,

Aklan as Agricultural Land Open to Disposition.


134 G.R. No. L-24796, June 28, 1968, 23 SCRA 1183, cited in Lepanto Consolidated Mining Company v.

Dumyung, G.R. Nos. L-31666-68, April 30, 1979, 89 SCRA 532.


135 Director of Forestry v. Muoz, id. at 1214.

The Lawphil Project - Arellano Law Foundation

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G.R. Nos. 171947-48

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. Nos. 171947-48 December 18, 2008

METROPOLITAN MANILA DEVELOPMENT AUTHORITY, DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, DEPARTMENT OF EDUCATION, CULTURE AND SPORTS,1 DEPARTMENT OF HEALTH, DEPARTMENT OF AGRICULTURE, DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, DEPARTMENT OF BUDGET AND MANAGEMENT, PHILIPPINE COAST GUARD, PHILIPPINE NATIONAL POLICE MARITIME GROUP, and DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT, petitioners, vs. CONCERNED RESIDENTS OF MANILA BAY, represented and joined by DIVINA V. ILAS, SABINIANO ALBARRACIN, MANUEL SANTOS, JR., DINAH DELA PEA, PAUL DENNIS QUINTERO, MA. VICTORIA LLENOS, DONNA CALOZA, FATIMA QUITAIN, VENICE SEGARRA, FRITZIE TANGKIA, SARAH JOELLE LINTAG, HANNIBAL AUGUSTUS BOBIS, FELIMON SANTIAGUEL, and JAIME AGUSTIN R. OPOSA, respondents. DE CIS ION VELASCO, JR., J.: The need to address environmental pollution, as a cause of climate change, has of late gained the attention of the international community. Media have finally trained their sights on the ill effects of pollution, the destruction of forests and other critical habitats, oil spills, and the unabated improper disposal of garbage. And rightly so, for the magnitude of environmental destruction is now on a scale few ever foresaw and the wound no longer simply heals by itself.2 But amidst hard evidence and clear signs of a climate crisis that need bold action, the voice of cynicism, naysayers, and procrastinators can still be heard. This case turns on government agencies and their officers who, by the nature of their respective offices or by direct statutory command, are tasked to protect and preserve, at the first instance, our internal waters, rivers, shores, and seas polluted by human activities. To most of these agencies and their official complement, the pollution menace does not seem to carry the high national priority it deserves, if their track records are to be the norm. Their cavalier attitude towards solving, if not mitigating, the environmental pollution problem, is a sad commentary on bureaucratic efficiency and commitment. At the core of the case is the Manila Bay, a place with a proud historic past, once brimming with marine life and, for so many decades in the past, a spot for different contact recreation activities, but now a dirty and slowly dying expanse mainly because of the abject official indifference of people and institutions that could have otherwise made a difference. This case started when, on January 29, 1999, respondents Concerned Residents of Manila Bay filed a complaint before the Regional Trial Court (RTC) in Imus, Cavite against several government agencies, among them the petitioners, for the cleanup, rehabilitation, and protection of the Manila Bay. Raffled to Branch 20 and docketed as Civil Case No. 1851-99 of the RTC, the complaint alleged that the water quality of the Manila Bay had fallen way below the allowable standards set by law, specifically Presidential Decree No. (PD) 1152 or the Philippine Environment Code. This environmental aberration, the complaint stated, stemmed from: x x x [The] reckless, wholesale, accumulated and ongoing acts of omission or commission [of the defendants] resulting in the clear and present danger to public health and in the depletion and contamination of the marine life of Manila Bay, [for which reason] ALL defendants must be held jointly and/or solidarily liable and be collectively ordered to clean up Manila Bay and to restore its water quality to class B waters fit for swimming, skin-diving, and other forms of contact recreation. 3

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In their individual causes of action, respondents alleged that the continued neglect of petitioners in abating the pollution of the Manila Bay constitutes a violation of, among others: (1) Respondents constitutional right to life, health, and a balanced ecology; (2) The Environment Code (PD 1152); (3) The Pollution Control Law (PD 984); (4) The Water Code (PD 1067); (5) The Sanitation Code (PD 856); (6) The Illegal Disposal of Wastes Decree (PD 825); (7) The Marine Pollution Law (PD 979); (8) Executive Order No. 192; (9) The Toxic and Hazardous Wastes Law (Republic Act No. 6969); (10) Civil Code provisions on nuisance and human relations; (11) The Trust Doctrine and the Principle of Guardianship; and (12) International Law Inter alia, respondents, as plaintiffs a quo , prayed that petitioners be ordered to clean the Manila Bay and submit to the RTC a concerted concrete plan of action for the purpose. The trial of the case started off with a hearing at the Manila Yacht Club followed by an ocular inspection of the Manila Bay. Renato T. Cruz, the Chief of the Water Quality Management Section, Environmental Management Bureau, Department of Environment and Natural Resources (DENR), testifying for petitioners, stated that water samples collected from different beaches around the Manila Bay showed that the amount of fecal coliform content ranged from 50,000 to 80,000 most probable number (MPN)/ml when what DENR Administrative Order No. 34-90 prescribed as a safe level for bathing and other forms of contact recreational activities, or the "SB" level, is one not exceeding 200 MPN/100 ml.4 Rebecca de Vera, for Metropolitan Waterworks and Sewerage System (MWSS) and in behalf of other petitioners, testified about the MWSS efforts to reduce pollution along the Manila Bay through the Manila Second Sewerage Project. For its part, the Philippine Ports Authority (PPA) presented, as part of its evidence, its memorandum circulars on the study being conducted on ship-generated waste treatment and disposal, and its Linis Dagat (Clean the Ocean) project for the cleaning of wastes accumulated or washed to shore. The RTC Ordered Petitioners to Clean Up and Rehabilitate Manila Bay On September 13, 2002, the RTC rendered a Decision5 in favor of respondents. The dispositive portion reads: WHEREFORE, finding merit in the complaint, judgment is hereby rendered ordering the abovenamed defendant-government agencies, jointly and solidarily, to clean up and rehabilitate Manila Bay and restore its waters to SB classification to make it fit for swimming, skin-diving and other forms of contact recreation. To attain this, defendant-agencies, with defendant DENR as the lead agency, are directed, within six (6) months from receipt hereof, to act and perform their respective duties by devising a consolidated, coordinated and concerted scheme of action for the rehabilitation and restoration of the bay. In particular: Defendant MWSS is directed to install, operate and maintain adequate [sewerage] treatment facilities in strategic places under its jurisdiction and increase their capacities.

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Defendant LWUA, to see to it that the water districts under its wings, provide, construct and operate sewage facilities for the proper disposal of waste. Defendant DENR, which is the lead agency in cleaning up Manila Bay, to install, operate and maintain waste facilities to rid the bay of toxic and hazardous substances. Defendant PPA, to prevent and also to treat the discharge not only of ship-generated wastes but also of other solid and liquid wastes from docking vessels that contribute to the pollution of the bay. Defendant MMDA, to establish, operate and maintain an adequate and appropriate sanitary landfill and/or adequate solid waste and liquid disposal as well as other alternative garbage disposal system such as reuse or recycling of wastes. Defendant DA, through the Bureau of Fisheries and Aquatic Resources, to revitalize the marine life in Manila Bay and restock its waters with indigenous fish and other aquatic animals. Defendant DBM, to provide and set aside an adequate budget solely for the purpose of cleaning up and rehabilitation of Manila Bay. Defendant DPWH, to remove and demolish structures and other nuisances that obstruct the free flow of waters to the bay. These nuisances discharge solid and liquid wastes which eventually end up in Manila Bay. As the construction and engineering arm of the government, DPWH is ordered to actively participate in removing debris, such as carcass of sunken vessels, and other non-biodegradable garbage in the bay. Defendant DOH, to closely supervise and monitor the operations of septic and sludge companies and require them to have proper facilities for the treatment and disposal of fecal sludge and sewage coming from septic tanks. Defendant DECS, to inculcate in the minds and hearts of the people through education the importance of preserving and protecting the environment. Defendant Philippine Coast Guard and the PNP Maritime Group, to protect at all costs the Manila Bay from all forms of illegal fishing. No pronouncement as to damages and costs. SO ORDERED. The MWSS, Local Water Utilities Administration (LWUA), and PPA filed before the Court of Appeals (CA) individual Notices of Appeal which were eventually consolidated and docketed as CA-G.R. CV No. 76528. On the other hand, the DENR, Department of Public Works and Highways (DPWH), Metropolitan Manila Development Authority (MMDA), Philippine Coast Guard (PCG), Philippine National Police (PNP) Maritime Group, and five other executive departments and agencies filed directly with this Court a petition for review under Rule 45. The Court, in a Resolution of December 9, 2002, sent the said petition to the CA for consolidation with the consolidated appeals of MWSS, LWUA, and PPA, docketed as CA-G.R. SP No. 74944. Petitioners, before the CA, were one in arguing in the main that the pertinent provisions of the Environment Code (PD 1152) relate only to the cleaning of specific pollution incidents and do not cover cleaning in general. And apart from raising concerns about the lack of funds appropriated for cleaning purposes, petitioners also asserted that the cleaning of the Manila Bay is not a ministerial act which can be compelled by mandamus. The CA Sustained the RTC By a Decision6 of September 28, 2005, the CA denied petitioners appeal and affirmed the Decision of the RTC in toto, stressing that the trial courts decision did not require petitioners to do tasks outside of their usual basic functions under existing laws.7 Petitioners are now before this Court praying for the allowance of their Rule 45 petition on the following ground and supporting arguments:

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THE [CA] DECIDED A QUESTION OF SUBSTANCE NOT HERETOFORE PASSED UPON BY THE HONORABLE COURT, I.E., IT AFFIRMED THE TRIAL COURTS DECISION DECLARING THAT SECTION 20 OF [PD] 1152 REQUIRES CONCERNED GOVERNMENT AGENCIES TO REMOVE ALL POLLUTANTS SPILLED AND DISCHARGED IN THE WATER SUCH AS FECAL COLIFORMS. ARGUMENTS I [SECTIONS] 17 AND 20 OF [PD] 1152 RELATE ONLY TO THE CLEANING OF SPECIFIC POLLUTION INCIDENTS AND [DO] NOT COVER CLEANING IN GENERAL II THE CLEANING OR REHABILITATION OF THE MANILA BAY IS NOT A MINISTERIAL ACT OF PETITIONERS THAT CAN BE COMPELLED BY MANDAMUS. The issues before us are two-fold. First , do Sections 17 and 20 of PD 1152 under the headings, Upgrading of Water Quality and Clean-up Operations , envisage a cleanup in general or are they limited only to the cleanup of specific pollution incidents? And second , can petitioners be compelled by mandamus to clean up and rehabilitate the Manila Bay? On August 12, 2008, the Court conducted and heard the parties on oral arguments. Our Ruling We shall first dwell on the propriety of the issuance of mandamus under the premises. The Cleaning or Rehabilitation of Manila Bay Can be Compelled by Mandamus Generally, the writ of mandamus lies to require the execution of a ministerial duty. 8 A ministerial duty is one that "requires neither the exercise of official discretion nor judgment." 9 It connotes an act in which nothing is left to the discretion of the person executing it. It is a "simple, definite duty arising under conditions admitted or proved to exist and imposed by law."10 Mandamus is available to compel action, when refused, on matters involving discretion, but not to direct the exercise of judgment or discretion one way or the other. Petitioners maintain that the MMDAs duty to take measures and maintain adequate solid waste and liquid disposal systems necessarily involves policy evaluation and the exercise of judgment on the part of the agency concerned. They argue that the MMDA, in carrying out its mandate, has to make decisions, including choosing where a landfill should be located by undertaking feasibility studies and cost estimates, all of which entail the exercise of discretion. Respondents, on the other hand, counter that the statutory command is clear and that petitioners duty to comply with and act according to the clear mandate of the law does not require the exercise of discretion. According to respondents, petitioners, the MMDA in particular, are without discretion, for example, to choose which bodies of water they are to clean up, or which discharge or spill they are to contain. By the same token, respondents maintain that petitioners are bereft of discretion on whether or not to alleviate the problem of solid and liquid waste disposal; in other words, it is the MMDAs ministerial duty to attend to such services. We agree with respondents. First off, we wish to state that petitioners obligation to perform their duties as defined by law, on one hand, and how they are to carry out such duties, on the other, are two different concepts. While the implementation of the MMDAs mandated tasks may entail a decision-making process, the enforcement of the law or the very act of doing what the law exacts to be done is ministerial in nature and may be compelled by mandamus. We said so in Social Justice Society v. Atienza11 in which the Court directed the City of Manila to enforce, as a matter of ministerial duty, its Ordinance No. 8027 directing the three big local oil players to cease and desist from operating their business in the so-called "Pandacan Terminals" within six months from the effectivity of the ordinance. But to

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illustrate with respect to the instant case, the MMDAs duty to put up an adequate and appropriate sanitary landfill and solid waste and liquid disposal as well as other alternative garbage disposal systems is ministerial, its duty being a statutory imposition. The MMDAs duty in this regard is spelled out in Sec. 3(c) of Republic Act No. (RA) 7924 creating the MMDA. This section defines and delineates the scope of the MMDAs waste disposal services to include: Solid waste disposal and management which include formulation and implementation of policies, standards, programs and projects for proper and sanitary waste disposal. It shall likewise include the establishment and operation of sanitary land fill and related facilities and the implementation of other alternative programs intended to reduce, reuse and recycle solid waste. (Emphasis added.) The MMDA is duty-bound to comply with Sec. 41 of the Ecological Solid Waste Management Act (RA 9003) which prescribes the minimum criteria for the establishment of sanitary landfills and Sec. 42 which provides the minimum operating requirements that each site operator shall maintain in the operation of a sanitary landfill. Complementing Sec. 41 are Secs. 36 and 37 of RA 9003, 12 enjoining the MMDA and local government units, among others, after the effectivity of the law on February 15, 2001, from using and operating open dumps for solid waste and disallowing, five years after such effectivity, the use of controlled dumps. The MMDAs duty in the area of solid waste disposal, as may be noted, is set forth not only in the Environment Code (PD 1152) and RA 9003, but in its charter as well. This duty of putting up a proper waste disposal system cannot be characterized as discretionary, for, as earlier stated, discretion presupposes the power or right given by law to public functionaries to act officially according to their judgment or conscience.13 A discretionary duty is one that "allows a person to exercise judgment and choose to perform or not to perform." 14 Any suggestion that the MMDA has the option whether or not to perform its solid waste disposal-related duties ought to be dismissed for want of legal basis. A perusal of other petitioners respective charters or like enabling statutes and pertinent laws would yield this conclusion: these government agencies are enjoined, as a matter of statutory obligation, to perform certain functions relating directly or indirectly to the cleanup, rehabilitation, protection, and preservation of the Manila Bay. They are precluded from choosing not to perform these duties. Consider: (1) The DENR, under Executive Order No. (EO) 192, 15 is the primary agency responsible for the conservation, management, development, and proper use of the countrys environment and natural resources. Sec. 19 of the Philippine Clean Water Act of 2004 (RA 9275), on the other hand, designates the DENR as the primary government agency responsible for its enforcement and implementation, more particularly over all aspects of water quality management. On water pollution, the DENR, under the Acts Sec. 19(k), exercises jurisdiction "over all aspects of water pollution, determine[s] its location, magnitude, extent, severity, causes and effects and other pertinent information on pollution, and [takes] measures, using available methods and technologies, to prevent and abate such pollution." The DENR, under RA 9275, is also tasked to prepare a National Water Quality Status Report, an Integrated Water Quality Management Framework, and a 10-year Water Quality Management Area Action Plan which is nationwide in scope covering the Manila Bay and adjoining areas. Sec. 19 of RA 9275 provides: Sec. 19 Lead Agency.The [DENR] shall be the primary government agency responsible for the implementation and enforcement of this Act x x x unless otherwise provided herein. As such, it shall have the following functions, powers and responsibilities: a) Prepare a National Water Quality Status report within twenty-four (24) months from the effectivity of this Act: Provided, That the Department shall thereafter review or revise and publish annually, or as the need arises, said report; b) Prepare an Integrated Water Quality Management Framework within twelve (12) months following the completion of the status report; c) Prepare a ten (10) year Water Quality Management Area Action Plan within 12 months following the completion of the framework for each designated water management area. Such action plan shall be reviewed by the water quality management area governing board every five (5) years or as need arises.

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The DENR has prepared the status report for the period 2001 to 2005 and is in the process of completing the preparation of the Integrated Water Quality Management Framework.16 Within twelve (12) months thereafter, it has to submit a final Water Quality Management Area Action Plan.17 Again, like the MMDA, the DENR should be made to accomplish the tasks assigned to it under RA 9275. Parenthetically, during the oral arguments, the DENR Secretary manifested that the DENR, with the assistance of and in partnership with various government agencies and non-government organizations, has completed, as of December 2005, the final draft of a comprehensive action plan with estimated budget and time frame, denominated as Operation Plan for the Manila Bay Coastal Strategy , for the rehabilitation, restoration, and rehabilitation of the Manila Bay. The completion of the said action plan and even the implementation of some of its phases should more than ever prod the concerned agencies to fast track what are assigned them under existing laws. (2) The MWSS, under Sec. 3 of RA 6234, 18 is vested with jurisdiction, supervision, and control over all waterworks and sewerage systems in the territory comprising what is now the cities of Metro Manila and several towns of the provinces of Rizal and Cavite, and charged with the duty: (g) To construct, maintain, and operate such sanitary sewerages as may be necessary for the proper sanitation and other uses of the cities and towns comprising the System; x x x (3) The LWUA under PD 198 has the power of supervision and control over local water districts. It can prescribe the minimum standards and regulations for the operations of these districts and shall monitor and evaluate local water standards. The LWUA can direct these districts to construct, operate, and furnish facilities and services for the collection, treatment, and disposal of sewerage, waste, and storm water. Additionally, under RA 9275, the LWUA, as attached agency of the DPWH, is tasked with providing sewerage and sanitation facilities, inclusive of the setting up of efficient and safe collection, treatment, and sewage disposal system in the different parts of the country.19 In relation to the instant petition, the LWUA is mandated to provide sewerage and sanitation facilities in Laguna, Cavite, Bulacan, Pampanga, and Bataan to prevent pollution in the Manila Bay. (4) The Department of Agriculture (DA), pursuant to the Administrative Code of 1987 (EO 292),20 is designated as the agency tasked to promulgate and enforce all laws and issuances respecting the conservation and proper utilization of agricultural and fishery resources. Furthermore, the DA, under the Philippine Fisheries Code of 1998 (RA 8550), is, in coordination with local government units (LGUs) and other concerned sectors, in charge of establishing a monitoring, control, and surveillance system to ensure that fisheries and aquatic resources in Philippine waters are judiciously utilized and managed on a sustainable basis. 21 Likewise under RA 9275, the DA is charged with coordinating with the PCG and DENR for the enforcement of water quality standards in marine waters. 22 More specifically, its Bureau of Fisheries and Aquatic Resources (BFAR) under Sec. 22(c) of RA 9275 shall primarily be responsible for the prevention and control of water pollution for the development, management, and conservation of the fisheries and aquatic resources. (5) The DPWH, as the engineering and construction arm of the national government, is tasked under EO 292 23 to provide integrated planning, design, and construction services for, among others, flood control and water resource development systems in accordance with national development objectives and approved government plans and specifications. In Metro Manila, however, the MMDA is authorized by Sec. 3(d), RA 7924 to perform metro-wide services relating to "flood control and sewerage management which include the formulation and implementation of policies, standards, programs and projects for an integrated flood control, drainage and sewerage system." On July 9, 2002, a Memorandum of Agreement was entered into between the DPWH and MMDA, whereby MMDA was made the agency primarily responsible for flood control in Metro Manila. For the rest of the country, DPWH shall remain as the implementing agency for flood control services. The mandate of the MMDA and DPWH on flood control and drainage services shall include the removal of structures, constructions, and encroachments built along rivers, waterways, and esteros (drainages) in violation of RA 7279, PD 1067, and other pertinent laws. (6) The PCG, in accordance with Sec. 5(p) of PD 601, or the Revised Coast Guard Law of 1974, and Sec. 6 of PD
24

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979, or the Marine Pollution Decree of 1976, shall have the primary responsibility of enforcing laws, rules, and regulations governing marine pollution within the territorial waters of the Philippines. It shall promulgate its own rules and regulations in accordance with the national rules and policies set by the National Pollution Control Commission upon consultation with the latter for the effective implementation and enforcement of PD 979. It shall, under Sec. 4 of the law, apprehend violators who: a. discharge, dump x x x harmful substances from or out of any ship, vessel, barge, or any other floating craft, or other man-made structures at sea, by any method, means or manner, into or upon the territorial and inland navigable waters of the Philippines; b. throw, discharge or deposit, dump, or cause, suffer or procure to be thrown, discharged, or deposited either from or out of any ship, barge, or other floating craft or vessel of any kind, or from the shore, wharf, manufacturing establishment, or mill of any kind, any refuse matter of any kind or description whatever other than that flowing from streets and sewers and passing therefrom in a liquid state into tributary of any navigable water from which the same shall float or be washed into such navigable water; and c. deposit x x x material of any kind in any place on the bank of any navigable water or on the bank of any tributary of any navigable water, where the same shall be liable to be washed into such navigable water, either by ordinary or high tides, or by storms or floods, or otherwise, whereby navigation shall or may be impeded or obstructed or increase the level of pollution of such water. (7) When RA 6975 or the Department of the Interior and Local Government (DILG) Act of 1990 was signed into law on December 13, 1990, the PNP Maritime Group was tasked to "perform all police functions over the Philippine territorial waters and rivers." Under Sec. 86, RA 6975, the police functions of the PCG shall be taken over by the PNP when the latter acquires the capability to perform such functions. Since the PNP Maritime Group has not yet attained the capability to assume and perform the police functions of PCG over marine pollution, the PCG and PNP Maritime Group shall coordinate with regard to the enforcement of laws, rules, and regulations governing marine pollution within the territorial waters of the Philippines. This was made clear in Sec. 124, RA 8550 or the Philippine Fisheries Code of 1998, in which both the PCG and PNP Maritime Group were authorized to enforce said law and other fishery laws, rules, and regulations. 25 (8) In accordance with Sec. 2 of EO 513, the PPA is mandated "to establish, develop, regulate, manage and operate a rationalized national port system in support of trade and national development." 26 Moreover, Sec. 6-c of EO 513 states that the PPA has police authority within the ports administered by it as may be necessary to carry out its powers and functions and attain its purposes and objectives, without prejudice to the exercise of the functions of the Bureau of Customs and other law enforcement bodies within the area. Such police authority shall include the following: xxxx b) To regulate the entry to, exit from, and movement within the port, of persons and vehicles, as well as movement within the port of watercraft. 27 Lastly, as a member of the International Marine Organization and a signatory to the International Convention for the Prevention of Pollution from Ships, as amended by MARPOL 73/78,28 the Philippines, through the PPA, must ensure the provision of adequate reception facilities at ports and terminals for the reception of sewage from the ships docking in Philippine ports. Thus, the PPA is tasked to adopt such measures as are necessary to prevent the discharge and dumping of solid and liquid wastes and other ship-generated wastes into the Manila Bay waters from vessels docked at ports and apprehend the violators. When the vessels are not docked at ports but within Philippine territorial waters, it is the PCG and PNP Maritime Group that have jurisdiction over said vessels. (9) The MMDA, as earlier indicated, is duty-bound to put up and maintain adequate sanitary landfill and solid waste and liquid disposal system as well as other alternative garbage disposal systems. It is primarily responsible for the implementation and enforcement of the provisions of RA 9003, which would necessary include its penal provisions, within its area of jurisdiction. 29 Among the prohibited acts under Sec. 48, Chapter VI of RA 9003 that are frequently violated are dumping of waste matters in public places, such as roads, canals or esteros, open burning of solid waste, squatting in open

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dumps and landfills, open dumping, burying of biodegradable or non- biodegradable materials in flood-prone areas, establishment or operation of open dumps as enjoined in RA 9003, and operation of waste management facilities without an environmental compliance certificate. Under Sec. 28 of the Urban Development and Housing Act of 1992 (RA 7279), eviction or demolition may be allowed "when persons or entities occupy danger areas such as esteros, railroad tracks, garbage dumps, riverbanks, shorelines, waterways, and other public places such as sidewalks, roads, parks and playgrounds." The MMDA, as lead agency, in coordination with the DPWH, LGUs, and concerned agencies, can dismantle and remove all structures, constructions, and other encroachments built in breach of RA 7279 and other pertinent laws along the rivers, waterways, and esteros in Metro Manila. With respect to rivers, waterways, and esteros in Bulacan, Bataan, Pampanga, Cavite, and Laguna that discharge wastewater directly or eventually into the Manila Bay, the DILG shall direct the concerned LGUs to implement the demolition and removal of such structures, constructions, and other encroachments built in violation of RA 7279 and other applicable laws in coordination with the DPWH and concerned agencies. (10) The Department of Health (DOH), under Article 76 of PD 1067 (the Water Code), is tasked to promulgate rules and regulations for the establishment of waste disposal areas that affect the source of a water supply or a reservoir for domestic or municipal use. And under Sec. 8 of RA 9275, the DOH, in coordination with the DENR, DPWH, and other concerned agencies, shall formulate guidelines and standards for the collection, treatment, and disposal of sewage and the establishment and operation of a centralized sewage treatment system. In areas not considered as highly urbanized cities, septage or a mix sewerage-septage management system shall be employed. In accordance with Sec. 72 30 of PD 856, the Code of Sanitation of the Philippines, and Sec. 5.1.1 31 of Chapter XVII of its implementing rules, the DOH is also ordered to ensure the regulation and monitoring of the proper disposal of wastes by private sludge companies through the strict enforcement of the requirement to obtain an environmental sanitation clearance of sludge collection treatment and disposal before these companies are issued their environmental sanitation permit. (11) The Department of Education (DepEd), under the Philippine Environment Code (PD 1152), is mandated to integrate subjects on environmental education in its school curricula at all levels.32 Under Sec. 118 of RA 8550, the DepEd, in collaboration with the DA, Commission on Higher Education, and Philippine Information Agency, shall launch and pursue a nationwide educational campaign to promote the development, management, conservation, and proper use of the environment. Under the Ecological Solid Waste Management Act (RA 9003), on the other hand, it is directed to strengthen the integration of environmental concerns in school curricula at all levels, with an emphasis on waste management principles. 33 (12) The Department of Budget and Management (DBM) is tasked under Sec. 2, Title XVII of the Administrative Code of 1987 to ensure the efficient and sound utilization of government funds and revenues so as to effectively achieve the countrys development objectives. 34 One of the countrys development objectives is enshrined in RA 9275 or the Philippine Clean Water Act of 2004. This law stresses that the State shall pursue a policy of economic growth in a manner consistent with the protection, preservation, and revival of the quality of our fresh, brackish, and marine waters. It also provides that it is the policy of the government, among others, to streamline processes and procedures in the prevention, control, and abatement of pollution mechanisms for the protection of water resources; to promote environmental strategies and use of appropriate economic instruments and of control mechanisms for the protection of water resources; to formulate a holistic national program of water quality management that recognizes that issues related to this management cannot be separated from concerns about water sources and ecological protection, water supply, public health, and quality of life; and to provide a comprehensive management program for water pollution focusing on pollution prevention. Thus, the DBM shall then endeavor to provide an adequate budget to attain the noble objectives of RA 9275 in line with the countrys development objectives. All told, the aforementioned enabling laws and issuances are in themselves clear, categorical, and complete as to what are the obligations and mandate of each agency/petitioner under the law. We need not belabor the issue that their tasks include the cleanup of the Manila Bay.

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Now, as to the crux of the petition. Do Secs. 17 and 20 of the Environment Code encompass the cleanup of water pollution in general, not just specific pollution incidents? Secs. 17 and 20 of the Environment Code Include Cleaning in General The disputed sections are quoted as follows: Section 17. Upgrading of Water Quality .Where the quality of water has deteriorated to a degree where its state will adversely affect its best usage, the government agencies concerned shall take such measures as may be necessary to upgrade the quality of such water to meet the prescribed water quality standards. Section 20. Clean-up Operations .It shall be the responsibility of the polluter to contain, remove and cleanup water pollution incidents at his own expense. In case of his failure to do so, the government agencies concerned shall undertake containment, removal and clean-up operations and expenses incurred in said operations shall be charged against the persons and/or entities responsible for such pollution. When the Clean Water Act (RA 9275) took effect, its Sec. 16 on the subject, o, amended the counterpart provision (Sec. 20) of the Environment Code (PD 1152). Sec. 17 of PD 1152 continues, however, to be operational. The amendatory Sec. 16 of RA 9275 reads: SEC. 16. Cleanup Operations .Notwithstanding the provisions of Sections 15 and 26 hereof, any person who causes pollution in or pollutes water bodies in excess of the applicable and prevailing standards shall be responsible to contain, remove and clean up any pollution incident at his own expense to the extent that the same water bodies have been rendered unfit for utilization and beneficial use: Provided, That in the event emergency cleanup operations are necessary and the polluter fails to immediately undertake the same, the [DENR] in coordination with other government agencies concerned, shall undertake containment, removal and cleanup operations. Expenses incurred in said operations shall be reimbursed by the persons found to have caused such pollution under proper administrative determination x x x. Reimbursements of the cost incurred shall be made to the Water Quality Management Fund or to such other funds where said disbursements were sourced. As may be noted, the amendment to Sec. 20 of the Environment Code is more apparent than real since the amendment, insofar as it is relevant to this case, merely consists in the designation of the DENR as lead agency in the cleanup operations. Petitioners contend at every turn that Secs. 17 and 20 of the Environment Code concern themselves only with the matter of cleaning up in specific pollution incidents, as opposed to cleanup in general. They aver that the twin provisions would have to be read alongside the succeeding Sec. 62(g) and (h), which defines the terms "cleanup operations" and "accidental spills," as follows: g. Clean-up Operations [refer] to activities conducted in removing the pollutants discharged or spilled in water to restore it to pre-spill condition. h. Accidental Spills [refer] to spills of oil or other hazardous substances in water that result from accidents such as collisions and groundings. Petitioners proffer the argument that Secs. 17 and 20 of PD 1152 merely direct the government agencies concerned to undertake containment, removal, and cleaning operations of a specific polluted portion or portions of the body of water concerned. They maintain that the application of said Sec. 20 is limited only to "water pollution incidents," which are situations that presuppose the occurrence of specific, isolated pollution events requiring the corresponding containment, removal, and cleaning operations. Pushing the point further, they argue that the aforequoted Sec. 62(g) requires "cleanup operations" to restore the body of water to pre-spill condition, which means that there must have been a specific incident of either intentional or accidental spillage of oil or other hazardous substances, as mentioned in Sec. 62(h). As a counterpoint, respondents argue that petitioners erroneously read Sec. 62(g) as delimiting the application of Sec. 20 to the containment, removal, and cleanup operations for accidental spills only. Contrary to petitioners posture, respondents assert that Sec. 62(g), in fact, even expanded the coverage of Sec. 20. Respondents explain
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that without its Sec. 62(g), PD 1152 may have indeed covered only pollution accumulating from the day-to-day operations of businesses around the Manila Bay and other sources of pollution that slowly accumulated in the bay. Respondents, however, emphasize that Sec. 62(g), far from being a delimiting provision, in fact even enlarged the operational scope of Sec. 20, by including accidental spills as among the water pollution incidents contemplated in Sec. 17 in relation to Sec. 20 of PD 1152. To respondents, petitioners parochial view on environmental issues, coupled with their narrow reading of their respective mandated roles, has contributed to the worsening water quality of the Manila Bay. Assuming, respondents assert, that petitioners are correct in saying that the cleanup coverage of Sec. 20 of PD 1152 is constricted by the definition of the phrase "cleanup operations" embodied in Sec. 62(g), Sec. 17 is not hobbled by such limiting definition. As pointed out, the phrases "cleanup operations" and "accidental spills" do not appear in said Sec. 17, not even in the chapter where said section is found. Respondents are correct. For one thing, said Sec. 17 does not in any way state that the government agencies concerned ought to confine themselves to the containment, removal, and cleaning operations when a specific pollution incident occurs. On the contrary, Sec. 17 requires them to act even in the absence of a specific pollution incident, as long as water quality "has deteriorated to a degree where its state will adversely affect its best usage." This section, to stress, commands concerned government agencies, when appropriate, "to take such measures as may be necessary to meet the prescribed water quality standards." In fine, the underlying duty to upgrade the quality of water is not conditional on the occurrence of any pollution incident. For another, a perusal of Sec. 20 of the Environment Code, as couched, indicates that it is properly applicable to a specific situation in which the pollution is caused by polluters who fail to clean up the mess they left behind. In such instance, the concerned government agencies shall undertake the cleanup work for the polluters account. Petitioners assertion, that they have to perform cleanup operations in the Manila Bay only when there is a water pollution incident and the erring polluters do not undertake the containment, removal, and cleanup operations, is quite off mark. As earlier discussed, the complementary Sec. 17 of the Environment Code comes into play and the specific duties of the agencies to clean up come in even if there are no pollution incidents staring at them. Petitioners, thus, cannot plausibly invoke and hide behind Sec. 20 of PD 1152 or Sec. 16 of RA 9275 on the pretext that their cleanup mandate depends on the happening of a specific pollution incident. In this regard, what the CA said with respect to the impasse over Secs. 17 and 20 of PD 1152 is at once valid as it is practical. The appellate court wrote: "PD 1152 aims to introduce a comprehensive program of environmental protection and management. This is better served by making Secs. 17 & 20 of general application rather than limiting them to specific pollution incidents." 35 Granting arguendo that petitioners position thus described vis--vis the implementation of Sec. 20 is correct, they seem to have overlooked the fact that the pollution of the Manila Bay is of such magnitude and scope that it is well-nigh impossible to draw the line between a specific and a general pollution incident. And such impossibility extends to pinpointing with reasonable certainty who the polluters are. We note that Sec. 20 of PD 1152 mentions "water pollution incidents" which may be caused by polluters in the waters of the Manila Bay itself or by polluters in adjoining lands and in water bodies or waterways that empty into the bay. Sec. 16 of RA 9275, on the other hand, specifically adverts to "any person who causes pollution in or pollutes water bodies," which may refer to an individual or an establishment that pollutes the land mass near the Manila Bay or the waterways, such that the contaminants eventually end up in the bay. In this situation, the water pollution incidents are so numerous and involve nameless and faceless polluters that they can validly be categorized as beyond the specific pollution incident level. Not to be ignored of course is the reality that the government agencies concerned are so undermanned that it would be almost impossible to apprehend the numerous polluters of the Manila Bay. It may perhaps not be amiss to say that the apprehension, if any, of the Manila Bay polluters has been few and far between. Hence, practically nobody has been required to contain, remove, or clean up a given water pollution incident. In this kind of setting, it behooves the Government to step in and undertake cleanup operations. Thus, Sec. 16 of RA 9275, previously Sec. 20 of PD 1152, covers for all intents and purposes a general cleanup situation. The cleanup and/or restoration of the Manila Bay is only an aspect and the initial stage of the long-term solution. The preservation of the water quality of the bay after the rehabilitation process is as important as the cleaning phase. It is imperative then that the wastes and contaminants found in the rivers, inland bays, and other bodies of water be stopped from reaching the Manila Bay. Otherwise, any cleanup effort would just be a futile, cosmetic

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exercise, for, in no time at all, the Manila Bay water quality would again deteriorate below the ideal minimum standards set by PD 1152, RA 9275, and other relevant laws. It thus behooves the Court to put the heads of the petitioner-department-agencies and the bureaus and offices under them on continuing notice about, and to enjoin them to perform, their mandates and duties towards cleaning up the Manila Bay and preserving the quality of its water to the ideal level. Under what other judicial discipline describes as "continuing mandamus," 36 the Court may, under extraordinary circumstances, issue directives with the end in view of ensuring that its decision would not be set to naught by administrative inaction or indifference. In India, the doctrine of continuing mandamus was used to enforce directives of the court to clean up the length of the Ganges River from industrial and municipal pollution. 37 The Court can take judicial notice of the presence of shanties and other unauthorized structures which do not have septic tanks along the Pasig-Marikina-San Juan Rivers, the National Capital Region (NCR) (Paraaque-Zapote, Las Pias) Rivers, the Navotas-Malabon-Tullahan-Tenejeros Rivers, the Meycuayan-Marilao-Obando (Bulacan) Rivers, the Talisay (Bataan) River, the Imus (Cavite) River, the Laguna De Bay, and other minor rivers and connecting waterways, river banks, and esteros which discharge their waters, with all the accompanying filth, dirt, and garbage, into the major rivers and eventually the Manila Bay. If there is one factor responsible for the pollution of the major river systems and the Manila Bay, these unauthorized structures would be on top of the list. And if the issue of illegal or unauthorized structures is not seriously addressed with sustained resolve, then practically all efforts to cleanse these important bodies of water would be for naught. The DENR Secretary said as much. 38 Giving urgent dimension to the necessity of removing these illegal structures is Art. 51 of PD 1067 or the Water Code, 39 which prohibits the building of structures within a given length along banks of rivers and other waterways. Art. 51 reads: The banks of rivers and streams and the shores of the seas and lakes throughout their entire length and within a zone of three (3) meters in urban areas, twenty (20) meters in agricultural areas and forty (40) meters in forest areas, along their margins, are subject to the easement of public use in the interest of recreation, navigation, floatage, fishing and salvage. No person shall be allowed to stay in this zone longer than what is necessary for recreation, navigation, floatage, fishing or salvage or to build structures of any kind. (Emphasis added.) Judicial notice may likewise be taken of factories and other industrial establishments standing along or near the banks of the Pasig River, other major rivers, and connecting waterways. But while they may not be treated as unauthorized constructions, some of these establishments undoubtedly contribute to the pollution of the Pasig River and waterways. The DILG and the concerned LGUs, have, accordingly, the duty to see to it that noncomplying industrial establishments set up, within a reasonable period, the necessary waste water treatment facilities and infrastructure to prevent their industrial discharge, including their sewage waters, from flowing into the Pasig River, other major rivers, and connecting waterways. After such period, non-complying establishments shall be shut down or asked to transfer their operations. At this juncture, and if only to dramatize the urgency of the need for petitioners-agencies to comply with their statutory tasks, we cite the Asian Development Bank-commissioned study on the garbage problem in Metro Manila, the results of which are embodied in the The Garbage Book. As there reported, the garbage crisis in the metropolitan area is as alarming as it is shocking. Some highlights of the report: 1. As early as 2003, three land-filled dumpsites in Metro Manila - the Payatas, Catmon and Rodriquez dumpsites - generate an alarming quantity of lead and leachate or liquid run-off. Leachate are toxic liquids that flow along the surface and seep into the earth and poison the surface and groundwater that are used for drinking, aquatic life, and the environment. 2. The high level of fecal coliform confirms the presence of a large amount of human waste in the dump sites and surrounding areas, which is presumably generated by households that lack alternatives to sanitation. To say that Manila Bay needs rehabilitation is an understatement. 3. Most of the deadly leachate, lead and other dangerous contaminants and possibly strains of pathogens seeps untreated into ground water and runs into the Marikina and Pasig River systems and Manila Bay. 40

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Given the above perspective, sufficient sanitary landfills should now more than ever be established as prescribed by the Ecological Solid Waste Management Act (RA 9003). Particular note should be taken of the blatant violations by some LGUs and possibly the MMDA of Sec. 37, reproduced below: Sec. 37. Prohibition against the Use of Open Dumps for Solid Waste.No open dumps shall be established and operated, nor any practice or disposal of solid waste by any person, including LGUs which [constitute] the use of open dumps for solid waste, be allowed after the effectivity of this Act: Provided, further that no controlled dumps shall be allowed (5) years following the effectivity of this Act . (Emphasis added.) RA 9003 took effect on February 15, 2001 and the adverted grace period of five (5) years which ended on February 21, 2006 has come and gone, but no single sanitary landfill which strictly complies with the prescribed standards under RA 9003 has yet been set up. In addition, there are rampant and repeated violations of Sec. 48 of RA 9003, like littering, dumping of waste matters in roads, canals, esteros, and other public places, operation of open dumps, open burning of solid waste, and the like. Some sludge companies which do not have proper disposal facilities simply discharge sludge into the Metro Manila sewerage system that ends up in the Manila Bay. Equally unabated are violations of Sec. 27 of RA 9275, which enjoins the pollution of water bodies, groundwater pollution, disposal of infectious wastes from vessels, and unauthorized transport or dumping into sea waters of sewage or solid waste and of Secs. 4 and 102 of RA 8550 which proscribes the introduction by human or machine of substances to the aquatic environment including "dumping/disposal of waste and other marine litters, discharge of petroleum or residual products of petroleum of carbonaceous materials/substances [and other] radioactive, noxious or harmful liquid, gaseous or solid substances, from any water, land or air transport or other human-made structure." In the light of the ongoing environmental degradation, the Court wishes to emphasize the extreme necessity for all concerned executive departments and agencies to immediately act and discharge their respective official duties and obligations. Indeed, time is of the essence; hence, there is a need to set timetables for the performance and completion of the tasks, some of them as defined for them by law and the nature of their respective offices and mandates. The importance of the Manila Bay as a sea resource, playground, and as a historical landmark cannot be overemphasized. It is not yet too late in the day to restore the Manila Bay to its former splendor and bring back the plants and sea life that once thrived in its blue waters. But the tasks ahead, daunting as they may be, could only be accomplished if those mandated, with the help and cooperation of all civic-minded individuals, would put their minds to these tasks and take responsibility. This means that the State, through petitioners, has to take the lead in the preservation and protection of the Manila Bay. The era of delays, procrastination, and ad hoc measures is over. Petitioners must transcend their limitations, real or imaginary, and buckle down to work before the problem at hand becomes unmanageable. Thus, we must reiterate that different government agencies and instrumentalities cannot shirk from their mandates; they must perform their basic functions in cleaning up and rehabilitating the Manila Bay. We are disturbed by petitioners hiding behind two untenable claims: (1) that there ought to be a specific pollution incident before they are required to act; and (2) that the cleanup of the bay is a discretionary duty. RA 9003 is a sweeping piece of legislation enacted to radically transform and improve waste management. It implements Sec. 16, Art. II of the 1987 Constitution, which explicitly provides that 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. So it was that in Oposa v. Factoran, Jr. the Court stated that the right to a balanced and healthful ecology need not even be written in the Constitution for it is assumed, like other civil and political rights guaranteed in the Bill of Rights, to exist from the inception of mankind and it is an issue of transcendental importance with intergenerational implications. 41 Even assuming the absence of a categorical legal provision specifically prodding petitioners to clean up the bay, they and the men and women representing them cannot escape their obligation to future generations of Filipinos to keep the waters of the Manila Bay clean and clear as humanly as possible. Anything less would be a betrayal of the trust reposed in them. WHEREFORE, the petition is DENIED . The September 28, 2005 Decision of the CA in CA-G.R. CV No. 76528

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and SP No. 74944 and the September 13, 2002 Decision of the RTC in Civil Case No. 1851-99 are AFFIRMED but with MODIFICATIONS in view of subsequent developments or supervening events in the case. The fallo of the RTC Decision shall now read: WHEREFORE, judgment is hereby rendered ordering the abovenamed defendant-government agencies to clean up, rehabilitate, and preserve Manila Bay, and restore and maintain its waters to SB level (Class B sea waters per Water Classification Tables under DENR Administrative Order No. 34 [1990]) to make them fit for swimming, skin-diving, and other forms of contact recreation. In particular: (1) Pursuant to Sec. 4 of EO 192, assigning the DENR as the primary agency responsible for the conservation, management, development, and proper use of the countrys environment and natural resources, and Sec. 19 of RA 9275, designating the DENR as the primary government agency responsible for its enforcement and implementation, the DENR is directed to fully implement its Operational Plan for the Manila Bay Coastal Strategy for the rehabilitation, restoration, and conservation of the Manila Bay at the earliest possible time. It is ordered to call regular coordination meetings with concerned government departments and agencies to ensure the successful implementation of the aforesaid plan of action in accordance with its indicated completion schedules. (2) Pursuant to Title XII (Local Government) of the Administrative Code of 1987 and Sec. 25 of the Local Government Code of 1991, 42 the DILG, in exercising the Presidents power of general supervision and its duty to promulgate guidelines in establishing waste management programs under Sec. 43 of the Philippine Environment Code (PD 1152), shall direct all LGUs in Metro Manila, Rizal, Laguna, Cavite, Bulacan, Pampanga, and Bataan to inspect all factories, commercial establishments, and private homes along the banks of the major river systems in their respective areas of jurisdiction, such as but not limited to the Pasig-Marikina-San Juan Rivers, the NCR (Paraaque-Zapote, Las Pias) Rivers, the Navotas-Malabon-Tullahan-Tenejeros Rivers, the MeycauayanMarilao-Obando (Bulacan) Rivers, the Talisay (Bataan) River, the Imus (Cavite) River, the Laguna De Bay, and other minor rivers and waterways that eventually discharge water into the Manila Bay; and the lands abutting the bay, to determine whether they have wastewater treatment facilities or hygienic septic tanks as prescribed by existing laws, ordinances, and rules and regulations. If none be found, these LGUs shall be ordered to require non-complying establishments and homes to set up said facilities or septic tanks within a reasonable time to prevent industrial wastes, sewage water, and human wastes from flowing into these rivers, waterways, esteros, and the Manila Bay, under pain of closure or imposition of fines and other sanctions. (3) As mandated by Sec. 8 of RA 9275, 43 the MWSS is directed to provide, install, operate, and maintain the necessary adequate waste water treatment facilities in Metro Manila, Rizal, and Cavite where needed at the earliest possible time. (4) Pursuant to RA 9275, 44 the LWUA, through the local water districts and in coordination with the DENR, is ordered to provide, install, operate, and maintain sewerage and sanitation facilities and the efficient and safe collection, treatment, and disposal of sewage in the provinces of Laguna, Cavite, Bulacan, Pampanga, and Bataan where needed at the earliest possible time. (5) Pursuant to Sec. 65 of RA 8550, 45 the DA, through the BFAR, is ordered to improve and restore the marine life of the Manila Bay. It is also directed to assist the LGUs in Metro Manila, Rizal, Cavite, Laguna, Bulacan, Pampanga, and Bataan in developing, using recognized methods, the fisheries and aquatic resources in the Manila Bay. (6) The PCG, pursuant to Secs. 4 and 6 of PD 979, and the PNP Maritime Group, in accordance with Sec. 124 of RA 8550, in coordination with each other, shall apprehend violators of PD 979, RA 8550, and other existing laws and regulations designed to prevent marine pollution in the Manila Bay. (7) Pursuant to Secs. 2 and 6-c of EO 513 46 and the International Convention for the Prevention of Pollution from Ships, the PPA is ordered to immediately adopt such measures to prevent the discharge and dumping of solid and liquid wastes and other ship-generated wastes into the Manila Bay waters from vessels docked at ports and apprehend the violators. (8) The MMDA, as the lead agency and implementor of programs and projects for flood control projects and

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G.R. Nos. 171947-48

drainage services in Metro Manila, in coordination with the DPWH, DILG, affected LGUs, PNP Maritime Group, Housing and Urban Development Coordinating Council (HUDCC), and other agencies, shall dismantle and remove all structures, constructions, and other encroachments established or built in violation of RA 7279, and other applicable laws along the Pasig-Marikina-San Juan Rivers, the NCR (Paraaque-Zapote, Las Pias) Rivers, the Navotas-Malabon-Tullahan-Tenejeros Rivers, and connecting waterways and esteros in Metro Manila. The DPWH, as the principal implementor of programs and projects for flood control services in the rest of the country more particularly in Bulacan, Bataan, Pampanga, Cavite, and Laguna, in coordination with the DILG, affected LGUs, PNP Maritime Group, HUDCC, and other concerned government agencies, shall remove and demolish all structures, constructions, and other encroachments built in breach of RA 7279 and other applicable laws along the Meycauayan-Marilao-Obando (Bulacan) Rivers, the Talisay (Bataan) River, the Imus (Cavite) River, the Laguna De Bay, and other rivers, connecting waterways, and esteros that discharge wastewater into the Manila Bay. In addition, the MMDA is ordered to establish, operate, and maintain a sanitary landfill, as prescribed by RA 9003, within a period of one (1) year from finality of this Decision. On matters within its territorial jurisdiction and in connection with the discharge of its duties on the maintenance of sanitary landfills and like undertakings, it is also ordered to cause the apprehension and filing of the appropriate criminal cases against violators of the respective penal provisions of RA 9003, 47 Sec. 27 of RA 9275 (the Clean Water Act), and other existing laws on pollution. (9) The DOH shall, as directed by Art. 76 of PD 1067 and Sec. 8 of RA 9275, within one (1) year from finality of this Decision, determine if all licensed septic and sludge companies have the proper facilities for the treatment and disposal of fecal sludge and sewage coming from septic tanks. The DOH shall give the companies, if found to be non-complying, a reasonable time within which to set up the necessary facilities under pain of cancellation of its environmental sanitation clearance. (10) Pursuant to Sec. 53 of PD 1152, 48 Sec. 118 of RA 8550, and Sec. 56 of RA 9003, 49 the DepEd shall integrate lessons on pollution prevention, waste management, environmental protection, and like subjects in the school curricula of all levels to inculcate in the minds and hearts of students and, through them, their parents and friends, the importance of their duty toward achieving and maintaining a balanced and healthful ecosystem in the Manila Bay and the entire Philippine archipelago. (11) The DBM shall consider incorporating an adequate budget in the General Appropriations Act of 2010 and succeeding years to cover the expenses relating to the cleanup, restoration, and preservation of the water quality of the Manila Bay, in line with the countrys development objective to attain economic growth in a manner consistent with the protection, preservation, and revival of our marine waters. (12) The heads of petitioners-agencies MMDA, DENR, DepEd, DOH, DA, DPWH, DBM, PCG, PNP Maritime Group, DILG, and also of MWSS, LWUA, and PPA, in line with the principle of "continuing mandamus," shall, from finality of this Decision, each submit to the Court a quarterly progressive report of the activities undertaken in accordance with this Decision. No costs. SO ORDERED . PRESBITERO J. VELASCO, JR. Associate Justice

WE CONCUR: REYNATO S. PUNO Chief Justice LEONARDO A. QUISUMBING Associate Justice ANTONIO T. CARPIO Associate Justice CONSUELO YNARES-SANTIAGO Associate Justice MA. ALICIA AUSTRIA-MARTINEZ Associate Justice

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RENATO C. CORONA Associate Justice ADOLFO S. AZCUNA Associate Justice MINITA V. CHICO-NAZARIO Associate Justice RUBEN T. REYES Associate Justice

CONCHITA CARPIO MORALES Associate Justice DANTE O. TINGA Associate Justice ANTONIO EDUARDO B. NACHURA Associate Justice TERESITA J. LEONARDO-DE CASTRO Associate Justice ARTURO D. BRION Associate Justice

CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. REYNATO S. PUNO Chief Justice

Footnotes
1 Now the Department of Education (DepEd). 2 Gore, An Inconvenient Truth 161. 3 Rollo, p. 74. 4 Id. at 53. 5 Id. at 109-123. Penned by Executive Judge Lucenito N. Tagle (now retired Court of Appeals Justice). 6 Id. at 47-58. Penned by Associate Justice Eliezer R. De Los Santos and concurred in by Associate

Justices Eugenio S. Labitoria and Jose C. Reyes, Jr.


7 Id. at 52. 8 Angchangco, Jr. v. Ombudsman, G.R. No. 122728, February 13, 1997, 268 SCRA 301, 306. 9 Blacks Law Dictionary (8th ed., 2004). 10 Lamb v. Phipps, 22 Phil. 456, 490 (1912). 11 G.R. No. 156052, March 7, 2007, 517 SCRA 657, as subsequently reiterated on February 13, 2008. 12 RA 9003 was approved on January 26, 2001. 13 2 Feria Noche, Civil Procedure Annotated. 14 Blacks Law Dictionary (8th ed., 2004). 15

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"Providing for the Reorganization of the [DENR], Renaming it as the Department of Environment and Natural Resources, and for Other Purposes."
16 Per DENR Secretary Jose Atienza, the DENR is preparing an EO for the purpose. TSN of oral

arguments, p. 118.
17 Per information from the Water Quality Management Section, Environmental Management Bureau,

DENR, as validated by the DENR Secretary during the oral arguments. TSN, pp. 119-120.
18 "An Act Creating the [MWSS] and Dissolving the National Waterworks and Sewerage Authority

[NAWASA]; and for Other Purposes."


19 Sec. 22. Linkage Mechanism.The [DENR] and its concerned attached agencies x x x shall coordinate

and enter into agreement with other government agencies, industrial sector and other concerned sectors in the furtherance of the objectives of this Act. The following agencies shall perform tile functions specified hereunder: xxxx b) DPWH through its attached agencies, such as the MWSS, LWUA, and including other urban water utilities for the provision or sewerage and sanitation facilities and the efficient and safe collection, treatment and disposal of sewage within their area of jurisdiction.
20 Book IV, Title IV, Sec. 2. 21 Sec. 14. Monitoring Control and Surveillance of the Philippine Waters.A monitoring, control and

surveillance system shall be established by the [DA] in coordination with LGUs and other agencies concerned to ensure that the fisheries and aquatic resources in the Philippine waters are judiciously and wisely utilized and managed on a sustainable basis x x x.
22 Sec. 22. Linkage Mechanism.x x x x

a) Philippine Coast Guard in coordination with DA and DENR shall enforce for the enforcement of water quality standards in marine waters x x x specifically from offshore sources; xxxx c) DA, shall coordinate with the DENR, in the formulation of guidelines x x x for the prevention, control and abatement of pollution from agricultural and aquaculture activities x x x Provided, further, That the x x x BFAR of the DA shall be primarily responsible for the prevention and control of water pollution for the development, management and conservation of the fisheries and aquatic resources.
23 Book IV, Title V, Sec. 2. Mandate.The [DPWH] shall be the States engineering arm and is tasked to

carry out the policy enumerated above [i.e., the planning, design, construction, and maintenance of infrastructure facilities, especially x x x flood control and water resources development systems]. Sec. 3. Powers and Functions.The Department, in order to carry out its mandate, shall: xxxx (2) Develop and implement effective codes, standards, and reasonable guidelines to ensure the safety of all public and private structures in the country and assure efficiency and proper quality in the construction of public works; (3) Ascertain that all public works plans and project implementation designs are consistent with current standards and guidelines; xxxx

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(8) Provide an integrated planning for x x x flood control and water resource and water resource development systems x x x.
24 Sec. 6. Enforcement and Implementation.The [PCG] shall have the primary responsibility of enforcing

the laws, rules and regulations governing marine pollution. However, it shall be the joint responsibility of the [PCG] and the National Pollution Control Commission to coordinate and cooperate with each other in the enforcement of the provisions of this decree and its implementing rules and regulations, and may call upon any other government office, instrumentality or agency to extend every assistance in this respect.
25 Sec. 124. Persons and Deputies Authorized to Enforce this Code x x x.The law enforcements of the

[DA], the Philippine Navy, [PCG, PNP], PNP-Maritime Command x x x are hereby authorized to enforce this Code and other fishery laws x x x.
26 <http://www.ppa.com.ph> (visited November 20, 2008). 27 EO 513, "Reorganizing the Philippine Ports Authority," Sec. 2 provides further:

Section 6 is hereby amended by adding a new paragraph to read as follows: Sec. 6-c. Police Authority.x x x Such police authority shall include the following: xxxx c) To maintain peace and order inside the port, in coordination with local police authorities; xxxx e) To enforce rules and regulations promulgated by the Authority pursuant to law.
28 "International Convention for the Prevention of Marine Pollution from Ships, 1973 as modified by the

Protocol of 1978 Relating Thereto."


29 Sec. 10. Role of LGUs in Solid Waste Management.Pursuant to the relevant provisions of RA No.

7160, otherwise known as the Local Government Code, the LGUs shall be primarily responsible for the implementation and enforcement of the provisions of this Act within their respective jurisdictions.
30 Sec. 72. Scope of Supervision of the Department .The approval of the Secretary or his duly authorized

representative is required in the following matters: xxxx (g) Method of disposal of sludge from septic tanks or other treatment plants.
31 Sec. 5.1.1.a. It shall be unlawful for any person, entity or firm to discharge untreated effluent of septic

tanks and/or sewage treatment plants to bodies of water without obtaining approval from the Secretary of Health or his duly authorized representatives.
32 Sec. 53. Environmental Education.The [DepEd] shall integrate subjects on environmental education in

its school curricula at all levels. It shall also endeavor to conduct special community education emphasizing the relationship of man and nature as well as environmental sanitation and practices.
33 Sec. 56. Environmental Education in the Formal and Nonformal Sectors.The national government,

through the [DepEd] and in coordination with concerned government agencies, NGOs and private institutions, shall strengthen the integration of environmental concerns in school curricula at all levels, with particular emphasis on the theory and practice of waste management principles like waste minimization, specifically resource conservation and recovery, segregation at source, reduction, recycling, re-use, and composing, in order to promote environmental awareness and action among the citizenry.
34

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Title XVII, Sec. 1. Declaration of Policy.The national budget shall be formulated and implemented as an instrument of national development, reflective of national objectives and plans; supportive of and consistent with the socio-economic development plans and oriented towards the achievement of explicit objectives and expected results, to ensure that the utilization of funds and operations of government entities are conducted effectively; formulated within the context of a regionalized governmental structure and within the totality of revenues and other receipts, expenditures and borrowings of all levels of government and of government-owned or controlled corporations; and prepared within the context of the national long-term plans and budget programs of the Government.
35 Rollo, p. 76. 36 Vineet Narain v. Union of India , 1 SCC 226 (1998). 37 M.C. Mehta v. Union of India , 4 SC 463 (1987). 38 TSN, p. 121. 39 Repealed Art. 638 of the Civil Code. See E.L. Pineda, Property 399 (1999). 40 Asian Development Bank, The Garbage Book 44-45 (November 2006). 41 G.R. No. 101083, July 30, 1993, 224 SCRA 792, 805. 42 Sec. 25. National Supervision over Local Government Units.(a) Consistent with the basic policy on

local autonomy, the President shall exercise general supervision over local government units to ensure that their acts are within the scope of their prescribed powers and functions.
43 Sec. 8. Domestic Sewage Collection, Treatment and Disposal.Within five (5) years following the

effectivity of this Act, the Agency vested to provide water supply and sewerage facilities and/or concessionaires in Metro Manila and other highly urbanized cities (HUCs) as defined in [RA] 7160, in coordination with LGUs, shall be required to connect the existing sewage line found in all subdivisions, condominiums, commercial centers, hotels, sports and recreational facilities, hospitals, market places, public buildings, industrial complex and other similar establishments including households to available sewerage system. Provided, That the said connection shall be subject to sewerage services charge/fees in accordance with existing laws, rules or regulations unless the sources had already utilized their own sewerage system: Provided, further, That all sources of sewage and septage shall comply with the requirements herein.
44 Supra note 19. 45 Sec. 65. Functions of the Bureau of Fisheries and Aquatic Resources.As a line bureau, the BFAR shall

have the following functions: xxxx q. assist the LGUs in developing their technical capability in the development, management, regulation, conservation, and protection of fishery resources; xxxx s. perform such other related function which shall promote the development, conservation, management, protection and utilization of fisheries and aquatic resources.
46 Supra notes 26 & 27. 47 Among the prohibited and penalized acts under Sec. 48 of RA 9003 are: (1) littering and dumping of

waste matters in public places; (2) open burning of solid wastes; (3) squatting in open dumps and landfills; (4) transporting and dumping in bulk of collected domestic, industrial, commercial and institutional wastes in
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areas other than centers and facilities prescribed under the Act; (5) construction or operation of waste management facilities without an Environmental Compliance Certificate; and (6) construction or operation of landfills or any waste disposal facility on any aquifer, groundwater reservoir or watershed area.
48 Supra note 32. 49 Supra note 33.

The Lawphil Project - Arellano Law Foundation

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Carino v. Insular Government - 212 U.S. 449 (1909) :: Justia US Supreme Court Center

Carino v. Insular Government - 212 U.S. 449 (1909)


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Carino v. Insular Government, 212 U.S. 449 (1909)
Carino v. Insular Government of the Philippine Islands No. 72 Argued January 13, 1909 Decided February 23, 1909 212 U.S. 449 ERROR TO THE SUPREME COURT OF THE PHILIPPINE ISLANDS Syllabus Writ of error is the general, and appeal the exceptional, method of bringing Cases to this Court. The latter method is in the main confined to equity cases, and the former is proper to bring up a judgment of the Supreme Court of the Philippine Islands affirming a judgment of the Court of Land Registration dismissing an application for registration of land. Although a province may be excepted from the operation of Act No. 926 of 1903 of the Philippine Commission which provides for the registration and perfecting of new titles, one who actually owns property in such province is entitled to registration under Act No. 496 of 1902, which applies to the whole archipelago. While, in legal theory and as against foreign nations, sovereignty is absolute, practically it is a question of strength and of varying degree, and it is for a new sovereign to decide how far it will insist upon theoretical relations of the subject to the former sovereign and how far it will recognize actual facts. Page 212 U. S. 450 The acquisition of the Philippines was not for the purpose of acquiring the lands occupied by the inhabitants, and under the Organic Act of July 1, 1902, c. 1369, 32 Stat. 691, providing that property rights are to be administered for the benefit of the inhabitants, one who actually owned land for many years cannot be deprived of it for failure to comply with certain ceremonies prescribed either by the acts of the Philippine Commission or by Spanish law. The Organic Act of the Philippines made a bill of rights embodying safeguards of the Constitution, and, like the Constitution, extends those safeguards to all. Every presumption of ownership is in favor of one actually occupying land for many years, and against the government which seeks to deprive him of it, for failure to comply with provisions of a subsequently enacted registration act.

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Carino v. Insular Government - 212 U.S. 449 (1909) :: Justia US Supreme Court Center

Title by prescription against the crown existed under Spanish law in force in the Philippine Islands prior to their acquisition by the United States, and one occupying land in the Province of Benguet for more than fifty years before the Treaty of Paris is entitled to the continued possession thereof. 7 Phil. 132 reversed. The facts are stated in the opinion. Page 212 U. S. 455 MR. JUSTICE HOLMES delivered the opinion of the Court. This was an application to the Philippine Court of Land Registration for the registration of certain land. The application was granted by the court on March 4, 1904. An appeal was taken to the Court of First Instance of the Province of Benguet on behalf of the government of the Philippines, and also on behalf of the United States, those governments having taken possession of the property for public and military purposes. The Court of First Instance found the facts and dismissed the application upon grounds of law. This judgment was affirmed by the supreme court, 7 Phil. 132, and the case then was brought here by writ of error. The material facts found are very few. The applicant and plaintiff in error is an Igorot of the Province of Benguet, where the land lies. For more than fifty years before the Treaty of Page 212 U. S. 456 Paris, April 11, 1899, as far back as the findings go, the plaintiff and his ancestors had held the land as owners. His grandfather had lived upon it, and had maintained fences sufficient for the holding of cattle, according to the custom of the country, some of the fences, it seems, having been of much earlier date. His father had cultivated parts and had used parts for pasturing cattle, and he had used it for pasture in his turn. They all had been recognized as owners by the Igorots, and he had inherited or received the land from his father in accordance with Igorot custom. No document of title, however, had issued from the Spanish Crown, and although, in 1893-1894 and again in 18961897, he made application for one under the royal decrees then in force, nothing seems to have come of it, unless, perhaps, information that lands in Benguet could not be conceded until those to be occupied for a sanatorium, etc., had been designated -a purpose that has been carried out by the Philippine government and the United States. In 1901, the plaintiff filed a petition, alleging ownership, under the mortgage law, and the lands were registered to him, that process, however, establishing only a possessory title, it is said. Before we deal with the merits, we must dispose of a technical point. The government has spent some energy in maintaining that this case should have been brought up by appeal, and not by writ of error. We are of opinion, however, that the mode adopted was right. The proceeding for registration is likened to bills in equity to quiet title, but it is different in principle. It is a proceeding in rem under a statute of the type of the Torrens Act, such as was discussed in Tyler v. Court of Registration, 175 Mass. 71. It is nearer to law than to equity, and is an assertion of legal title; but we think it unnecessary to put it into either pigeon hole. A writ of error is the general method of bringing cases to this Court, an appeal the exception, confined to equity in the main. There is no reason for not applying the general rule to this case. Ormsby v. Webb, 134 U. S. 47, 134 U. S. 65; Campbell v. Porter, 162 U. S. 478; Metropolitan R. Co. v.

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Carino v. Insular Government - 212 U.S. 449 (1909) :: Justia US Supreme Court Center

District of Columbia, 195 U. S. 322. Page 212 U. S. 457 Another preliminary matter may as well be disposed of here. It is suggested that, even if the applicant have title, he cannot have it registered, because the Philippine Commission's Act No. 926, of 1903, excepts the Province of Benguet among others from its operation. But that act deals with the acquisition of new titles by homestead entries, purchase, etc., and the perfecting of titles begun under the Spanish law. The applicant's claim is that he now owns the land, and is entitled to registration under the Philippine Commission's Act No. 496, of 1902, which established a court for that purpose with jurisdiction "throughout the Philippine Archipelago," 2, and authorized in general terms applications to be made by persons claiming to own the legal estate in fee simple, as the applicant does. He is entitled to registration if his claim of ownership can be maintained. We come, then, to the question on which the case was decided below -- namely, whether the plaintiff owns the land. The position of the government, shortly stated, is that Spain assumed, asserted, and had title to all the land in the Philippines except so far as it saw fit to permit private titles to be acquired; that there was no prescription against the Crown, and that, if there was, a decree of June 25, 1880, required registration within a limited time to make the title good; that the plaintiff's land was not registered, and therefore became, if it was not always, public land; that the United States succeeded to the title of Spain, and so that the plaintiff has no rights that the Philippine government is bound to respect. If we suppose for the moment that the government's contention is so far correct that the Crown of Spain in form asserted a title to this land at the date of the Treaty of Paris, to which the United States succeeded, it is not to be assumed without argument that the plaintiff's case is at an end. It is true that Spain, in its earlier decrees, embodied the universal feudal theory that all lands were held from the Crown, and perhaps the general attitude of conquering nations toward people not recognized as entitled to the treatment accorded to those Page 212 U. S. 458 in the same zone of civilization with themselves. It is true also that, in legal theory, sovereignty is absolute, and that, as against foreign nations, the United States may assert, as Spain asserted, absolute power. But it does not follow that, as against the inhabitants of the Philippines, the United States asserts that Spain had such power. When theory is left on one side, sovereignty is a question of strength, and may vary in degree. How far a new sovereign shall insist upon the theoretical relation of the subjects to the head in the past, and how far it shall recognize actual facts, are matters for it to decide. The Province of Benguet was inhabited by a tribe that the Solicitor General, in his argument, characterized as a savage tribe that never was brought under the civil or military government of the Spanish Crown. It seems probable, if not certain, that the Spanish officials would not have granted to anyone in that province the registration to which formerly the plaintiff was entitled by the Spanish laws, and which would have made his title beyond question good. Whatever may have been the technical position of Spain, it does not follow that, in the view of the United States, he had lost all rights and was a mere trespasser when the present government seized his land. The argument to that effect seems to amount to a denial of native titles throughout an

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Carino v. Insular Government - 212 U.S. 449 (1909) :: Justia US Supreme Court Center

important part of the island of Luzon, at least, for the want of ceremonies which the Spaniards would not have permitted and had not the power to enforce. The acquisition of the Philippines was not like the settlement of the white race in the United States. Whatever consideration may have been shown to the North American Indians, the dominant purpose of the whites in America was to occupy the land. It is obvious that, however stated, the reason for our taking over the Philippines was different. No one, we suppose, would deny that, so far as consistent with paramount necessities, our first object in the internal administration of the islands is to do justice to the natives, not to exploit their country for private gain. By the Organic Act of July 1, 1902, c. 1369, 12, 32 Stat. 691, all the property and rights acquired there by the Page 212 U. S. 459 United States are to be administered "for the benefit of the inhabitants thereof." It is reasonable to suppose that the attitude thus assumed by the United States with regard to what was unquestionably its own is also its attitude in deciding what it will claim for its own. The same statute made a bill of rights, embodying the safeguards of the Constitution, and, like the Constitution, extends those safeguards to all. It provides that "no law shall be enacted in said islands which shall deprive any person of life, liberty, or property without due process of law, or deny to any person therein the equal protection of the laws." 5. In the light of the declaration that we have quoted from 12, it is hard to believe that the United States was ready to declare in the next breath that "any person" did not embrace the inhabitants of Benguet, or that it meant by "property" only that which had become such by ceremonies of which presumably a large part of the inhabitants never had heard, and that it proposed to treat as public land what they, by native custom and by long association -- one of the profoundest factors in human thought -regarded as their own. It is true that, by 14, the government of the Philippines is empowered to enact rules and prescribe terms for perfecting titles to public lands where some, but not all, Spanish conditions had been fulfilled, and to issue patents to natives for not more than sixteen hectares of public lands actually occupied by the native or his ancestors before August 13, 1898. But this section perhaps might be satisfied if confined to cases where the occupation was of land admitted to be public land, and had not continued for such a length of time and under such circumstances as to give rise to the understanding that the occupants were owners at that date. We hesitate to suppose that it was intended to declare every native who had not a paper title a trespasser, and to set the claims of all the wilder tribes afloat. It is true again that there is excepted from the provision that we have quoted as to the administration of the property and rights acquired by the United States such land and property as shall be designated by the President for military or other reservations, Page 212 U. S. 460 as this land since has been. But there still remains the question what property and rights the United States asserted itself to have acquired. Whatever the law upon these points may be, and we mean to go no further than the necessities of decision demand, every presumption is and ought to be against the government in a case like the present. It might, perhaps, be proper and sufficient to

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Carino v. Insular Government - 212 U.S. 449 (1909) :: Justia US Supreme Court Center

say that when, as far back as testimony or memory goes, the land has been held by individuals under a claim of private ownership, it will be presumed to have been held in the same way from before the Spanish conquest, and never to have been public land. Certainly, in a case like this, if there is doubt or ambiguity in the Spanish law, we ought to give the applicant the benefit of the doubt. Whether justice to the natives and the import of the organic act ought not to carry us beyond a subtle examination of ancient texts, or perhaps even beyond the attitude of Spanish law, humane though it was, it is unnecessary to decide. If, in a tacit way, it was assumed that the wild tribes of the Philippines were to be dealt with as the power and inclination of the conqueror might dictate, Congress has not yet sanctioned the same course as the proper one "for the benefit of the inhabitants thereof." If the applicant's case is to be tried by the law of Spain, we do not discover such clear proof that it was bad by that law as to satisfy us that he does not own the land. To begin with, the older decrees and laws cited by the counsel for the plaintiff in error seem to indicate pretty clearly that the natives were recognized as owning some lands, irrespective of any royal grant. In other words, Spain did not assume to convert all the native inhabitants of the Philippines into trespassers, or even into tenants at will. For instance, Book 4, Title 12, Law 14 of the Recopilacion de Leyes de las Indias, cited for a contrary conclusion in Valenton v. Murciano, 3 Phil. 537, while it commands viceroys and others, when it seems proper, to call for the exhibition of grants, directs them to confirm those who hold by good grants or justa prescripcion. It is true that it Page 212 U. S. 461 begins by the characteristic assertion of feudal overlordship and the origin of all titles in the King or his predecessors. That was theory and discourse. The fact was that titles were admitted to exist that owed nothing to the powers of Spain beyond this recognition in their books. Prescription is mentioned again in the royal cedula of October 15, 1754, cited in 3 Phil. 546: "Where such possessors shall not be able to produce title deeds, it shall be sufficient if they shall show that ancient possession, as a valid title by prescription." It may be that this means possession from before 1700; but, at all events, the principle is admitted. As prescription, even against Crown lands, was recognized by the laws of Spain, we see no sufficient reason for hesitating to admit that it was recognized in the Philippines in regard to lands over which Spain had only a paper sovereignty. The question comes, however, on the decree of June 25, 1880, for the adjustment of royal lands wrongfully occupied by private individuals in the Philippine Islands. This begins with the usual theoretic assertion that, for private ownership, there must have been a grant by competent authority; but instantly descends to fact by providing that, for all legal effects, those who have been in possession for certain times shall be deemed owners. For cultivated land, twenty years, uninterrupted, is enough. For uncultivated, thirty. Art. 5. So that, when this decree went into effect, the applicant's father was owner of the land by the very terms of the decree. But, it is said, the object of this law was to require the adjustment or registration proceedings that it described, and in that way to require everyone to get a document of title or lose his land. That purpose may have been entertained, but it does not appear clearly to have been applicable to all. The regulations purport to have been made "for the adjustment

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Carino v. Insular Government - 212 U.S. 449 (1909) :: Justia US Supreme Court Center

of royal lands wrongfully occupied by private individuals." (We follow the translation in the government's brief.) It does not appear that this land ever was royal land or wrongfully occupied. In Article 6, it is provided that "interested parties not included within the two preceding Page 212 U. S. 462 articles [the articles recognizing prescription of twenty and thirty years] may legalize their possession, and thereby acquire the full ownership of the said lands, by means of adjustment proceedings, to be conducted in the following manner." This seems, by its very terms, not to apply to those declared already to be owners by lapse of time. Article 8 provides for the case of parties not asking an adjustment of the lands of which they are unlawfully enjoying the possession, within one year, and threatens that the treasury "will reassert the ownership of the state over the lands," and will sell at auction such part as it does not reserve. The applicant's possession was not unlawful, and no attempt at any such proceedings against him or his father ever was made. Finally, it should be noted that the natural construction of the decree is confirmed by the report of the council of state. That report puts forward as a reason for the regulations that, in view of the condition of almost all property in the Philippines, it is important to fix its status by general rules on the principle that the lapse of a fixed period legalizes completely all possession, recommends in two articles twenty and thirty years, as adopted in the decree, and then suggests that interested parties not included in those articles may legalize their possession and acquire ownership by adjustment at a certain price. It is true that the language of Articles 4 and 5 attributes title to those "who may prove" possession for the necessary time, and we do not overlook the argument that this means may prove in registration proceedings. It may be that an English conveyancer would have recommended an application under the foregoing decree, but certainly it was not calculated to convey to the mind of an Igorot chief the notion that ancient family possessions were in danger, if he had read every word of it. The words "may prove" ( acrediten ), as well, or better, in view of the other provisions, might be taken to mean when called upon to do so in any litigation. There are indications that registration was expected from all, but none sufficient to show that, for want of it, ownership actually gained would be lost. Page 212 U. S. 463 The effect of the proof, wherever made, was not to confer title, but simply to establish it, as already conferred by the decree, if not by earlier law. The royal decree of February 13, 1894, declaring forfeited titles that were capable of adjustment under the decree of 1880, for which adjustment had not been sought, should not be construed as a confiscation, but as the withdrawal of a privilege. As a matter of fact, the applicant never was disturbed. This same decree is quoted by the Court of Land Registration for another recognition of the common law prescription of thirty years as still running against alienable Crown land. It will be perceived that the rights of the applicant under the Spanish law present a problem not without difficulties for courts of a different legal tradition. We have deemed it proper on that account to notice the possible effect of the change of sovereignty and the act of Congress establishing the fundamental principles now to be observed. Upon a consideration of the whole case, we are of opinion that law and

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Carino v. Insular Government - 212 U.S. 449 (1909) :: Justia US Supreme Court Center

justice require that the applicant should be granted what he seeks, and should not be deprived of what, by the practice and belief of those among whom he lived, was his property, through a refined interpretation of an almost forgotten law of Spain. Judgment reversed.

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G.R. No. L-30389

Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. L-30389 December 27, 1972 PEDRO LEE HONG HOK, SIMEON LEE HONG HOK, ROSITA LEE HONG HOK and LEONCIO LEE HONG HOK, petitioners, vs. ANIANO DAVID, THE HON. SECRETARY OF AGRICULTURE AND NATURAL RESOURCES, THE DIRECTOR OF LANDS and COURT OF APPEALS, respondents. Augusto A. Pardalis for petitioners. Luis General, Jr. for respondent Aniano David. Office of the Solicitor General for other respondents.

FERNANDO, J.: p Petitioners 1 in this appeal by certiorari would have us reverse a decision of respondent Court of Appeals affirming a lower court judgment dismissing their complaint to have the Torrens Title 2 of respondent Aniano David declared null and void. What makes the task for petitioners quite difficult is that their factual support for their pretension to ownership of such disputed lot through accretion was rejected by respondent Court of Appeals. Without such underpinning, they must perforce rely on a legal theory, which, to put it mildly, is distinguished by unorthodoxy and is therefore far from persuasive. A grant by the government through the appropriate public officials 3 exercising the competence duly vested in them by law is not to be set at naught on the premise, unexpressed but implied, that land not otherwise passing into private ownership may not be disposed of by the state. Such an assumption is at war with settled principles of constitutional law. It cannot receive our assent. We affirm. The decision of respondent Court of Appeals following that of the lower court makes clear that there is no legal justification for nullifying the right of respondent Aniano David to the disputed lot arising from the grant made in his favor by respondent officials. As noted in the decision under review, he "acquired lawful title thereby pursuant to his miscellaneous sales application in accordance with which an order of award and for issuance of a sales patent was made by the Director of Lands on June 18, 1958, covering Lot 2892 containing an area of 226 square meters, which is a portion of Lot 2863 of the Naga Cadastre. On the basis of the order of award of the Director of Lands the Undersecretary of Agriculture and Natural Resources issued on August 26, 1959, Miscellaneous Sales Patent No. V-1209 pursuant to which OCT No. 510 was issued by the Register of Deeds of Naga City to defendantappellee Aniano David on October 21, 1959. According to the Stipulation of Facts, since the filing of the sales application of Aniano David and during all the proceedings in connection with said application, up to the actual issuance of the sales patent in his favor, the plaintiffs-appellants did not put up any opposition or adverse claim thereto. This is fatal to them because after the registration and issuance of the certificate and duplicate certificate of title based on a public land patent, the land covered thereby automatically comes under the operation of Republic Act 496 subject to all the safeguards provided therein.... Under Section 38 of Act 496 any question concerning the validity of the certificate of title based on fraud should be raised within one year from the date of the issuance of the patent. Thereafter the certificate of title based thereon becomes indefeasible.... In this case the land in question is not a private property as the Director of Lands and the Secretary of Agriculture and Natural Resources have always sustained the public character thereof for having been formed by reclamation.... The only remedy therefore, available to the appellants is an action for reconveyance on the ground of fraud. In this case we do not see any fraud committed by defendant-appellant Aniano David in applying for the purchase of the land

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G.R. No. L-30389

involved through his Miscellaneous Sales Application No. MSA-V-26747, entered in the records of the Bureau of Lands [Miscellaneous Sales] Entry No. V-9033, because everything was done in the open. The notices regarding the auction sale of the land were published, the actual sale and award thereof to Aniano David were not clandestine but open and public official acts of an officer of the Government. The application was merely a renewal of his deceased wife's application, and the said deceased occupied the land since 1938." 4 On such finding of facts, the attempt of petitioners to elicit a different conclusion is likely to be attended with frustration. The first error assigned predicated an accretion having taken place, notwithstanding its rejection by respondent Court of Appeals, would seek to disregard what was accepted by respondent Court as to how the disputed lot came into being, namely by reclamation. It does not therefore call for any further consideration. Neither of the other two errors imputed to respondent Court, as to its holding that authoritative doctrines preclude a party other than the government to dispute the validity of a grant and the recognition of the indefeasible character of a public land patent after one year, is possessed of merit. Consequently, as set forth at the outset, there is no justification for reversal. 1. More specifically, the shaft of criticism was let loose by petitioner aimed at this legal proposition set forth in the exhaustive opinion of then Justice Salvador Esguerra of the Court of Appeals, now a member of this Court: "There is, furthermore, a fatal defect of parties to this action. Only the Government, represented by the Director of Lands, or the Secretary of Agriculture and Natural Resources, can bring an action to cancel a void certificate of title issued pursuant to a void patent (Lucas vs. Durian, 102 Phil. 1157; Director of Lands vs. Heirs of Ciriaco Carlo, G.R. No. L-12485, July 31, 1959). This was not done by said officers but by private parties like the plaintiffs, who cannot claim that the patent and title issued for the land involved are void since they are not the registered owners thereof nor had they been declared as owners in the cadastral proceedings of Naga Cadastre after claiming it as their private property. The cases cited by appellants are not in point as they refer to private registered lands or public lands over which vested rights have been acquired but notwithstanding such fact the Land Department subsequently granted patents to public land applicants." 5 Petitioner ought to have known better. The above excerpt is invulnerable to attack. It is a restatement of a principle that dates back to Maninang v. Consolacion , 6 a 1908 decision. As was there categorically stated: "The fact that the grant was made by the government is undisputed. Whether the grant was in conformity with the law or not is a question which the government may raise, but until it is raised by the government and set aside, the defendant can not question it. The legality of the grant is a question between the grantee and the government." 7 The above citation was repeated ipsissimis verbis in Salazar v. Court of Appeals. 8 Bereft as petitioners were of the right of ownership in accordance with the findings of the Court of Appeals, they cannot, in the language of Reyes v. Rodriguez, 9 "question the [title] legally issued."
10 The second assignment of error is thus disposed of.

2. As there are overtones indicative of skepticism, if not of outright rejection, of the well-known distinction in public law between the government authority possessed by the state which is appropriately embraced in the concept of sovereignty, and its capacity to own or acquire property, it is not inappropriate to pursue the matter further. The former comes under the heading of imperium and the latter of dominium. The use of this term is appropriate with reference to lands held by the state in its proprietary character. In such capacity, it may provide for the exploitation and use of lands and other natural resources, including their disposition, except as limited by the Constitution. Dean Pound did speak of the confusion that existed during the medieval era between such two concepts, but did note the existence of res publicae as a corollary to dominium." 11 As far as the Philippines was concerned, there was a recognition by Justice Holmes in Cario v. Insular Government , 12 a case of Philippine origin, that "Spain in its earlier decrees embodied the universal feudal theory that all lands were held from the Crown...." 13 That was a manifestation of the concept of jura regalia , 14 which was adopted by the present Constitution, ownership however being vested in the state as such rather than the head thereof. What was stated by Holmes served to confirm a much more extensive discussion of the matter in the leading case of Valenton v. Murciano , 15 decided in 1904. One of the royal decrees cited was incorporated in the Recopilacion de Leyes de las Indias 16 in these words: "We having acquired full sovereignty over the Indies and all lands, territories, and possessions not heretofore ceded away by our royal predecessors, or by us, or in our name, still pertaining to the royal crown and patrimony, it is our will that all lands which are held without proper and true deeds of grant be restored to us according as they belong to us, in order that after reserving before all what to us or to our viceroys audiences, and governors may seem necessary for public squares, ways, pastures, and commons in those places which are peopled, taking into consideration not only their present condition, but also their future and their probable increase, and after

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G.R. No. L-30389

distributing to the natives what may be necessary for tillage and pasturage, confirming them in what they now have and giving them more if necessary, all the rest of said lands may remain free and unencumbered for us to dispose of as we may wish." 17 It could therefore be affirmed in Montano v. Insular Government" 18 that "as to the unappropriated public lands constituting the public domain the sole power of legislation is vested in Congress, ..." 19 They continue to possess that character until severed therefrom by state grant. 20 Where, as in this case, it was found by the Court of Appeals that the disputed lot was the result of reclamation, its being correctly categorized as public land is undeniable. 21 What was held in Heirs of Datu Pendatun v. Director of Lands 22 finds application. Thus: "There being no evidence whatever that the property in question was ever acquired by the applicants or their ancestors either by composition title from the Spanish Government or by possessory information title or by any other means for the acquisition of public lands, the property must be held to be public domain." 23 For it is well-settled "that no public land can be acquired by private persons without any grant, express or implied, from the government." 24 It is indispensable then that there be a showing of a title from the state or any other mode of acquisition recognized by law. 25 The most recent restatement of the doctrine, found in an opinion of Justice J.B.L. Reyes, follows: 26 "The applicant, having failed to establish his right or title over the northern portion of Lot No. 463 involved in the present controversy, and there being no showing that the same has been acquired by any private person from the Government, either by purchase or by grant, the property is and remains part of the public domain." 27 To repeat, the second assignment of error is devoid of merit. 3. The last error assigned would take issue with this portion of the opinion of Justice Esguerra: "According to the Stipulation of Facts, since the filing of the sales application of Aniano David and during all the proceedings in connection with said application, up to the actual issuance of the sales patent in his favor, the plaintiffs-appellants did not put up any opposition or adverse claim thereto. This is fatal to them because after the registration and issuance of the certificate and duplicate certificate of title based on a public land patent, the land covered thereby automatically comes under the operation of Republic Act 496 subject to all the safeguards provided therein ... Under Section 38 of Act 496 any question concerning the validity of the certificate of title based on fraud should be raised within one year from the date of the issuance of the patent. Thereafter the certificate of title based thereon becomes indefeasible ..." 28 Petitioners cannot reconcile themselves to the view that respondent David's title is impressed with the quality of indefeasibility. In thus manifesting such an attitude, they railed to accord deference to controlling precedents. As far back as 1919, in Aquino v. Director of Lands , 29 Justice Malcolm, speaking for the Court, stated: "The proceedings under the Land Registration Law and under the provisions of Chapter VI of the Public Land Law are the same in that both are against the whole world, both take the nature of judicial proceedings, and for both the decree of registration issued is conclusive and final." 30 Such a view has been followed since then. 31 The latest case in point is Cabacug v. Lao . 32 There is this revealing excerpt appearing in that decision: "It is said, and with reason, that a holder of a land acquired under a free patent is more favorably situated than that of an owner of registered property. Not only does a free patent have a force and effect of a Torrens Title, but in addition the person to whom it is granted has likewise in his favor the right to repurchase within a period of five years." 33 It is quite apparent, therefore, that petitioners' stand is legally indefensible. WHEREFORE, the decision of respondent Court of Appeals of January 31, 1969 and its resolution of March 14, 1969 are affirmed. With costs against petitioners-appellants. Concepcion, C.J., Makalintal, Zaldivar, Castro, Teehankee Barredo, Makasiar, Antonio and Esguerra, JJ., concur.

Footnotes 1 Petitioners are Pedro Lee Hong Hok, Simeon Lee Hong Hok, Rosita Lee Hong Hok and Leoncio Lee Hong Hok. 2 Original Certificate of Title No. 510 of the Registry of Naga City. 3 The Secretary of Agriculture and Natural Resources and the Director of Lands were likewise named

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G.R. No. L-30389

respondents. 4 Decision Appendix A, Brief for the Petitioners, 54-56. 5 Ibid , 56-57. 6 12 Phil. 342. 7 Ibid , 349. 8 87 Phil. 456 (1950). 9 62 Phil. 771 (1936). 10 Ibid , 776. 11 Cf. 3 Pound, Jurisprudence, 108-109 (1959). 12 212 US 449 (1909). 13 Ibid , 458. 14 Cf. Radin, Law Dictionary, 288 (1955). 15 3 Phil. 537. 16 Law I, Title 12, Book 4. 17 3 Phil. 537, 542-543. 18 12 Phil. 572 (1909). 19 Ibid , 579. Cf. Insular Government v. Aldecoa & Co., 19 Phil. 505, (1911); Ankron v. Government of the Philippine Islands, 40 Phil. 10 (1919). 20 Cf. Archbishop of Manila v. Director of Lands, 27 Phil. 245 (1914). 21 Cf. Aragon v. Insular Government, 19 Phil. 223 (1911); Francisco v. Government, 28 Phil. 505 (1914); Government v. Cabangis 53 Phil. 112 (1929). 22 59 Phil. 600 (1934). 23 Ibid , 603. 24 Padilla v. Reyes, 60 Phil. 967, 969 (1934). 25 Cf. Reyes v. Rodriguez, 62 Phil. 771 (1936). 26 Director of Lands v. Court of Appeals, L-29575, April 30, 1971, 38 Phil. 634. 27 Ibid , 639. 28 Decision, Appendix A to Brief for Petitioners, 54-55. 29 39 Phil. 850 (1919). 30 Ibid , 858. 31 Cf. Manalo v. Lukban, 48 Phil. 973, (1924); El Hogar Filipino v. Olviga, 60 Phil. 17 (1934); Republic of the Philippines v. Abacite, L-15415, April 26, 1961, 1 SCRA 1076; Panimdim v. Director of Lands, L-19731, July 31, 1964, 11 SCRA 628; Director of Lands v. The Court of Appeals, L-17696, May 19, 1966, 17 SCRA 71; Antonio v. Barroga, L-23769, April 29, 1968, 23 SCRA 357; Dela Cruz v. Reano, L-29792, August 31, 1970, 34 SCRA 585.
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G.R. No. L-30389

32 L-27036, November 26, 1970, 36 SCRA 92. 33 Ibid , 96.


The Lawphil Project - Arellano Law Foundation

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G.R. No. L-50464

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-50464 January 29, 1990 SUNBEAM CONVENIENCE FOODS INC., CORAL BEACH DEVELOPMENT CORP., and the REGISTER OF DEEDS OF BATAAN, petitioners, vs. HON. COURT OF APPEALS and THE REPUBLIC OF THE PHILIPPINES, respondents. Filoteo T. Banzon for petitioners. SARMIENTO, J.: In this petition for review on certiorari, Convenience Foods Corporation (hereafter simply SUNBEAM) and Coral Beach Development Corporation (hereafter simply CORAL BEACH) bring to our attention the decision rendered by the Court of Appeals in "Republic of the Philippines v. Hon. Pedro T. Santiago, et al.," disposing as follows:

WHEREFORE, the writ prayed for is granted. The order of the respondent judge dated October 7, 1977, dismissing Civil Case No. 4062 is set aside, and respondent judge is ordered to require private respondents to file their answer to the complaint in said Civil Case No. 4062 and thereafter to proceed with the trial of the case on the merits and to render judgment thereon.' The following facts stated by the respondent Court in its decision and restated by the petitioners in their petition are accurate: (a) On April 29, 1963, the Director of Lands caused the issuance of a Sales Patent in favor of defendant Sunbeam Convenience Foods, Inc., over the parcels of land both situated in Mariveles, Bataan and more particularly described and bounded as follows: Lot 1-Sgs-2409 (area 3,113,695 sq. m ) Lot 2-Sgs-2409 area 1,401,855 sq. m (b) On May 3, 1963, the aforesaid Sales Patent was registered with the defendant Register of Deeds of Bataan who in turn issued Original Certificate of Title No. Sp-24 in favor of defendant Sunbeam Convenience Foods, Inc., for the two parcels of land above-described; (c) Subsequently, Original Certificate of Title No. Sp-24 was cancelled and in lieu thereof, Transfer Certificate of Title No. T-12421 was issued over Lot 1, Sgs-2409, while Transfer Certificate of Title No. 12422 was issued over Lot 2, Sgs-2409, both in favor of defendant Coral Beach Development Corporation I (d) On May 11, 1976, the Solicitor General in the name of the Republic of the Philippines instituted before the Court of First Instance of Bataan, an action for reversion docketed as Civil Case No. 4062. 2 SUNBEAM and CORAL BEACH filed a Motion to Dismiss on the following grounds: 1. The Republic of the Philippines should have exhausted all administrative remedies before filing the case in court; 2. The title issued to SUNBEAM and CORAL BEACH had become indefeasible and imprescriptible; 3. The action for reversion was defective, having been initiated by the Solicitor General and not by the Director of

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G.R. No. L-50464

Lands. 3 The then Court of First Instance of Bataan dismissed the complaint in the Order of October 7, 1977, 4 adopting mainly the theory that since the titles sought to be cancelled emanated from the administrative act of the Bureau of Lands Director, the latter, not the courts, had jurisdiction over the disposition of the land. The Solicitor General received the copy of the Order on October 11, 1977 and filed a Notice of Appeal dated October 25, 1977 . 5 The Solicitor General then moved for an extension of thirty days within which to file the Record on Appeal and to pay the docket fee in order to perfect the appeal. This was to be followed by another motion for extension filed by the Solicitor General, resulting in the Court of Appeals granting the petitioner another extension of fifteen days from December 10, 1977. Finally before this period of extension lapsed, instead of an appeal, a petition for certiorari with the respondent Court of Appeals was filed. According to the Solicitor General, the Court of First Instance committed grave abuse of discretion in dismissing the complaint and in a. Not finding that since the lower court acted in a Motion to Dismiss, the correctness of its decision must be decided in the assumed truth and accuracy of the allegations of the complaint. The complaint alleges that the lands in question are forest lands; hence, inalienable. b. Finding that Lots I and 2 are alienable and disposable lands of the public domain under the jurisdiction of the Director of Lands despite clear and positive evidence to the contrary. c. Concluding that the complaint for reversion is defective as it was not initiated by the Director of Lands. d. Finding that the complaint for reversion states no cause of action for alleged failure of petitioner to exhaust administrative remedies. 6 The Court of Appeals gave due course to the petition for certiorari, set aside the Order of Dismissal rendered by the Court of First Instance in Civil Case No. 4062, and ordered the presiding judge Hon. Pedro T. Santiago to receive the answers of the private respondents SUNBEAM and CORAL BEACH in the action for reversion. Hence Sunbeam and Coral Beach filed this petition for review. A review is not a matter of right but of sound judicial discretion, and is granted only when there are special and important reasons therefore. The following, while neither controlling nor fully measuring the Court's discretion, enumerates the premises for granting a review: (a) When the Court of Appeals has decided a question of substance, not theretofore determined by the Supreme Court or has decided it in a way probably not in accord with law or the applicable decisions of the Supreme Court; and (b) When the Court of Appeals has so far departed from the accepted and usual course of judicial proceedings or so far sanctioned such departure by a lower court as to call for supervision . 7 We agree with the Court of Appeals' granting of the petition filed by the Republic of the Philippines charging the then Court of First Instance with grave abuse of discretion. The filing of the Motion to Dismiss the complaint for reversion by SUNBEAM and CORAL BEACH on the ground of lack of cause of action, necessarily carried with it the admission, for purposes of the motion, of the truth of all material facts pleaded in the complaint instituted by the Republic. An important factual issue raised in the complaint was the classification of the lands as forest lands. This material allegation stated in the Republic's complaint' was never denied specifically 9 by the defendants (petitioners herein) SUNBEAM and CORAL BEACH. If it is true that the lands are forest lands, then all these proceedings become moot and academic. Land remains unclassified land until it is released therefrom and rendered open to disposition. 10 Our adherence to the Regalian doctrine subjects all agricultural, timber, and mineral lands to the dominion of the State. 11 Thus, before any land may be declassified from the forest group and converted into alienable or

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G.R. No. L-50464

disposable land for agricultural or other purposes, there must be a positive act from the government. Even rules on the confirmation of imperfect titles do not apply unless and until the land classified as forest land is released in an official proclamation to that effect so that it may form part of the disposable agricultural lands of the public domain.
12

The mere fact that a title was issued by the Director of Lands does not confer any validity on such title if the property covered by the title or patent is part of the public forest. 13 The only way to resolve this question of fact as to the classification of the land is by remanding the case to the lower court for a full- dress trial on the issues involved. Generally, the rules of procedure must be observed so that the efficient administration of justice is ensured. However, the rules of procedure should be viewed as mere tools designed to facilitate the attainment of justice. 14 They must lead to the proper and just determination of litigation, without tying the hands of the law or making it indifferent to realities. Certiorari is one such remedy. Considered extraordinary, it is made available only when there is no appeal, nor any plain, speedy or adequate remedy in the ordinary course of the law. 15 The long line of decisions denying the petition for certiorari, either before appeal was availed of or specially in instances where the appeal period has lapsed, far outnumbers the instances when certiorari was given due course. The few significant exceptions were: when public welfare and the advancement of public policy dictate; or when the broader interests of justice so require, or when the writs issued are null, 16 or when the questioned order amounts to an oppressive exercise of judicial authority. 17 We find nothing disagreeable with the action of the Court of Appeals to give due course to the petition considering that the issue affected a matter of public concern which is the disposition of the lands of our matrimony No less than the Constitution protects its policy. We therefore find no compelling reason to disturb the findings of the appellate court, in the absence of a clear showing that the Court of Appeals has decided a question of substance in a manner inconsistent with jurisprudence, or that the respondent Court has departed from the accepted and usual course of judicial proceedings. In sum, no reversible error has been committed by the respondent court. 18 WHEREFORE, the petition is DENIED and the decision of the Court of Appeals is affirmed. Costs against the petitioners. SO ORDERED. Melencio-Herrera (Chairperson), Paras, Padilla and Regalado, JJ., concur.

Footnotes 1 CA-G.R. No. SP-07196-R, October 7, 1987, Special Third Division: Alampay, Nestor B., J., ponente; Reyes, Luis B. and Busran, Mama D. JJ., concurring; rollo, 67. 2 Rollo, 55-56; 5-6. 3 Motion to Dismiss, Republic v. Sunbeam Convenience Foods, Inc., CFI (Balanga, Bataan V), Civil Case No. 4062; Original Record, 21-25. 4 Republic v. Sunbeam Convenience Foods, Inc., CFI (Balanga, Bataan V), Civil Case No. 4062, October 7,1977; Original Record, 261. 5 Notice of Appeal, Republic v. Sunbeam Convenience Foods, Inc., CFI (Balanga, Bataan V_, Civil Case No. 4062; Original Record, 363. 6 Petition for Certiorari, Republic of the Philippines v. Hon. Pedro T. Santiago, CA-G.R. No. SP-

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07196, R, 8; Original Record, 373. 7 Sec. 4, Rule 45, RULES OF COURT. 8 Republic of the Philippines, Plaintiff, v. Sunbeam Convenience Foods, Inc., etc., Defendant,, CFI (Balanga, Bataan V), Civil Case No. 4062; Original Record, 1. 9 Motion to Dismiss, Republic v. Sunbeam Convenience Foods, CFI (Balanga, Bataan V), Civil Case No. 4062; Original Record, 21 to 25; Defendants' Rejoinder to Opposition with Additional Ground to Dismiss, Republic v. Sunbeam Convenience Foods, CFI (Balanga, Bataan V), Civil Case No. 4062; Original Record, 44 to 54. 10 Director of Lands v. Court of Appeals, _o. L-58867, June 22, 1984, 129 SCRA 692. 11 Sec. 2, Article XII, CONST.; Republic v. Court of Appeals, No. L-43938; Consolidated, Inc.v. Hon. Court of Appeals, No. L-44081; Atok Big Wedged Mining Company v. Hon. Court of Appeals, No. L44092, April 15, 1988, 160 SCRA 231. 12 Director of Lands v. Court of Appeals,, G.R. 83609, October 26, 1989. 13 Vallarta v. Intermediate Appellate Court, No. L-74957, June 30,1987, 151 SCRA 679; Republic v. Court of Appeals, No. L- 40402, March 16, 1987, 148 SCRA 488; Republic v. Court of Appeals, No. L-56077, February 28,1985,135 SCRA 165,166. 14 Aznar III v. Bernard No. L-81190, May 9,1988,161 SCRA 282, 283@ Guballa v. Court of Appeals, et al., G.R. 78223-1 Mozar v. Court of Appeals, G.R. No. 79403, December 9,1988. 15 Rule 65, RULES OF COURT, section 1. 16 YU Cong Eng v. Trinidad, 47 Phil. 385, 390 (1925); Tirona v. Nanawa No, L-22107, September 30,1967, 21 SCRA 395,400; Director of Lands v. Santamaria, 44 Phil. 594, 596 (1923) cited in 3 MORN COMMENTS ON THE RULES OF COURT, 170- 172 (1980). 17 Acain v. Intermediate Appellate Court, No. L-72706, October 27 1987 155 SCRA 109.
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G.R. No. L-60413

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-60413 October 31, 1990 REPUBLIC OF THE PHILIPPINES, petitioner, vs. HON. SOFRONIO G. SAYO, Judge, Br. I, C I, Nueva Vizcaya, HEIRS OF CASIANO SANDOVAL, HEIRS OF LIBERATO BAYAUA, JOSE C. REYES, and PHILIPPINE CACAO AND FARM PRODUCTS, INC., respondents. Celso D. Gangan respondent Heirs of Liberato Bayaua. Acosta & Associates fox Phil. Cacao and Farm Products, Inc. Jose Reyes & Associates for Heirs of Casiano Sandoval, et al.

NARVASA, J.: Sought to be annulled and set aside in this special civil action of certiorari is the decision of respondent Judge Sofronio G. Sayo rendered on March 5, 1981 in Land Registration Case No. N-109, LRC Record No. 20850, confirming, by virtue of a compromise agreement, the title of the private respondents over a tract of land. The spouses, Casiano Sandoval and Luz Marquez, filed an original application for registration of a tract of land identified as Lot No. 7454 of the Cadastral Survey of Santiago, BL Cad. 211 (July 17, 1961) and having an area of 33,950 hectares. The land was formerly part of the Municipality of Santiago, Province of Isabela, but had been transferred to Nueva Vizcaya in virtue of Republic Act No. 236. Oppositions were filed by the Government, through the Director of Lands and the Director of Forestry, and some others, including the Heirs of Liberato Bayaua. 1 In due course, an order of general default was thereafter entered on December 11, 1961 against the whole world except the oppositors. The case dragged on for about twenty (20) years until March 3, 1981 when a compromise agreement was entered into by and among all the parties, assisted by their respective counsel, namely: the Heirs of Casiano Sandoval (who had since died), the Bureau of Lands, the Bureau of Forest Development, the Heirs of Liberato Bayaua, and the Philippine Cacao and Farm Products, Inc. Under the compromise agreement, the Heirs of Casiano Sandoval (as applicants) renounced their claims and ceded 1) in favor of the Bureau of Lands, an area of 4,109 hectares; 2) in favor of the Bureau of Forest Development, 12,341 hectares; 3) in favor of the Heirs of Liberato Bayaua, 4,000 hectares; and 4) in favor of Philippine Cacao & Farm Products, Inc., 8,000 hectares. The remaining area of 5,500 hectares was, under the compromise agreement, adjudicated to and acknowledged as owned by the Heirs of Casiano Sandoval, but out of this area, 1,500 hectares were assigned by the Casiano Heirs to their counsel, Jose C. Reyes, in payment of his attorney's fees. In consideration of the areas respectively allocated to them, all the parties also mutually waived and renounced all their prior claims to and over Lot No. 7454 of the Santiago Cadastre. In a decision rendered on March 5, 1981, the respondent Judge approved the compromise agreement and

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confirmed the title and ownership of the parties in accordance with its terms. The Solicitor General, in behalf of the Republic of the Philippines, has taken the present recourse in a bid to have that decision of March 5, 1981 annulled as being patently void and rendered in excess of jurisdiction or with grave abuse of discretion. The Solicitor General contends that 1) no evidence whatever was adduced by the parties in support of their petitions for registration; 2) neither the Director of Lands nor the Director of Forest Development had legal authority to enter into the compromise agreement; 3) as counsel of the Republic, he should have been but was not given notice of the compromise agreement or otherwise accorded an opportunity to take part therein; 4) that he was not even served with notice of the decision approving the compromise; it was the Sangguniang Panlalawigan of Quirino Province that drew his attention to the "patently erroneous decision" and requested him to take immediate remedial measures to bring about its annulment. The respondents maintain, on the other hand, that the Solicitor General's arguments are premised on the proposition that Lot 7454 is public land, but it is not. According to them, as pointed out in the application for registration, the private character of the land is demonstrated by the following circumstances, to wit: 1) the possessory information title of the applicants and their predecessors-in-interest; 2) the fact that Lot 7454 was never claimed to be public land by the Director of Lands in the proper cadastral proceedings; 3) the pre-war certification of the National Library dated August 16, 1932 to the effect that the (Estadistica de Propiedades) of Isabela issued in 1896 and appearing in the Bureau of Archives, the property in question was registered under the 'Spanish system of land registration as private property owned by Don Liberato Bayaua, applicants' predecessors-in-interest; 4) the proceeding for registration, brought under Act 496 (the Torrens Act) presupposes that there is already a title to be confirmed by the court, distinguishing it from proceedings under the Public Land Act where the presumption is always that the land involved belongs to the State. Under the Regalian Doctrine 2 all lands not otherwise appearing to be clearly within private ownership are presumed to belong to the State. Hence it is that all applicants in land registration proceedings have the burden of overcoming the presumption that the land thus sought to be registered forms part of the public domain. 3 Unless the applicant succeeds in showing by clear and convincing evidence that the property involved was acquired by him or his ancestors either by composition title from the Spanish Government or by possessory information title, or any other means for the proper acquisition of public lands, the property must be held to be part of the public domain . 4 The applicant must present competent and persuasive proof to substantiate his claim; he may not rely on general statements, or mere conclusions of law other than factual evidence of possession and title. 5 In the proceeding at bar, it appears that the principal document relied upon and presented by the applicants for registration, to prove the private character of the large tract of land subject of their application, was a photocopy of a certification of the National Library dated August 16, 1932 (already above mentioned) to the effect that according to the Government's (Estadistica de Propiedades) of Isabela issued in 1896, the property in question was registered under the Spanish system of land registration as private property of Don Liberato Bayaua. But, as this Court has already had occasion to rule, that Spanish document, the (Estadistica de Propiedades,) cannot be considered a title to property, it not being one of the grants made during the Spanish regime, and obviously not constituting primary evidence of ownership. 6 It is an inefficacious document on which to base any finding of the private character of the land in question. And, of course, to argue that the initiation of an application for registration of land under the Torrens Act is proof that the land is of private ownership, not pertaining to the public domain, is to beg the question. It is precisely the character of the land as private which the applicant has the obligation of establishing. For there can be no doubt of the intendment of the Land Registration Act, Act 496, that every applicant show a proper title for registration;

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G.R. No. L-60413

indeed, even in the absence of any adverse claim, the applicant is not assured of a favorable decree by the Land Registration Court, if he fails to establish a proper title for official recognition. It thus appears that the decision of the Registration Court a quo is based solely on the compromise agreement of the parties. But that compromise agreement included private persons who had not adduced any competent evidence of their ownership over the land subject of the registration proceeding. Portions of the land in controversy were assigned to persons or entities who had presented nothing whatever to prove their ownership of any part of the land. What was done was to consider the compromise agreement as proof of title of the parties taking part therein, a totally unacceptable proposition. The result has been the adjudication of lands of no little extension to persons who had not submitted any substantiation at all of their pretensions to ownership, founded on nothing but the agreement among themselves that they had rights and interests over the land. The assent of the Directors of Lands and Forest Development to the compromise agreement did not and could not supply the absence of evidence of title required of the private respondents. As to the informacion posesoria invoked by the private respondents, it should be pointed out that under the Spanish Mortgage Law, it was considered a mode of acquiring title to public lands, subject to two (2) conditions: first, the inscription thereof in the Registry of Property, and second, actual, public, adverse, and uninterrupted possession of the land for twenty (20) years (later reduced to ten [10] years); but where, as here, proof of fulfillment of these conditions is absent, the informacion posesoria cannot be considered as anything more than prima facie evidence of possession. 7 Finally, it was error to disregard the Solicitor General in the execution of the compromise agreement and its submission to the Court for approval. It is, after all, the Solicitor General, who is the principal counsel of the Government; this is the reason for our holding that "Court orders and decisions sent to the fiscal, acting as agent of the Solicitor General in land registration cases, are not binding until they are actually received by the Solicitor General." 8 It thus appears that the compromise agreement and the judgment approving it must be, as they are hereby, declared null and void, and set aside. Considerations of fairness however indicate the remand of the case to the Registration Court so that the private parties may be afforded an opportunity to establish by competent evidence their respective claims to the property. WHEREFORE, the decision of the respondent Judge complained of is ANNULLED and SET ASIDE. Land Registration Case No. N-109 subject of the petition is REMANDED to the court of origin which shall conduct further appropriate proceedings therein, receiving the evidence of the parties and thereafter rendering judgment as such evidence and the law may warrant. No pronouncement as to costs. SO ORDERED. Cruz, Gancayco, Grio-Aquino and Medialdea, JJ., concur.

Footnotes 1 See Municipality of Santiago, Isabela v. CA et al., 120 SCRA 734, infra, involving parties surnamed Bayaua, claimants to Lots No. 49760A and No. 8000-A of the Santiago cadastre, Province of Isabela, which lots were declared to belong to the Municipality of Santiago. 2 Embodied "in Section 1 of Article XIII of the Constitution of 1935 . . declaring that 'al agricultural, timber, and mineral lands of the public dmain ... and other natural resources of the Philippines belong to the State..."(Pinero, Jr. v. Director of Lands, 57 SCRA 386) (See Secs. 2 and 3, ART. XII, 1987 Constitution). 3 National Power Corporation v. C.A., 114 SCRA 318 [1982]; Armagui v. Director of Forestry, 126 SCRA 69 [1983]. 4 Director of Lands v. Reyes, 68 SCRA 2177 [1971].

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G.R. No. L-60413

5 Republic v. C.A 167 SCRA 150 [1988). 6 Municipality of Santiago v. C.A. 120 SCRA 734, 743 [1983]. 7 Republic v. Feliciano, 148 SCRA 424 [1987]. 8 Republic v. C.A., 148 SCRA 480 [1987]; Republic v. C.A., 135 SCRA 157 [1985]; Republic v. Mendoza, 125 SCRA 539 [1983].
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G.R. No. 73246

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. 73246 March 2, 1993 DIRECTOR OF LANDS AND DIRECTOR OF FOREST DEVELOPMENT, petitioners, vs. INTERMEDIATE APPELLATE COURT AND J. ANTONIO ARANETA, respondents. The Solicitor General for petitioners. Jimenez, Leynes & Associates for private respondent.

NOCON, J.: For review before Us is the decision of the Court of Appeals in the land registration case entitled J. Antonio Araneta v. The Director of Lands and Director of Forest Development, AC-G.R. CV. No. 00636, 1 affirming the lower court's approval of the application for registration of a parcel of land in favor of applicant therein, J. Antonio Araneta. Evidence show that the land involved is actually an island known as Tambac Island in Lingayen Gulf. Situated in the Municipality of Bani, Pangasinan, the area consists of 187,288 square meters, more or less. The initial application for registration was filed for Pacific Farms, Inc. under the provisions of the Land Registration Act, Act No. 496, as amended. The Republic of the Philippines, thru the Director of Lands opposed the application alleging that the applicant, Pacific Farms, Inc. does not possess a fee simple title to the land nor did its predecessors possess the land for at least thirty (30) years immediately preceding the filing of application. The opposition likewise specifically alleged that the applicant is a private corporation disqualified under the (1973) new Philippine Constitution from acquiring alienable lands of the public domain citing Section 11, Article 14. 2 The Director of Forest Development also entered its opposition alleging that the land is within the unclassified public land and, hence, inalienable. Other private parties also filed their oppositions, but were subsequently withdrawn. In an amended application, Pacific Farms, Inc. filed a manifestation-motion to change the applicant from Pacific Farms, Inc. to J. Antonio Araneta . Despite the supposed amendment, there was no republication. Evidence presented by the applicant include the testimony of Placido Orlando, fishery guard of Pacific Farms, Inc., who said he has known the disputed land since he attained the age of reason for some forty (40) years now; that when he first came to know the property it was then owned by and in the possession of Paulino Castelo, Juan Ambrosio and Julio Castelo, and later on the whole island was bought by Atty. Vicente Castelo who in turn sold it to J. Antonio Araneta. Deposition by oral examination of Araneta was also presented, together with documents of sale, tax declarations and receipts, and survey of property. Applicant, however, failed to present the tracing cloth plan and instead submitted to the court certified copies thereof. While this case is pending here in Court, respondent filed an Omnibus Motion for Substitution of private respondent. 3 Apparently, Antonio Araneta had assigned his rights to and interest in Tambac Island to Amancio R.

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G.R. No. 73246

Garcia 4 who in turn assigned his rights and interest in the same property to Johnny A. Khonghun whose nationality was not alleged in the pleadings. On October 4, 1979, the trial court rendered a decision adjudicating the subject property to J. Antonio Araneta. On appeal to the then Intermediate Appellate Court, the decision of the lower court was affirmed on December 12, 1985. Petitioners raised the following errors: I. The lower court erred in adjudicating the lands subject of registration to applicant-appellee despite his failure to present the original tracing cloth plan the submission of which is a statutory requirement of mandatory character. II. The lower court erred in not denying registration in favor of J. Antonio Araneta since the amendment of the application was simply an attempt to avoid the application of the constitutional provision disqualifying a private corporation the Pacific Farms, Inc. in this case from acquiring lands of public domain. III. The lower court erred in not declaring the land known as the "Tambac Island" not subject of registration it being an island formed on the seas. IV. The lower court erred in adjudicating the land to the applicant under the provisions of Presidential Decree No. 1529, otherwise known as the Property Registration Decree, despite absence of any specific invocation of this law in the original and amended application. V. The lower court erred in not granting the government's motion for reconsideration at least to enable it to present proof of the status of the land as within the unclassified public forest, and hence beyond the court's jurisdiction to adjudicate as private property. VI. The lower court erred in not declaring that the applicant has failed to overthrow the presumption that the land is a portion of the public domain belonging to the Republic of the Philippines. From the foregoing it appears that the more important issues are: 1) whether the presentation of the tracing cloth plan is necessary; and 2) whether the land known as "Tambac Island" can be subject to registration. By mere consideration of the first assignment of error, We can right away glean the merit of the petition. Respondent claims that the tracing cloth plan is with the files of the Land Registration Commission, and the only evidence that can be presented to that fact is the request for the issuance of a certified copy thereof and the certified copy issued pursuant to the request. 5 Respondent further argues that failure of the petitioners to object to the presentation of the certified copy of the tracing cloth plan was the basis of the trial court's denial of petitioner's motion for reconsideration. In a very recent decision of this Court, entitled The Director of Lands v. The Honorable Intermediate Appellate Court and Lino Anit , 6 We have ruled that the submission of the tracing cloth plan is a mandatory requirement for registration. Reiterating Our ruling in Director of Lands v. Reyes, 7 We asserted that failure to submit in evidence the original tracing cloth plan is fatal it being a statutory requirement of mandatory character. It is of no import that petitioner failed to object to the presentation of the certified copy of the said plan. What is required is the original tracing cloth plan of the land applied for and objection to such requirement cannot be waived either expressly or impliedly. 8 This case is no different from the case of Director of Lands v. Reyes, supra wherein We said that if the original tracing cloth plan was indeed with the Land Registration Commission, there is no reason why the applicant cannot easily retrieve the same and submit it in evidence, it being an essential requirement for registration. As to the second assignment of error, We are inclined to agree with petitioners that the amendment of the application from the name of Pacific Farms Inc., as applicant, to the name of J. Antonio Araneta Inc., was a mere attempt to evade disqualification. Our Constitution, whether the 1973 9 or
10

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1987, prohibits private corporations or associations from holding alienable lands of the public domain except by lease. Apparently realizing such prohibition, respondent amended its application to conform with the mandates of the law. However, We cannot go along with petitioners' position that the absence of republication of an amended application for registration is a jurisdictional flaw. We should distinguish. Amendments to the application may be due to change in parties or substantial change in the boundaries or increase in the area of the land applied for. In the former case, neither the Land Registration Act, as amended, nor Presidential Decree No. 1529, otherwise known as the Property Registration Decree, requires republication and registration may be allowed by the court at any stage of the proceeding upon just and reasonable terms. 11 On the other hand, republication is required if the amendment is due to substantial change in the boundaries or increase in the area of the land applied for. As to the fourth assignment of error. We do not see any relevant dispute in the lower court's application of Presidential Decree No. 1529, instead of Act No. 496, in adjudicating the land to the then applicant, assuming that the land involved is registrable. Both laws are existing and can stand together. P.D. 1529 was enacted to codify the various laws relative to registration of property, in order to facilitate effective implementation of said laws. 12 The third, fifth and sixth assignment of errors are likewise meritorious and shall be discussed forthwith together. Respondent asserts that contrary to the allegation of petitioners, the reports of the District Land Officer of Dagupan City, Land Inspector Perfecto Daroy and Supervising Land Examiner Teodoro P. Nieva show that the subject property is an unclassified public land, not forest land. This claim is rather misleading. The report of Supervising Land Examiner Nieva specifically states that the "land is within the unclassified forest land" under the administrative jurisdiction of the then Bureau of Forest Development. 13 This was based on the reports of Land Inspector Daroy and District Land Officer Feliciano Liggayu. Lands of the public domain are classified under three main categories, namely: Mineral, Forest and Disposable or Alienable Lands. 14 Under the Commonwealth Constitution, only agricultural lands were allowed to be alienated. Their disposition was provided for under Commonwealth Act No. 141 (Secs. 6-7), which states that it is only the President, upon the recommendation of the proper department head, who has the authority to classify the lands of the public domain into alienable or disposable, timber and mineral lands. Mineral and Timber or forest lands are not subject to private ownership unless they are first reclassified as agricultural lands and so released for alienation. 15 In the absence of such classification, the land remains as unclassified land until released therefrom and rendered open to disposition. Courts have no authority to do so. 16 This is in consonance with the Regalian doctrine that all lands of the public domain belong to the State, and that the State is the source of any asserted right to ownership in land and charged with the conservation of such patrimony. Under the Regalian Doctrine, all lands not otherwise appearing to be clearly within private ownership are presumed to belong to the State. Hence, a positive act of the government is needed to declassify a forest land into alienable or disposable land for agricultural or other purposes. 17 The burden of proof in overcoming the presumption of state ownership of the lands of the public domain is on the person applying for registration that the land subject of the application is alienable or disposable. 18 Unless the applicant succeeds in showing by convincing evidence that the property involved was acquired by him or his ancestors either by composition title from the Spanish Government or by possessory information title, or any other means for the proper acquisition of public lands, the property must be held to be part of the public domain. The applicant must present evidence and persuasive proof to substantiate his claim. 19 In this particular case, respondent presented proof that as early as 1921, the subject property has been declared for tax purposes with receipts attached, in the names of respondent's predecessors-in-interest. Nevertheless, in that span of time there had been no attempt to register the same either under Act 496 or under the Spanish Mortgage Law. It is also rather intriguing that Vicente Castelo who acquired almost 90% of the property from Alejo Ambrosia, et al. on June 18, 1958 and from Julio Castelo on June 19, 1958 immediately sold the same to applicant J. Antonio Araneta on 3 July 1958.

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G.R. No. 73246

According to the report of Land Investigator Daroy, the land was declared for taxation purposes in the name of Vicente Castelo only in 1958 and the purported old tax declarations are not on file with the Provincial Assessor's Office. In any case tax declarations and receipts are not conclusive evidence of ownership or of the right to possess land when not supported by evidence. 20 The fact that the disputed property may have been declared for taxation purposes in the names of the applicants or of their predecessors-in-interest way back in 1921 does not necessarily prove ownership. They are merely indicia of a claim of ownership. 21 Respondent's contention that the BFD, LC Map No. 681, certified on August 8, 1927 which was the basis of the report and recommendation of the Land Examiner, is too antiquated; that it cannot be conclusively relied upon and was not even presented in evidence, is not well taken. As We have said in the case of Director of Lands v. CA : 22 And the fact that BF Map LC No. 673 dated March 1, 1927 showing subject property to be within unclassified region was not presented in evidence will not operate against the State considering the stipulation between the parties and under the well-settled rule that the State cannot be estopped by the omission, mistake or error of its officials or agents, if omission there was, in fact. Respondent even admitted that Tambac Island is still an unclassified public land as of 1927 and remains to be unclassified. Since the subject property is still unclassified, whatever possession the applicant may have had and however long, cannot ripen into private ownership. 23 The conversion of subject property does not automatically render the property as alienable and disposable. In effect what the courts a quo have done is to release the subject property from the unclassified category, which is beyond their competence and jurisdiction. We reiterate that the classification of public lands is an exclusive prerogative of the Executive Department of the Government and not of the Courts. In the absence of such classification, the land remains unclassified until released therefrom and rendered open to disposition. 24 In fairness to respondent, the petitioners should seriously consider the matter of the reclassification of the land in question. The attempt of people to have disposable lands they have been tilling for generations titled in their name should not only be viewed with understanding attitude, but as a matter of policy encouraged. 25 WHEREFORE, the petition is hereby GRANTED and the decisions of the courts a quo are REVERSED. SO ORDERED. Narvasa, C.J., Padilla, Regalado and Campos, Jr., JJ., concur .

Footnotes 1 Justice Ramon G. Gaviola, Jr., ponente; Justices Eduardo R. Caquioa and Ma. Rosario QuetulioLosa, concurring. 2 Now Section 3, Art. XII of the 1987 Constitution. 3 Rollo, p. 125. 4 Rollo, p. 128. 5 Rollo, p. 83. 6 G.R. No. 65663, October 16, 1992. 7 68 SCRA 177. 8 Director of Lands v. IAC and Anit, supra .

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9 Sec. 11, Art. XIV. 10 Sec. 3, Art. XII. 11 Sec. 23 of the Land Registration Act; Sec. 19 of the Property Registration Decree. 12 Preamble, P.D. 1529. 13 Original Records, Par. 5, p. 78. 14 Sec. 6, Commonwealth Act 141. 15 Director of Forestry v. Villareal, G.R. No. 32266, 27 Feb. 89. 16 Manalo vs. Intermediate Appellate Court, G.R. No. 64753, 172 SCRA 795. 17 Director of Lands, et al. v. Aquino, G.R. No. 31688, 192 SCRA 296. 18 Director vs. Aquino, Ibid . 19 Republic v. Sayo, G.R. No. 60413, 191 SCRA 71. 20 Director of Lands v. Court of Appeals, G.R. No. L-50340, 133 SCRA 701; Baez v. Court of Appeals, G.R. No. L-30351, 56 SCRA 15. 21 Municipality of Antipolo v. Zapanta, G.R. No. L-65334, 133 SCRA 820; Municipality of Santiago Isabela v. Court of Appeals, 120 SCRA 734; Elumbaring v. Elumbaring, 12 Phil 384. 22 Director of Lands v. CA and Valeriano, G.R. No. 58867, 129 SCRA 689 (1984); Republic v. Court of Appeals, 89 SCRA 648. 23 Dir. of Lands v. CA, 129 SCRA 689, Adorable v. Director of Lands, 107 Phil. 401, Republic v. Court of Appeals, 89 SCRA 648. 24 Yngson v. Sec. of Agriculture and Natural Resources, 123 SCRA 441, Republic v. Court of Appeals, 99 SCRA 742. 25 Director of Lands v. Funtillar, 142 SCRA 57.
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G.R. No. 73974

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

G.R. No. 73974 May 31, 1995 REPUBLIC OF THE PHILIPPINES (Represented by the Director of Lands), petitioner, vs. THE REGISTER OF DEEDS OF QUEZON, MANUEL G. ATIENZA, DEVELOPMENT BANK OF THE PHILIPPINES (Lucena Branch) and INTERMEDIATE APPELLATE COURT, respondents.

ROMERO, J.: This petition for review on certiorari seeks to nullify and set aside the decision 1 of the then Intermediate Appellate Court reversing the decision of the former Court of First Instance of Quezon, Branch II at Lucena City 2 which annulled Original Certificate of Title (OCT) No. P-13840 and Free Patent (FP) No. 324198 issued to Manuel Atienza for a 17-hectare piece of land which turned out to be within the forest zone in Pagbilao, Quezon. On April 18, 1967, Atienza was awarded FP No. 324198 over a parcel of land located in Ila, Malicboy, Pagbilao, Quezon, with an area of 172,028 square meters. By virtue of such award, he was issued on May 5, 1967, OCT No. P-13840. Sometime in 1968, an investigation was conducted by the Bureau of Lands in connection with alleged land grabbing activities in Pagbilao. It appeared that some of the free patents, including that of Atienza's, were fraudulently acquired. Thus, on March 19, 1970, a criminal complaint for falsification of public documents was filed in the then Court of First Instance of Quezon, Branch II, against Atienza and four other persons for allegedly falsifying their applications for free patent, the survey plans, and other documents pertinent to said applications. In its decision dated October 4, 1972, the court acquitted the accused of the crime charged but, finding that the land covered by the application for free patent of private respondent was within the forest zone, declared as null and void OCT No. P-13840 in Atienza's name and ordered the Register of Deeds of Quezon to cancel the same. Meanwhile, before the promulgation of said decision, or on May 10, 1972, then Acting Solicitor General Conrado T. Limcaoco filed for the petitioner a complaint against Atienza, the Register of Deeds of Quezon, and the Rural Bank of Sariaya, which was later dropped as defendant and, in an amended complaint, substituted by the Development Bank of the Philippines as actual mortgagee of the subject parcel of land. Docketed as Civil Case No. 7555, the complaint prayed for the declaration of nullity of FP No. 324198 and OCT No. P-13840. In his answer, Atienza claimed that the land in question was no longer within the unclassified public forest land because by the approval of his application for free patent by the Bureau of Lands, the land "was already alienable and disposable public agricultural land." Since the subject land was a very small portion of Lot 5139 of the Pagbilao Cadastre, an area which had been declared disposable public land by the cadastral court on March 9, 1932 in Cadastral Case No. 76 entitled "El Govierno Filipino de las Islas Filipinas contra Jose Abastillas, et al., G.L.R.O. cadastral Record No. 1124," he also averred that the Director of Lands had given due course to free and homestead patent applications of claimants to Lot 5139. He further alleged that through a certain Sergio Castillo, he had been in possession of the land since the Japanese occupation, cultivating it and introducing improvements thereon. The DBP, after due and proper investigation and inspection of his title, even granted him a loan with the subject property as collateral. Finally, he stated that his acquittal in the criminal case proved that he committed no fraud in his application for free patent. On July 27, 1981, the lower court rendered a decision with the categorical finding based on "solid evidence" that

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"the land in question was found definitely within the forest zone denominated as Project 21-A." The dispositive portion thereof reads as follows: WHEREFORE, in view of the foregoing, (J)udgment is hereby rendered: (a) Declaring as null and void Original Certificate of Title No. P-13840 in the name of defendant Manuel G. Atienza, as well as Free Patent No. V-324198; (b) Ordering defendant Manuel G. Atienza to pay the Development Bank of the Philippines, Lucena City Branch, the sum of P15,053.97, and all interests due thereon; and (c) Ordering defendant Manuel G. Atienza to pay the costs of this suit. SO ORDERED. On appeal, Atienza maintained that the land in question was not within the unclassified public forest land and therefore alienable land of the public domain. The then Intermediate Appellate Court relied only on the arguments he raised since petitioner had not filed any brief, and arrived at the conclusion that "(t)he litigated land is part of public land alienable and disposable for homestead and [F]ree Patent." On December 27, 1985, the appellate court set aside the lower court's decision, declared as valid and subsisting Atienza's OCT, and dismissed the cross-claim of the DBP. After receiving a copy of said decision, Assistant Solicitor General Oswaldo D. Agcaoili informed the Director of Lands of the adverse decision of the appellate court, which noted that no appellee's brief had been filed in said court. Agcaoili also stated that the Office of the Solicitor General (OSG) had not been furnished with the appellant's brief; that the Bureau of Lands received notice of hearing of the record on appeal filed by the appellant but the OSG had not been informed of the "action taken thereon;" that since the Bureau of Lands had been furnished directly with relevant pleadings and orders, the same office should "take immediate appropriate action on the decision;" and that it may file a motion for reconsideration within fifteen (15) days from January 6, 1986, the date of receipt by the OSG of the copy of the decision sought to be appealed. On January 28, 1986, petitioner filed a motion for extension of time to file motion for reconsideration which was denied in a resolution dated February 12, 1986. Petitioner's motion for reconsideration of said resolution was likewise denied. The instant petition for review on certiorari raises the following arguments: (a) petitioner was denied due process and fair play when Atienza did not furnish it with a copy of his appellant's brief before the then Intermediate Appellate Court thereby depriving it of the opportunity to rebut his assertions which later became the sole basis of the assailed decision of December 27, 1985; (b) the appellate court erred in holding that the land in question is part of the alienable and disposable public land in complete disregard of the trial court's finding that it forms part of the unclassified public forest zone; and (c) the appellate court erred in declaring that the land in question could be alienated and disposed of in favor of Atienza. We find for the petitioner. Appeal is an essential part of our judicial system. As such, courts should proceed with caution so as not to deprive a party of the right to appeal, particularly if the appeal is meritorious. 3 Respect for the appellant's right, however, carries with it the corresponding respect for the appellee's similar rights to fair play and justice. Thus, appeal being a purely statutory right, an appealing party must strictly comply with the requisites laid down in the Rules of Court.
4

Of paramount importance is the duty of an appellant to serve a copy of his brief upon the appellee with proof of service thereof. 5 This procedural requirement is consonant with Section 2 of Rule 13, which mandates that all pleadings and papers "shall be filed with the court, and served upon the parties affected thereby." The importance of serving copies of the brief upon the adverse party is underscored in Mozar v. Court of Appeals, 6 where the Court held that the appellees "should have been given an opportunity to file their appellee's brief in the Court of Appeals if only to emphasize the necessity of due process."

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In this case, however, the Court of Appeals, oblivious of the fact that this case involves public lands requiring as it does the exercise of extraordinary caution lest said lands be dissipated and erroneously alienated to undeserving or unqualified private individuals, decided the appeal without hearing the government's side. Atienza avers that he furnished Atty. Francisco Torres, a lawyer in the Bureau of Lands and designated special attorney for the Office of the Solicitor General, with two copies of the appellant's brief, thereby implying that it was not his fault that petitioner failed to file its appellee's brief. Such an assertion betrays a lack of comprehension of the role of the Solicitor General as government counsel or of the OSG as the government's "law office." 7 Only the Solicitor General, as the lawyer of the government, can bring or defend actions on behalf of the Republic of the Philippines and, therefore, actions filed in the name of the Republic, if not initiated by the Solicitor General, will be summarily dismissed. 8 Specifically, he is empowered to represent the Government in all land registration and related proceedings, 9 such as, an action for cancellation of title and for reversion of a homestead to the government. 10 Hence, he is entitled to be furnished with copies of all court orders, notices and decisions. Consequently, service of decisions on the Solicitor General is the proper basis for computing the reglementary period for filing appeals and for finality of decisions. His representative, who may be a lawyer from the Bureau of Lands, has no legal authority to decide whether or not an appeal should be made.
11

Service of the appellant's brief on Atty. Torres was no service at all upon the Solicitor General. It may be argued that Atty. Torres could have transmitted one of the two copies of appellant's brief upon the Solicitor General, but such omission does not excuse Atienza's failure to serve a copy of his brief directly on the Solicitor General. On the part of the appellate court, its decision based solely on, and even quoting verbatim from, the appellant's brief was certainly arrived at in grave abuse of discretion. It denied appellee (petitioner herein) of the opportunity to be heard and to rebut Atienza's allegations, in rank disregard of its right to due process. Such violation of due process could have been rectified with the granting of petitioner's motion for reconsideration by the appellate court, 12 but even the door to this recourse was slammed by the appellate court with the denial of petitioner's motion for extension of time to file motion for reconsideration in a resolution dated February 12, 1986, which ruling erroneously applied the Habaluyas doctrine. 13 Such denial notwithstanding, petitioner filed its motion for reconsideration. Considering the clear allegations thereunder, the appellate court would have done well, in the interest of justice, not to blindly adhere to technical rules of procedure by dismissing outright said motion. As we declared in Villareal v. Court of Appeals: 14 . . . The requirements of due process are satisfied when the parties are afforded a fair and reasonable opportunity to explain and air their side. The essence of due process is simply the opportunity to be heard or as applied to administrative proceedings, an opportunity to explain one's side or an opportunity to seek a reconsideration of the action or ruling taken . (Emphasis supplied) In view of the foregoing and the long-standing procedural rule that this Court may review the findings of facts of the Court of Appeals in the event that they may be contrary to those of the trial court, 15 in order to attain substantial justice, the Court now reviews the facts of the case. Under the Regalian Doctrine, all lands not otherwise clearly appearing to be privately-owned are presumed to belong to the State. Forest lands, like mineral or timber lands which are public lands, are not subject to private ownership unless they under the Constitution, become private properties. In the absence of such classification, the land remains unclassified public land until released therefrom and rendered open to disposition. 16 In our jurisdiction, the task of administering and disposing lands of the public domain belongs to the Director of Lands, and ultimately, the Secretary of Agriculture and Natural Resources 17 (now the Secretary of Environment and Natural Resources). 18 Classification of public lands is, thus, an exclusive prerogative of the Executive Department through the Office of the President. 19 Courts have no authority to do so. 20 Thus, in controversies involving the disposition of public agricultural lands, the burden of overcoming the presumption of state ownership of lands of the public domain lies upon the private claimant 21 who, in this case,

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is Atienza. The records show, however, that he failed to present clear, positive and absolute evidence 22 to overcome said presumption and to support his claim. Atienza's claim is rooted in the March 9, 1932 decision of the then Court of First Instance of Tayabas in Cadastral Case No. 76, which was not given much weight by the court a quo , and for good reasons. Apart from his assertions before this Court, Atienza failed to present proof that he or his predecessor-in-interest was one of the claimants who answered the petition filed by the then Attorney-General in the said cadastral proceedings. The document reflecting said cadastral decision, a xerox copy, indicated the claimants simply as "Jose Abastillas et al." In support of that decision, Atienza presented a certification purportedly issued by someone from the Technical Reference Section of the Surveys Division, apparently of the Bureau of Lands, stating that "Lot 5886 is a portion of Lot 5139 Pagbilao Cadastre," which evidence is, however, directly controverted by the sketch plan showing that the land in controversy is actually outside the alienable and disposable public lands, although part of Lot 5139. The fact that Atienza acquired a title to the land is of no moment, notwithstanding the indefeasibility of titles issued under the Torrens system. In Bornales v. Intermediate Appellate Court , 23 we ruled that the indefeasibility of a certificate of title cannot be invoked by one who procured the same by means of fraud. The "fraud" contemplated by the law (Sec. 32, P.D. 1529) is actual and extrinsic, that is, "an intentional omission of fact required by law," 24 which in the case at bench consisted in the failure of Atienza to state that the land sought to be registered still formed part of the unclassified forest lands. WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE and the decision of the court a quo dated July 27, 1981, is REINSTATED. SO ORDERED. Feliciano, Melo, Vitug and Francisco, JJ., concur.

Footnotes 1 Penned by Associate Justice Mariano A. Zosa and concurred in by Associate Justices Jorge R. Coquia, Floreliana Castro-Bartolome and Bienvenido C. Ejercito. 2 Presided by Judge Benigno M. Puno. 3 Goulds Pumps (Phils.), Inc. v. Court of Appeals, G.R. No. 102748, June 30, 1993, 224 SCRA 127. 4 U-Sing Button and Buckle Industry v. NLRC, G.R. No. 94754, May 11, 1993, 221 SCRA 680, citing Ozaeta v. Court of Appeals, G.R. No. 83281, December 4, 1989, 179 SCRA 800. 5 Section 10, Rule 96, Rules of Court. 6 G.R. No. 79403, November 13, 1989, 179 SCRA 353. 7 Section 35, Title III, Chapter 12, Revised Administrative Code of 1987. 8 Republic v. Court of Appeals, G.R. No. 90482, August 5, 1991, 200 SCRA 226, citing Republic v. Partisala, G.R. No. 61997, November 15, 1982, 118 SCRA 370. 9 Sec. 35[5], Title III, Chapter 12, Revised Administrative Code of 1987. 10 Causapin v. Court of Appeals, G.R. No. 107432, July 4, 1994, 233 SCRA 615. 11 Republic v. Court of Appeals, L-48327, August 21, 1991, 201 SCRA 1; Republic v. Andaya, G.R. No. 55854, February 23, 1990,182 SCRA 524. 12 German Management & Services, Inc. v. Court of Appeals, G.R. No. 76216, September 14, 1989,

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177 SCRA 495. 13 The ruling in Habaluyas Enterprises, Inc. v. Habaluyas (G.R. No. 70895, August 5, 1985, 138 SCRA 46) that the fifteen-day period within which a party may file a motion for reconsideration of a final order or ruling of the Regional Trial Court may not be extended has been reconsidered in the resolution of May 30, 1986 (142 SCRA 208), where the Court, after categorically stating that "the law and the Rules of Court do not expressly prohibit the filing of a motion for extension of time to file a motion for reconsideration of a final order or judgment," held that the rule that "no motion for extension of time to file a motion for new trial or reconsideration may be filed with the . . . Intermediate Appellate Court" shall be strictly enforced "beginning one month after the promulgation of this Resolution" (or more than four months after the resolution of February 12, 1986 was issued). The Court later clarified the modes and periods of appeal in Lacsamana v. Second Special Cases Division of the Intermediate Appellate Court (G.R. No. 73146-53, August 26, 1986, 143 SCRA 643). It was only on April 7, 1988, however, that the Court resolved to formally adopt "as a general policy" the rule that reconsideration shall be granted after the Court (or the Court of Appeals) has rendered its judgment." 14 G.R. No. 97505, March 1, 1993, 219 SCRA 293. 15 Gaw v. Intermediate Appellate Court, G.R. No. 70451, March 24, 1993, 220 SCRA 405; Massive Construction, Inc. v. Intermediate Appellate Court, G.R. Nos. 70310-11, June 1, 1993, 223 SCRA 1; Crisostomo v. Court of Appeals, G.R. Nos. 91383-84, May 31, 1991, 197 SCRA 833. 16 Director of Lands v. Intermediate Appellate Court, G.R. No. 73246, March 2, 1993, 219 SCRA 339. 17 Busante v. Court of Appeals, G.R. No. 97389, October 20, 1992, 214 SCRA 774. 18 Under Section 15, Title XIV of the Revised Administrative Code of 1987, the Lands Management Bureau "shall absorb the functions and powers of the Bureau of Lands abolished by Executive Order No. 131," including the "management and disposition of alienable and disposable lands of the public domain." 19 Director of Lands v. Aquino, G.R. No. 31688, December 17, 1990, 192 SCRA 296. 20 Director of Lands v. Intermediate Appellate Court, supra . 21 Ibid . 22 National Power Corporation v. Court of Appeals, G.R. No. 45664, January 29, 1993, 218 SCRA 31. 23 G.R. No. L-75336, October 18, 1988, 166 SCRA 519. 24 Pea, Registration of Land Titles and Deeds, 1982, p. 113.
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G.R. No. 128017

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. No. 128017 January 20, 1999 RAMON ITURALDE, petitioner, vs. ALFREDO FALCASANTOS, respondent.

PARDO, J.: The case is an appeal via certiorari from a decision of the Court of Appeals reversing that of the Regional Trial Court, Branch 2, Basilan province, and dismissing petitioner's complaint for recovery of possession and ownership of a parcel of land with the improvements existing thereon, situated at Barangay Upper Baas, municipality of Lantawan, province of Basilan, with an area of 7.1248 hectares. The facts may be related as follows: On October 17, 1986, petitioner acquired by purchase from the heirs of. Pedro Mana-ay a parcel of land located at Baas, Lantawan, Basilan Province, with an area of 6.0000 hectares, more or less, more particularly described as follows: A parcel of land, situated at Baas, Lantawan Basilan. Bounded on the North by property of Alejandro; Marso; on the East by property of Ramon Bacor; on the South by property at Atty. Ricardo G. Mon and on the West by property of Librada Guerrero. Containing an area of 6.0000 hectares, more or less. However, on November 3, 1986, respondent applied with the Bureau of Lands in Isabela, Basilan province, for the award to him of the same parcel of land under free patent. On November 17, 1986, petitioner filed a protest to such application. On February 7, 1989, the Regional Director of Lands rendered a decision giving respondent a period of one hundred twenty (120) days to exercise the right to repurchase the land by reimbursing petitioner of all expenses he incurred in the purchase of the property in question, and held in abeyance respondent's application for free patent. On October 11, 1989, the Regional Director issued an order declaring that respondent had waived his right of repurchase, and rejected his application for free patent for lack of interest, and allowed petitioner to file a public land application for the subject land. On May 8, 1990, the Regional Director ordered respondent to vacate the land in question, but respondent refused. On July 24, 1990, petitioner filed with the Regional Trial Court, Basilan province, a complaint for recovery of ownership and possession with preliminary injunction of the subject parcel of land. In Answer to the complaint, respondent alleged that the land occupied by him belonged to the Republic of the Philippines, and that he had introduced improvements thereon such as coconut and other fruit trees. After trial on the merits, on March 20, 1993, the trial court rendered decision declaring petitioner the owner and the possessor of the subject parcel of land with all the improvements existing thereon, situated at Barangay Upper Baas, municipality of Lantawan, province of Basilan, with an area of 3.1248 hectares, and ordering respondent to

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vacate the land in question, to pay petitioner the amount of ten thousand pesos (P10,000.00) as attorneys fee, the amount of five thousand pesos (P5,000.00) as litigation expenses, the three hundred pesos (P300.00) as judicial cost. In due time, petitioner appealed the trial court's decision to the Court of Appeals. On December 20, 1996, the Court of Appeals rendered decision reversing the appealed decision, and entering a new judgment dismissing petitioner's complaint without prejudice to any action that petitioner may take if the subject land was declassified from forest land to alienable and disposable land of the public domain. Hence, the present recourse. Petitioner submits that the Court of Appeals erred in setting aside the trial court's decision in his favor and dismissing the complaint because when the Director of Lands allowed petitioner to file a public land application for said property, it was equivalent to a declaration that said land was no longer part of the public domain. We deny the petition. The Court of Appeals correctly held that "the evidence is unrebutted that the subject land is within the Forest Reserve Area as per L.C. Map No. 1557 certified on August 13, 1951'." 1 and, hence, not capable of private appropriation and occupation. 2 In Republic vs. Register of Deeds of Quezon , we held that "Forest land, like mineral timber lands which are public lands, are not subject to private ownership unless they under the Constitution, become private properties. In the absence of such classification, the land remains unclassified public land until released therefrom and rendered open to disposition." 3 In Sunbeam Convenience Foods Inc. vs. Court of Appeals, we said: "Thus, before any land may be declassified from the forest group and converted into alienable or disposable land for agricultural or other purposes, there must be a positive act from the government. Even rules on the confirmation of imperfect titles do not apply unless and until the land classified as forest land is released in an official proclamation to that effect so that it may form part of the disposable agricultural lands of the public domain." 4 Hence, a positive act of the government is needed to declassify a forest land into alienable or disposable land for agricultural or other purposes. " 5 And the rule is "Possession of forest lands, however long, cannot ripen into private ownership." 6 What is more, there is yet no award or grant to petitioner of the land in question by free patent or other ways of acquisition of public land. Consequently, he cannot lawfully claim to be the owner of the land in question. WHEREFORE, the Courts hereby AFFIRMS the appealed decision of the Court of Appeals in CA-G.R. CV No. 42306, dismissing the complaint of petitioner before the Regional Trial Court, Basilan province, in Civil Case No. 441-63. No costs.
1wphi1.nt

SO ORDERED. Davide, Jr., C.J., Melo, Kapunan and Martinez, JJ., concur. Footnotes 1 Exhibit 4, 4-A, Record, p. 186. 2 Director of Land Management vs. Court of Appeals, 172 SCRA 455; Republic vs. Court of Appeals 154 SCRA 476. 3 244 SCRA 537, 546 (1995). 4 181 SCRA 443, 448 (1990); De la Cruz vs. Court of Appeals, G.R. No. 120652, February 11, 1998.

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5 Director of Lands vs. Intermidiate Appellate Court, 219 SCRA 339, 347 (1993). 6 Director of Forestry vs. Muuz, 23 SCRA 1184, 1199, citing Adorable vs. Director, 107 Phil. 401; see also Vao vs. Government, 41 Phil. 161, 162.
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G.R. No. 162243

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 162243 December 3, 2009

HON. HEHERSON ALVAREZ substituted by HON. ELISEA G. GOZUN, in her capacity as Secretary of the Department of Environment and Natural Resources, Petitioner, vs. PICOP RESOURCES, INC., Respondent. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 164516 PICOP RESOURCES, INC., Petitioner, vs. HON. HEHERSON ALVAREZ substituted by HON. ELISEA G. GOZUN, in her capacity as Secretary of the Department of Environment and Natural Resources Respondent. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 171875 THE HON. ANGELO T. REYES (formerly Hon. Elisea G. Gozun), in his capacity as Secretary of the Department of Environment and Natural Resources (DENR), Petitioner, vs. PAPER INDUSTRIES CORP. OF THE PHILIPPINES (PICOP), Respondent. RESOLUTION CHICO-NAZARIO, J.: The cause of action of PICOP Resources, Inc. (PICOP) in its Petition for Mandamus with the trial court is clear: the government is bound by contract, a 1969 Document signed by then President Ferdinand Marcos, to enter into an Integrated Forest Management Agreement (IFMA) with PICOP. Since the remedy of mandamus lies only to compel an officer to perform a ministerial duty, and since the 1969 Document itself has a proviso requiring compliance with the laws and the Constitution, the issues in this Motion for Reconsideration are the following: (1) firstly, is the 1969 Document a contract enforceable under the Non-Impairment Clause of the Constitution, so as to make the signing of the IFMA a ministerial duty? (2) secondly, did PICOP comply with all the legal and constitutional requirements for the issuance of an IFMA? To recall, PICOP filed with the Department of Environment and Natural Resources (DENR) an application to have its Timber License Agreement (TLA) No. 43 converted into an IFMA. In the middle of the processing of PICOPs application, however, PICOP refused to attend further meetings with the DENR. Instead, on 2 September 2002, PICOP filed before the Regional Trial Court (RTC) of Quezon City a Petition for Mandamus 1 against then DENR Secretary Heherson T. Alvarez. PICOP seeks the issuance of a privileged writ of mandamus to compel the DENR Secretary to sign, execute and deliver an IFMA to PICOP, as well as to [I]ssue the corresponding IFMA assignment number on the area covered by the IFMA, formerly TLA No. 43, as amended; b) to issue the necessary permit allowing petitioner to act and harvest timber from the said area of TLA No. 43, sufficient to meet the raw material requirements of petitioners pulp and paper mills in accordance with the warranty and agreement of July 29, 1969 between the government and PICOPs predecessor-in-interest; and c) to honor and respect the Government Warranties and contractual obligations to PICOP strictly in accordance with the warranty and

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agreement dated July 29, [1969] between the government and PICOPs predecessor-in-interest. x x x.2 On 11 October 2002, the RTC rendered a Decision granting PICOPs Petition for Mandamus, thus: WHEREFORE, premises considered, the Petition for Mandamus is hereby GRANTED. The Respondent DENR Secretary Hon. Heherson Alvarez is hereby ordered: 1. to sign, execute and deliver the IFMA contract and/or documents to PICOP and issue the corresponding IFMA assignment number on the area covered by the IFMA, formerly TLA No. 43, as amended; 2. to issue the necessary permit allowing petitioner to act and harvest timber from the said area of TLA No. 43, sufficient to meet the raw material requirements of petitioners pulp and paper mills in accordance with the warranty and agreement of July 29, 1969 between the government and PICOPs predecessor-in-interest; and 3. to honor and respect the Government Warranties and contractual obligations to PICOP strictly in accordance with the warranty and agreement dated July 29, 1999 (sic) between the government and PICOPs predecessor-in-interest (Exhibits "H", "H-1" to "H-5", particularly the following: a) the area coverage of TLA No. 43, which forms part and parcel of the government warranties; b) PICOP tenure over the said area of TLA No. 43 and exclusive right to cut, collect and remove sawtimber and pulpwood for the period ending on April 26, 1977; and said period to be renewable for [an]other 25 years subject to compliance with constitutional and statutory requirements as well as with existing policy on timber concessions; and c) The peaceful and adequate enjoyment by PICOP of the area as described and specified in the aforesaid amended Timber License Agreement No. 43. The Respondent Secretary Alvarez is likewise ordered to pay petitioner the sum of P10 million a month beginning May 2002 until the conversion of TLA No. 43, as amended, to IFMA is formally effected and the harvesting from the said area is granted. 3 On 25 October 2002, the DENR Secretary filed a Motion for Reconsideration. 4 In a 10 February 2003 Order, the RTC denied the DENR Secretarys Motion for Reconsideration and granted PICOPs Motion for the Issuance of Writ of Mandamus and/or Writ of Mandatory Injunction.5 The fallo of the 11 October 2002 Decision was practically copied in the 10 February 2003 Order, although there was no mention of the damages imposed against then DENR Secretary Alvarez. 6 The DENR Secretary filed a Notice of Appeal7 from the 11 October 2002 Decision and the 10 February 2003 Order. On 19 February 2004, the Seventh Division of the Court of Appeals affirmed8 the Decision of the RTC, to wit: WHEREFORE, the appealed Decision is hereby AFFIRMED with modification that the order directing then DENR Secretary Alvarez "to pay petitioner-appellee the sum of P10 million a month beginning May, 2002 until the conversion to IFMA of TLA No. 43, as amended, is formally effected and the harvesting from the said area is granted" is hereby deleted. 9 Challenging the deletion of the damages awarded to it, PICOP filed a Motion for Partial Reconsideration 10 of this Decision, which was denied by the Court of Appeals in a 20 July 2004 Resolution. 11 The DENR Secretary and PICOP filed with this Court separate Petitions for Review of the 19 February 2004 Court of Appeals Decision. These Petitions were docketed as G.R. No. 162243 and No. 164516, respectively. These cases were consolidated with G.R. No. 171875, which relates to the lifting of a Writ of Preliminary Injunction enjoining the execution pending appeal of the foregoing Decision. On 29 November 2006, this Court rendered the assailed Decision on the Consolidated Petitions:

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WHEREFORE, the Petition in G.R. No. 162243 is GRANTED. The Decision of the Court of Appeals insofar as it affirmed the RTC Decision granting the Petition for Mandamus filed by Paper Industries Corp. of the Philippines (PICOP) is hereby REVERSED and SET ASIDE. The Petition in G.R. No. 164516 seeking the reversal of the same Decision insofar as it nullified the award of damages in favor of PICOP is DENIED for lack of merit. The Petition in G.R. No. 171875, assailing the lifting of the Preliminary Mandatory Injunction in favor of the Secretary of Environment and Natural Resources is DISMISSED on the ground of mootness.12 On 18 January 2006, PICOP filed the instant Motion for Reconsideration, based on the following grounds: I. THE HONORABLE COURT ERRED IN HOLDING THAT THE CONTRACT WITH PRESIDENTIAL WARRANTY SIGNED BY THE PRESIDENT OF THE REPUBLIC ON 29 JUNE 1969 ISSUED TO PICOP IS A MERE PERMIT OR LICENSE AND IS NOT A CONTRACT, PROPERTY OR PROPERTY RIGHT PROTECTED BY THE DUE PROCESS CLAUSE OF THE CONSTITUTION II. THE EVALUATION OF PICOPS MANAGEMENT OF THE TLA 43 NATURAL FOREST CLEARLY SHOWED SATISFACTORY PERFORMANCE FOR KEEPING THE NATURAL FOREST GENERALLY INTACT AFTER 50 YEARS OF FOREST OPERATIONS. THIS COMPLETES THE REQUIREMENT FOR AUTOMATIC CONVERSION UNDER SECTION 9 OF DAO 99-53. III. WITH DUE RESPECT, THE HONORABLE COURT, IN REVERSING THE FINDINGS OF FACTS OF THE TRIAL COURT AND THE COURT OF APPEALS, MISAPPRECIATED THE EVIDENCE, TESTIMONIAL AND DOCUMENTARY, WHEN IT RULED THAT: i. PICOP FAILED TO SUBMIT A FIVE-YEAR FOREST PROTECTION PLAN AND A SEVEN-YEAR REFORESTATION PLAN FOR THE YEARS UNDER REVIEW. ii. PICOP FAILED TO COMPLY WITH THE PAYMENT OF FOREST CHARGES. iii. PICOP DID NOT COMPLY WITH THE REQUIREMENT FOR A CERTIFICATION FROM THE NCIP THAT THE AREA OF TLA 43 DOES NOT OVERLAP WITH ANY ANCESTRAL DOMAIN. iv. PICOP FAILED TO HAVE PRIOR CONSULTATION WITH AND APPROVAL FROM THE SANGUNIAN CONCERNED, AS REQUIRED BY SECTION 27 OF THE REPUBLIC ACT NO. 7160, OTHERWISE KNOWN AS THE LOCAL GOVERNMENT CODE OF 1991. v. PCIOP FAILED TO SECURE SOCIAL ACCEPTABILITY UNDER PRESIDENTIAL DECREE NO. 1586. IV THE MOTIVATION OF ALVAREZ IN RECALLING THE CLEARANCE FOR AUTOMATIC CONVERSION HE ISSUED ON 25 OCTOBER 2001 WAS NOT DUE TO ANY SHORTCOMING FROM PICOP BUT DUE TO HIS DETERMINATION TO EXCLUDE 28,125 HECTARES FROM THE CONVERSION AND OTHER THINGS.

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On 15 December 2008, on Motion by PICOP, the Third Division of this Court resolved to refer the consolidated cases at bar to the Court en banc. On 16 December 2008, this Court sitting en banc resolved to accept the said cases and set them for oral arguments. Oral arguments were conducted on 10 February 2009. PICOPs Cause of Action: Matters PICOP Should Have Proven to Be Entitled to a Writ of Mandamus In seeking a writ of mandamus to compel the issuance of an IFMA in its favor, PICOP relied on a 29 July 1969 Document, the so-called Presidential Warranty approved by then President Ferdinand E. Marcos in favor of PICOPs predecessor-in-interest, Bislig Bay Lumber Company, Inc. (BBLCI). PICOPs cause of action is summarized in paragraphs 1.6 and 4.19 of its Petition for Mandamus: 1.6 Respondent Secretary impaired the obligation of contract under the said Warranty and Agreement of 29 July 1969 by refusing to respect the tenure; and its renewal for another twenty five (25) years, of PICOP over the area covered by the said Agreement which consists of permanent forest lands with an aggregate area of 121,587 hectares and alienable and disposable lands with an aggregate area of approximately 21,580 hectares, and petitioners exclusive right to cut, collect and remove sawtimber and pulpwood therein and the peaceful and adequate enjoyment of the said area as described and specified in petitioners Timber License Agreement (TLA) No. 43 guaranteed by the Government, under the Warranty and Agreement of 29 July 1969. 13 4.19 Respondent is in violation of the Constitution and has impaired the obligation of contract by his refusal to respect: a) the tenurial rights of PICOP over the forest area covered by TLA No. 43, as amended and its renewal for another twenty five (25) years; b) the exclusive right of PICOP to cut, collect and remove sawtimber and pulpwood therein; and c) PICOPs peaceful and adequate enjoyment of the said area which the government guaranteed under the Warranty and Agreement of 29 July 1969. 14 The grounds submitted by PICOP in its Petition for Mandamus are as follows: I Respondent secretary has unlawfully refused and/or neglected to sign and execute the IFMA contract of PICOP even as the latter has complied with all the legal requirements for the automatic conversion of TLA No. 43, as amended, into an IFMA. II Respondent Secretary acted with grave abuse of discretion and/or in excess of jurisdiction in refusing to sign and execute PICOPs IFMA contract, notwithstanding that PICOP had complied with all the requirements for Automatic Conversion under DAO 99-53, as in fact Automatic Conversion was already cleared in October, 2001, and was a completed process. III Respondent Secretary has impaired the obligation of contract under a valid and binding warranty and agreement of 29 July 1969 between the government and PICOPs predecessor-in-interest, by refusing to respect: a) the tenure of PICOP, and its renewal for another twenty five (25) years, over the TLA No.43 area covered by said agreement; b) the exclusive right to cut, collect and remove sawtimber and pulpwood timber; and c) the peaceful and adequate enjoyment of the said area. IV As a result of respondent Secretarys unlawful refusal and/or neglect to sign and deliver the IFMA contract, and violation of the constitutional rights of PICOP against non-impairment of the obligation of contract (Sec. 10, Art. III, 1997 [sic] Constitution), PICOP suffered grave and irreparable damages. 15 Petitions for Mandamus are governed by Rule 65 of the Rules of Court, Section 3 of which provides: SEC. 3. Petition for mandamus. When any tribunal, corporation, board, officer or person unlawfully neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes another from the use and enjoyment of a right or office to which such other is entitled, and there is no other plain, speedy and adequate remedy in the ordinary course of law, the person aggrieved thereby
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may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered commanding the respondent, immediately or at some other time to be specified by the court, to do the act required to be done to protect the rights of the petitioner, and to pay the damages sustained by the petitioner by reason of the wrongful acts of the respondent. (Emphasis supplied.) PICOP is thus asking this Court to conclude that the DENR Secretary is specifically enjoined by law to issue an IFMA in its favor. An IFMA, as defined by DENR Administrative Order (DAO) No. 99-53, 16 is [A] production-sharing contract entered into by and between the DENR and a qualified applicant wherein the DENR grants to the latter the exclusive right to develop, manage, protect and utilize a specified area of forestland and forest resource therein for a period of 25 years and may be renewed for another 25-year period, consistent with the principle of sustainable development and in accordance with an approved CDMP, and under which both parties share in its produce. 17 PICOP stresses the word "automatic" in Section 9 of this DAO No. 99-53: Sec. 9. Qualifications of Applicants. The applicants for IFMA shall be: (a) A Filipino citizen of legal age; or, (b) Partnership, cooperative or corporation whether public or private, duly registered under Philippine laws. However, in the case of application for conversion of TLA into IFMA, an automatic conversion after proper evaluation shall be allowed, provided the TLA holder shall have signified such intention prior to the expiry of the TLA, PROVIDED further, that the TLA holder has showed satisfactory performance and have complied in the terms of condition of the TLA and pertinent rules and regulations. (Emphasis supplied.)18 This administrative regulation provision allowing automatic conversion after proper evaluation can hardly qualify as a law, much less a law specifically enjoining the execution of a contract. To enjoin is "to order or direct with urgency; to instruct with authority; to command." 19 "Enjoin is a mandatory word, in legal parlance, always; in common parlance, usually." 20 The word "allow," on the other hand, is not equivalent to the word "must," and is in no sense a command. 21 As an extraordinary writ, the remedy of mandamus lies only to compel an officer to perform a ministerial duty, not a discretionary one; mandamus will not issue to control the exercise of discretion of a public officer where the law imposes upon him the duty to exercise his judgment in reference to any manner in which he is required to act, because it is his judgment that is to be exercised and not that of the court. 22 The execution of agreements, in itself, involves the exercise of discretion. Agreements are products of negotiations and mutual concessions, necessitating evaluation of their provisions on the part of both parties. In the case of the IFMA, the evaluation on the part of the government is specifically mandated in the afore-quoted Section 3 of DAO No. 99-53. This evaluation necessarily involves the exercise of discretion and judgment on the part of the DENR Secretary, who is tasked not only to negotiate the sharing of the profit arising from the IFMA, but also to evaluate the compliance with the requirements on the part of the applicant. Furthermore, as shall be discussed later, the period of an IFMA that was merely automatically converted from a TLA in accordance with Section 9, paragraph 2 of DAO No. 99-53 would only be for the remaining period of the TLA. Since the TLA of PICOP expired on 26 April 2002, the IFMA that could have been granted to PICOP via the automatic conversion provision in DAO No. 99-53 would have expired on the same date, 26 April 2002, and the PICOPs Petition for Mandamus would have become moot. This is where the 1969 Document, the purported Presidential Warranty, comes into play. When PICOPs application was brought to a standstill upon the evaluation that PICOP had yet to comply with the requirements for such conversion, PICOP refused to attend further meetings with the DENR and instead filed a Petition for Mandamus, insisting that the DENR Secretary had impaired the obligation of contract by his refusal to respect: a) the tenurial rights of PICOP over the forest area covered by TLA No. 43, as amended, and its renewal for another twenty-five (25) years; b) the exclusive right of PICOP to cut, collect and remove sawtimber and pulpwood therein; and c) PICOPs peaceful and adequate enjoyment of the said area which the government guaranteed under the

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Warranty and Agreement of 29 July 1969. 23 PICOP is, thus, insisting that the government is obligated by contract to issue an IFMA in its favor because of the 1969 Document. A contract, being the law between the parties, can indeed, with respect to the State when it is a party to such contract, qualify as a law specifically enjoining the performance of an act. Hence, it is possible that a writ of mandamus may be issued to PICOP, but only if it proves both of the following: 1) That the 1969 Document is a contract recognized under the non-impairment clause; and 2) That the 1969 Document specifically enjoins the government to issue the IFMA. If PICOP fails to prove any of these two matters, the grant of a privileged writ of mandamus is not warranted. This was why we pronounced in the assailed Decision that the overriding controversy involved in the Petition was one of law.24 If PICOP fails to prove any of these two matters, more significantly its assertion that the 1969 Document is a contract, PICOP fails to prove its cause of action. 25 Not even the satisfactory compliance with all legal and administrative requirements for an IFMA would save PICOPs Petition for Mandamus. The reverse, however, is not true. The 1969 Document expressly states that the warranty as to the tenure of PICOP is "subject to compliance with constitutional and statutory requirements as well as with existing policy on timber concessions." Thus, if PICOP proves the two above-mentioned matters, it still has to prove compliance with statutory and administrative requirements for the conversion of its TLA into an IFMA. Exhaustion of Administrative Remedies PICOP uses the same argument that the government is bound by contract to issue the IFMA in its refusal to exhaust all administrative remedies by not appealing the alleged illegal non-issuance of the IFMA to the Office of the President. PICOP claimed in its Petition for Mandamus with the trial court that: 1.10 This petition falls as an exception to the exhaustion of administrative remedies. The acts of respondent DENR Secretary complained of in this petition are patently illegal; in derogation of the constitutional rights of petitioner against non-impairment of the obligation of contracts; without jurisdiction, or in excess of jurisdiction or so capriciously as to constitute an abuse of discretion amounting to excess or lack of jurisdiction; and moreover, the failure or refusal of a high government official such as a Department head from whom relief is brought to act on the matter was considered equivalent to exhaustion of administrative remedies (Sanoy v. Tantuico, 50 SCRA 455 [1973]), and there are compelling and urgent reasons for judicial intervention (Bagatsing v. Ramirez, 74 SCRA 306 [1976]). Thus, if there has been no impairment of the obligation of contracts in the DENR Secretarys non-issuance of the IFMA, the proper remedy of PICOP in claiming that it has complied with all statutory and administrative requirements for the issuance of the IFMA should have been with the Office of the President. This makes the issue of the enforceability of the 1969 Document as a contract even more significant. The Nature and Effects of the Purported 29 July 1969 Presidential Warranty Base Metals Case PICOP challenges our ruling that the 1969 Document is not a contract. Before we review this finding, however, it must be pointed out that one week after the assailed Decision, another division of this Court promulgated a Decision concerning the very same 1969 Document. Thus, in PICOP Resources, Inc. v. Base Metals Mineral Resources Corporation, 26 five other Justices who were still unaware of this Divisions Decision,27 came up with the same conclusion as regards the same issue of whether former President Marcoss Presidential Warranty is a contract: Finally, we do not subscribe to PICOPs argument that the Presidential Warranty dated September 25, 1968 is a contract protected by the non-impairment clause of the 1987 Constitution. An examination of the Presidential Warranty at once reveals that it simply reassures PICOP of the governments

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commitment to uphold the terms and conditions of its timber license and guarantees PICOPs peaceful and adequate possession and enjoyment of the areas which are the basic sources of raw materials for its wood processing complex. The warranty covers only the right to cut, collect, and remove timber in its concession area, and does not extend to the utilization of other resources, such as mineral resources, occurring within the concession. The Presidential Warranty cannot be considered a contract distinct from PTLA No. 47 and FMA No. 35. We agree with the OSGs position that it is merely a collateral undertaking which cannot amplify PICOPs rights under its timber license. Our definitive ruling in Oposa v. Factoran that a timber license is not a contract within the purview of the non-impairment clause is edifying. We declared: Needless to say, all licenses may thus be revoked or rescinded by executive action. It is not a contract, property or a property right protected by the due process clause of the Constitution. In Tan vs. Director of Forestry, this Court held: "x x x A timber license is an instrument by which the State regulates the utilization and disposition of forest resources to the end that public welfare is promoted. A timber license is not a contract within the purview of the due process clause; it is only a license or a privilege, which can be validly withdrawn whenever dictated by public interest or public welfare as in this case. A license is merely a permit or privilege to do what otherwise would be unlawful, and is not a contract between the authority, federal, state, or municipal, granting it and the person to whom it is granted; neither is it a property or a property right, nor does it create a vested right; nor is it taxation' (C.J. 168). Thus, this Court held that the granting of license does not create irrevocable rights, neither is it property or property rights (People vs. Ong Tin, 54 O.G. 7576). x x x" We reiterated this pronouncement in Felipe Ysmael, Jr. & Co., Inc. vs. Deputy Executive Secretary: "x x x Timber licenses, permits and license agreements are the principal instruments by which the State regulates the utilization and disposition of forest resources to the end that public welfare is promoted. And it can hardly be gainsaid that they merely evidence a privilege granted by the State to qualified entities, and do not vest in the latter a permanent or irrevocable right to the particular concession area and the forest products therein. They may be validly amended, modified, replaced or rescinded by the Chief Executive when national interests so require. Thus, they are not deemed contracts within the purview of the due process of law clause [See Sections 3(ee) and 20 of Pres. Decree No. 705, as amended. Also, Tan v. Director of Forestry, G.R. No. L-24548, October 27, 1983, 125 SCRA 302]." Since timber licenses are not contracts, the non-impairment clause, which reads: "SEC. 10. No law impairing the obligation of contracts shall be passed." cannot be invoked. The Presidential Warranty cannot, in any manner, be construed as a contractual undertaking assuring PICOP of exclusive possession and enjoyment of its concession areas. Such an interpretation would result in the complete abdication by the State in favor of PICOP of the sovereign power to control and supervise the exploration, development and utilization of the natural resources in the area.28 The Motion for Reconsideration was denied with finality on 14 February 2007. A Second Motion for Reconsideration filed by PICOP was denied on 23 May 2007. PICOP insists that the pronouncement in Base Metals is a mere obiter dictum, which would not bind this Court in resolving this Motion for Reconsideration. In the oral arguments, however, upon questioning from the ponente himself of Base Metals, it was agreed that the issue of whether the 1969 Document is a contract was necessary in the resolution of Base Metals: JUSTICE TINGA: And do you confirm that one of the very issues raised by PICOP in that case [PICOP Resources Inc. v. Base Metal Mineral Resources Corporation] revolves around its claim that a Presidential Warranty is protected by the non-

DEFINITION

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impairment c[l]ause of the Constitution. ATTY. AGABIN: Yes, I believe that statement was made by the Court, your Honor. JUSTICE TINGA: Yes. And that claim on the part of PICOP necessarily implies that the Presidential Warranty according to PICOP is a contract protected by the non-impairment clause. ATTY. AGABIN: Yes, Your Honor. JUSTICE TINGA: Essentially, the PICOP raised the issue of whether the Presidential Warranty is a contract or not. ATTY. AGABIN: Yes, Your Honor. JUSTICE TINGA: And therefore any ruling on the part of the Court on that issue could not be an obiter dictum. ATTY. AGABIN: Your Honor, actually we believe that the basic issue in that case was whether or not Base Metals could conduct mining activities underneath the forest reserve allotted to PICOP and the Honorable Court ruled that the Mining Act of 1995 as well as the Department Order of DENR does not disallow mining activity under a forest reserve. JUSTICE TINGA: But it was PICOP itself which raised the claim that a Presidential Warranty is a contract. And therefore be, should be protected on the under the non-impairment clause of the Constitution. ATTY. AGABIN: Yes, Your Honor. Except that JUSTICE TINGA: So, how can you say now that the Court merely uttered, declared, laid down an obiter dictum in saying that the Presidential Warranty is not a contract, and it is not being a contract, it is not prohibited by the non-impairment clause. ATTY. AGABIN: This Honorable Court could have just ruled, held that the mining law allows mining activities under a forest reserve without deciding on that issue that was raised by PICOP, your Honor, and therefore we believe. JUSTICE TINGA: It could have been better if PICOP has not raised that issue and had not claimed that the Presidential Warranty is not a contract. ATTY. AGABIN: Well, that is correct, your Honor except that the Court could have just avoided that question. Because

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JUSTICE TINGA: Why[?] ATTY. AGABIN: It already settled the issue, the basic issue. JUSTICE TINGA: Yes, because the Court in saying that merely reiterated a number of rulings to the effect that the Presidential Warranty, a Timber License for that matter is not a contract protected by the non-impairment laws. ATTY. AGABIN: Well, it is our submission, your Honor, that it is obiter because, that issue even a phrase by PICOP was not really fully argued by the parties for the Honorable Court and it seems from my reading at least it was just an aside given by the Honorable Court to decide on that issue raised by PICOP but it was not necessary to the decision of the court. JUSTICE TINGA: It was not necessary[?] ATTY. AGABIN: To the decision of the Court. JUSTICE TINGA: It was. ATTY. AGABIN: It was not necessary. JUSTICE TINGA: It was. ATTY. AGABIN: Yes. JUSTICE TINGA: And PICOP devoted quite a number of pages in [its] memorandum to that issue and so did the Court [in its Decision]. ATTY. AGABIN: Anyway, your Honor, we beg the Court to revisit, not to29 Interpretation of the 1969 Document That Would Be in Harmony with the Constitution To remove any doubts as to the contents of the 1969 Document, the purported Presidential Warranty, below is a complete text thereof: Republic of the Philippines Department of Agriculture and Natural Resources OFFICE OF THE SECRETARY Diliman, Quezon City

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D-53, Licenses (T.L.A. No. 43) Bislig Bay Lumber Co., Inc. (Bislig, Surigao) July 29, 1969 Bislig Bay Lumber Co., Inc. [unreadable word] Bldg. Makati, Rizal S i r s: This has reference to the request of the Board of Investments through its Chairman in a letter dated July 16, 1969 for a warranty on the boundaries of your concession area under Timber License Agreement No. 43, as amended. We are made to understand that your company is committed to support the first large scale integrated wood processing complex hereinafter called: "The Project") and that such support will be provided not only in the form of the supply of pulpwood and other wood materials from your concession but also by making available funds generated out of your own operations, to supplement PICOPs operational sources of funds and other financial arrangements made by him. In order that your company may provide such support effectively, it is understood that you will call upon your stockholders to take such steps as may be necessary to effect a unification of managerial, technical, economic and manpower resources between your company and PICOP. It is in the public interest to promote industries that will enhance the proper conservation of our forest resources as well as insure the maximum utilization thereof to the benefit of the national economy. The administration feels that the PICOP project is one such industry which should enjoy priority over the usual logging operations hitherto practiced by ordinary timber licensees: For this reason, we are pleased to consider favorably the request. We confirm that your Timber License Agreement No. 43, as amended (copy of which is attached as Annex "A" hereof which shall form part and parcel of this warranty) definitely establishes the boundary lines of your concession area which consists of permanent forest lands with an aggregate area of 121,587 hectares and alienable or disposable lands with an aggregate area of approximately 21,580 hectares. We further confirm that your tenure over the area and exclusive right to cut, collect and remove sawtimber and pulpwood shall be for the period ending on April 26, 1977; said period to be renewable for other 25 years subject to compliance with constitutional and statutory requirements as well as with existing policy on timber concessions. The peaceful and adequate enjoyment by you of your area as described and specified in your aforesaid amended Timber License Agreement No. 43 is hereby warranted provided that pertinent laws, regulations and the terms and conditions of your license agreement are observed. Very truly yours, (Sgd.) FERNANDO LOPEZ Secretary of Agriculture and Natural Resources Encl.: RECOMMENDED BY: (Sgd.) JOSE VIADO Acting Director of Forestry APPROVED:

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(Sgd.) FERDINAND E. MARCOS President of the Philippines ACCEPTED: BISLIG BAY LBR. CO., INC. By: (Sgd.) JOSE E. SORIANO President PICOP interprets this document in the following manner: 6.1 It is clear that the thrust of the government warranty is to establish a particular area defined by boundary lines of TLA No. 43 for the PICOP Project. In consideration for PICOPs commitment to pursue and establish the project requiring huge investment/funding from stockholders and lending institutions, the government provided a warranty that ensures the continued and exclusive right of PICOP to source its raw materials needs from the forest and renewable trees within the areas established. 6.2 As a long-term support, the warranty covers the initial twenty five (25) year period and is renewable for periods of twenty five (25) years provided the project continues to exist and operate. Very notably, the wording of the Presidential Warranty connotes that for as long as the holder complies with all the legal requirements, the term of the warranty is not limited to fifty (50) years but other twenty five (25) years. 6.3 Note must be made that the government warranted that PICOPs tenure over the area and exclusive right to cut, collect and remove saw timber and pulpwood shall be for the period ending on 26 April 1977 and said period to be renewable for other 25 years subject to "compliance with constitutional and statutory requirements as well as existing policy on timber requirements". It is clear that the renewal for other 25 years, not necessarily for another 25 years is guaranteed. This explains why on 07 October 1977, TLA No. 43, as amended, was automatically renewed for another period of twenty five (25) years to expire on 26 April 2002. 30 PICOPs interpretation of the 1969 Document cannot be sustained. PICOPs claim that the term of the warranty is not limited to fifty years, but that it extends to other fifty years, perpetually, violates Section 2, Article XII of the Constitution which provides: 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. Mr. Justice Dante O. Tingas interpretation of the 1969 Document is much more in accord with the laws and the Constitution. What one cannot do directly, he cannot do indirectly. Forest lands cannot be alienated in favor of private entities. Granting to private entities, via a contract, a permanent, irrevocable, and exclusive possession of and right over forest lands is tantamount to granting ownership thereof. PICOP, it should be noted, claims nothing less than having exclusive, continuous and uninterrupted possession of its concession areas,31 where all other entrants are illegal,32 and where so-called "illegal settlers and squatters" are apprehended. 33 IFMAs are production-sharing agreements concerning the development and utilization of natural resources. As such, these agreements "may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law." Any superior "contract" requiring the State to issue TLAs and IFMAs whenever they expire clearly circumvents Section 2, Article XII of the

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Constitution, which provides for the only permissible schemes wherein the full control and supervision of the State are not derogated: co-production, joint venture, or production-sharing agreements within the time limit of twentyfive years, renewable for another twenty-five years. On its face, the 1969 Document was meant to expire on 26 April 2002, upon the expiration of the expected extension of the original TLA period ending on 26 April 1977: We further confirm that your tenure over the area and exclusive right to cut, collect and remove sawtimber and pulpwood shall be for the period ending on April 26, 1977; said period to be renewable for other 25 years subject to compliance with constitutional and statutory requirements as well as with existing policy on timber concessions.
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Any interpretation extending the application of the 1969 Document beyond 26 April 2002 and any concession that may be granted to PICOP beyond the said date would violate the Constitution, and no amount of legal hermeneutics can change that. Attempts of PICOP to explain its way out of this Constitutional provision only led to absurdities, as exemplified in the following excerpt from the oral arguments: JUSTICE CARPIO: The maximum trend of agreement to develop and utilize natural resources like forest products is 25 years plus another 25 years or a total of 50 years correct? ATTY. AGABIN Yes, Your Honor. JUSTICE CARPIO: That is true for the 1987, 1973, 1935 Constitution, correct? ATTY. AGABIN: Yes, Your Honor. JUSTICE CARPIO: The TLA here, TLA 43, expired, the first 25 years expired in 1977, correct? ATTY. AGABIN: Yes, Your Honor. JUSTICE CARPIO: And it was renewed for another 25 years until 2002, the 50th year? ATTY. AGABIN: Yes, Your Honor. JUSTICE CARPIO: Now, could PICOP before the end of the 50th year lets say in 2001, one year before the expiration, could it have asked for an extension of another 25 years of its TLA agreement[?] ATTY. AGABIN: I believe so, Your Honor. JUSTICE CARPIO: But the Constitution says, maximum of fifty years. How could you ask for another 25 years of its TLA.

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ATTY. AGABIN: Well, your Honor, we believe on a question like this, this Honorable Court should balance the interest. JUSTICE CARPIO: The Constitution is very clear, you have only a maximum of 50 years, 25 plus another 25. PICOP could never have applied for an extension, for a third 25-year term whether under the 1935 Constitution, the 1973 Constitution and the 1987 Constitution, correct? ATTY. AGABIN: Your Honor, except that we are invoking the warranty, the terms of the warranty. JUSTICE CARPIO: Can the warranty prevail over the Constitution? ATTY. AGABIN: Well, it is a vested right, your Honor. JUSTICE CARPIO: Yes, but whatever it is, can it prevail over the Constitution? ATTY. AGABIN: The Constitution itself provides that vested rights should be . JUSTICE CARPIO: If it is not in violation of specific provision of the Constitution. The Constitution says, 25 years plus another 25 years, thats the end of it. You mean to say that a President of the Philippines can give somebody 1,000 years license? ATTY. AGABIN: Well, that is not our position, Your Honor. Because our position is that . JUSTICE CARPIO: My question is, what is the maximum term, you said 50 years. So, my next question is, can PICOP apply for an extension of another 25 years after 2002, the 50th year? ATTY. AGABIN: Yes, based on the contract of warranty, Your Honor, because the contract of warranty. JUSTICE CARPIO: But in the PICOP license it is very clear, it says here, provision 28, it says the license agreement is for a total of 50 years. I mean it is very simple, the President or even Congress cannot pass a law extending the license, whatever kind of license to utilize natural resources for more than fifty year[s]. I mean even the law cannot do that. It cannot prevail over the Constitution. Is that correct, Counsel? ATTY. AGABIN: It is correct, Your Honor, except that in this case, what is actually our application is that the law provides for the conversion of existing TLA into IFMA. JUSTICE CARPIO:

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So, they file the petition for conversion before the end of the 50th year for IFMA. ATTY. AGABIN: Yes, Your Honor. JUSTICE CARPIO: But IFMA is the same, it is based on Section 2, Article 12 of the Constitution, develop and utilize natural resources because as you said when the new constitution took effect we did away with the old licensing regime, we have now co-production, a production sharing, joint venture, direct undertaking but still the same developing and utilizing the natural resources, still comes from section 2, Art. 12 of the Constitution. It is still a license but different format now. ATTY. AGABIN: It is correct, Your Honor, except that the regimes of joint venture, co-production and production sharing are what is referred to in the constitution, Your Honor, and still covered JUSTICE CARPIO: Yes, but it is covered by same 25 year[s], you mean to say people now can circumvent the 50 year maximum term by calling their TLA as IFMA and after fifty years calling it ISMA, after another 50 years call it MAMA. ATTY. AGABIN: Yes, Your Honor. Because JUSTICE CARPIO: It can be done. ATTY. AGABIN: That is provided for by the department itself.34 PICOP is, in effect, arguing that the DENR issued DAO No. 99-53 in order to provide a way to circumvent the provisions of the Constitution limiting agreements for the utilization of natural resources to a maximum period of fifty years. Official duties are, however, disputably considered to be regularly performed,35 and good faith is always presumed. DAO No. 99-53 was issued to change the means by which the government enters into an agreement with private entities for the utilization of forest products. DAO No. 99-53 is a late response to the change in the constitutional provisions on natural resources from the 1973 Constitution, which allowed the granting of licenses to private entities, 36 to the present Constitution, which provides for co-production, joint venture, or production-sharing agreements as the permissible schemes wherein private entities may participate in the utilization of forest products. Since the granting of timber licenses ceased to be a permissible scheme for the participation of private entities under the present Constitution, their operations should have ceased upon the issuance of DAO No. 99-53, the rule regulating the schemes under the present Constitution. This would be iniquitous to those with existing TLAs that would not have expired yet as of the issuance of DAO No. 99-53, especially those with new TLAs that were originally set to expire after 10 or even 20 or more years. The DENR thus inserted a provision in DAO No. 99-53 allowing these TLA holders to finish the period of their TLAs, but this time as IFMAs, without the rigors of going through a new application, which they have probably just gone through a few years ago. Such an interpretation would not only make DAO No. 99-53 consistent with the provisions of the Constitution, but would also prevent possible discrimination against new IFMA applicants: ASSOCIATE JUSTICE DE CASTRO: I ask this question because of your interpretation that the period of the IFMA, if your TLA is converted into IFMA,

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would cover a new a fresh period of twenty-five years renewable by another period of twenty-five years. DEAN AGABIN: Yes, Your Honor. ASSOCIATE JUSTICE DE CASTRO: Dont you think that will, in effect, be invidious discrimination with respect to other applicants if you are granted a fresh period of twenty-five years extendible to another twenty-five years? DEAN AGABIN: I dont think it would be, Your Honor, considering that the IFMA is different regime from the TLA. And not only that, there are considerations of public health and ecology which should come into play in this case, and which we had explained in our opening statement and, therefore the provision of the Constitution on the twenty-five limits for renewal of co-production, joint venture and production sharing agreements, should be balanced with other values stated in the Constitution, like the value of balanced ecology, which should be in harmony with the rhythm of nature, or the policy of forest preservation in Article XII, Section 14 of the Constitution. These are all important policy considerations which should be balanced against the term limits in Article II of the Constitution. ASSOCIATE JUSTICE DE CASTRO: The provision of this Administrative Order regarding automatic conversion may be reasonable, if, I want to know if you agree with me, if we limit this automatic conversion to the remaining period of the TLA, because in that case there will be a valid ground to make a distinction between those with existing TLA and those who are applying for the first time for IFMA? DEAN AGABIN: Well, Your Honor, we beg to disagree, because as I said TLAs are completely different from IFMA. The TLA has no production sharing or co-production agreement or condition. All that the licensee has to do is, to pay forest charges, taxes and other impositions from the local and national government. On the other hand, the IFMAs contained terms and conditions which are completely different, and that they either impose co-production, production sharing or joint venture terms. So its a completely different regime, Your Honor. ASSOCIATE JUSTICE DE CASTRO: Precisely, that is the reason why there should be an evaluation of what you mentioned earlier of the development plan. DEAN AGABIN: Yes, Your Honor. ASSOCIATE JUSTICE DE CASTRO: So it will be reasonable to convert a TLA into an IFMA without considering the development plan submitted by other applicants or the development plan itself of one seeking conversion into IFMA if it will only be limited to the period, the original period of the TLA. But once you go beyond the period of the TLA, then you will be, the DENR is I think should evaluate the different proposals of the applicants if we are thinking of a fresh period of twenty-five years, and which is renewable under the Constitution by another twenty-five years. So the development plan will be important in this case, the submission of the development plan of the different applicants must be considered. So I dont understand why you mentioned earlier that the development plan will later on be a subject matter of negotiation between the IFMA grantee and the government. So it seems that it will be too late in the day to discuss that if you have already converted the TLA into IFMA or if the government has already granted the IFMA, and then it will later on study the development plan, whether it is viable or not, or it is sustainable or not, and whether the development plan of the different applicants are, are, which of the development plan of the different applicants is better or more advantageous to the government.37

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PICOP insists that the alleged Presidential Warranty, having been signed on 29 July 1969, could not have possibly considered the limitations yet to be imposed by future issuances, such as the 1987 Constitution. However, Section 3, Article XVIII of said Constitution, provides: Section 3. All existing laws, decrees, executive orders, proclamations, letters of instructions, and other executive issuances not inconsistent with this Constitution shall remain operative until amended, repealed, or revoked. In the recent case Sabio v. Gordon,38 we ruled that "(t)he clear import of this provision is that all existing laws, executive orders, proclamations, letters of instructions and other executive issuances inconsistent or repugnant to the Constitution are repealed." When a provision is susceptible of two interpretations, "the one that will render them operative and effective and harmonious with other provisions of law"39 should be adopted. As the interpretations in the assailed Decision and in Mr. Justice Tingas ponencia are the ones that would not make the subject Presidential Warranty unconstitutional, these are what we shall adopt. Purpose of the 1969 Document: Assurance That the Boundaries of Its Concession Area Would Not Be Altered Despite the Provision in the TLA that the DENR Secretary Can Amend Said Boundaries In the assailed Decision, we ruled that the 1969 Document cannot be considered a contract that would bind the government regardless of changes in policy and the demands of public interest and social welfare. PICOP claims this conclusion "did not take into consideration that PICOP already had a valid and current TLA before the contract with warranty was signed in 1969." 40 PICOP goes on: "The TLA is a license that equips any TLA holder in the country for harvesting of timber. A TLA is signed by the Secretary of the DANR now DENR. The Court ignored the significance of the need for another contract with the Secretary of the DANR but this time with the approval of the President of the Republic." 41 PICOP then asks us: "If PICOP/BBLCI was only an ordinary TLA holder, why will it go through the extra step of securing another contract just to harvest timber when the same can be served by the TLA signed only by the Secretary and not requiring the approval of the President of the Republic(?)"42 The answer to this query is found in TLA No. 43 itself wherein, immediately after the boundary lines of TLA No. 43 were established, the following conditions were given: This license is granted to the said party of the second part upon the following express conditions: I. That authority is granted hereunder to the party of the second part 43 to cut, collect or remove firewood or other minor forest products from the area embraced in this license agreement except as hereinafter provided. II. That the party of the first part 44 may amend or alter the description of the boundaries of the area covered by this license agreement to conform with official surveys and that the decision of the party of the first part as to the exact location of the said boundaries shall be final. III. That if the party of the first part deems it necessary to establish on the ground the boundary lines of the area granted under this license agreement, the party of the second part shall furnish to the party of the first part or its representatives as many laborers as it needs and all the expenses to be incurred on the work including the wages of such laborers shall be paid by the party of the second part. 45 Thus, BBLCI needed an assurance that the boundaries of its concession area, as established in TLA No. 43, as amended, would not be altered despite this provision. Hence, BBLCI endeavored to obtain the 1969 Document, which provides: We confirm that your Timber License Agreement No. 43, as amended (copy of which is attached as Annex "A" hereof which shall form part and parcel of this warranty) definitely establishes the boundary lines of your concession area which consists of permanent forest lands with an aggregate area of 121,587 hectares and alienable or disposable lands with an aggregate area of approximately 21,580 hectares. We further confirm that your tenure over the area and exclusive right to cut, collect and remove sawtimber and pulpwood shall be for the period ending on April 26, 1977; said period to be renewable for other 25 years subject

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to compliance with constitutional and statutory requirements as well as with existing policy on timber concessions. The peaceful and adequate enjoyment by you of your area as described and specified in your aforesaid amended Timber License Agreement No. 43 is hereby warranted provided that pertinent laws, regulations and the terms and conditions of your license agreement are observed. 46 In Koa v. Court of Appeals, 47 we ruled that a warranty is a collateral undertaking and is merely part of a contract. As a collateral undertaking, it follows the principal wherever it goes. When this was pointed out by the Solicitor General, PICOP changed its designation of the 1969 Document from "Presidential Warranty" or "government warranty" in all its pleadings prior to our Decision, to "contract with warranty" in its Motion for Reconsideration. This, however, is belied by the statements in the 29 July 1969 Document, which refers to itself as "this warranty." Re: Allegation That There Were Mutual Contract Considerations Had the 29 July 1969 Document been intended as a contract, it could have easily said so. More importantly, it could have clearly defined the mutual considerations of the parties thereto. It could have also easily provided for the sanctions for the breach of the mutual considerations specified therein. PICOP had vigorously argued that the 1969 Document was a contract because of these mutual considerations, apparently referring to the following paragraph of the 1969 Document: We are made to understand that your company is committed to support the first large scale integrated wood processing complex hereinafter called: "The Project") and that such support will be provided not only in the form of the supply of pulpwood and other wood materials from your concession but also by making available funds generated out of your own operations, to supplement PICOPs operational surces (sic) of funds and other financial arrangements made by him. In order that your company may provide such support effectively, it is understood that you will call upon your stockholders to take such steps as may be necessary to effect a unification of managerial, technical, economic and manpower resources between your company and PICOP.
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This provision hardly evinces a contract consideration (which, in PICOPs interpretation, is in exchange for the exclusive and perpetual tenure over 121,587 hectares of forest land and 21,580 hectares of alienable and disposable lands). As elucidated by PICOP itself in bringing up the Investment Incentives Act which we shall discuss later, and as shown by the tenor of the 1969 Document, the latter document was more of a conferment of an incentive for BBLCIs investment rather than a contract creating mutual obligations on the part of the government, on one hand, and BBLCI, on the other. There was no stipulation providing for sanctions for breach if BBLCIs being "committed to support the first large scale integrated wood processing complex" remains a commitment. Neither did the 1969 Document give BBLCI a period within which to pursue this commitment. According to Article 1350 of the Civil Code, "(i)n onerous contracts the cause is understood to be, for each contracting party, the prestation or promise of a thing or service by the other."48 Private investments for ones businesses, while indeed eventually beneficial to the country and deserving to be given incentives, are still principally and predominantly for the benefit of the investors. Thus, the "mutual" contract considerations by both parties to this alleged contract would be both for the benefit of one of the parties thereto, BBLCI, which is not obligated by the 1969 Document to surrender a share in its proceeds any more than it is already required by its TLA and by the tax laws. PICOPs argument that its investments can be considered as contract consideration derogates the rule that "a license or a permit is not a contract between the sovereignty and the licensee or permittee, and is not a property in the constitutional sense, as to which the constitutional proscription against the impairment of contracts may extend." All licensees obviously put up investments, whether they are as small as a tricycle unit or as big as those put up by multi-billion-peso corporations. To construe these investments as contract considerations would be to abandon the foregoing rule, which would mean that the State would be bound to all licensees, and lose its power to revoke or amend these licenses when public interest so dictates. The power to issue licenses springs from the States police power, known as "the most essential, insistent and least limitable of powers, extending as it does to all the great public needs." 49 Businesses affecting the public interest, such as the operation of public utilities and those involving the exploitation of natural resources, are mandated by law to acquire licenses. This is so in order that the State can regulate their operations and thereby protect the public interest. Thus, while these licenses come in the form of "agreements," e.g., "Timber License

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Agreements," they cannot be considered contracts under the non-impairment clause. 50 PICOP found this argument "lame," arguing, thus: 43. It is respectfully submitted that the aforesaid pronouncement in the Decision is an egregious and monumental error. 44. The Decision could not dismiss as "preposterous" the mutual covenants in the Presidential Warranty which calls for a huge investment of Php500 million at that time in 1969 out of which Php268,440,000 raised from domestic foreign lending institution to establish the first large scale integrated wood processing complex in the Philippines. 45. The Decision puts up a lame explanation that "all licensees put up investments in pursuing their business" 46. Now there are about a hundred timber licenses issued by the Government thru the DENR, but these are ordinary timber licenses which involve the mere cutting of timber in the concession area, and nothing else. Records in the DENR shows that no timber licensee has put up an integrated large wood processing complex in the Philippines except PICOP. 51 PICOP thus argues on the basis of quantity, and wants us to distinguish between the investment of the tricycle driver and that of the multi-billion corporation. However, not even billions of pesos in investment can change the fact that natural resources and, therefore, public interest are involved in PICOPs venture, consequently necessitating the full control and supervision by the State as mandated by the Constitution. Not even billions of pesos in investment can buy forest lands, which is practically what PICOP is asking for by interpreting the 1969 Document as a contract giving it perpetual and exclusive possession over such lands. Among all TLA holders in the Philippines, PICOP has, by far, the largest concession area at 143,167 hectares, a land area more than the size of two Metro Manilas. 52 How can it not expect to also have the largest investment? Investment Incentives Act PICOP then claims that the contractual nature of the 1969 Document was brought about by its issuance in accordance with and pursuant to the Investment Incentives Act. According to PICOP: The conclusion in the Decision that to construe PICOPs investments as a consideration in a contract would be to stealthily render ineffective the principle that a license is not a contract between the sovereignty and the licensee is so flawed since the contract with the warranty dated 29 July 1969 was issued by the Government in accordance with and pursuant to Republic Act No. 5186, otherwise known as "The Investment Incentives Act." 53 PICOP then proceeds to cite Sections 2 and 4(d) and (e) of said act: Section 2. Declaration of Policy To accelerate the sound development of the national economy in consonance with the principles and objectives of economic nationalism, and in pursuance of a planned, economically feasible and practicable dispersal of industries, under conditions which will encourage competition and discharge monopolies, it is hereby declared to be the policy of the state to encourage Filipino and foreign investments, as hereinafter set out, in projects to develop agricultural, mining and manufacturing industries which increase national income most at the least cost, increase exports, bring about greater economic stability, provide more opportunities for employment, raise the standards of living of the people, and provide for an equitable distribution of wealth. It is further declared to be the policy of the state to welcome and encourage foreign capital to establish pioneer enterprises that are capital intensive and would utilize a substantial amount of domestic raw materials, in joint venture with substantial Filipino capital, whenever available. Section 4. Basic Rights and Guarantees. All investors and enterprises are entitled to the basic rights and guarantees provided in the constitution. Among other rights recognized by the Government of the Philippines are the following: xxxx d) Freedom from Expropriation. There shall be no expropriation by the government of the property represented by investments or of the property of enterprises except for public use or in the interest of national welfare and

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defense and upon payment of just compensation. x x x. e) Requisition of Investment. There shall be no requisition of the property represented by the investment or of the property of enterprises, except in the event of war or national emergency and only for the duration thereof. Just compensation shall be determined and paid either at the time of requisition or immediately after cessation of the state of war or national emergency. Payments received as compensation for the requisitioned property may be remitted in the currency in which the investment was originally made and at the exchange rate prevailing at the time of remittance, subject to the provisions of Section seventy-four of republic Act Numbered Two hundred sixtyfive. Section 2 speaks of the policy of the State to encourage Filipino and foreign investments. It does not speak of how this policy can be implemented. Implementation of this policy is tackled in Sections 5 to 12 of the same law,54 which PICOP failed to mention, and for a good reason. None of the 24 incentives enumerated therein relates to, or even remotely suggests that, PICOPs proposition that the 1969 Document is a contract. PICOP could indeed argue that the enumeration is not exclusive. Certainly, granting incentives to investors, whether included in the enumeration or not, would be an implementation of this policy. However, it is presumed that whatever incentives may be given to investors should be within the bounds of the laws and the Constitution. The declaration of policy in Section 2 cannot, by any stretch of the imagination, be read to provide an exception to either the laws or, heaven forbid, the Constitution. Exceptions are never presumed and should be convincingly proven. Section 2 of the Investment Incentives Act cannot be read as exempting investors from the Constitutional provisions (1) prohibiting private ownership of forest lands; (2) providing for the complete control and supervision by the State of exploitation activities; or (3) limiting exploitation agreements to twenty-five years, renewable for another twenty-five years. Section 4(d) and (e), on the other hand, is a recognition of rights already guaranteed under the Constitution. Freedom from expropriation is granted under Section 9 of Article III55 of the Constitution, while the provision on requisition is a negative restatement of Section 6, Article XII. 56 Refusal to grant perpetual and exclusive possession to PICOP of its concession area would not result in the expropriation or requisition of PICOPs property, as these forest lands belong to the State, and not to PICOP. This is not changed by PICOPs allegation that: Since it takes 35 years before the company can go back and harvest their residuals in a logged-over area, it must be assured of tenure in order to provide an inducement for the company to manage and preserve the residuals during their growth period. This is a commitment of resources over a span of 35 years for each plot for each cycle. No company will undertake the responsibility and cost involved in policing, preserving and managing residual forest areas until it were sure that it had firm title to the timber.57 The requirement for logging companies to preserve and maintain forest areas, including the reforestation thereof, is one of the prices a logging company must pay for the exploitation thereof. Forest lands are meant to be enjoyed by countless future generations of Filipinos, and not just by one logging company. The requirements of reforestation and preservation of the concession areas are meant to protect them, the future generations, and not PICOP. Reforestation and preservation of the concession areas are not required of logging companies so that they would have something to cut again, but so that the forest would remain intact after their operations. That PICOP would not accept the responsibility to preserve its concession area if it is not assured of tenure thereto does not speak well of its corporate policies. Conclusion In sum, PICOP was not able to prove either of the two things it needed to prove to be entitled to a Writ of Mandamus against the DENR Secretary. The 1969 Document is not a contract recognized under the nonimpairment clause and, even if we assume for the sake of argument that it is, it did not enjoin the government to issue an IFMA in 2002 either. These are the essential elements in PICOPs cause of action, and the failure to prove the same warrants a dismissal of PICOPs Petition for Mandamus, as not even PICOPs compliance with all the administrative and statutory requirements can save its Petition now. Whether PICOP Has Complied with the Statutory and Administrative Requirements for the Conversion of the TLA

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to an IFMA In the assailed Decision, our ruling was based on two distinct grounds, each one being sufficient in itself for us to rule that PICOP was not entitled to a Writ of Mandamus: (1) the 1969 Document, on which PICOP hinges its right to compel the issuance of an IFMA, is not a contract; and (2) PICOP has not complied with all administrative and statutory requirements for the issuance of an IFMA. When a court bases its decision on two or more grounds, each is as authoritative as the other and neither is obiter dictum. 58 Thus, both grounds on which we based our ruling in the assailed Decision would become judicial dictum, and would affect the rights and interests of the parties to this case unless corrected in this Resolution on PICOPs Motion for Reconsideration. Therefore, although PICOP would not be entitled to a Writ of Mandamus even if the second issue is resolved in its favor, we should nonetheless resolve the same and determine whether PICOP has indeed complied with all administrative and statutory requirements for the issuance of an IFMA. While the first issue (on the nature of the 1969 Document) is entirely legal, this second issue (on PICOPs compliance with administrative and statutory requirements for the issuance of an IFMA) has both legal and factual sub-issues. Legal sub-issues include whether PICOP is legally required to (1) consult with and acquire an approval from the Sanggunian concerned under Sections 26 and 27 of the Local Government Code; and (2) acquire a Certification from the National Commission on Indigenous Peoples (NCIP) that the concession area does not overlap with any ancestral domain. Factual sub-issues include whether, at the time it filed its Petition for Mandamus, PICOP had submitted the required Five-Year Forest Protection Plan and Seven-Year Reforestation Plan and whether PICOP had paid all forest charges. For the factual sub-issues, PICOP invokes the doctrine that factual findings of the trial court, especially when upheld by the Court of Appeals, deserve great weight. However, deserving of even greater weight are the factual findings of administrative agencies that have the expertise in the area of concern. The contentious facts in this case relate to the licensing, regulation and management of forest resources, the determination of which belongs exclusively to the DENR: SECTION 4. Mandate. The Department shall be the primary government agency responsible for the conservation, management, development and proper use of the countrys environment and natural resources, specifically forest and grazing lands, mineral resources, including those in reservation and watershed areas, and lands of the public domain, as well as the licensing and regulation of all natural resources as may be provided for by law in order to ensure equitable sharing of the benefits derived therefrom for the welfare of the present and future generations of Filipinos. 59 When parties file a Petition for Certiorari against judgments of administrative agencies tasked with overseeing the implementation of laws, the findings of such administrative agencies are entitled to great weight. In the case at bar, PICOP could not have filed a Petition for Certiorari, as the DENR Secretary had not yet even determined whether PICOP should be issued an IFMA. As previously mentioned, when PICOPs application was brought to a standstill upon the evaluation that PICOP had yet to comply with the requirements for the issuance of an IFMA, PICOP refused to attend further meetings with the DENR and instead filed a Petition for Mandamus against the latter. By jumping the gun, PICOP did not diminish the weight of the DENR Secretarys initial determination. Forest Protection and Reforestation Plans The Performance Evaluation Team tasked to appraise PICOPs performance on its TLA No. 43 found that PICOP had not submitted its Five-Year Forest Protection Plan and its Seven-Year Reforestation Plan.60 In its Motion for Reconsideration, PICOP asserts that, in its Letter of Intent dated 28 August 2000 and marked as Exhibit L in the trial court, there was a reference to a Ten-Year Sustainable Forest Management Plan (SFMP), in which a Five-Year Forest Protection Plan and a Seven-Year Reforestation Plan were allegedly incorporated. PICOP submitted a machine copy of a certified photocopy of pages 50-67 and 104-110 of this SFMP in its Motion for Reconsideration. PICOP claims that the existence of this SFMP was repeatedly asserted during the IFMA application process.61 Upon examination of the portions of the SFMP submitted to us, we cannot help but notice that PICOPs concept of forest protection is the security of the area against "illegal" entrants and settlers. There is no mention of the

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protection of the wildlife therein, as the focus of the discussion of the silvicultural treatments and the SFMP itself is on the protection and generation of future timber harvests. We are particularly disturbed by the portions stating that trees of undesirable quality shall be removed. However, when we required the DENR Secretary to comment on PICOPs Motion for Reconsideration, the DENR Secretary did not dispute the existence of this SFMP, or question PICOPs assertion that a Ten-Year Forest Protection Plan and a Ten-Year Reforestation Plan are already incorporated therein. Hence, since the agency tasked to determine compliance with IFMA administrative requirements chose to remain silent in the face of allegations of compliance, we are constrained to withdraw our pronouncement in the assailed Decision that PICOP had not submitted a Five-Year Forest Protection Plan and a Seven-Year Reforestation Plan for its TLA No. 43. As previously mentioned, the licensing, regulation and management of forest resources are the primary responsibilities of the DENR. 62 The compliance discussed above is, of course, only for the purpose of determining PICOPs satisfactory performance as a TLA holder, and covers a period within the subsistence of PICOPs TLA No. 43. This determination, therefore, cannot prohibit the DENR from requiring PICOP, in the future, to submit proper forest protection and reforestation plans covering the period of the proposed IFMA. Forest Charges In determining that PICOP did not have unpaid forest charges, the Court of Appeals relied on the assumption that if it were true that PICOP had unpaid forest charges, it should not have been issued an approved Integrated Annual Operation Plan (IAOP) for the year 2001-2002 by Secretary Alvarez himself. 63 In the assailed Decision, we held that the Court of Appeals had been selective in its evaluation of the IAOP, as it disregarded the part thereof that shows that the IAOP was approved subject to several conditions, not the least of which was the submission of proof of the updated payment of forest charges from April 2001 to June 2001. 64 We also held that even if we considered for the sake of argument that the IAOP should not have been issued if PICOP had existing forestry accounts, the issuance of the IAOP could not be considered proof that PICOP had paid the same. Firstly, the best evidence of payment is the receipt thereof. PICOP has not presented any evidence that such receipts were lost or destroyed or could not be produced in court. 65 Secondly, the government cannot be estopped by the acts of its officers. If PICOP has been issued an IAOP in violation of the law, allegedly because it may not be issued if PICOP had existing forestry accounts, the government cannot be estopped from collecting such amounts and providing the necessary sanctions therefor, including the withholding of the IFMA until such amounts are paid. We therefore found that, as opposed to the Court of Appeals findings, which were based merely on estoppel of government officers, the positive and categorical evidence presented by the DENR Secretary was more convincing with respect to the issue of payment of forestry charges: 1. Forest Management Bureau (FMB) Senior Forest Management Specialist (SFMS) Ignacio M. Evangelista testified that PICOP had failed to pay its regular forest charges covering the period from 22 September 2001 to 26 April 2002 in the total amount of P15,056,054.05 66 PICOP also allegedly paid late most of its forest charges from 1996 onwards, by reason of which, PICOP is liable for a surcharge of 25% per annum on the tax due and interest of 20% per annum which now amounts to P150,169,485.02. 67 Likewise, PICOP allegedly had overdue and unpaid silvicultural fees in the amount of P2,366,901.00 as of 30 August 2002. 68 Summing up the testimony, therefore, it was alleged that PICOP had unpaid and overdue forest charges in the sum of P167,592,440.90 as of 10 August 2002. 69 2. Collection letters were sent to PICOP, but no official receipts are extant in the DENR record in Bislig City evidencing payment of the overdue amount stated in the said collection letters. 70 There were no official receipts for the period covering 22 September 2001 to 26 April 2002. We also considered these pieces of evidence more convincing than the other ones presented by PICOP: 1. PICOP presented the certification of Community Environment and Natural Resources Office (CENRO) Officer Philip A. Calunsag, which refers only to PICOPs alleged payment of regular forest charges covering

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the period from 14 September 2001 to 15 May 2002. 71 We noted that it does not mention similar payment of the penalties, surcharges and interests that PICOP incurred in paying late several forest charges, which fact was not rebutted by PICOP. 2. The 27 May 2002 Certification by CENRO Calunsag specified only the period covering 14 September 2001 to 15 May 2002 and the amount of P53,603,719.85 paid by PICOP without indicating the corresponding volume and date of production of the logs. This is in contrast to the findings of SFMS Evangelista, which cover the period from CY 1996 to 30 August 2002 and includes penalties, interests, and surcharges for late payment pursuant to DAO 80, series of 1987. 3. The 21 August 2002 PICOP-requested certification issued by Bill Collector Amelia D. Arayan, and attested to by CENRO Calunsag himself, shows that PICOP paid only regular forest charges for its log production covering 1 July 2001 to 21 September 2001. However, there were log productions after 21 September 2001, the regular forest charges for which have not been paid, amounting to P15,056,054.05. 72 The same certification shows delayed payment of forest charges, thereby corroborating the testimony of SFMS Evangelista and substantiating the imposition of penalties and surcharges. In its Motion for Reconsideration, PICOP claims that SFMS Evangelista is assigned to an office that has nothing to do with the collection of forest charges, and that he based his testimony on the Memoranda of Forest Management Specialist II (FMS II) Teofila Orlanes and DENR, Bislig City Bill Collector Amelia D. Arayan, neither of whom was presented to testify on his or her Memorandum. PICOP also submitted an Addendum to Motion for Reconsideration, wherein it appended certified true copies of CENRO Summaries with attached Official Receipts tending to show that PICOP had paid a total of P81,184,747.70 in forest charges for 10 January 2001 to 20 December 2002, including the period during which SFMS Evangelista claims PICOP did not pay forest charges (22 September 2001 to 26 April 2002). Before proceeding any further, it is necessary for us to point out that, as with our ruling on the forest protection and reforestation plans, this determination of compliance with the payment of forest charges is exclusively for the purpose of determining PICOPs satisfactory performance on its TLA No. 43. This cannot bind either party in a possible collection case that may ensue. An evaluation of the DENR Secretarys position on this matter shows a heavy reliance on the testimony of SFMS Evangelista, making it imperative for us to strictly scrutinize the same with respect to its contents and admissibility. PICOP claims that SFMS Evangelistas office has nothing to do with the collection of forest charges. According to PICOP, the entity having administrative jurisdiction over it is CENRO, Bislig City by virtue of DENR Administrative Order No. 96-36, dated 20 November 1996, which states: 1. In order for the DENR to be able to exercise closer and more effective supervision, management and control over the forest resources within the areas covered by TLA No. 43, PTLA No. 47 and IFMA No. 35 of the PICOP Resources, Inc., (PRI) and, at the same time, provide greater facility in the delivery of DENR services to various publics, the aforesaid forest holdings of PRI are hereby placed under the exclusive jurisdiction of DENR Region No. XIII with the CENR Office at Bislig, Surigao del Sur, as directly responsible thereto. x x x. We disagree. Evangelista is an SFMS assigned at the Natural Forest Management Division of the FMB, DENR. In Evangelistas aforementioned affidavit submitted as part of his direct examination, Evangelista enumerated his duties and functions as SFMS: 1. As SFMS, I have the following duties and functions: a) To evaluate and act on cases pertaining to forest management referred to in the Natural forest Management Division; b) To monitor, verify and validate forest management and related activities by timber licences as to their compliance to approved plans and programs; c) To conduct investigation and verification of compliance by timber licenses/permittees to existing DENR rules and regulations;

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d) To gather field data and information to be used in the formulation of forest policies and regulations; and e) To perform other duties and responsibilities as may be directed by superiors. 73 PICOP also alleges that the testimony of SFMS Evangelista was based on the aforementioned Memoranda of Orlanes and Arayan and that, since neither Orlanes nor Arayan was presented as a witness, SFMS Evangelistas testimony should be deemed hearsay. SFMS Evangelistas 1 October 2002 Affidavit,74 which was offered as part of his testimony, provides: 2. Sometime in September, 2001 the DENR Secretary was furnished a copy of forest Management Specialist II (FMS II) Teofila L. Orlanes Memorandum dated September 24, 2001 concerning unopaid forest charges of PICOP. Attached to the said Memorandum was a Memorandum dated September 19, 2001 of Amelia D. Arayan, Bill collector of the DENR R13-14, Bislig City. Copies of the said Memoranda are attached as Annexes 1 and 2, respectively. 3. The said Memoranda were referred to the FMB Director for appropriate action. 4. Thus, on August 5, 2002, I was directed by the FMB Director to proceed to Region 13 to gather forestryrelated data and validate the report contained in the Memoranda of Ms. Orlanes and Arayan. 5. On August 6, 2002, I proceeded to DENR Region 13 in Bislig City. A copy of my Travel Order is attached as Annex 3. 6. Upon my arrival at CENRO, Bislig, surigao del Sur, I coordinated with CENRO Officer Philip A. Calunsag and requested him to make available to me the records regarding the forest products assessments of PICOP. 7. After I was provided with the requested records, I evaluated and collected the data. 8. After the evaluation, I found that the unpaid forest charges adverted to in the Memoranda of Mr. Orlanes and Arayan covering the period from May 8, 2001 to July 7, 2001 had already been paid but late. I further found out that PICOP had not paid its forest charges covering the period from September 22, 2001 to April 26, 2002 in the total amount of P15,056,054.05. 9. I also discovered that from 1996 up to august 30, 2002, PICOP paid late some of its forest charges in 1996 and consistently failed to pay late its forest charges from 1997 up to the present time. 10. Under Section 7.4 of DAO No. 80 Series of 197\87 and Paragraph (4a), Section 10 of BIR revenue Regulations No. 2-81 dated November 18, 1980, PICOP is mandated to pay a surcharge of 25% per annum of the tax due and interest of 20% per annum for late payment of forest charges. 11. The overdue unpaid forest charges of PICOP as shown in the attached tabulation marked as Annex 4 hereof is P150,169,485.02. Likewise, PICOP has overdue and unpaid silvicultural fees in the amount of P2,366,901.00 from 1996 to the present. 12. In all, PICOP has an outstanding and overdue total obligation of P167,592,440.90 as of August 30, 2002 based on the attached tabulation which is marked as Annex 5 hereof.75 Clearly, SFMS Evangelista had not relied on the Memoranda of Orlanes and Arayan. On the contrary, he traveled to Surigao del Sur in order to verify the contents of these Memoranda. SFMS Evangelista, in fact, revised the findings therein, as he discovered that certain forest charges adverted to as unpaid had already been paid. This does not mean, however, that SFMS Evangelistas testimony was not hearsay. A witness may testify only on facts of which he has personal knowledge; that is, those derived from his perception, except in certain circumstances allowed by the Rules.76 Otherwise, such testimony is considered hearsay and, hence, inadmissible in evidence.77 SFMS Evangelista, while not relying on the Memoranda of Orlanes and Arayan, nevertheless relied on records,

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the preparation of which he did not participate in.78 These records and the persons who prepared them were not presented in court, either. As such, SFMS Evangelistas testimony, insofar as he relied on these records, was on matters not derived from his own perception, and was, therefore, hearsay. Section 44, Rule 130 of the Rules of Court, which speaks of entries in official records as an exception to the hearsay rule, cannot excuse the testimony of SFMS Evangelista. Section 44 provides: SEC. 44. Entries in official records. Entries in official records made in the performance of his duty by a public officer of the Philippines, or by a person in the performance of a duty specially enjoined by law, are prima facie evidence of the facts therein stated. In Africa v. Caltex, 79 we enumerated the following requisites for the admission of entries in official records as an exception to the hearsay rule: (1) the entries were made by a public officer or a private person in the performance of a duty; (2) the performance of the duty is especially enjoined by law; (3) the public officer or the private person had sufficient knowledge of the facts stated by him, which must have been acquired by him personally or through official information. The presentation of the records themselves would, therefore, have been admissible as an exception to the hearsay rule even if the public officer/s who prepared them was/were not presented in court, provided the above requisites could be adequately proven. In the case at bar, however, neither the records nor the persons who prepared them were presented in court. Thus, the above requisites cannot be sufficiently proven. Also, since SFMS Evangelista merely testified based on what those records contained, his testimony was hearsay evidence twice removed, which was one step too many to be covered by the official-records exception to the hearsay rule. SFMS Evangelistas testimony of nonpayment of forest charges was, furthermore, based on his failure to find official receipts corresponding to billings sent to PICOP. As stated above, PICOP attached official receipts in its Addendum to Motion for Reconsideration to this Court. While this course of action is normally irregular in judicial proceedings, we merely stated in the assailed Decision that "the DENR Secretary has adequately proven that PICOP has, at this time, failed to comply with administrative and statutory requirements for the conversion of TLA No. 43 into an IFMA," 80 and that "this disposition confers another chance to comply with the foregoing requirements." 81 In view of the foregoing, we withdraw our pronouncement that PICOP has unpaid forestry charges, at least for the purpose of determining compliance with the IFMA requirements. NCIP Certification The Court of Appeals held that PICOP need not comply with Section 59 of Republic Act No. 8371, which requires prior certification from the NCIP that the areas affected do not overlap with any ancestral domain before any IFMA can be entered into by the government. According to the Court of Appeals, Section 59 should be interpreted to refer to ancestral domains that have been duly established as such by the continuous possession and occupation of the area concerned by indigenous peoples since time immemorial up to the present. The Court of Appeals held that PICOP had acquired property rights over TLA No. 43 areas, being in exclusive, continuous and uninterrupted possession and occupation of these areas since 1952 up to the present. In the assailed Decision, we reversed the findings of the Court of Appeals. Firstly, the Court of Appeals ruling defies the settled jurisprudence we have mentioned earlier, that a TLA is neither a property nor a property right, and that it does not create a vested right. 82 Secondly, the Court of Appeals resort to statutory construction is misplaced, as Section 59 of Republic Act No. 8379 is clear and unambiguous: SEC. 59. Certification Precondition. All departments and other governmental agencies shall henceforth be strictly enjoined from issuing, renewing or granting any concession, license or lease, or entering into any productionsharing agreement, without prior certification from the NCIP that the area affected does not overlap with any ancestral domain. Such certification shall only be issued after a field-based investigation is conducted by the Ancestral Domains Office of the area concerned: Provided, That no certification shall be issued by the NCIP without the free and prior informed and written consent of the ICCs/IPs concerned: Provided, further, That no

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department, government agency or government-owned or controlled corporation may issue new concession, license, lease, or production sharing agreement while there is a pending application for a CADT: Provided, finally, That the ICCs/IPs shall have the right to stop or suspend, in accordance with this Act, any project that has not satisfied the requirement of this consultation process. PICOP had tried to put a cloud of ambiguity over Section 59 of Republic Act No. 8371 by invoking the definition of Ancestral Domains in Section 3(a) thereof, wherein the possesssion by Indigenous Cultural Communities/Indigenous Peoples (ICCs/IPs) must have been continuous to the present. However, we noted the exception found in the very same sentence invoked by PICOP: a) Ancestral domains Subject to Section 56 hereof, refers to all areas generally belonging to ICCs/IPs comprising lands, inland waters, coastal areas, and natural resources therein, held under a claim of ownership, occupied or possessed by ICCs/IPs, by themselves or through their ancestors, communally or individually since time immemorial, continuously to the present except when interrupted by war, force majeure or displacement by force, deceit, stealth or as a consequence of government projects or any other voluntary dealings entered into by government and private individuals/corporations, and which are necessary to ensure their economic, social and cultural welfare. It shall include ancestral lands, forests, pasture, residential, agricultural, and other lands individually owned whether alienable and disposable or otherwise, hunting grounds, burial grounds, worship areas, bodies of water, mineral and other natural resources, and lands which may no longer be exclusively occupied by ICCs/IPs but from which they traditionally had access to for their subsistence and traditional activities, particularly the home ranges of ICCs/IPs who are still nomadic and/or shifting cultivators; Ancestral domains, therefore, remain as such even when possession or occupation of these areas has been interrupted by causes provided under the law, such as voluntary dealings entered into by the government and private individuals/corporations. Consequently, the issuance of TLA No. 43 in 1952 did not cause the ICCs/IPs to lose their possession or occupation over the area covered by TLA No. 43. Thirdly, we held that it was manifestly absurd to claim that the subject lands must first be proven to be part of ancestral domains before a certification that the lands are not part of ancestral domains can be required, and invoked the separate opinion of now Chief Justice Reynato Puno in Cruz v. Secretary of DENR83 : As its subtitle suggests, [Section 59 of R.A. No. 8371] requires as a precondition for the issuance of any concession, license or agreement over natural resources, that a certification be issued by the NCIP that the area subject of the agreement does not lie within any ancestral domain. The provision does not vest the NCIP with power over the other agencies of the State as to determine whether to grant or deny any concession or license or agreement. It merely gives the NCIP the authority to ensure that the ICCs/IPs have been informed of the agreement and that their consent thereto has been obtained. Note that the certification applies to agreements over natural resources that do not necessarily lie within the ancestral domains. For those that are found within the said domains, Sections 7(b) and 57 of the IPRA apply. PICOP rejects the entire disposition of this Court on the matter, relying on the following theory: 84. It is quite clear that Section 59 of R.A. 8371 does not apply to the automatic conversion of TLA 43 to IFMA. First, the automatic conversion of TLA 43 to an IFMA is not a new project. It is a mere continuation of the harvesting process in an area that PICOP had been managing, conserving and reforesting for the last 50 years since 1952. Hence any pending application for a CADT within the area, cannot affect much less hold back the automatic conversion. That the government now wishes to change the tenurial system to an IFMA could not change the PICOP project, in existence and operating for the last 30 (sic) years, into a new one. 84 PICOPs position is anything but clear. What is clearly provided for in Section 59 is that it covers "issuing, renewing or granting (of) any concession, license or lease, or entering into any production sharing agreement." PICOP is implying that, when the government changed the tenurial system to an IFMA, PICOPs existing TLA would just be upgraded or modified, but would be the very same agreement, hence, dodging the inclusion in the word "renewing." However, PICOP is conveniently leaving out the fact that its TLA expired in 2002. If PICOP really intends to pursue the argument that the conversion of the TLA into an IFMA would not create a new agreement, but would only be a modification of the old one, then it should be willing to concede that the IFMA expired as well in 2002. An automatic modification would not alter the terms and conditions of the TLA except when they are inconsistent with the terms and conditions of an IFMA. Consequently, PICOPs concession period under the

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renewed TLA No. 43, which is from the year 1977 to 2002, would remain the same. PICOP cannot rely on a theory of the case whenever such theory is beneficial to it, but refute the same whenever the theory is damaging to it. In the same way, PICOP cannot claim that the alleged Presidential Warranty is "renewable for other 25 years" and later on claim that what it is asking for is not a renewal. Extensions of agreements must necessarily be included in the term renewal. Otherwise, the inclusion of "renewing" in Section 59 would be rendered inoperative. PICOP further claims: 85. Verily, in interpreting the term "held under claim of ownership," the Supreme Court could not have meant to include claims that had just been filed and not yet recognized under the provisions of DENR Administrative Order No. 2 Series of 1993, nor to any other community / ancestral domain program prior to R.A. 8371. xxxx 87. One can not imagine the terrible damage and chaos to the country, its economy, its people and its future if a mere claim filed for the issuance of a CADC or CADT will already provide those who filed the application, the authority or right to stop the renewal or issuance of any concession, license or lease or any production-sharing agreement. The same interpretation will give such applicants through a mere application the right to stop or suspend any project that they can cite for not satisfying the requirements of the consultation process of R.A. 8371. If such interpretation gets enshrined in the statures of the land, the unscrupulous and the extortionists can put any ongoing or future project or activity to a stop in any part of the country citing their right from having filed an application for issuance of a CADC or CADT claim and the legal doctrine established by the Supreme Court in this PICOP case. 85 We are not sure whether PICOPs counsels are deliberately trying to mislead us, or are just plainly ignorant of basic precepts of law. The term "claim" in the phrase "claim of ownership" is not a document of any sort. It is an attitude towards something. The phrase "claim of ownership" means "the possession of a piece of property with the intention of claiming it in hostility to the true owner."86 It is also defined as "a partys manifest intention to take over land, regardless of title or right." 87 Other than in Republic Act No. 8371, the phrase "claim of ownership" is thoroughly discussed in issues relating to acquisitive prescription in Civil Law. Before PICOPs counsels could attribute to us an assertion that a mere attitude or intention would stop the renewal or issuance of any concession, license or lease or any production-sharing agreement, we should stress beforehand that this attitude or intention must be clearly shown by overt acts and, as required by Section 3(a), should have been in existence "since time immemorial, continuously to the present except when interrupted by war, force majeure or displacement by force, deceit, stealth or as a consequence of government projects or any other voluntary dealings entered into by government and private individuals/corporations." Another argument of PICOP involves the claim itself that there was no overlapping: Second, there could be no overlapping with any Ancestral Domain as proven by the evidence presented and testimonies rendered during the hearings in the Regional Trial Court. x x x. x x x x. 88. The DENR issued a total of 73 CADCs as of December 11, 1996. The DENR Undersecretary for Field Operations had recommended another 11 applications for issuance of CADCs. None of the CADCs overlap the TLA 43 area. 89. However former DENR Secretary Alvarez, in a memorandum dated 13 September, 2002 addressed to PGMA, insisted that PICOP had to comply with the requirement to secure a Free and Prior Informed Concent because CADC 095 was issued covering 17,112 hectares of TLA 43. 90. This CADC 095 is a fake CADC and was not validly released by the DENR. While the Legal Department of the DENR was still in the process of receiving the filings for applicants and the oppositors to the CADC application, PICOP came across filed copies of a CADC 095 with the PENRO of Davao Oriental as part of their application for a Community Based Forest Management Agreement (CBFMA). Further research came across the same group

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filing copies of the alleged CADC 095 with the Mines and Geosciences Bureau in Davao City for a mining agreement application. The two applications had two different versions of the CADCs second page. One had Mr. Romeo T. Acosta signing as the Social reform Agenda Technical Action Officer, while the other had him signing as the Head, Community-Based Forest Management Office. One had the word "Eight" crossed out and "Seven" written to make it appear that the CADC was issued on September 25, 1997, the other made it appear that there were no alterations and the date was supposed to be originally 25 September 1997. What is required in Section 59 of Republic Act No. 8379 is a Certification from the NCIP that there was no overlapping with any Ancestral Domain. PICOP cannot claim that the DENR gravely abused its discretion for requiring this Certification, on the ground that there was no overlapping. We reiterate that it is manifestly absurd to claim that the subject lands must first be proven to be part of ancestral domains before a certification that they are not can be required. As discussed in the assailed Decision, PICOP did not even seek any certification from the NCIP that the area covered by TLA No. 43, subject of its IFMA conversion, did not overlap with any ancestral domain.88 Sanggunian Consultation and Approval While PICOP did not seek any certification from the NCIP that the formers concession area did not overlap with any ancestral domain, PICOP initially sought to comply with the requirement under Sections 26 and 27 of the Local Government Code to procure prior approval of the Sanggunians concerned. However, only one of the many provinces affected approved the issuance of an IFMA to PICOP. Undaunted, PICOP nevertheless submitted to the DENR the purported resolution89 of the Province of Surigao del Sur indorsing the approval of PICOPs application for IFMA conversion, apparently hoping either that the disapproval of the other provinces would go unnoticed, or that the Surigao del Sur approval would be treated as sufficient compliance. Surprisingly, the disapproval by the other provinces did go unnoticed before the RTC and the Court of Appeals, despite the repeated assertions thereof by the Solicitor General. When we pointed out in the assailed Decision that the approval must be by all the Sanggunians concerned and not by only one of them, PICOP changed its theory of the case in its Motion for Reconsideration, this time claiming that they are not required at all to procure Sanggunian approval. Sections 2(c), 26 and 27 of the Local Government Code provide: SEC. 2. x x x. xxxx (c) It is likewise the policy of the State to require all national agencies and offices to conduct periodic consultations with appropriate local government units, nongovernmental and peoples organizations, and other concerned sectors of the community before any project or program is implemented in their respective jurisdictions. SEC. 26. Duty of National Government Agencies in the Maintenance of Ecological Balance. It shall be the duty of every national agency or government-owned or controlled corporation authorizing or involved in the planning and implementation of any project or program that may cause pollution, climatic change, depletion of nonrenewable resources, loss of crop land, rangeland, or forest cover, and extinction of animal or plant species, to consult with the local government units, nongovernmental organizations, and other sectors concerned and explain the goals and objectives of the project or program, its impact upon the people and the community in terms of environmental or ecological balance, and the measures that will be undertaken to prevent or minimize the adverse effects thereof. SEC. 27. Prior Consultations Required. No project or program shall be implemented by government authorities unless the consultations mentioned in Sections 2(c) and 26 hereof are complied with, and prior approval of the sanggunian concerned is obtained: Provided, That occupants in areas where such projects are to be implemented shall not be evicted unless appropriate relocation sites have been provided, in accordance with the provisions of the Constitution. As stated in the assailed Decision, the common evidence of the DENR Secretary and PICOP, namely, the 31 July 2001 Memorandum of Regional Executive Director (RED) Elias D. Seraspi, Jr., enumerated the local government units and other groups which had expressed their opposition to PICOPs application for IFMA conversion:

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7. During the conduct of the performance evaluation of TLA No. 43 issues complaints against PRI were submitted thru Resolutions and letters. It is important that these are included in this report for assessment of what are their worth, viz: xxxx 7.2 Joint Resolution (unnumbered), dated March 19, 2001 of the Barangay Council and Barangay Tribal Council of Simulao, Boston, Davao Oriental (ANNEX F) opposing the conversion of TLA No. 43 into IFMA over the 17,112 hectares allegedly covered with CADC No. 095. 7.3 Resolution Nos. 10, s-2001 and 05, s-2001 (ANNEXES G & H) of the Bunawan Tribal Council of Elders (BBMTCE) strongly demanding none renewal of PICOP TLA. They claim to be the rightful owner of the area it being their alleged ancestral land. 7.4 Resolution No. 4, S-2001 of Sitio Linao, San Jose, Bislig City (ANNEX I) requesting not to renew TLA 43 over the 900 hectares occupied by them. 7.5 Resolution No. 22, S-2001 (ANNEX J) of the Sanguniang Bayan, Lingig, Surigao del Sur not to grant the conversion of TLA 43 citing the plight of former employees of PRI who were forced to enter and farm portion of TLA No. 43, after they were laid off. 7.6 SP Resolution No. 2001-113 and CDC Resolution Nos. 09-2001 of the Sanguniang Panglungsod of Bislig City (ANNEXES K & L) requesting to exclude the area of TLA No. 43 for watershed purposes. 7.7 Resolution No. 2001-164, dated June 01, 2001 (ANNEX M) Sanguniang Panglungsod of Bislig City opposing the conversion of TLA 43 to IFMA for the reason that IFMA do not give revenue benefits to the City.90 PICOP had claimed that it complied with the Local Government Code requirement of obtaining prior approval of the Sanggunian concerned by submitting a purported resolution91 of the Province of Surigao del Sur indorsing the approval of PICOPs application for IFMA conversion. We ruled that this cannot be deemed sufficient compliance with the foregoing provision. Surigao del Sur is not the only province affected by the area covered by the proposed IFMA. As even the Court of Appeals found, PICOPs TLA No. 43 traverses the length and breadth not only of Surigao del Sur but also of Agusan del Sur, Compostela Valley and Davao Oriental.92 On Motion for Reconsideration, PICOP now argues that the requirement under Sections 26 and 27 does not apply to it: 97. PICOP is not a national agency. Neither is PICOP government owned or controlled. Thus Section 26 does not apply to PICOP. 98. It is very clear that Section 27 refers to projects or programs to be implemented by government authorities or government-owned and controlled corporations. PICOPs project or the automatic conversion is a purely private endevour. First the PICOP project has been implemented since 1969. Second, the project was being implemented by private investors and financial institutions. 99. The primary government participation is to warrant and ensure that the PICOP project shall have peaceful tenure in the permanent forest allocated to provide raw materials for the project. To rule now that a project whose foundations were commenced as early as 1969 shall now be subjected to a 1991 law is to apply the law retrospectively in violation of Article 4 of the Civil Code that laws shall not be applied retroactively. 100. In addition, under DAO 30, Series of 1992, TLA and IFMA operations were not among those devolved function from the National Government / DENR to the local government unit. Under its Section 03, the devolved function cover only: a) Community Based forestry projects. b) Communal forests of less than 5000 hectares c) Small watershed areas which are sources of local water supply. 93

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We have to remind PICOP again of the contents of Section 2, Article XII of the Constitution: Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of the grant. All projects relating to the exploration, development and utilization of natural resources are projects of the State. While the State may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by these citizens, such as PICOP, the projects nevertheless remain as State projects and can never be purely private endeavors. Also, despite entering into co-production, joint venture, or production-sharing agreements, the State remains in full control and supervision over such projects. PICOP, thus, cannot limit government participation in the project to being merely its bouncer, whose primary participation is only to "warrant and ensure that the PICOP project shall have peaceful tenure in the permanent forest allocated to provide raw materials for the project." PICOP is indeed neither a national agency nor a government-owned or controlled corporation. The DENR, however, is a national agency and is the national agency prohibited by Section 27 from issuing an IFMA without the prior approval of the Sanggunian concerned. As previously discussed, PICOPs Petition for Mandamus can only be granted if the DENR Secretary is required by law to issue an IFMA. We, however, see here the exact opposite: the DENR Secretary was actually prohibited by law from issuing an IFMA, as there had been no prior approval by all the other Sanggunians concerned. As regards PICOPs assertion that the application to them of a 1991 law is in violation of the prohibition against the non-retroactivity provision in Article 4 of the Civil Code, we have to remind PICOP that it is applying for an IFMA with a term of 2002 to 2027. Section 2, Article XII of the Constitution allows exploitation agreements to last only "for a period not exceeding twenty-five years, renewable for not more than twenty-five years." PICOP, thus, cannot legally claim that the projects term started in 1952 and extends all the way to the present. Finally, the devolution of the project to local government units is not required before Sections 26 and 27 would be applicable. Neither Section 26 nor 27 mentions such a requirement. Moreover, it is not only the letter, but more importantly the spirit of Sections 26 and 27, that shows that the devolution of the project is not required. The approval of the Sanggunian concerned is required by law, not because the local government has control over such project, but because the local government has the duty to protect its constituents and their stake in the implementation of the project. Again, Section 26 states that it applies to projects that "may cause pollution, climatic change, depletion of non-renewable resources, loss of crop land, rangeland, or forest cover, and extinction of animal or plant species." The local government should thus represent the communities in such area, the very people who will be affected by flooding, landslides or even climatic change if the project is not properly regulated, and who likewise have a stake in the resources in the area, and deserve to be adequately compensated when these resources are exploited. Indeed, it would be absurd to claim that the project must first be devolved to the local government before the requirement of the national government seeking approval from the local government can be applied. If a project has been devolved to the local government, the local government itself would be implementing the project. That the local government would need its own approval before implementing its own project is patently silly. EPILOGUE AND DISPOSITION PICOPc cause of action consists in the allegation that the DENR Secretary, in not issuing an IFMA, violated its constitutional right against non-impairment of contracts. We have ruled, however, that the 1969 Document is not a contract recognized under the non-impairment clause, much less a contract specifically enjoining the DENR Secretary to issue the IFMA. The conclusion that the 1969 Document is not a contract recognized under the non-

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impairment clause has even been disposed of in another case decided by another division of this Court, PICOP Resources, Inc. v. Base Metals Mineral Resources Corporation, 94 the Decision in which case has become final and executory. PICOPs Petition for Mandamus should, therefore, fail. Furthermore, even if we assume for the sake of argument that the 1969 Document is a contract recognized under the non-impairment clause, and even if we assume for the sake of argument that the same is a contract specifically enjoining the DENR Secretary to issue an IFMA, PICOPs Petition for Mandamus must still fail. The 1969 Document expressly states that the warranty as to the tenure of PICOP is "subject to compliance with constitutional and statutory requirements as well as with existing policy on timber concessions." Thus, if PICOP proves the two above-mentioned matters, it still has to prove compliance with statutory and administrative requirements for the conversion of its TLA into an IFMA. While we have withdrawn our pronouncements in the assailed Decision that (1) PICOP had not submitted the required forest protection and reforestation plans, and that (2) PICOP had unpaid forestry charges, thus effectively ruling in favor of PICOP on all factual issues in this case, PICOP still insists that the requirements of an NCIP certification and Sanggunian consultation and approval do not apply to it. To affirm PICOPs position on these matters would entail nothing less than rewriting the Indigenous Peoples Rights Act and the Local Government Code, an act simply beyond our jurisdiction. WHEREFORE, the Motion for Reconsideration of PICOP Resources, Inc. is DENIED. SO ORDERED. MINITA V. CHICO-NAZARIO Associate Justice WE CONCUR: REYNATO S. PUNO Chief Justice ANTONIO T. CARPIO Associate Justice CONCHITA CARPIO MORALES Associate Justice No part ANTONIO EDUARDO B. NACHURA * Associate Justice ARTURO D. BRION Associate Justice LUCAS P. BERSAMIN Associate Justice ROBERTO A. ABAD Associate Justice RENATO C. CORONA Associate Justice PRESBITERO J. VELASCO, JR. Associate Justice TERESITA J. LEONARDO-DE CASTRO Associate Justice DIOSDADO M. PERALTA Associate Justice MARIANO C. DEL CASTILLO Associate Justice MARTIN S. VILLARAMA, JR. Associate Justice CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Resolution were reached in consultation before the case was assigned to the writer of the opinion of the Court. REYNATO S. PUNO

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Chief Justice

Footnotes
* No part. 1 Records, pp. 1-38. 2 Id. at 36. 3 Rollo (G.R. No. 162243), pp. 221-222. 4 Records, Vol. 2, pp. 393-456. 5 Records, Vol. 4, pp. 1349-1575. 6 The dispositive portion of the 10 February 2003 Order reads:

WHEREFORE, premises considered, the Motion for Reconsideration dated October 25, 2002 is hereby DENIED for utter lack of merit while the Motion for the Issuance of Writ of Mandamus and/or Writ of Mandatory Injunction is GRANTED. Accordingly, respondent DENR Secretary Heherson Alvarez, now substituted by Secretary Elisea Gozun, is hereby ordered: 1. to sign, execute and deliver the IFMA contract and/or documents to PICOP and issue the corresponding IFMA assignment number on the area covered by IFMA, formerly TLA No. 43, as amended; 2. to issue the necessary permit allowing petitioner to act and harvest timber from the said area of TLA No. 43, sufficient to meet the raw material requirements of petitioners pulp and paper mills in accordance with the warranty and agreement of July 29, 1969 between the government and PICOPs predecessor-in-interest; and 3. to honor and respect the Government Warranties and contractual obligations to PICOP strictly in accordance with the warranty and agreement dated July 29, 1999 (sic) between the government and PICOPs predecessor-in-interest (Exhibits "H", "H-1" to "H-5", particularly the following: a) The area coverage of TLA No. 43, which forms part and parcel of the government warranties; b) PICOP tenure over the said area of TLA No. 43 and exclusive right to cut, collect and remove sawtimber and pulpwood for the period ending on April 26, 1977; and said period to be renewable for another 25 years subject to compliance with constitutional and statutory requirements as well as with existing policy on timber concessions, and c) The peaceful and adequate enjoyment by PICOP of the area as described and specified in the aforesaid amended Timber License Agreement No. 43. (Records, Vol. 4, pp. 1374-1375)
7 Records, Vol. 2, p. 611. 8 Rollo (G.R. No. 162243), pp. 229-258. Penned by Associate Justice Ruben T. Reyes, with Associate

Justices Edgardo P. Cruz and Noel G. Tijam concurring; rollo (G.R. No. 162243), pp. 229-258.
9 Rollo (G.R. No. 162243), p. 257. 10 Rollo (G.R. No. 164516), pp. 107-119. 11

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Id. at 121-122.
12 Id. at 814. 13 PICOPs Petition for Mandamus; records, p. 5. 14 Id.; records, p. 20. 15 Id. at 20-21. 16 Regulations Governing the Integrated Forest Management Program (IFMP); records, pp. 41-55. 17 Records, p. 43. 18 Id. at 46. 19 14A Words and Phrases, West Publishing Co., p. 290 (1952), citing Lawrence v. Cooke, N.Y., 32 Hun

126, 134.
20 Id., citing Clifford v. Stewart, 49 A. 52, 55, 95 Me. 38. 21 3 Words and Phrases, West Publishing Co., p. 344 (1953), citing Giffin v. Petree, 46 S.W. 2d 609, 618,

226 Mo. App. 718.


22 Akbayan-Youth v. Commission on Elections, 407 Phil. 618, 646 (2001). 23 PICOPs Petition for Mandamus; records, p. 20. 24 Decision, p. 26. 25 The nature of PICOPs Petition for Mandamus reads in full:

NATURE OF THE PETITION/COMPLAINT 1. This is a Special Civil Action for Mandamus, with prayer for issuance of Writ of Preliminary Prohibitory and Mandatory Injunction with Damages under Rule 65 of the 1997 Rules of Civil Procedure, as amended. 1.1 Petitioner invokes the jurisdiction of this Honorable Court conferred by Batas Pambansa Blg. 129, The Judiciary Reorganization Act of 1980, under Sections 21 thereof: "Sec. 21. Original Jurisdiction in other cases. Regional Trial Court shall exercise original jurisdiction: (1) In the issuance of writs of certiorari, prohibition mandamus, quo warranto, habeas corpus and injunction which may be enforced in any part of their respective regions; xxx (underscoring supplied). 1.2 Petitioner brings the instant petition for the grant of the privileged writ of mandamus, with prayer for the issuance of provisional remedies of preliminary prohibitory and mandatory injunction pendente lite against respondent Secretary for illegal acts which impinge on and violate the constitutional rights of petitioner, and respondent Secretary has acted without jurisdiction or in excess of jurisdiction or so capriciously as to constitute an abuse of discretion amounting to excess of jurisdiction. 1.3 Appropriateness of Recourse to Mandamus. The 1997 Rules of Civil Procedure, as amended, under Rule 65, Sec. 3 thereof provides relief against official acts by public officers which are illegal and traduces fundamental rights of a party aggrieved, or acts done without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction. Thus: "Sec. 3. Petition for Mandamus. When any tribunal, corporation, board, officer or person unlawfully

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neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, trust or station, or unlawfully excludes another person from the use and enjoyment of a right or office to which such other is entitled, and there is no other plain, speedy and adequate remedy in the ordinary course of law, the person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered commanding the respondent, immediately or at some other time to be specified by the court, to do the act required to be done to protect the rights of the petitioner, and to pay damages sustained by the petitioner by reason of the wrongful acts of the respondent." (Emphasis supplied) 1.4 The jurisdiction of this Honorable Court to adjudicate the matters raised in this petition and to issue the privileged writ of mandamus is a settled matter. In Taada v. Angara, 272 SCRA 18 [1997], the Supreme Court held: The jurisdiction of this Court to adjudicate the matters raised in the petition is clearly set out in the 1987 Constitution, as follows: 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. The foregoing text emphasizes the judicial departments duty and power to strike down grave abuse of discretion on the part of any branch or instrumentality of government including Congress. It is innovation in our political law. As explained by former Chief Justice Roberto Concepcion, the judiciary is the final arbiter on the question of whether or not a branch of government or any of its officials has acted without jurisdiction or in excess of jurisdiction or so capriciously as to constitute an abuse of discretion amounting to excess of jurisdiction. This is not a judicial power but a duty to pass judgment on matters of this nature. As this Court has repeatedly and firmly emphasized in many cases, it will not shirk, digress from or abandon its sacred duty and authority to uphold the Constitution in matters that involve grave abuse of discretion brought before it in appropriate cases, committed by any officer, agency, instrumentality or department of the government. As the petition alleges grave abuse of discretion and as there is no other plain, speedy or adequate remedy in the ordinary course of law, we have no hesitation at all in holding that this petition should be given due course and the vital questions raised therein ruled upon under Rule 65 of the Rules of Court. Indeed, certiorari, prohibition and mandamus are appropriate remedies to raise constitutional issues and to review and/or prohibit/nullify, when proper, acts of legislative and executive officials. On this, we have no equivocation. 1.5 By this privileged writ of mandamus, petitioner seeks to: 1.5.1 Compel respondent Department of Environment and Natural Resources (DENR) Secretary Heherson T. Alvarez to execute and deliver the Integrated Forestry Management Agreement (IFMA for short), and issue the corresponding IFMA number assignment to petitioner and to which it has a clear legal right and respondent has the legal duty to perform. Respondent DENR Secretary has unlawfully refused and neglected and continue to unlawfully refuse and neglect, to issue the IFMA and corresponding IFMA number assignment to PICOP, the performance of which the law specifically enjoins as a duty resulting from his office. Respondent Secretary Alvarez in refusing to sign, execute and deliver the IFMA and corresponding IFMA assignment number to PICOP has acted without jurisdiction or in excess of jurisdiction or so capriciously as to constitute an abuse of discretion amounting to excess or lack of jurisdiction. 1.5.2 Compel respondent DENR Secretary to abide by and respect the obligation of contract embodied under a letter warranty and agreement entered into by and between the Government and PICOPs predecessor-in-interest dated 29 July 1969, with the following covenants: "This has reference to the request of the Board of Investment through its Chairman in a letter dated
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July 16, 1969 for a warranty on the boundaries of your concession area under Timber License Agreement No. 43, as amended. We are made to understand that your company is committed to support the first large scale integrated wood processing complex (hereinafter called "The Project") and that such support will be provided not only in the form of the supply of pulpwood and other wood materials from your concession but also by making available funds generated out of your own operations, to supplement PICOPs operational sources of funds and other financial arrangements made by him. In order that your company may provide such support effectively, it is understood that you will call upon your stockholders to take such steps as may be necessary to effect in unification of managerial, technical, economical and manpower resources between your company and PICOP. It is in the public interest to promote industries that will enhance the proper conservation of our forest resources as well as insure the maximum utilization thereof to the benefit of the national economy. The Administration feels that the PICOP project is one such industry which should enjoy priority over the usual logging operations hitherto practiced by ordinary timber licenses for this reason, we are pleased to consider favorably the request. We confirm that your Timber License Agreement No. 43, as amended, (copy of which is attached as Annex "A") hereof attached to form part and parcel of this warranty) definitely establishes the boundary lines of your concession area which consists of permanent forest lands with an aggregate area of 121,587 hectares and alienable or disposable lands with an aggregate area of approximately 21,580 hectares. We further confirm that your tenure over the area and exclusive right to cut, collect and remove sawtimber and pulpwood shall be for the period ending on April 26, 1997; said period to be renewable for other 25 years subject to compliance with constitutional and statutory requirements as well as with existing policy on timber concessions. The peaceful and adequate enjoyment by you of your area as described and specified in your aforesaid amended Timber License Agreement No. 43 is hereby warranted provided that pertinent laws, regulations and the terms and conditions of your license agreement are observed." Copy of which is attached as Annex "A". 1.6 Respondent Secretary impaired the obligation of contract under the said Warranty and Agreement of 29 July 1969 by refusing to respect the tenure; and its renewal for other twenty five (25) years, of PICOP over the area covered by said Agreement which consists of permanent forest lands with an aggregate area of 121,587 hectares and alienable or disposable lands with an aggregate area of approximately 21,580 hectares, and petitioners exclusive right to cut, collect and remove sawtimber and pulpwood therein and the peaceful and adequate enjoyment of the said area as described and specified in petitioners Timber License Agreement (TLA) No. 43 guaranteed by the Government, under the Warranty and Agreement of 29 July 1969. 1.7 The Bill of Rights of the 1987 Constitution guarantees the non-impairment of the obligation of contract, providing in Sec. 10, Art. III thereof that: "Sec. 10. No law impairing the obligation of contracts shall be passed." 1.8 The obligation of a contract is the law or duty which binds the parties to perform their agreement according to its terms or intent (Sturgess v. Crownshields, 4 Wheat 122). The treaties on the Constitution state the scope of terms "law" and "contract", to mean: (1) The law, the enactment of which is prohibited, includes executive and administrative orders issued by heads of departments, and ordinances enacted by local governments. (citing Lim v. Secretary of Agriculture, 34 SCRA 751 [1970]). (2) The contract, the obligation of which is secured against impairment by the Constitution, includes contracts entered into by the Government (citing Maddumba v. GSIS, 182 SCRA 281 [1990]). An example of impairment by law is when a tax exemption based on a contract entered

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into by the government is revoked by a letter taxing statute (citing Casanova v. Hord, 8 Phil. 125 [1907]). (3) The State when contracting does so upon the same terms as a private individual or corporation and may not plead its sovereignty as justification in impairing a contractual obligation which it has assumed (citing Willoughby, op. Cit. p. 1224). (4) In a Contract, a party acquires a right and the other assumed an obligation arising from the same (Art. 1305, New Civil Code). A contract is the law between the contracting parties, their assigns, and their heirs (Arts. 1159, 1311 par. 1, Civil Code) (De Leon, Philippine Constitutional Law, Principles and Cases, 1999 Ed., pp. 682, 283). As used in the Constitution, the word "Contracts" includes other arrangement not normally considered to be contracts such as a legislative grant of a public land to particular individuals, such that a subsequent attempt by the State to annul the title of purchasers in good faith from the grantee would be unconstitutional (citing Fletcher v. Peck, 10 US 87). (ibid., p. 6). 1.9 There is no appeal or any other plain, speedy and adequate remedy in the ordinary course of law except the privileged writ of mandamus prayed for in this petition. 1.10 This petition falls as an exception to the exhaustion of administrative remedies. The acts of respondent DENR Secretary complained of in this petition are patently illegal; in derogation of the constitutional rights of petitioner against non-impairment of the obligation of contracts; without jurisdiction, or in excess of jurisdiction or so capriciously as to constitute an abuse of discretion amounting to excess or lack of jurisdiction; and moreover, the failure or refusal of a high government official such as a Department head from whom relief is brought to act on the matter was considered equivalent to exhaustion of administrative remedies (Sanoy v. Tantuico, 50 SCRA 455 [1973]), and there are compelling and urgent reasons for judicial intervention (Bagatsing v. Ramirez, 74 SCRA 306 [1976]). (PICOPs Petition for Mandamus, Records pp. 1-6.)
26 G.R. No. 163509, 6 December 2006, 510 SCRA 400, penned by Associate Justice Dante O. Tinga with

Associate Justices Leo A. Quisumbing, Antonio T. Carpio, Conchita Carpio Morales, and Presbitero J. Velasco, Jr., concurring.
27 That the erstwhile Third Division of this Court was still unaware of this Divisions Decision is shown by

the following excerpts in its Decision: PICOP brings to the Courts attention the case of PICOP Resources, Inc. v. Hon. Heherson T. Alvarez, wherein the Court of Appeals ruled that the Presidential Warranty issued to PICOP for its TLA No. 43 dated July 29, 1969, a TLA distinct from PTLA No. 47 involved in this case, is a valid contract involving mutual prestations on the part of the Government and PICOP. xxxx The case of PICOP Resources, Inc. v. Hon. Heherson T. Alvarez, supra, cited by PICOP cannot be relied upon to buttress the latters claim that a presidential warranty is a valid and subsisting contract between PICOP and the Government because the decision of the appellate court in that case is still pending review before the Courts Second Division. (Id. at 411-415.)
28 Id. at 426-428. 29 TSN, Oral Arguments, pp. 174-181. 30 PICOPs Petition for Mandamus; records, pp. 26-27. 31 PICOPs Memorandum, p. 101; rollo, p. 1262. 32 PICOPs Motion for Reconsideration, p. 50; rollo, p. 1391a; TSN, 19 September 2002, pp. 27-35; 41-45.

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G.R. No. 162243 33 Id. at 51; rollo, p. 1391b. 34 Oral Arguments, 10 February 2009; TSN, pp. 158-167. 35 RULES OF COURT, Section 3(m), Rule 131. 36 Article XIV, Section 8, 1973 Constitution provides:

Section 8. All lands of public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, wildlife, and other natural resources of the Philippines belong to the State. With the exception of agricultural, industrial or commercial, residential, or resettlement lands of the public domain, natural resources shall not be alienated, and no license, concession, or lease for the exploration, or utilization of any of the natural resources shall be granted for a period exceeding twenty-five years, except as to water rights for irrigation, water supply, fisheries, or industrial uses other than development of water power, in which cases, beneficial use may by the measure and the limit of the grant.
37 Oral Arguments, 10 February 2009, TSN, pp. 230-236. 38 G.R. No. 174340, 17 October 2006, 504 SCRA 704, 730. 39 Javellana v. Tayo, 116 Phil. 1342, 1351 (1962). 40 PICOPs Motion for Reconsideration, p. 16; rollo, p. 1385. 41 Id. 42 Id. 43 PICOP (CA rollo, p. 176). 44 Secretary of Agriculture and Natural Resources (id.). 45 Timber License Agreement No. 43; CA rollo, p. 177. 46 CA rollo, pp. 323-324. 47 G.R. No. 84847, 5 March 1993, 219 SCRA 541. 48 Quirino v. Palarca, 139 Phil. 488, 492 (1969). 49 Ermita-Malate Hotel and Motel Operators Association, Inc. v. City Mayor of Manila, 127 Phil. 306, 318

(1967).
50 The definition in DAO No. 99-53 that an IFMA is a "production sharing contract" has not been assailed as

unconstitutional, thus prohibiting us from determining its constitutionality. Nonetheless, a mere designation in an administrative rule cannot alter the legal nature thereof.
51 PICOPs Motion for Reconsideration, p. 21; rollo, p. 1386. 52 The land area of Metro Manila is 63,600 hectares, or 636 square kilometers. Metro Manila includes within

its boundaries the following cities and municipalities: Quezon City, Manila, Caloocan, Makati, Pasig, Marikina, Mandaluyong, Pasay City, Muntinlupa, Paraaque, Las Pias, Valenzuela, Taguig, Malabon, Navotas, San Juan and Pateros.
53 PICOPs Motion for Reconsideration, pp. 22-23; rollo, pp. 1386a-1386b.

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G.R. No. 162243 54 SECTION 5. Incentives to Investors in a Registered Enterprise. An investor, with respect to his

investment in a registered enterprise, shall be granted the following incentive benefits: (a) Protection of Patents and Other Proprietary Rights. The right to be protected from infringement of patents, trademarks, copyright, trade names, and other proprietary rights, where such patents, trade marks, copyright, trade names, and other proprietary rights have been registered with the Board and the appropriate agencies of the Government of the Philippines. (b) Capital Gains Tax Exemption. Exemption from income tax on that portion of the gains realized from the sale, disposition, or transfer of capital assets, as defined in Section thirty-four of the National Internal Revenue Code, that corresponds to the portion of the proceeds of the sale that is invested in new issues of capital stock of a registered enterprise within six months from the date the gains were realized: Provided, (1) that the said sale, disposition or transfer and the investment of the proceeds thereof have been registered with the Board and the Bureau of Internal Revenue; and (2) that the shares of stock representing the investment are not disposed of, transferred, assigned, or conveyed for a period of five years from the date the investment was made. If such shares of stock are disposed of within the said period of five (5) years, all taxes due on the gains realized from the original transfer, sale or disposition of the capital assets shall immediately become due and payable. SECTION 6. Incentives to Philippine Nationals Investing in Pioneer Enterprises. In addition to the incentives provided in the preceding sections, Philippine Nationals investing in a pioneer enterprise shall be granted the following incentives benefits: (a) Tax Allowance for Investments. An investment allowance to the extent of his actual investment, paid in cash or property shall be allowed as a deduction from his taxable income but not to exceed ten per cent thereof: Provided, (1) That the investment is made in a subscription of shares in the original and/or increased capital stock of a pioneer enterprise within seven years from the date of registration; (2) that the shares are held for a period of not less than three years and; (3) that the investment is registered with the Board. If the shares are disposed of within the said three year period, the tax payer shall lose the benefit of this deduction, his income tax liability shall be recomputed, and he shall pay whatever additional sum be due plus interest thereon, within thirty days from the date of disposition. (b) Capital Gains Tax Exemption. Exemption from income tax on the portion of the gains realized from the sale, disposition, or transfer of capital assets, as defined in Section thirty-four of the National Internal Revenue Code, that corresponds to the portion of the proceeds of the sale that is invested in new issues of capital stock of, or in the purchase of stock owned by foreigners in, pioneer enterprises, within six months from the date the gains were realized: Provided, (1) That such sale, disposition or transfer and the investment of the proceeds thereof are registered with the Board and the Bureau of Internal Revenue; and (2) that the shares of stock representing the investment are not disposed of, transferred, assigned or conveyed for a period of three (3) years from the date the investment was made. If said shares of stock are disposed of within the said period of three (3) years, all taxes due on the gains realized from the original transfer, sale or disposition of the capital assets shall immediately become due and payable. (c) Tax Exemption on Sale of Stock Dividends. Exemption from income tax on all gains realized from the sale, disposition, or transfer of stock dividends received from a pioneer enterprise: Provided, That the sale, disposition or transfer occurs within seven years from the date of registration of the enterprise. SECTION 7. Incentives to a Registered Enterprise. A registered enterprise, to the extent engaged in a preferred area of investment, shall be granted the following incentive benefits: (a) Deduction of Organizational and Pre-Operating Expenses. All capitalized organizational and pre-operating expenses attributable to the establishment of a registered enterprise may be deducted from its taxable income over a period of not more than ten years beginning with the month the enterprise begins operations, provided the taxpayer indicates the desired

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amortization period at the time of the filing of the income tax returns for the first taxable year. For the purpose of this provision, organizational and pre-operating expenses shall include expenses for pre-investment studies, start up costs, costs of initial recruitment and training, and similar expenses. (b) Accelerated Depreciation. At the option of the taxpayer and in accordance with the procedure established by the Bureau of Internal Revenue, fixed assets may be (1) depreciated to the extent of not more than twice as fast as normal rate of depreciation or depreciated at normal rate of depreciation if expected life is ten years or less; or (2) depreciated over any number of years between five years and expected life if the latter is more than ten (10) years; and the depreciation thereon allowed as a deduction from taxable income: Provided, That the taxpayer notifies the Bureau of Internal Revenue at the beginning of the depreciation period which depreciation rate allowed by this section will be used by it. (c) Net Operating Loss Carry-over. A net operating loss incurred in any of the first ten years of operations may be carried over as a deduction from taxable income for the six years immediately following the year of such loss. The entire amount of the loss shall be carried over to the first of the six taxable years following the loss, and any portion of such loss which exceeds the taxable income of such first year shall be deducted in like manner from the taxable income of the next remaining five years. The net operating loss shall be computed in accordance with the provisions of the National Internal Revenue Code, any provision of this Act to the contrary notwithstanding, except that income not taxable either in whole or in part under this or other laws shall be included in gross income. (d) Tax Exemption on Imported Capital Equipment. Within seven years from the date of registration of the enterprise, importation of machinery and equipment, and spare parts shipped with such machinery and equipment, shall not be subject to tariff duties and compensating tax: Provided, That said machinery, equipment and spare parts: (1) are not manufactured domestically in reasonable quantity and quality at reasonable prices; (2) are directly and actually needed and will be used exclusively by the registered enterprise in the manufacture of its products; (3) are covered by shipping documents in the name of the registered enterprise to whom the shipment will be delivered direct by customs authorities; (4) the prior approval of the Board was obtained by the registered enterprise before the importation of such machinery, equipment and spare parts; and (5) the registered enterprise chooses not to avail of the privileges granted by Republic Act Numbered Thirty-one hundred twenty-seven, as amended. If the registered enterprise sells, transfers, or disposes of these machinery, equipment and spare parts without the prior approval of the Board within five (5) years from the date of acquisition, the registered enterprise shall pay twice the amount of the tax exemption given it. However, the Board shall allow and approve the sale, transfer, or disposition of the said items within the said period of five (5) years if made: (1) to another registered enterprise; (2) for reasons of proven technical obsolescence; or (3) for purposes of replacement to improve and/or expand the operations of the enterprise. (e) Tax Credit on Domestic Capital Equipment. A tax credit equivalent to one hundred per cent (100%) of the value of the compensating tax and customs duties that would have been paid on the machinery, equipment and spare parts had these items been imported shall be given to the registered enterprise who purchases machinery, equipment and spare parts from a domestic manufacturer, and another tax credit equivalent to fifty per cent (50%) thereof shall be given to the said manufacturer: Provided, (1) That the said machinery, equipment and spare parts are directly and actually needed and will be used exclusively by the registered enterprise in the manufacture of its products; (2) that the prior approval of the Board was obtained by the local manufacturer concerned; and (3) that the sale is made within seven years from the date of registration of the registered enterprise. If the registered enterprise sells, transfers or disposes of these machinery, equipment and spare parts without the prior approval of the Board within five years from the date of acquisition, then it shall pay twice the amount of the tax credit given it. However, the Board shall allow and approve the sale, transfer, or disposition of the said items within the said period of five years if made (1) to another registered enterprise; (2) for reasons of proven technical obsolescence; or (3) for purposes of replacement to improve

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and/or expand the operations of the enterprise (f) Tax Credit for Withholding Tax on Interest. A tax credit for taxes withheld on interest payments on foreign loans shall be given a registered enterprise when (1) no such credit is enjoyed by the lender-remittee in his country and (2) the registered enterprise has assumed the liability for payment of the tax due from the lender-remittee. (g) Employment of Foreign Nationals. Subject to the provisions of Section twenty-nine of Commonwealth Act Numbered Six hundred thirteen, as amended, an enterprise may, within five years from registration, employ foreign nationals in supervisory, technical or advisory positions not in excess of five per centum of its total personnel in each such category: Provided, That in no case shall each employment exceed five years. The employment of foreign nationals after five years from registration, or within such five years but in excess of the proportion herein provided, shall be governed by Section twenty of Commonwealth Act Numbered Six hundred thirteen, as amended. Foreign nationals under employment contract within the purview of this Act, their spouse and unmarried children under twenty-one years of age, who are not excluded by Section twentynine of Commonwealth Act Numbered Six hundred thirteen, shall be permitted to enter and reside in the Philippines during the period of employment of such foreign nationals. A registered enterprise shall train Filipinos in administrative, supervisory, and technical skills and shall submit annual reports on such training to the Board of Investments. (h) Deduction for Expansion Reinvestment. When a registered enterprise reinvests its undistributed profit or surplus by actual transfer thereof to the capital stock of the corporation for procurement of machinery, equipment and spare parts previously approved by the Board under Subsections "d" and "e" hereof or for the expansion of machinery and equipment used in production or for the construction of the buildings, improvements or other facilities for the installation of the said machinery and equipment, the amount so reinvested shall be allowed as a deduction from its taxable income in the year in which such reinvestment was made: Provided, (1) That prior approval by the Board of such reinvestment was obtained by the registered enterprise planning such reinvestment, and (2) that the registered enterprise does not reduce its capital stock represented by the reinvestment within seven years from the date such reinvestment was made. In the event the registered enterprise does not order the machinery and equipment within two (2) years from the date the reinvestment was made or reduces its capital stock represented by the reinvestment within a period of seven years from the date of reinvestment, a recomputation of the income tax liability therefor shall be made for the period when the deduction was made, and the proper taxes shall be assessed and paid with interest. (i) Anti-Dumping Protection. Upon recommendation of the Board, made after notice and hearing, the President shall issue a directive banning for a limited period the importation of goods or commodities which, as provided in Section three hundred one (a) of the Tariff and Customs Code of the Philippines, unfairly or unnecessarily complete with those produced by registered enterprises: Provided, (1) That the Board certifies to the satisfactory quality of the goods or commodities produced or manufactured by the registered enterprises; and (2) that the enterprises agree not to increase the price of these goods or commodities during this period, unless for good cause, the Board allows such an increase. (j) Protection from Government Competition. No agency or instrumentality of the government shall import, or allow the importation tax and duty free of products or items that are being produced or manufactured by registered enterprises, except when the President determines that the national interest so requires or when international commitments require international competitive bidding. SECTION 8. Incentives to a Pioneer Enterprise. In addition to the incentives provided in the preceding section, pioneer enterprises shall be granted the following incentives benefits:

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G.R. No. 162243

(a) Tax Exemptions. Exemptions from all taxes under the National Internal Revenue Code, except income tax, to the following extent: (1) One hundred per cent up to December 31, 1972; (2) Seventy-five per cent up to December 31, 1975; (3) Fifty per cent up to December 31, 1977; (4) Twenty per cent up to December 31, 1979; (5) Ten per cent up to December 31, 1981; (b) Employment of Foreign Nationals. Subject to the provisions of Section twenty nine of Commonwealth Act Numbered Six hundred thirteen, as amended, to employ and bring into the Philippines foreign nationals under the following conditions: (1) That all such foreign nationals shall register with the Board; (2) That the employment of all foreign nationals shall cease and they shall be repatriated five years after the registered enterprise has begun operating: Provided, That when the majority of the capital stock of the pioneer enterprise is owned by foreign investors, the positions of president, treasurer and general manager, or their equivalents, may be retained by foreign nationals. In exceptional cases, the Board may allow employment of foreign nationals in other positions that cannot be filled by the Philippine nationals, but in such cases the limitations of Section seven paragraph (g) of this Act shall apply. Foreign nationals under employment contract within the purview of this Act, their spouse and unmarried children under twenty-one years of age, who are not excluded by Section twentynine of Commonwealth Act Numbered Six hundred thirteen, shall be permitted to enter and reside in the Philippines during the period of employment of such foreign nationals. (c) Post-Operative Tariff Protection. Upon recommendation of the Board, the President, with or without the recommendation of the Tariff Commission or the National Economic Council, shall issue a certification that a pioneer industry shall be entitled to post-operative tariff protection to an extent not exceeding fifty per cent of the dutiable value of imported items similar to those being manufactured or produced by a pioneer enterprise, unless a higher rate or amount is provided for in the Tariff Code or pertinent laws. Said tariff shall take effect automatically upon certification by the Board that the pioneer enterprise is operating on a commercial scale: Provided, That said tariff, once operative, may be modified in accordance with Section four hundred one of the Tariff and Customs Code. SECTION 9. Special Export Incentives for Registered Enterprises. Registered enterprises shall be entitled to the following special incentives for exports of their completely finished products and commodities: (a) Double Deduction of Promotional Expenses. To deduct from taxable income twice the amount of the ordinary and necessary expenses incurred for the purpose of promoting the sale of their products abroad; (b) Double Deduction of Shipping Costs. To deduct from taxable income twice the amount of shipping freight incurred in connection with the export of their products, if the shipments are made in vessels of Philippine registry to their regular ports of call; and to deduct one hundred fifty per cent (150%) of the freight when shipments are made in vessels of foreign registry to a port which is not a regular port of call of Philippine vessels; (c) Special Tax Credit on Raw Materials. A tax credit equivalent to seven per cent (7%) of the total cost of the raw materials and supplies purchased by registered enterprises or an amount equivalent to the taxes actually paid by registered enterprises on said raw materials, whichever is higher, to the extent used in manufacturing exported products and commodities.

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Before registered enterprises may avail themselves of the foregoing exports incentives benefits, the shall apply first with the Board, which shall approve the application upon proof: (1) that the enterprise proposes to engage in good faith in creating a market for its products abroad; (2) that the product to be exported is one included in the government priorities plan as suitable for export, or if not so included that its export will not adversely affect the needs of the domestic market for the finished product to be exported or for the domestic raw materials used in its manufacture; (3) that the enterprise has or will set up an adequate accounting system to segregate revenues, purchases and expenses of its export market operations from those of its domestic market operations; and (4) that the exported products and commodities meet the standards of quality established by the Bureau of Standards or, in default thereof, by the Board. SECTION 10. Preference in Grant of Government Loans. Government financial institutions such as the Development Bank of the Philippines, Philippine National Bank, Government Service Insurance System, Social Security System, Land Bank, and such other government institutions as are now engaged or may hereafter engage in financing or investment operations shall, in accordance with and to the extent allowed by the enabling provisions of their respective charters or applicable laws, accord high priority to applications for financial assistance submitted by pioneer and other registered enterprises, whether such financial assistance be in the form of equity participation in preferred, common, or preferred convertible shares of stock, or in loans and guarantees, and shall facilitate the processing thereof and the release of the funds therefor. However, no financial assistance shall be extended under this section to any investor or enterprise that is not a Philippine National. The above-mentioned financial institutions, to the extent allowed by their respective charters or applicable laws, shall contribute to the capital of a registered enterprise whenever the said contribution would enable the formation of pioneer or other registered enterprise with at least sixty per cent control by Philippine Nationals: Provided, That the capital contribution of the said financial institutions shall be limited to the amount that cannot be contributed by private Filipino investors, and shall in no case exceed thirty per cent of the total capitalization of the pioneer or other registered enterprises. The shares representing the contribution of the said financial institutions shall be offered for public sale to Philippine Nationals through all the members of a registered Philippine stock exchange. To facilitate the implementation of the provisions of this Section, all the said financial institutions shall coordinate their financial assistance programs with each other, exchange relevant information about applicants and applications, and submit a monthly report to the Board showing the amount of funds available for financial assistance to pioneer or other registered enterprises. The Board shall recommend to the Board of Directors of each such financial institution what order of priority shall be given the applications of pioneer and other registered enterprises, or of applicants that propose to seek registration as such. SECTION 11. Private Financial Assistance. Any provision of existing laws to the contrary notwithstanding, the Insurance Commissioner is hereby authorized to allow insurance companies, under such rules and regulations as he may issue, to invest in new issues of stock of registered enterprises, notwithstanding that said enterprises may not have paid regular dividends, to the extent set out in section two hundred, paragraphs (c) and (f) of the Insurance Act, as amended: Provided, that said investments are diversified. SECTION 12. Loans for Investment. The Government Service Insurance System and the Social Security System shall extend to their respective members five-year loans at a rate of interest not to exceed six per cent per annum for the purchase of shares of stock in any registered enterprise: Provided, That (1) the shares so purchased shall be deposited in escrow with the lending institution for the full five-year term of the loan; partial releases of the shares shall, however, be allowed to the extent of the payment of amortization made therefor; (2) such loans shall be amortized in sixty equal monthly installments which shall be withheld by the employer from the monthly salary of the employee concerned and remitted to the lending institution by the employer; but any and all dividends earned by shares of stock while they are held in escrow shall be delivered to the employee; and (3) the maximum loan available to each employee in any one calendar year shall not exceed fifty per centum of the employee's annual gross income: Provided, further, That the total investment of the

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government financial institution concerned, consisting of its direct investment in the registered enterprise and the loans it has extended to its respective members which have been invested by the members in a registered enterprise, shall not be more than forty-nine per cent (49%) of the total capitalization of the registered enterprise in which the investments have been made.
55 Section 9. Private property shall not be taken for public use without just compensation. 56 Section 18. The State may, in the interest of national welfare or defense, establish and operate vital

industries and, upon payment of just compensation, transfer to public ownership utilities and other private enterprises to be operated by the Government.
57 PICOPs Motion for Reconsideration, pp. 17-18. rollo pp. 1386a-1386b. 58 Riss & Co. v. Wallace, 195 S.W. 2d 881, 885, 239 Mo.App. 979, cited in Words and Phrases, Permanent

Edition, Vol. 29, p. 13.


59 E.O. No. 192, otherwise known as the "Reorganization Act of the Department of Environment and

Natural Resources," Section 4.


60 Exhibit 7-g-2, Folder of Exhibits, Vol. 3, pp. 480-482. 61 Motion for Reconsideration, p. 30. 62 E.O. No. 192, otherwise known as the "Reorganization Act of the Department of Environment and

Natural Resources," Section 4.


63 Rollo (G.R. No. 162243), p. 252. 64 Folder of Exhibits, Vol. 2, pp. 398-399. 65 See Rules of Court, Rule 130, Section 3(a). 66 Folder of Exhibits, Vol. 3, pp. 433-434. 67 Exhibit 6, p. 440; Folder of Exhibits, Vol. 3. 68 Id. 69 Id. 70 TSN, 1 October 2002, pp. 13-14. 71 Exhibit NN, p. 349; Folder of Exhibits, Vol. 2. 72 Records, Vol. 2, pp. 457-458. 73 Folder of Exhibits, Volume 3, p. 423. 74 Folder of Exhibits, Volume 3, pp. 423-425. 75 Id. 76 Section 36, Rule 130 of the Rules of Court. 77 People v. Parungao, 332 Phil. 917, 924 (1996).

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G.R. No. 162243 78 TSN, Volume 2, 1 October 2002, p. 32. 79 123 Phil. 272, 277 (1966). 80 Alvarez v. PICOP Resources, Inc., G.R. No. 162243, 29 November 2006, 508 SCRA 498, 553. 81 Id. 82 Oposa v. Factoran, Jr., G.R. No. 101083, 30 July 1993, 224 SCRA 792, 812; Tan v. Director of Forestry,

210 Phil. 244 (1983).


83 400 Phil. 904, 1012-1013 (2000), Separate Opinion of Justice Reynato Puno. 84 PICOPs Motion for Reconsideration, p. 41; rollo, pp. 1390a-1390b. 85 PICOPs Motion for Reconsideration, pp. 43-44; rollo, pp. 1390a-1390b. 86 Blacks Law Dictionary (Eighth Edition), p. 265. 87 Id. 88 Rollo (G.R. No. 162243), pp. 470-472. 89 Folder of Exhibits, Vol. 2, Exhibit OO, p. 351. 90 Folder of Exhibits, Vol. 2, Exhibit O-1, p. 176; Folder of Exhibits, Vol. 3, Exhibit 7-g, p. 475. 91 Folder of Exhibits, Vol. 2, Exhibit OO, p. 351. 92 Rollo (G.R. No. 162243), p. 230. 93 PICOPs Motion for Reconsideration, pp. 48-49, rollo, pp. 1391a-1391b. 94 Supra note 26.

The Lawphil Project - Arellano Law Foundation

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G.R. No. 98332

Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. 98332 January 16, 1995 MINERS ASSOCIATION OF THE PHILIPPINES, INC., petitioner, vs. HON. FULGENCIO S. FACTORAN, JR., Secretary of Environment and Natural Resources, and JOEL D. MUYCO, Director of Mines and Geosciences Bureau, respondents .

ROMERO, J.: The instant petition seeks a ruling from this Court on the validity of two Administrative Orders issued by the Secretary of the Department of Environment and Natural Resources to carry out the provisions of certain Executive Orders promulgated by the President in the lawful exercise of legislative powers. Herein controversy was precipitated by the change introduced by Article XII, Section 2 of the 1987 Constitution on the system of exploration, development and utilization of the country's natural resources. No longer is the utilization of inalienable lands of public domain through "license, concession or lease" under the 1935 and 1973 Constitutions 1 allowed under the 1987 Constitution. The adoption of the concept of jura regalia 2 that all natural resources are owned by the State embodied in the 1935, 1973 and 1987 Constitutions, as well as the recognition of the importance of the country's natural resources, not only for national economic development, but also for its security and national defense, 3 ushered in the adoption of the constitutional policy of "full control and supervision by the State" in the exploration, development and utilization of the country's natural resources. The options open to the State are through direct undertaking or by entering into co-production, joint venture; or production-sharing agreements, or by entering into agreement with foreign-owned corporations for large-scale exploration, development and utilization. Article XII, Section 2 of the 1987 Constitution provides: Sec. 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 product-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 The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country. In such agreements, the

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State shall promote the development and use of local scientific and technical resources . The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution. (Emphasis supplied) Pursuant to the mandate of the above-quoted provision, legislative acts 4 were successively issued by the President in the exercise of her legislative power. 5 To implement said legislative acts, the Secretary of the Department of Environment and Natural Resources (DENR) in turn promulgated Administrative Order Nos. 57 and 82, the validity and constitutionality of which are being challenged in this petition. On July 10, 1987, President Corazon C. Aquino, in the exercise of her then legislative powers under Article II, Section 1 of the Provisional Constitution and Article XIII, Section 6 of the 1987 Constitution, promulgated Executive Order No. 211 prescribing the interim procedures in the processing and approval of applications for the exploration, development and utilization of minerals pursuant to the 1987 Constitution in order to ensure the continuity of mining operations and activities and to hasten the development of mineral resources. The pertinent provisions read as follows: Sec. 1. Existing mining permits, licenses, leases and other mining grants issued by the Department of Environment and Natural Resources and Bureau of Mines and Geo-Sciences, including existing operating agreements and mining service contracts, shall continue and remain in full force and effect, subject to the same terms and conditions as originally granted and/or approved. Sec. 2. Applications for the exploration, development and utilization of mineral resources, including renewal applications for approval of operating agreements and mining service contracts, shall be accepted and processed and may be approved; concomitantly thereto, declarations of locations and all other kinds of mining applications shall be accepted and registered by the Bureau of Mines and Geo-Sciences. Sec. 3. The processing, evaluation and approval of all mining applications, declarations of locations, operating agreements and service contracts as provided for in Section 2 above, shall be governed by Presidential Decree No. 463, as amended, other existing mining laws and their implementing rules and regulations: Provided, however, that the privileges granted, as well as the terms and conditions thereof shall be subject to any and all modifications or alterations which Congress may adopt pursuant to Section 2, Article XII of the 1987 Constitution. On July 25, 1987, President Aquino likewise promulgated Executive Order No. 279 authorizing the DENR Secretary to negotiate and conclude joint venture, co-production, or production-sharing agreements for the exploration, development and utilization of mineral resources, and prescribing the guidelines for such agreements and those agreements involving technical or financial assistance by foreign-owned corporations for large-scale exploration, development, and utilization of minerals. The pertinent provisions relevant to this petition are as follows: Sec. 1. The Secretary of the Department of Environment and Natural Resources (hereinafter referred to as "the Secretary") is hereby authorized to negotiate and enter into, for and in behalf of the Government, joint venture, co-production, or production-sharing agreements for the exploration, development, and utilization of mineral resources with any Filipino citizens, or corporation or association at least sixty percent (60%) of whose capital is owned by Filipino citizens. Such joint venture, co-production, or production-sharing agreements may be for a period not exceeding twentyfive years, renewable for not more than twenty-five years, and shall include the minimum terms and conditions prescribed in Section 2 hereof. In the execution of a joint venture, co-production or production agreements, the contracting parties, including the Government, may consolidate two or more contiguous or geologically related mining claims or leases and consider them as one contract area for purposes of determining the subject of the joint venture, co-production, or production-sharing agreement. xxx xxx xxx

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Sec. 6. The Secretary shall promulgate such supplementary rules and regulations as may be necessary to effectively implement the provisions of this Executive Order. Sec. 7. All provisions of Presidential Decree No. 463, as amended, other existing mining laws, and their implementing rules and regulations, or parts thereof, which are not inconsistent with the provisions of this Executive Order, shall continue in force and effect. Pursuant to Section 6 of Executive Order No. 279, the DENR Secretary issued on June 23, 1989 DENR Administrative Order No. 57, series of 1989, captioned "Guidelines of Mineral Production Sharing Agreement under Executive Order No. 279." 6 Under the transitory provision of said DENR Administrative Order No. 57, embodied in its Article 9, all existing mining leases or agreements which were granted after the effectivity of the 1987 Constitution pursuant to Executive Order No. 211, except small scale mining leases and those pertaining to sand and gravel and quarry resources covering an area of twenty (20) hectares or less, shall be converted into production-sharing agreements within one (1) year from the effectivity of these guidelines. On November 20, 1980, the Secretary of the DENR Administrative Order No. 82, series of 1990, laying down the "Procedural Guidelines on the Award of Mineral Production Sharing Agreement (MPSA) through Negotiation." 7 Section 3 of the aforementioned DENR Administrative Order No. 82 enumerates the persons or entities required to submit Letter of Intent (LOIs) and Mineral Production Sharing Agreement (MPSAs) within two (2) years from the effectivity of DENR Administrative Order No. 57 or until July 17, 1991. Failure to do so within the prescribed period shall cause the abandonment of mining, quarry and sand and gravel claims. Section 3 of DENR Administrative Order No. 82 provides: Sec. 3. Submission of Letter of Intent (LOIs) and MPSAs). The following shall submit their LOIs and MPSAs within two (2) years from the effectivity of DENR A.O. 57 or until July 17, 1991. i. Declaration of Location (DOL) holders, mining lease applicants, exploration permitees, quarry applicants and other mining applicants whose mining/quarry applications have not been perfected prior to the effectivity of DENR Administrative Order No. 57. ii. All holders of DOL acquired after the effectivity of DENR A.O. No. 57. iii. Holders of mining leases or similar agreements which were granted after (the) effectivity of 1987 Constitution. Failure to submit letters of intent and MPSA applications/proposals within the prescribed period shall cause the abandonment of mining, quarry and sand and gravel claims. The issuance and the impeding implementation by the DENR of Administrative Order Nos. 57 and 82 after their respective effectivity dates compelled the Miners Association of the Philippines, Inc. 8 to file the instant petition assailing their validity and constitutionality before this Court. In this petition for certiorari , petitioner Miners Association of the Philippines, Inc. mainly contends that respondent Secretary of DENR issued both Administrative Order Nos. 57 and 82 in excess of his rule-making power under Section 6 of Executive Order No. 279. On the assumption that the questioned administrative orders do not conform with Executive Order Nos. 211 and 279, petitioner contends that both orders violate the non-impairment of contract provision under Article III, Section 10 of the 1987 Constitution on the ground that Administrative Order No. 57 unduly pre-terminates existing mining agreements and automatically converts them into production-sharing agreements within one (1) year from its effectivity date. On the other hand, Administrative Order No. 82 declares that failure to submit Letters of Intent and Mineral Production-Sharing Agreements within two (2) years from the date of effectivity of said guideline or on July 17, 1991 shall cause the abandonment of their mining, quarry and sand gravel permits. On July 2, 1991, the Court, acting on petitioner's urgent ex-parte petition for issuance of a restraining order/preliminary injunction, issued a Temporary Restraining Order, upon posting of a P500,000.00 bond, enjoining the enforcement and implementation of DENR Administrative Order Nos. 57 and 82, as amended, Series of 1989 and 1990, respectively. 9

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On November 13, 1991, Continental Marble Corporation, 10 thru its President, Felipe A. David, sought to intervene 11 in this case alleging that because of the temporary order issued by the Court , the DENR, Regional Office No. 3 in San Fernando, Pampanga refused to renew its Mines Temporary Permit after it expired on July 31, 1991. Claiming that its rights and interests are prejudicially affected by the implementation of DENR Administrative Order Nos. 57 and 82, it joined petitioner herein in seeking to annul Administrative Order Nos. 57 and 82 and prayed that the DENR, Regional Office No. 3 be ordered to issue a Mines Temporary Permit in its favor to enable it to operate during the pendency of the suit. Public respondents were acquired to comment on the Continental Marble Corporation's petition for intervention in the resolution of November 28, 1991. 12 Now to the main petition. If its argued that Administrative Order Nos. 57 and 82 have the effect of repealing or abrogating existing mining laws 13 which are not inconsistent with the provisions of Executive Order No. 279. Invoking Section 7 of said Executive Order No. 279, 14 petitioner maintains that respondent DENR Secretary cannot provide guidelines such as Administrative Order Nos. 57 and 82 which are inconsistent with the provisions of Executive Order No. 279 because both Executive Order Nos. 211 and 279 merely reiterated the acceptance and registration of declarations of location and all other kinds of mining applications by the Bureau of Mines and Geo-Sciences under the provisions of Presidential Decree No. 463, as amended, until Congress opts to modify or alter the same. In other words, petitioner would have us rule that DENR Administrative Order Nos. 57 and 82 issued by the DENR Secretary in the exercise of his rule-making power are tainted with invalidity inasmuch as both contravene or subvert the provisions of Executive Order Nos. 211 and 279 or embrace matters not covered, nor intended to be covered, by the aforesaid laws. We disagree. We reiterate the principle that the power of administrative officials to promulgate rules and regulations in the implementation of a statute is necessarily limited only to carrying into effect what is provided in the legislative enactment. The principle was enunciated as early as 1908 in the case of United States v. Barrias . 15 The scope of the exercise of such rule-making power was clearly expressed in the case of United States v. Tupasi Molina , 16 decided in 1914, thus: "Of course, the regulations adopted under legislative authority by a particular department must be in harmony with the provisions of the law, and for the sole purpose of carrying into effect its general provisions. By such regulations, of course, the law itself can not be extended. So long, however, as the regulations relate solely to carrying into effect its general provisions. By such regulations, of course, the law itself can not be extended. So long, however, as the regulations relate solely to carrying into effect the provision of the law, they are valid." Recently, the case of People v. Maceren 17 gave a brief delienation of the scope of said power of administrative officials: Administrative regulations adopted under legislative authority by a particular department must be in harmony with the provisions of the law, and should be for the sole purpose of carrying into effect its general provision. By such regulations, of course, the law itself cannot be extended (U.S. v. Tupasi Molina, supra ). An administrative agency cannot amend an act of Congress (Santos vs. Estenzo, 109 Phil. 419, 422; Teoxon vs. Members of the Board of Administrators, L-25619, June 30, 1970, 33 SCRA 585; Manuel vs. General Auditing Office, L-28952, December 29, 1971, 42 SCRA 660; Deluao v. Casteel, L-21906, August 29, 1969, 29 SCRA 350). The rule-making power must be confined to details for regulating the mode or proceeding to carry into effect the law as it has been enacted. The power cannot be extended to amending or expanding the statutory requirements or to embrace matters not covered by the statute. Rules that subvert the statute cannot be sanctioned (University of Santo Tomas v. Board of Tax Appeals, 93 Phil. 376, 382, citing 12 C.J. 845-46. As to invalid regulations, see Collector of Internal Revenue v. Villaflor, 69 Phil. 319; Wise & Co. v. Meer, 78 Phil. 655, 676; Del Mar v. Phil. Veterans Administration, L-27299, June 27, 1973, 51 SCRA 340, 349).

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xxx xxx xxx . . . The rule or regulation should be within the scope of the statutory authority granted by the legislature to the administrative agency (Davis, Administrative Law, p. 194, 197, cited in Victorias Milling Co., Inc. v. Social Security Commission, 114 Phil. 555, 558). In case of discrepancy between the basic law and a rule or regulation issued to implement said law, the basic prevails because said rule or regulations cannot go beyond the terms and provisions of the basic law (People v. Lim, 108 Phil. 1091). Considering that administrative rules draw life from the statute which they seek to implement, it is obvious that the spring cannot rise higher than its source. We now examine petitioner's argument that DENR Administrative Order Nos. 57 and 82 contravene Executive Order Nos. 211 and 279 as both operate to repeal or abrogate Presidential Decree No. 463, as amended, and other mining laws allegedly acknowledged as the principal law under Executive Order Nos. 211 and 279. Petitioner's insistence on the application of Presidential Decree No. 463, as amended, as the governing law on the acceptance and approval of declarations of location and all other kinds of applications for the exploration, development, and utilization of mineral resources pursuant to Executive Order No. 211, is erroneous. Presidential Decree No. 463, as amended, pertains to the old system of exploration, development and utilization of natural resources through "license, concession or lease" which, however, has been disallowed by Article XII, Section 2 of the 1987 Constitution. By virtue of the said constitutional mandate and its implementing law, Executive Order No. 279 which superseded Executive Order No. 211, the provisions dealing on "license, concession or lease" of mineral resources under Presidential Decree No. 463, as amended, and other existing mining laws are deemed repealed and, therefore, ceased to operate as the governing law. In other words, in all other areas of administration and management of mineral lands, the provisions of Presidential Decree No. 463, as amended, and other existing mining laws, still govern. Section 7 of Executive Order No. 279 provides, thus: Sec. 7. All provisions of Presidential Decree No. 463, as amended, other existing mining laws, and their implementing rules and regulations, or parts thereof, which are not inconsistent with the provisions of this Executive Order, shall continue in force and effect. Specifically, the provisions of Presidential Decree No. 463, as amended, on lease of mining claims under Chapter VIII, quarry permits on privately-owned lands of quarry license on public lands under Chapter XIII and other related provisions on lease, license and permits are not only inconsistent with the raison d'etre for which Executive Order No. 279 was passed, but contravene the express mandate of Article XII, Section 2 of the 1987 Constitution. It force and effectivity is thus foreclosed. Upon the effectivity of the 1987 Constitution on February 2, 1987, 18 the State assumed a more dynamic role in the exploration, development and utilization of the natural resources of the country. Article XII, Section 2 of the said Charter explicitly ordains that the exploration, development and utilization of natural resources shall be under the full control and supervision of the State. Consonant therewith, the exploration, development and utilization of natural resources may be undertaken by means of direct act of the State, or it may opt to enter into co-production, joint venture, or production-sharing agreements, or it may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country. Given these considerations, there is no clear showing that respondent DENR Secretary has transcended the bounds demarcated by Executive Order No. 279 for the exercise of his rule-making power tantamount to a grave abuse of discretion. Section 6 of Executive Order No. 279 specifically authorizes said official to promulgate such supplementary rules and regulations as may be necessary to effectively implement the provisions thereof. Moreover, the subject sought to be governed and regulated by the questioned orders is germane to the objects and purposes of Executive Order No. 279 specifically issued to carry out the mandate of Article XII, Section 2 of the 1987 Constitution. Petitioner likewise maintains that Administrative Order No. 57, in relation to Administrative Order No. 82, impairs vested rights as to violate the non-impairment of contract doctrine guaranteed under Article III, Section 10 of the 1987 Constitution because Article 9 of Administrative Order No. 57 unduly pre-terminates and automatically

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converts mining leases and other mining agreements into production-sharing agreements within one (1) year from effectivity of said guideline, while Section 3 of Administrative Order No. 82, declares that failure to submit Letters of Intent (LOIs) and MPSAs within two (2) years from the effectivity of Administrative Order No. 57 or until July 17, 1991 shall cause the abandonment of mining, quarry, and sand gravel permits. In Support of the above contention, it is argued by petitioner that Executive Order No. 279 does not contemplate automatic conversion of mining lease agreements into mining production-sharing agreement as provided under Article 9, Administrative Order No. 57 and/or the consequent abandonment of mining claims for failure to submit LOIs and MPSAs under Section 3, Administrative Order No. 82 because Section 1 of said Executive Order No. 279 empowers the DENR Secretary to negotiate and enter into voluntary agreements which must set forth the minimum terms and conditions provided under Section 2 thereof. Moreover, petitioner contends that the power to regulate and enter into mining agreements does not include the power to preterminate existing mining lease agreements. To begin with, we dispel the impression created by petitioner's argument that the questioned administrative orders unduly preterminate existing mining leases in general. A distinction which spells a real difference must be drawn. Article XII, Section 2 of the 1987 Constitution does not apply retroactively to "license, concession or lease" granted by the government under the 1973 Constitution or before the effectivity of the 1987 Constitution on February 2, 1987. The intent to apply prospectively said constitutional provision was stressed during the deliberations in the Constitutional Commission, 19 thus: MR. DAVIDE: Under the proposal, I notice that except for the [inalienable] lands of the public domain, all other natural resources cannot be alienated and in respect to [alienable] lands of the public domain, private corporations with the required ownership by Filipino citizens can only lease the same. Necessarily, insofar as other natural resources are concerned, it would only be the State which can exploit, develop, explore and utilize the same. However, the State may enter into a joint venture, co-production or production-sharing. Is that not correct? MR. VILLEGAS: Yes. MR. DAVIDE: Consequently, henceforth upon, the approval of this Constitution, no timber or forest concession, permits or authorization can be exclusively granted to any citizen of the Philippines nor to any corporation qualified to acquire lands of the public domain? MR. VILLEGAS: Would Commissioner Monsod like to comment on that? I think his answer is "yes." MR. DAVIDE: So, what will happen now license or concessions earlier granted by the Philippine government to private corporations or to Filipino citizens? Would they be deemed repealed? MR. VILLEGAS: This is not applied retroactively. They will be respected. MR. DAVIDE: In effect, they will be deemed repealed? MR. VILLEGAS: No. (Emphasis supplied) During the transition period or after the effectivity of the 1987 Constitution on February 2, 1987 until the first Congress under said Constitution was convened on July 27, 1987, two (2) successive laws, Executive Order Nos. 211 and 279, were promulgated to govern the processing and approval of applications for the exploration, development and utilization of minerals. To carry out the purposes of said laws, the questioned Administrative Order Nos. 57 and 82, now being assailed, were issued by the DENR Secretary. Article 9 of Administrative Order No. 57 provides: ARTICLE 9 TRANSITORY PROVISION

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9.1. All existing mining leases or agreements which were granted after the effectivity of the 1987 Constitution pursuant to Executive Order No. 211, except small scale mining leases and those pertaining to sand and gravel and quarry resources covering an area of twenty (20) hectares or less shall be subject to these guidelines. All such leases or agreements shall be converted into production sharing agreement within one (1) year from the effectivity of these guidelines. However, any minimum firm which has established mining rights under Presidential Decree 463 or other laws may avail of the provisions of EO 279 by following the procedures set down in this document. It is clear from the aforestated provision that Administrative Order No. 57 applies only to all existing mining leases or agreements which were granted after the effectivity of the 1987 Constitution pursuant to Executive Order No. 211. It bears mention that under the text of Executive Order No. 211, there is a reservation clause which provides that the privileges as well as the terms and conditions of all existing mining leases or agreements granted after the effectivity of the 1987 Constitution pursuant to Executive Order No. 211, shall be subject to any and all modifications or alterations which Congress may adopt pursuant to Article XII, Section 2 of the 1987 Constitution. Hence, the strictures of the non-impairment of contract clause under Article III, Section 10 of the 1987 Constitution 20 do not apply to the aforesaid leases or agreements granted after the effectivity of the 1987 Constitution, pursuant to Executive Order No. 211. They can be amended, modified or altered by a statute passed by Congress to achieve the purposes of Article XII, Section 2 of the 1987 Constitution. Clearly, Executive Order No. 279 issued on July 25, 1987 by President Corazon C. Aquino in the exercise of her legislative power has the force and effect of a statute or law passed by Congress. As such, it validly modified or altered the privileges granted, as well as the terms and conditions of mining leases and agreements under Executive Order No. 211 after the effectivity of the 1987 Constitution by authorizing the DENR Secretary to negotiate and conclude joint venture, co-production, or production-sharing agreements for the exploration, development and utilization of mineral resources and prescribing the guidelines for such agreements and those agreements involving technical or financial assistance by foreign-owned corporations for large-scale exploration, development, and utilization of minerals. Well -settled is the rule, however, that regardless of the reservation clause, mining leases or agreements granted by the State, such as those granted pursuant to Executive Order No. 211 referred to this petition, are subject to alterations through a reasonable exercise of the police power of the State. In the 1950 case of Ongsiako v. Gamboa, 21 where the constitutionality of Republic Act No. 34 changing the 50-50 sharecropping system in existing agricultural tenancy contracts to 55-45 in favor of tenants was challenged, the Court, upholding the constitutionality of the law, emphasized the superiority of the police power of the State over the sanctity of this contract: The prohibition contained in constitutional provisions against: impairing the obligation of contracts is not an absolute one and it is not to be read with literal exactness like a mathematical formula. Such provisions are restricted to contracts which respect property, or some object or value, and confer rights which may be asserted in a court of justice, and have no application to statute relating to public subjects within the domain of the general legislative powers of the State, and involving the public rights and public welfare of the entire community affected by it. They do not prevent a proper exercise by the State of its police powers. By enacting regulations reasonably necessary to secure the health, safety, morals, comfort, or general welfare of the community, even the contracts may thereby be affected; for such matter can not be placed by contract beyond the power of the State shall regulates and control them. 22 In Ramas v. CAR and Ramos 23 where the constitutionality of Section 14 of Republic Act No. 1199 authorizing the tenants to charge from share to leasehold tenancy was challenged on the ground that it impairs the obligation of contracts, the Court ruled that obligations of contracts must yield to a proper exercise of the police power when such power is exercised to preserve the security of the State and the means adopted are reasonably adapted to the accomplishment of that end and are, therefore, not arbitrary or oppressive. The economic policy on the exploration, development and utilization of the country's natural resources under Article XII, Section 2 of the 1987 Constitution could not be any clearer. As enunciated in Article XII, Section 1 of the 1987 Constitution, the exploration, development and utilization of natural resources under the new system mandated in Section 2, is geared towards a more equitable distribution of opportunities, income, and wealth; a

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sustained increase in the amount of goods and services produced by the nation for the benefit of the people; and an expanding productivity as the key to raising the quality of life for all, especially the underprivileged. The exploration, development and utilization of the country's natural resources are matters vital to the public interest and the general welfare of the people. The recognition of the importance of the country's natural resources was expressed as early as the 1984 Constitutional Convention. In connection therewith, the 1986 U.P. Constitution Project observed: "The 1984 Constitutional Convention recognized the importance of our natural resources not only for its security and national defense. Our natural resources which constitute the exclusive heritage of the Filipino nation, should be preserved for those under the sovereign authority of that nation and for their prosperity. This will ensure the country's survival as a viable and sovereign republic." Accordingly, the State, in the exercise of its police power in this regard, may not be precluded by the constitutional restriction on non-impairment of contract from altering, modifying and amending the mining leases or agreements granted under Presidential Decree No. 463, as amended, pursuant to Executive Order No. 211. Police Power, being co-extensive with the necessities of the case and the demands of public interest; extends to all the vital public needs. The passage of Executive Order No. 279 which superseded Executive Order No. 211 provided legal basis for the DENR Secretary to carry into effect the mandate of Article XII, Section 2 of the 1987 Constitution. Nowhere in Administrative Order No. 57 is there any provision which would lead us to conclude that the questioned order authorizes the automatic conversion of mining leases and agreements granted after the effectivity of the 1987 Constitution, pursuant to Executive Order No. 211, to production-sharing agreements. The provision in Article 9 of Administrative Order No. 57 that "all such leases or agreements shall be converted into production sharing agreements within one (1) year from the effectivity of these guidelines" could not possibility contemplate a unilateral declaration on the part of the Government that all existing mining leases and agreements are automatically converted into production-sharing agreements. On the contrary, the use of the term "production-sharing agreement" if they are so minded. Negotiation negates compulsion or automatic conversion as suggested by petitioner in the instant petition. A mineral production-sharing agreement (MPSA) requires a meeting of the minds of the parties after negotiations arrived at in good faith and in accordance with the procedure laid down in the subsequent Administrative Order No. 82. We, therefore, rule that the questioned administrative orders are reasonably directed to the accomplishment of the purposes of the law under which they were issued and were intended to secure the paramount interest of the public, their economic growth and welfare. The validity and constitutionality of Administrative Order Nos. 57 and 82 must be sustained, and their force and effect upheld. We now, proceed to the petition-in-intervention. Under Section 2, Rule 12 of the Revised Rules of Court, an intervention in a case is proper when the intervenor has a "legal interest in the matter in litigation, or in the success of either of the parties, or an interest against both, or when he is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer thereof. "Continental Marble Corporation has not sufficiently shown that it falls under any of the categories mentioned above. The refusal of the DENR, Regional Office No. 3, San Fernando, Pampanga to renew its Mines Temporary Permit does not justify such an intervention by Continental Marble Corporation for the purpose of obtaining a directive from this Court for the issuance of said permit. Whether or not Continental Marble matter best addressed to the appropriate government body but certainly, not through this Court. Intervention is hereby DENIED. WHEREFORE, the petition is DISMISSED for lack of merit. The Temporary Restraining Order issued on July 2, 1991 is hereby LIFTED. SO ORDERED. Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Bellosillo, Melo, Quiason, Puno, Vitug, Kapunan and Mendoza, JJ., concur.

Footnotes 1 Article XIII, Section 1 of the 1935 Constitution provides:

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Section 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, and other natural resources of the Philippines belong to the State, and their disposition, exploitation, development, or utilization shall be limited to citizens of the Philippines, or to corporation or associations at least sixty per centum of the capital of which is owned by such citizens, subject to any existing right, grant, lease or concession at the time of the inauguration of the Government established under this Constitution. Natural resources, with the exception of public agricultural land, shall not be alienated, and no license, concession, or lease for the exploitation, development, or utilization of any of the natural resources shall be granted for a period exceeding twenty-five years, renewable for another twenty-five years, except as to water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, in which cases beneficial use may be the measure and the limit of the grant. xxx xxx xxx Article XIV, Section 8 of the 1973 Constitution provides: Section 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, wildlife, and other natural resources of the Philippines belong to the State. With the exception of agricultural, industrial or commercial, residential, and resettlement lands of the public domain, natural resources shall not be alienated, and no license, concession, or lease for the exploration, development, exploitation, or utilization of any of the natural resources shall be granted for a period exceeding twenty-five years, renewable for not more than twenty-five years, except as to water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, in which cases, beneficial use may be the measure and the limit of the grant. 2 Cario v. Insular Government, 212 US 449 (1909); Valenton v. Mariano, 3 Phil. 537 (1904); Lee Hung Hok v. David, G.R. No. L-30389, December 27, 1972, 48 SCRA 372, 377. 3 1986 U.P. Law Constitution Project, Vol. I, pp. 8-11. 4 Executive Order No. 211 (July 10, 1987) and Executive Order No. 279 (July 25, 1987). 5 Article II, Section 1, 1987 Provisional Constitution; Article XIII, Section 6, 1987 Constitution; Tan v. Marquez, G.R. No. 93288, October 25, 1990, Minute Resolution, En Banc. 6 Published in the July 3, 1989 issue of the Philippine Daily Inquirer, a newspaper of general circulation, and became effective on July 18, 1989. 7 Published in the December 21, 1990 issue of the Philippine Daily Inquirer, a newspaper of general circulation, and became effective on January 5, 1991. 8 A non-stock and non-profit organization duly formed and existing under and by virtue of the laws of the Philippines with principal office at Suite 609 Don Santiago Building whose members include mining prospectors and claimowners or claimholders. 9 Rollo, pp. 46-48. 10 A domestic corporation engaged in the business of marble mining with factory processing plant at 24 General Luis St., Novaliches, Quezon City. It has filed a Declaration of Location dated November 13, 1973 for a placer mine known as "MARGEL" located at Matitic, Norzagaray, Bulacan. It has been operating as a mining entity and exporting its finished products (marble tiles) by virtue of a Mines Temporary Permit issued by the DENR. 11 Rollo, pp. 99-104. 12 Rollo, p. 114. 13 Presidential Decree No. 463, as amended, otherwise known as "The Mineral Resources Development Decree of 1974" promulgated on May 17, 1974.

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14 Section 7, Executive Order No. 279 provides: All provisions of Presidential Decree No. 463, as amended, other existing mining laws, and their implementing rules and regulations, or parts thereof, which are not inconsistent with the provisions of this Executive Order, shall continue in force and effect. 15 11 Phil. 327, 330 (1908). 16 29 Phil. 120, 124 (1914). 17 No. L-32166, October 18, 1977, 79 SCRA 450. 18 De Leon v. Esguerra, G.R. No. 78058, August 31, 187, 153 SCRA 602. 19 Record of the Constitutional Commission, Proceedings and Debate, Vol. III, p. 260. 20 Article III, Section 10 of the 1987 Constitutions provides: No law impairing the obligation of contracts shall be passed. 21 86 Phil. 50 (1950). 22 86 Phil. at 54-55. 23 120 Phil. 168 (1964).
The Lawphil Project - Arellano Law Foundation

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G.R. No. 122156

Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. 122156 February 3, 1997 MANILA PRINCE HOTEL petitioner, vs. GOVERNMENT SERVICE INSURANCE SYSTEM, MANILA HOTEL CORPORATION, COMMITTEE ON PRIVATIZATION and OFFICE OF THE GOVERNMENT CORPORATE COUNSEL, respondents.

BELLOSILLO, J.: The FiIipino First Policy enshrined in the 1987 Constitution, i .e., in the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos , 1 is in oked by petitioner in its bid to acquire 51% of the shares of the Manila Hotel Corporation (MHC) which owns the historic Manila Hotel. Opposing, respondents maintain that the provision is not self-executing but requires an implementing legislation for its enforcement. Corollarily, they ask whether the 51% shares form part of the national economy and patrimony covered by the protective mantle of the Constitution. The controversy arose when respondent Government Service Insurance System (GSIS), pursuant to the privatization program of the Philippine Government under Proclamation No. 50 dated 8 December 1986, decided to sell through public bidding 30% to 51% of the issued and outstanding shares of respondent MHC. The winning bidder, or the eventual "strategic partner," is to provide management expertise and/or an international marketing/reservation system, and financial support to strengthen the profitability and performance of the Manila Hotel. 2 In a close bidding held on 18 September 1995 only two (2) bidders participated: petitioner Manila Prince Hotel Corporation, a Filipino corporation, which offered to buy 51% of the MHC or 15,300,000 shares at P41.58 per share, and Renong Berhad, a Malaysian firm, with ITT-Sheraton as its hotel operator, which bid for the same number of shares at P44.00 per share, or P2.42 more than the bid of petitioner. Pertinent provisions of the bidding rules prepared by respondent GSIS state I. EXECUTION OF THE NECESSARY CONTRACTS WITH GSIS/MHC 1. The Highest Bidder must comply with the conditions set forth below by October 23, 1995 (reset to November 3, 1995) or the Highest Bidder will lose the right to purchase the Block of Shares and GSIS will instead offer the Block of Shares to the other Qualified Bidders: a. The Highest Bidder must negotiate and execute with the GSIS/MHC the Management Contract, International Marketing/Reservation System Contract or other type of contract specified by the Highest Bidder in its strategic plan for the Manila Hotel. . . . b. The Highest Bidder must execute the Stock Purchase and Sale Agreement with GSIS .... K. DECLARATION OF THE WINNING BIDDER/STRATEGIC PARTNER The Highest Bidder will be declared the Winning Bidder/Strategic Partner after the following conditions are met: a. Execution of the necessary contracts with GSIS/MHC not later than October 23, 1995

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(reset to November 3, 1995); and


b. Requisite approvals from the GSIS/MHC and COP (Committee on Privatization)/OGCC (Office of the Government Corporate Counsel) are obtained. 3

Pending the declaration of Renong Berhad as the winning bidder/strategic partner and the execution of the necessary contracts, petitioner in a letter to respondent GSIS dated 28 September 1995 matched the bid price of P44.00 per share tendered by Renong Berhad. 4 In a subsequent letter dated 10 October 1995 petitioner sent a manager's check issued by Philtrust Bank for Thirty-three Million Pesos (P33.000.000.00) as Bid Security to match the bid of the Malaysian Group, Messrs . Renong Berhad . . . 5 which respondent GSIS refused to accept. On 17 October 1995, perhaps apprehensive that respondent GSIS has disregarded the tender of the matching bid and that the sale of 51% of the MHC may be hastened by respondent GSIS and consummated with Renong Berhad, petitioner came to this Court on prohibition and mandamus . On 18 October 1995 the Court issued a temporary restraining order enjoining respondents from perfecting and consummating the sale to the Malaysian firm. On 10 September 1996 the instant case was accepted by the Court En Banc after it was referred to it by the First Division. The case was then set for oral arguments with former Chief Justice Enrique M. Fernando and Fr. Joaquin G. Bernas, S.J., as amici curiae . In the main, petitioner invokes Sec. 10, second par., Art. XII, of the 1987 Constitution and submits that the Manila Hotel has been identified with the Filipino nation and has practically become a historical monument which reflects the vibrancy of Philippine heritage and culture . It is a proud legacy of an earlier generation of Filipinos who believed in the nobility and sacredness of independence and its power and capacity to release the full potential of the Filipino people . To all intents and purposes, it has become a part of the national patrimony . 6 Petitioner also argues that since 51% of the shares of the MHC carries with it the ownership of the business of the hotel which is owned by respondent GSIS, a government-owned and controlled corporation, the hotel business of respondent GSIS being a part of the tourism industry is unquestionably a part of the national economy. Thus, any transaction involving 51% of the shares of stock of the MHC is clearly covered by the term national economy, to which Sec. 10, second par., Art. XII, 1987 Constitution, applies. 7 It is also the thesis of petitioner that since Manila Hotel is part of the national patrimony and its business also unquestionably part of the national economy petitioner should be preferred after it has matched the bid offer of the Malaysian firm. For the bidding rules mandate that if for any reason, the Highest Bidder cannot be awarded the Block of Shares, GSIS may offer this to the other Qualified Bidders that have validly submitted bids provided that these Qualified Bidders are willing to match the highest bid in terms of price per share . 8 Respondents except. They maintain that: First , Sec. 10, second par., Art. XII, of the 1987 Constitution is merely a statement of principle and policy since it is not a self-executing provision and requires implementing legislation(s) . . . Thus, for the said provision to Operate, there must be existing laws "to lay down conditions under which business may be done ." 9 Second , granting that this provision is self-executing, Manila Hotel does not fall under the term national patrimony which only refers to lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna and all marine wealth in its territorial sea, and exclusive marine zone as cited in the first and second paragraphs of Sec. 2, Art. XII, 1987 Constitution. According to respondents, while petitioner speaks of the guests who have slept in the hotel and the events that have transpired therein which make the hotel historic, these alone do not make the hotel fall under the patrimony of the nation. What is more, the mandate of the Constitution is addressed to the State, not to respondent GSIS which possesses a personality of its own separate and distinct from the Philippines as a State. Third, granting that the Manila Hotel forms part of the national patrimony , the constitutional provision invoked is still inapplicable since what is being sold is only 51% of the outstanding shares of the corporation, not the hotel building nor the land upon which the building stands. Certainly, 51% of the equity of the MHC cannot be considered part of the national patrimony . Moreover, if the disposition of the shares of the MHC is really contrary to the Constitution, petitioner should have questioned it right from the beginning and not after it had lost in the bidding.
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Fourth , the reliance by petitioner on par. V., subpar. J. 1., of the bidding rules which provides that if for any reason, the Highest Bidder cannot be awarded the Block of Shares, GSIS may offer this to the other Qualified Bidders that have validly submitted bids provided that these Qualified Bidders are willing to match the highest bid in terms of price per share , is misplaced. Respondents postulate that the privilege of submitting a matching bid has not yet arisen since it only takes place if for any reason, the Highest Bidder cannot be awarded the Block of Shares . Thus the submission by petitioner of a matching bid is premature since Renong Berhad could still very well be awarded the block of shares and the condition giving rise to the exercise of the privilege to submit a matching bid had not yet taken place. Finally , the prayer for prohibition grounded on grave abuse of discretion should fail since respondent GSIS did not exercise its discretion in a capricious, whimsical manner, and if ever it did abuse its discretion it was not so patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law. Similarly, the petition for mandamus should fail as petitioner has no clear legal right to what it demands and respondents do not have an imperative duty to perform the act required of them by petitioner. We now resolve. A constitution is a system of fundamental laws for the governance and administration of a nation. It is supreme, imperious, absolute and unalterable except by the authority from which it emanates. It has been defined as the fundamental and paramount law of the nation . 10 It prescribes the permanent framework of a system of government, assigns to the different departments their respective powers and duties, and establishes certain fixed principles on which government is founded. The fundamental conception in other words is that it is a supreme law to which all other laws must conform and in accordance with which all private rights must be determined and all public authority administered. 11 Under the doctrine of constitutional supremacy, if a law or contract violates any norm of the constitution that law or contract whether promulgated by the legislative or by the executive branch or entered into by private persons for private purposes is null and void and without any force and effect. Thus, since the Constitution is the fundamental, paramount and supreme law of the nation, it is deemed written in every statute and contract. Admittedly, some constitutions are merely declarations of policies and principles. Their provisions command the legislature to enact laws and carry out the purposes of the framers who merely establish an outline of government providing for the different departments of the governmental machinery and securing certain fundamental and inalienable rights of citizens. 12 A provision which lays down a general principle, such as those found in Art. II of the 1987 Constitution, is usually not self-executing. But a provision which is complete in itself and becomes operative without the aid of supplementary or enabling legislation, or that which supplies sufficient rule by means of which the right it grants may be enjoyed or protected, is self-executing. Thus a constitutional provision is selfexecuting if the nature and extent of the right conferred and the liability imposed are fixed by the constitution itself, so that they can be determined by an examination and construction of its terms, and there is no language indicating that the subject is referred to the legislature for action. 13 As against constitutions of the past, modern constitutions have been generally drafted upon a different principle and have often become in effect extensive codes of laws intended to operate directly upon the people in a manner similar to that of statutory enactments, and the function of constitutional conventions has evolved into one more like that of a legislative body. Hence, unless it is expressly provided that a legislative act is necessary to enforce a constitutional mandate, the presumption now is that all provisions of the constitution are self-executing If the constitutional provisions are treated as requiring legislation instead of self-executing, the legislature would have the power to ignore and practically nullify the mandate of the fundamental law. 14 This can be cataclysmic. That is why the prevailing view is, as it has always been, that
. . . in case of doubt, the Constitution should be considered self-executing rather than non-self-executing . . . . Unless the contrary is clearly intended, the provisions of the Constitution should be considered selfexecuting, as a contrary rule would give the legislature discretion to determine when, or whether, they shall be effective. These provisions would be subordinated to the will of the lawmaking body, which could make them entirely meaningless by simply refusing to pass the needed implementing statute. 15

Respondents argue that Sec. 10, second par., Art. XII, of the 1987 Constitution is clearly not self-executing, as they quote from discussions on the floor of the 1986 Constitutional Commission MR. RODRIGO. Madam President, I am asking this question as the Chairman of the

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Committee on Style. If the wording of "PREFERENCE" is given to QUALIFIED FILIPINOS," can it be understood as a preference to qualified Filipinos vis-a-vis Filipinos who are not qualified. So, why do we not make it clear? To qualified Filipinos as against aliens? THE PRESIDENT. What is the question of Commissioner Rodrigo? Is it to remove the word "QUALIFIED?". MR. RODRIGO. No, no, but say definitely "TO QUALIFIED FILIPINOS" as against whom? As against aliens or over aliens? MR. NOLLEDO. Madam President, I think that is understood. We use the word "QUALIFIED" because the existing laws or prospective laws will always lay down conditions under which business may be done . For example, qualifications on the setting up of other financial structures, et cetera (emphasis supplied by respondents) MR. RODRIGO. It is just a matter of style.
MR. NOLLEDO Yes, 16

Quite apparently, Sec. 10, second par., of Art XII is couched in such a way as not to make it appear that it is nonself-executing but simply for purposes of style. But, certainly, the legislature is not precluded from enacting other further laws to enforce the constitutional provision so long as the contemplated statute squares with the Constitution. Minor details may be left to the legislature without impairing the self-executing nature of constitutional provisions. In self-executing constitutional provisions, the legislature may still enact legislation to facilitate the exercise of powers directly granted by the constitution, further the operation of such a provision, prescribe a practice to be used for its enforcement, provide a convenient remedy for the protection of the rights secured or the determination thereof, or place reasonable safeguards around the exercise of the right. The mere fact that legislation may supplement and add to or prescribe a penalty for the violation of a self-executing constitutional provision does not render such a provision ineffective in the absence of such legislation. The omission from a constitution of any express provision for a remedy for enforcing a right or liability is not necessarily an indication that it was not intended to be self-executing. The rule is that a self-executing provision of the constitution does not necessarily exhaust legislative power on the subject, but any legislation must be in harmony with the constitution, further the exercise of constitutional right and make it more available. 17 Subsequent legislation however does not necessarily mean that the subject constitutional provision is not, by itself, fully enforceable. Respondents also argue that the non-self-executing nature of Sec. 10, second par., of Art. XII is implied from the tenor of the first and third paragraphs of the same section which undoubtedly are not self-executing. 18 The argument is flawed. If the first and third paragraphs are not self-executing because Congress is still to enact measures to encourage the formation and operation of enterprises fully owned by Filipinos, as in the first paragraph, and the State still needs legislation to regulate and exercise authority over foreign investments within its national jurisdiction, as in the third paragraph, then a fortiori, by the same logic, the second paragraph can only be self-executing as it does not by its language require any legislation in order to give preference to qualified Filipinos in the grant of rights, privileges and concessions covering the national economy and patrimony. A constitutional provision may be self-executing in one part and non-self-executing in another. 19 Even the cases cited by respondents holding that certain constitutional provisions are merely statements of principles and policies, which are basically not self-executing and only placed in the Constitution as moral incentives to legislation, not as judicially enforceable rights are simply not in point. Basco v. Philippine Amusements and Gaming Corporation 20 speaks of constitutional provisions on personal dignity, 21 the sanctity of family life, 22 the vital role of the youth in nation-building 23 the promotion of social justice, 24 and the values of education. 25 Tolentino v. Secretary of Finance 26 refers to the constitutional provisions on social justice and human rights 27 and on education. 28 Lastly, Kilosbayan, Inc. v. Morato 29 cites provisions on the promotion of general welfare, 30 the sanctity of family life, 31 the vital role of the youth in nation-building 32 and the promotion of total human liberation and development. 33 A reading of these provisions indeed clearly shows that they are

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not judicially enforceable constitutional rights but merely guidelines for legislation. The very terms of the provisions manifest that they are only principles upon which the legislations must be based. Res ipsa loquitur. On the other hand, Sec. 10, second par., Art. XII of the of the 1987 Constitution is a mandatory, positive command which is complete in itself and which needs no further guidelines or implementing laws or rules for its enforcement. From its very words the provision does not require any legislation to put it in operation. It is per se judicially enforceable When our Constitution mandates that [i]n the grant of rights, privileges, and concessions covering national economy and patrimony, the State shall give preference to qualified Filipinos , it means just that qualified Filipinos shall be preferred. And when our Constitution declares that a right exists in certain specified circumstances an action may be maintained to enforce such right notwithstanding the absence of any legislation on the subject; consequently, if there is no statute especially enacted to enforce such constitutional right, such right enforces itself by its own inherent potency and puissance, and from which all legislations must take their bearings. Where there is a right there is a remedy. Ubi jus ibi remedium . As regards our national patrimony , a member of the 1986 Constitutional Commission 34 explains The patrimony of the Nation that should be conserved and developed refers not only to out rich natural resources but also to the cultural heritage of out race. It also refers to our intelligence in arts, sciences and letters. Therefore, we should develop not only our lands, forests, mines and other natural resources but also the mental ability or faculty of our people. We agree. In its plain and ordinary meaning, the term patrimony pertains to heritage. 35 When the Constitution speaks of national patrimony, it refers not only to the natural resources of the Philippines, as the Constitution could have very well used the term natural resources , but also to the cultural heritage of the Filipinos. Manila Hotel has become a landmark a living testimonial of Philippine heritage. While it was restrictively an American hotel when it first opened in 1912, it immediately evolved to be truly Filipino, Formerly a concourse for the elite, it has since then become the venue of various significant events which have shaped Philippine history. It was called the Cultural Center of the 1930's. It was the site of the festivities during the inauguration of the Philippine Commonwealth. Dubbed as the Official Guest House of the Philippine Government . it plays host to dignitaries and official visitors who are accorded the traditional Philippine hospitality. 36 The history of the hotel has been chronicled in the book The Manila Hotel: The Heart and Memory of a City . 37 During World War II the hotel was converted by the Japanese Military Administration into a military headquarters. When the American forces returned to recapture Manila the hotel was selected by the Japanese together with Intramuros as the two (2) places fro their final stand. Thereafter, in the 1950's and 1960's, the hotel became the center of political activities, playing host to almost every political convention. In 1970 the hotel reopened after a renovation and reaped numerous international recognitions, an acknowledgment of the Filipino talent and ingenuity. In 1986 the hotel was the site of a failed coup d' etat where an aspirant for vice-president was "proclaimed" President of the Philippine Republic. For more than eight (8) decades Manila Hotel has bore mute witness to the triumphs and failures, loves and frustrations of the Filipinos; its existence is impressed with public interest; its own historicity associated with our struggle for sovereignty, independence and nationhood. Verily, Manila Hotel has become part of our national economy and patrimony. For sure, 51% of the equity of the MHC comes within the purview of the constitutional shelter for it comprises the majority and controlling stock, so that anyone who acquires or owns the 51% will have actual control and management of the hotel. In this instance, 51% of the MHC cannot be disassociated from the hotel and the land on which the hotel edifice stands. Consequently, we cannot sustain respondents' claim that the Filipino First Policy provision is not applicable since what is being sold is only 51% of the outstanding shares of the corporation, not the Hotel building nor the land upon which the building stands . 38 The argument is pure sophistry. The term qualified Filipinos as used in Our Constitution also includes corporations at least 60% of which is owned by Filipinos. This is very clear from the proceedings of the 1986 Constitutional Commission THE PRESIDENT. Commissioner Davide is recognized. MR. DAVIDE. I would like to introduce an amendment to the Nolledo amendment. And

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the amendment would consist in substituting the words "QUALIFIED FILIPINOS" with the following: "CITIZENS OF THE PHILIPPINES OR CORPORATIONS OR ASSOCIATIONS WHOSE CAPITAL OR CONTROLLING STOCK IS WHOLLY OWNED BY SUCH CITIZENS. xxx xxx xxx MR. MONSOD. Madam President, apparently the proponent is agreeable, but we have to raise a question. Suppose it is a corporation that is 80-percent Filipino, do we not give it preference? MR. DAVIDE. The Nolledo amendment would refer to an individual Filipino. What about a corporation wholly owned by Filipino citizens? MR. MONSOD. At least 60 percent, Madam President. MR. DAVIDE. Is that the intention? MR. MONSOD. Yes, because, in fact, we would be limiting it if we say that the preference should only be 100-percent Filipino. MR: DAVIDE. I want to get that meaning clear because "QUALIFIED FILIPINOS" may refer only to individuals and not to juridical personalities or entities.
MR. MONSOD. We agree, Madam President. 39

xxx xxx xxx MR. RODRIGO. Before we vote, may I request that the amendment be read again.
MR. NOLLEDO. The amendment will read: "IN THE GRANT OF RIGHTS, PRIVILEGES AND CONCESSIONS COVERING THE NATIONAL ECONOMY AND PATRIMONY, THE STATE SHALL GIVE PREFERENCE TO QUALIFIED FILIPINOS." And the word "Filipinos" here, as intended by the proponents, will include not only individual Filipinos but also Filipino-controlled entities or entities fully-controlled by Filipinos. 40

The phrase preference to qualified Filipinos was explained thus MR. FOZ. Madam President, I would like to request Commissioner Nolledo to please restate his amendment so that I can ask a question. MR. NOLLEDO. "IN THE GRANT OF RIGHTS, PRIVILEGES AND CONCESSIONS COVERING THE NATIONAL ECONOMY AND PATRIMONY, THE STATE SHALL GIVE PREFERENCE TO QUALIFIED FILIPINOS." MR FOZ. In connection with that amendment, if a foreign enterprise is qualified and a Filipino enterprise is also qualified, will the Filipino enterprise still be given a preference? MR. NOLLEDO. Obviously. MR. FOZ. If the foreigner is more qualified in some aspects than the Filipino enterprise, will the Filipino still be preferred? MR. NOLLEDO. The answer is "yes."
MR. FOZ. Thank you, 41

Expounding further on the Filipino First Policy provision Commissioner Nolledo continues
MR. NOLLEDO. Yes, Madam President. Instead of "MUST," it will be "SHALL THE STATE SHALL GlVE PREFERENCE TO QUALIFIED FILIPINOS. This embodies the so-called "Filipino First" policy. That means

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that Filipinos should be given preference in the grant of concessions, privileges and rights covering the national patrimony. 42

The exchange of views in the sessions of the Constitutional Commission regarding the subject provision was still further clarified by Commissioner Nolledo 43 Paragraph 2 of Section 10 explicitly mandates the "Pro-Filipino" bias in all economic concerns. It is better known as the FILIPINO FIRST Policy . . . This provision was never found in previous Constitutions . . . . The term "qualified Filipinos" simply means that preference shall be given to those citizens who can make a viable contribution to the common good, because of credible competence and efficiency. It certainly does NOT mandate the pampering and preferential treatment to Filipino citizens or organizations that are incompetent or inefficient, since such an indiscriminate preference would be counter productive and inimical to the common good. In the granting of economic rights, privileges, and concessions, when a choice has to be made between a "qualified foreigner" end a "qualified Filipino," the latter shall be chosen over the former." Lastly, the word qualified is also determinable. Petitioner was so considered by respondent GSIS and selected as one of the qualified bidders. It was pre-qualified by respondent GSIS in accordance with its own guidelines so that the sole inference here is that petitioner has been found to be possessed of proven management expertise in the hotel industry, or it has significant equity ownership in another hotel company, or it has an overall management and marketing proficiency to successfully operate the Manila Hotel. 44 The penchant to try to whittle away the mandate of the Constitution by arguing that the subject provision is not self-executory and requires implementing legislation is quite disturbing. The attempt to violate a clear constitutional provision by the government itself is only too distressing. To adopt such a line of reasoning is to renounce the duty to ensure faithfulness to the Constitution. For, even some of the provisions of the Constitution which evidently need implementing legislation have juridical life of their own and can be the source of a judicial remedy. We cannot simply afford the government a defense that arises out of the failure to enact further enabling, implementing or guiding legislation. In fine, the discourse of Fr. Joaquin G. Bernas, S.J., on constitutional government is apt
The executive department has a constitutional duty to implement laws, including the Constitution, even before Congress acts provided that there are discoverable legal standards for executive action. When the executive acts, it must be guided by its own understanding of the constitutional command and of applicable laws. The responsibility for reading and understanding the Constitution and the laws is not the sole prerogative of Congress. If it were, the executive would have to ask Congress, or perhaps the Court, for an interpretation every time the executive is confronted by a constitutional command. That is not how constitutional government operates. 45

Respondents further argue that the constitutional provision is addressed to the State, not to respondent GSIS which by itself possesses a separate and distinct personality. This argument again is at best specious. It is undisputed that the sale of 51% of the MHC could only be carried out with the prior approval of the State acting through respondent Committee on Privatization. As correctly pointed out by Fr. Joaquin G. Bernas, S.J., this fact alone makes the sale of the assets of respondents GSIS and MHC a "state action ." In constitutional jurisprudence, the acts of persons distinct from the government are considered "state action " covered by the Constitution (1) when the activity it engages in is a "public function ;" (2) when the government is so significantly involved with the private actor as to make the government responsible for his action; and, (3) when the government has approved or authorized the action. It is evident that the act of respondent GSIS in selling 51% of its share in respondent MHC comes under the second and third categories of "state action ." Without doubt therefore the transaction. although entered into by respondent GSIS, is in fact a transaction of the State and therefore subject to the constitutional command. 46 When the Constitution addresses the State it refers not only to the people but also to the government as elements of the State. After all, government is composed of three (3) divisions of power legislative, executive and judicial. Accordingly, a constitutional mandate directed to the State is correspondingly directed to the three(3) branches of

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

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and procedures but with the Constitution as well. The refusal of respondent GSIS to execute the corresponding documents with petitioner as provided in the bidding rules after the latter has matched the bid of the Malaysian firm clearly constitutes grave abuse of discretion. The Filipino First Policy is a product of Philippine nationalism. It is embodied in the 1987 Constitution not merely to be used as a guideline for future legislation but primarily to be enforced; so must it be enforced. This Court as the ultimate guardian of the Constitution will never shun, under any reasonable circumstance, the duty of upholding the majesty of the Constitution which it is tasked to defend. It is worth emphasizing that it is not the intention of this Court to impede and diminish, much less undermine, the influx of foreign investments. Far from it, the Court encourages and welcomes more business opportunities but avowedly sanctions the preference for Filipinos whenever such preference is ordained by the Constitution. The position of the Court on this matter could have not been more appropriately articulated by Chief Justice Narvasa As scrupulously as it has tried to observe that it is not its function to substitute its judgment for that of the legislature or the executive about the wisdom and feasibility of legislation economic in nature, the Supreme Court has not been spared criticism for decisions perceived as obstacles to economic progress and development . . . in connection with a temporary injunction issued by the Court's First Division against the sale of the Manila Hotel to a Malaysian Firm and its partner, certain statements were published in a major daily to the effect that injunction "again demonstrates that the Philippine legal system can be a major obstacle to doing business here.
Let it be stated for the record once again that while it is no business of the Court to intervene in contracts of the kind referred to or set itself up as the judge of whether they are viable or attainable, it is its bounden duty to make sure that they do not violate the Constitution or the laws, or are not adopted or implemented with grave abuse of discretion amounting to lack or excess of jurisdiction. It will never shirk that duty, no matter how buffeted by winds of unfair and ill-informed criticism. 48

Privatization of a business asset for purposes of enhancing its business viability and preventing further losses, regardless of the character of the asset, should not take precedence over non-material values. A commercial, nay even a budgetary, objective should not be pursued at the expense of national pride and dignity. For the Constitution enshrines higher and nobler non-material values. Indeed, the Court will always defer to the Constitution in the proper governance of a free society; after all, there is nothing so sacrosanct in any economic policy as to draw itself beyond judicial review when the Constitution is involved. 49 Nationalism is inherent, in the very concept of the Philippines being a democratic and republican state, with sovereignty residing in the Filipino people and from whom all government authority emanates. In nationalism, the happiness and welfare of the people must be the goal. The nation-state can have no higher purpose. Any interpretation of any constitutional provision must adhere to such basic concept. Protection of foreign investments, while laudible, is merely a policy. It cannot override the demands of nationalism. 50 The Manila Hotel or, for that matter, 51% of the MHC, is not just any commodity to be sold to the highest bidder solely for the sake of privatization. We are not talking about an ordinary piece of property in a commercial district. We are talking about a historic relic that has hosted many of the most important events in the short history of the Philippines as a nation. We are talking about a hotel where heads of states would prefer to be housed as a strong manifestation of their desire to cloak the dignity of the highest state function to their official visits to the Philippines. Thus the Manila Hotel has played and continues to play a significant role as an authentic repository of twentieth century Philippine history and culture. In this sense, it has become truly a reflection of the Filipino soul a place with a history of grandeur; a most historical setting that has played a part in the shaping of a country. 51 This Court cannot extract rhyme nor reason from the determined efforts of respondents to sell the historical landmark this Grand Old Dame of hotels in Asia to a total stranger. For, indeed, the conveyance of this epic exponent of the Filipino psyche to alien hands cannot be less than mephistophelian for it is, in whatever manner viewed, a veritable alienation of a nation's soul for some pieces of foreign silver. And so we ask: What advantage, which cannot be equally drawn from a qualified Filipino, can be gained by the Filipinos Manila Hotel and all that it stands for is sold to a non-Filipino? How much of national pride will vanish if the nation's cultural heritage is entrusted to a foreign entity? On the other hand, how much dignity will be preserved and realized if the national patrimony is safekept in the hands of a qualified , zealous and well-meaning Filipino? This is the plain and simple meaning of the Filipino First Policy provision of the Philippine Constitution. And this Court, heeding the clarion call

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of the Constitution and accepting the duty of being the elderly watchman of the nation, will continue to respect and protect the sanctity of the Constitution. WHEREFORE, respondents GOVERNMENT SERVICE INSURANCE SYSTEM, MANILA HOTEL CORPORATION, COMMITTEE ON PRIVATIZATION and OFFICE OF THE GOVERNMENT CORPORATE COUNSEL are directed to CEASE and DESIST from selling 51% of the shares of the Manila Hotel Corporation to RENONG BERHAD, and to ACCEPT the matching bid of petitioner MANILA PRINCE HOTEL CORPORATION to purchase the subject 51% of the shares of the Manila Hotel Corporation at P44.00 per share and thereafter to execute the necessary clearances and to do such other acts and deeds as may be necessary for purpose. SO ORDERED. Regalado, Davide, Jr., Romero, Kapunan, Francisco and Hermosisima, Jr., JJ., concur.

Separate Opinions

PADILLA, J., concurring: I concur with the ponencia of Mr. Justice Bellosillo. At the same time, I would like to expound a bit more on the concept of national patrimony as including within its scope and meaning institutions such as the Manila Hotel. It is argued by petitioner that the Manila Hotel comes under "national patrimony" over which qualified Filipinos have the preference, in ownership and operation. The Constitutional provision on point states: xxx xxx xxx
In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall Give preference to qualified Filipinos. 1

Petitioner's argument, I believe, is well taken. Under the 1987 Constitution, "national patrimony" consists of the natural resources provided by Almighty God (Preamble) in our territory (Article I) consisting of land, sea, and air. 2 study of the 1935 Constitution, where the concept of "national patrimony" originated, would show that its framers decided to adopt the even more comprehensive expression "Patrimony of the Nation" in the belief that the phrase encircles a concept embracing not only their natural resources of the country but practically everything that belongs to the Filipino people, the tangible and the material as well as the intangible and the spiritual assets and possessions of the people. It is to be noted that the framers did not stop with conservation. They knew that conservation alone does not spell progress; and that this may be achieved only through development as a correlative factor to assure to the people not only the exclusive ownership, but also the exclusive benefits of their national patrimony). 3 Moreover, the concept of national patrimony has been viewed as referring not only to our rich natural resources but also to the cultural heritage of our race. 4 There is no doubt in my mind that the Manila Hotel is very much a part of our national patrimony and, as such, deserves constitutional protection as to who shall own it and benefit from its operation. This institution has played an important role in our nation's history, having been the venue of many a historical event, and serving as it did, and as it does, as the Philippine Guest House for visiting foreign heads of state, dignitaries, celebrities, and others.
5

It is therefore our duty to protect and preserve it for future generations of Filipinos. As President Manuel L. Quezon once said, we must exploit the natural resources of our country, but we should do so with. an eye to the

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welfare of the future generations. In other words, the leaders of today are the trustees of the patrimony of our race. To preserve our national patrimony and reserve it for Filipinos was the intent of the distinguished gentlemen who first framed our Constitution. Thus, in debating the need for nationalization of our lands and natural resources, one expounded that we should "put more teeth into our laws, and; not make the nationalization of our lands and natural resources a subject of ordinary legislation but of constitutional enactment" 6 To quote further: "Let not our children be mere tenants and trespassers in their own country. Let us preserve and bequeath to them what is rightfully theirs, free from all foreign liens and encumbrances". 7 Now, a word on preference. In my view "preference to qualified Filipinos", to be meaningful, must refer not only to things that are peripheral, collateral, or tangential. It must touch and affect the very "heart of the existing order." In the field of public bidding in the acquisition of things that pertain to the national patrimony, preference to qualified Filipinos must allow a qualified Filipino to match or equal the higher bid of a non-Filipino; the preference shall not operate only when the bids of the qualified Filipino and the non-Filipino are equal in which case, the award should undisputedly be made to the qualified Filipino. The Constitutional preference should give the qualified Filipino an opportunity to match or equal the higher bid of the non-Filipino bidder if the preference of the qualified Filipino bidder is to be significant at all. It is true that in this present age of globalization of attitude towards foreign investments in our country, stress is on the elimination of barriers to foreign trade and investment in the country. While government agencies, including the courts should re-condition their thinking to such a trend, and make it easy and even attractive for foreign investors to come to our shores, yet we should not preclude ourselves from reserving to us Filipinos certain areas where our national identity, culture and heritage are involved. In the hotel industry, for instance, foreign investors have established themselves creditably, such as in the Shangri-La, the Nikko, the Peninsula, and Mandarin Hotels. This should not stop us from retaining 51% of the capital stock of the Manila Hotel Corporation in the hands of Filipinos. This would be in keeping with the intent of the Filipino people to preserve our national patrimony, including our historical and cultural heritage in the hands of Filipinos. VITUG, J., concurring: I agree with Mr. Justice Josue N. Bellosillo on his clear-cut statements, shared by Mr. Justice Reynato S. Puno in a well written separate (dissenting) opinion, that: First , the provision in our fundamental law which provides that "(I)n the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos" 1 is selfexecutory. The provision verily does not need, although it can obviously be amplified or regulated by, an enabling law or a set of rules. Second , the term "patrimony" does not merely refer to the country's natural resources but also to its cultural heritage. A "historical landmark," to use the words of Mr. Justice Justo P. Torres, Jr., Manila Hotel has now indeed become part of Philippine heritage. Third, the act of the Government Service Insurance System ("GSIS"), a government entity which derives its authority from the State, in selling 51% of its share in MHC should be considered an act of the State subject to the Constitutional mandate. On the pivotal issue of the degree of "preference to qualified Filipinos," I find it somewhat difficult to take the same path traversed by the forceful reasoning of Justice Puno. In the particular case before us, the only meaningful preference, it seems, would really be to allow the qualified Filipino to match the foreign bid for, as a particular matter, I cannot see any bid that literally calls for millions of dollars to be at par (to the last cent) with another. The magnitude of the magnitude of the bids is such that it becomes hardly possible for the competing bids to stand exactly "equal" which alone, under the dissenting view, could trigger the right of preference. It is most unfortunate that Renong Berhad has not been spared this great disappointment, a letdown that it did not deserve, by a simple and timely advise of the proper rules of bidding along with the peculiar constitutional implications of the proposed transaction. It is also regrettable that the Court at time is seen, to instead, be the refuge for bureaucratic inadequate which create the perception that it even takes on non-justiciable controversies. All told, I am constrained to vote for granting the petition.

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MENDOZA, J., concurring in the judgment: I take the view that in the context of the present controversy the only way to enforce the constitutional mandate that "[i]n the grant of rights, privileges and concessions covering the national patrimony the State shall give preference to qualified Filipinos" 1 is to allow petitioner Philippine corporation to equal the bid of the Malaysian firm Renong Berhad for the purchase of the controlling shares of stocks in the Manila Hotel Corporation. Indeed, it is the only way a qualified Filipino of Philippine corporation can be given preference in the enjoyment of a right, privilege or concession given by the State, by favoring it over a foreign national corporation. Under the rules on public bidding of the Government Service and Insurance System, if petitioner and the Malaysian firm had offered the same price per share, "priority [would be given] to the bidder seeking the larger ownership interest in MHC," 2 so that petitioner bid for more shares, it would be preferred to the Malaysian corporation for that reason and not because it is a Philippine corporation. Consequently, it is only in cases like the present one, where an alien corporation is the highest bidder, that preferential treatment of the Philippine corporation is mandated not by declaring it winner but by allowing it "to match the highest bid in terms of price per share" before it is awarded the shares of stocks. 3 That, to me, is what "preference to qualified Filipinos" means in the context of this case by favoring Filipinos whenever they are at a disadvantage vis-a-vis foreigners. This was the meaning given in Co Chiong v. Cuaderno 4 to a 1947 statute giving "preference to Filipino citizens in the lease of public market stalls." 5 This Court upheld the cancellation of existing leases covering market stalls occupied by persons who were not Filipinos and the award thereafter of the stalls to qualified Filipino vendors as ordered by the Department of Finance. Similarly, in Vda. de Salgado v. De la Fuente , 6 this Court sustained the validity of a municipal ordinance passed pursuant to the statute (R.A. No. 37), terminating existing leases of public market stalls and granting preference to Filipino citizens in the issuance of new licenses for the occupancy of the stalls. In Chua Lao v. Raymundo, 7 the preference granted under the statute was held to apply to cases in which Filipino vendors sought the same stalls occupied by alien vendors in the public markets even if there were available other stalls as good as those occupied by aliens. "The law, apparently, is applicable whenever there is a conflict of interest between Filipino applicants and aliens for lease of stalls in public markets, in which situation the right to preference immediately arises." 8 Our legislation on the matter thus antedated by a quarter of a century efforts began only in the 1970s in America to realize the promise of equality, through affirmative action and reverse discrimination programs designed to remedy past discrimination against colored people in such areas as employment, contracting and licensing. 9 Indeed, in vital areas of our national economy, there are situations in which the only way to place Filipinos in control of the national economy as contemplated in the Constitution 10 is to give them preferential treatment where they can at least stand on equal footing with aliens. There need be no fear that thus preferring Filipinos would either invite foreign retaliation or deprive the country of the benefit of foreign capital or know-how. We are dealing here not with common trades of common means of livelihood which are open to aliens in our midst, 11 but with the sale of government property, which is like the grant of government largess of benefits and concessions covering the national economy" and therefore no one should begrudge us if we give preferential treatment to our citizens. That at any rate is the command of the Constitution. For the Manila Hotel is a business owned by the Government. It is being privatized. Privatization should result in the relinquishment of the business in favor of private individuals and groups who are Filipino citizens, not in favor of aliens. Nor should there be any doubt that by awarding the shares of stocks to petitioner we would be trading competence and capability for nationalism. Both petitioner and the Malaysian firm are qualified, having hurdled the prequalification process. 12 It is only the result of the public bidding that is sought to be modified by enabling petitioner to up its bid to equal the highest bid. Nor, finally, is there any basis for the suggestion that to allow a Filipino bidder to match the highest bid of an alien could encourage speculation, since all that a Filipino entity would then do would be not to make a bid or make only a token one and, after it is known that a foreign bidder has submitted the highest bid, make an offer matching that of the foreign firm. This is not possible under the rules on public bidding of the GSIS. Under these rules there is a minimum bid required (P36.87 per share for a range of 9 to 15 million shares). 13 Bids below the minimum

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will not be considered. On the other hand, if the Filipino entity, after passing the prequalification process, does not submit a bid, he will not be allowed to match the highest bid of the foreign firm because this is a privilege allowed only to those who have "validly submitted bids." 14 The suggestion is, to say the least, fanciful and has no basis in fact. For the foregoing reasons, I vote to grant the petition. TORRES, JR., J., separate opinion: Constancy in law is not an attribute of a judicious mind. I say this as we are not confronted in the case at bar with legal and constitutional issues and yet I am driven so to speak on the side of history. The reason perhaps is due to the belief that in the words of Justice Oliver Wendell Holmes, Jr., a "page of history is worth a volume of logic." I will, however, attempt to share my thoughts on whether the Manila Hotel has a historical and cultural aspect within the meaning of the constitution and thus, forming part of the "patrimony of the nation". Section 10, Article XII of the 1987 Constitution provides: xxx xxx xxx In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos. The State shall regulate and exercise authority over foreign investments within its national goals and priorities. The foregoing provisions should be read in conjunction with Article II of the same Constitution pertaining to "Declaration of Principles and State Policies" which ordain The State shall develop a self-reliant and independent national economy effectively by Filipinos. (Sec. 19). Interestingly, the matter of giving preference to "qualified Filipinos" was one of the highlights in the 1987 Constitution Commission proceedings thus: xxx xxx xxx MR. NOLLEDO. The Amendment will read: "IN THE GRANT OF RIGHTS, PRIVILEGES AND CONCESSIONS COVERING THE NATIONAL ECONOMY AND PATRIMONY, THE STATE SHALL GIVE PREFERENCE TO QUALIFIED FILIPINOS". And the word "Filipinos" here, as intended by the proponents, will include not only individual Filipinos but also FilipinoControlled entities fully controlled by Filipinos (Vol. III, Records of the Constitutional Commission, p. 608). MR. MONSOD. We also wanted to add, as Commissioner Villegas said, this committee and this body already approved what is known as the Filipino First policy which was suggested by Commissioner de Castro. So that it is now in our Constitution (Vol. IV, Records of the Constitutional Commission, p. 225). Commissioner Jose Nolledo explaining the provision adverted to above, said: MR. NOLLEDO. In the grant of rights, privileges and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos. MR. FOZ. In connection with that amendment, if a foreign enterprise is qualified and the Filipinos enterprise is also qualified, will the Filipino

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enterprise still be given a preference? MR. NOLLEDO. Obviously. MR. FOZ. If the foreigner is more qualified in some aspects than the Filipino enterprise, will the Filipino still be preferred:? MR. NOLLEDO. The answer is "yes". (Vol. III, p. 616, Records of the Constitutional Commission). The nationalistic provisions of the 1987 Constitution reflect the history and spirit of the Malolos Constitution of 1898, the 1935 Constitution and the 1973 Constitutions. That we have no reneged on this nationalist policy is articulated in one of the earliest case, this Court said The nationalistic tendency is manifested in various provisions of the Constitution. . . . It cannot therefore be said that a law imbued with the same purpose and spirit underlying many of the provisions of the Constitution is unreasonable, invalid or unconstitutional (Ichong, et al. vs. Hernandez, et al., 101 Phil. 1155). I subscribe to the view that history, culture, heritage, and traditions are not legislated and is the product of events, customs, usages and practices. It is actually a product of growth and acceptance by the collective mores of a race. It is the spirit and soul of a people. The Manila Hotel is part of our history, culture and heritage. Every inch of the Manila Hotel is witness to historic events (too numerous to mention) which shaped our history for almost 84 years. As I intimated earlier, it is not my position in this opinion, to examine the single instances of the legal largese which have given rise to this controversy. As I believe that has been exhaustively discussed in the ponencia. Suffice it to say at this point that the history of the Manila Hotel should not be placed in the auction block of a purely business transaction, where profits subverts the cherished historical values of our people. As a historical landmark in this "Pearl of the Orient Seas", it has its enviable tradition which, in the words of the philosopher Salvador de Madarriaga tradition is "more of a river than a stone, it keeps flowing, and one must view the flowing , and one must view the flow of both directions. If you look towards the hill from which the river flows, you see tradition in the form of forceful currents that push the river or people towards the future, and if you look the other way, you progress." Indeed, tradition and progress are the same, for progress depends on the kind of tradition. Let us not jettison the tradition of the Manila Hotel and thereby repeat our colonial history. I grant, of course the men of the law can see the same subject in different lights. I remember, however, a Spanish proverb which says "He is always right who suspects that he makes mistakes". On this note, I say that if I have to make a mistake, I would rather err upholding the belief that the Filipino be first under his Constitution and in his own land. I vote GRANT the petition.

PUNO, J., dissenting: This is a. petition for prohibition and mandamus filed by the Manila Prince Hotel Corporation, a domestic corporation, to stop the Government Service Insurance System (GSIS) from selling the controlling shares of the Manila Hotel Corporation to a foreign corporation. Allegedly, the sale violates the second paragraph of section 10, Article XII of the Constitution. Respondent GSIS is a government-owned and controlled corporation. It is the sole owner of the Manila Hotel which it operates through its subsidiary, the Manila Hotel Corporation. Manila Hotel was included in the privatization program of the government. In 1995, GSIS proposed to sell to interested buyers 30% to 51% of its shares, ranging from 9,000,000 to 15,300,000 shares, in the Manila Hotel Corporation. After the absence of bids at
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the first public bidding, the block of shares offered for sale was increased from a maximum of 30% to 51%. Also, the winning bidder, or the eventual "strategic partner" of the GSIS was required to "provide management expertise and/or an international marketing/reservation system, and financial support to strengthen the profitability and performance of the Manila Hotel" 1 The proposal was approved by respondent Committee on Privatization. In July 1995, a conference was held where prequalification documents and the bidding rules were furnished interested parties. Petitioner Manila Prince Hotel, a domestic corporation, and Renong Berhad, Malaysian firm with ITT Sheraton as operator, prequalified. 2 The bidding rules and procedures entitled "Guidelines and Procedures: Second Prequalification and Public Bidding of the MHC Privatization" provide: I INTRODUCTION AND HIGHLIGHTS DETERMINING THE WINNING BIDDER/STRATEGIC PARTNER The party that accomplishes the steps set forth below will be declared the Winning Bidder/Strategic Partner and will be awarded the Block of Shares: First Pass the prequalification process; Second Submit the highest bid on a price per share basis for the Block of Shares; Third Negotiate and execute the necessary contracts with GSIS/MHC not later than October 23, 1995; xxx xxx xxx IV GUIDELINES FOR PREQUALIFICATION A. PARTIES WHO MAP APPLY FOR PREQUALIFICATION The Winning Bidder/Strategic Partner will be expected to provide management expertise and/or an international marketing reservation system, and financial support to strengthen the profitability and performance of The Manila Hotel. In this context, the GSIS is inviting to the prequalification process any local and/or foreign corporation, consortium/joint venture or juridical entity with at least one of the following qualifications: a. Proven management .expertise in the hotel industry; or b. Significant equity ownership (i .e. board representation) in another hotel company; or c. Overall management and marketing expertise to successfully operate the Manila Hotel. Parties interested in bidding for MHC should be able to provide access to the requisite management expertise and/or international marketing/reservation system for The Manila Hotel. xxx xxx xxx D. PREQUALIFICATION DOCUMENTS xxx xxx xxx E. APPLICATION PROCEDURE 1. DOCUMENTS AVAILABLE AT THE REGISTRATION OFFICE The prequalification documents can be secured at the Registration Office between 9:00

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AM to 4:00 PM during working days within the period specified in Section III. Each set of documents consists of the following: a. Guidelines and Procedures: Second Prequalification and Public Bidding of the MHC Privatization b. Confidential Information Memorandum: The Manila Hotel Corporation c. Letter of Invitation. to the Prequalification and Bidding Conference xxx xxx xxx 4. PREQUALIFICATION AND BIDDING CONFERENCE A prequalification and bidding conference will be held at The Manila Hotel on the date specified in Section III to allow the Applicant to seek clarifications and further information regarding the guidelines and procedures. Only those who purchased the prequalification documents will be allowed in this conference. Attendance to this conference is strongly advised, although the Applicant will not be penalized if it does not attend. 5. SUBMISSION OF PREQUALIFICATION DOCUMENTS The applicant should submit 5 sets of the prequalification documents (1 original set plus 4 copies) at the Registration Office between 9:00 AM to 4:00 PM during working days within the period specified in Section III. F. PREQUALIFICATION PROCESS 1. The Applicant will be evaluated by the PBAC with the assistance of the TEC based on the Information Package and other information available to the PBAC. 2. If the Applicant is a Consortium/Joint Venture, the evaluation will consider the overall qualifications of the group, taking into account the contribution of each member to the venture. 3. The decision of the PBAC with respect to the results of the PBAC evaluation will be final. 4. The Applicant shall be evaluated according to the criteria set forth below: a. Business experience management expertise, track record, and

b. Financial capability. c. Feasibility and acceptability of the proposed strategic plan for the Manila Hotel 5. The PBAC will shortlist such number of Applicants as it may deem appropriate. 6. The parties that prequalified in the first MHC public bidding ITT Sheraton, Marriot International Inc., Renaissance Hotels International Inc., consortium of RCBC Capital/Ritz Carlton may participate in the Public Bidding without having to undergo the prequalification process again. G. SHORTLIST OF QUALIFIED BIDDERS 1. A notice of prequalification results containing the shortlist of Qualified Bidders will be posted at the Registration Office at the date specified in Section III.

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2. In the case of a Consortium/Joint Venture, the withdrawal by member whose qualification was a material consideration for being included in the shortlist is ground for disqualification of the Applicant. V. GUIDELINES FOR THE PUBLIC BIDDING A. PARTIES WHO MAY PARTICIPATE IN THE PUBLIC BIDDING All parties in the shortlist of Qualified Bidders will be eligible to participate in the Public Bidding. B. BLOCK OF SHARES A range of Nine Million (9,000,000) to Fifteen Million Three Hundred Thousand (15,300,000) shares of stock representing Thirty Percent to Fifty-One Percent (30%51%) of the issued and outstanding shares of MHC, will be offered in the Public Bidding by the GSIS. The Qualified Bidders will have the Option of determining the number of shares within the range to bid for. The range is intended to attract bidders with different preferences and objectives for the operation and management of The Manila Hotel. C. MINIMUM BID REQUIRED ON A PRICE PER SHARE BASIS 1. Bids will be evaluated on a price per share basis. The minimum bid required on a price per share basis for the Block of Shares is Thirty-Six Pesos and Sixty-Seven Centavos (P36.67). 2. Bids should be in the Philippine currency payable to the GSIS. 3. Bids submitted with an equivalent price per share below the minimum required will not considered. D. TRANSFER COSTS xxx xxx xxx E. OFFICIAL BID FORM 1. Bids must be contained in the prescribed Official Bid Form, a copy of which is attached as Annex IV. The Official Bid Form must be properly accomplished in all details; improper accomplishment may be a sufficient basis for disqualification. 2. During the Public Bidding, the Qualified Bidder will submit the Official Bid Form, which will indicate the offered purchase price, in a sealed envelope marked "OFFICIAL BID." F. SUPPORTING DOCUMENTS During the Public Bidding, the following documents should be submitted along with the bid in a separate envelop marked "SUPPORTING DOCUMENTS": 1. WRITTEN AUTHORITY TO BID (UNDER OATH) . If the Qualified Bidder is a corporation, the representative of the Qualified Bidder should submit a Board resolution which adequately authorizes such representative to bid for and in behalf of the corporation with full authority to perform such acts necessary or requisite to bind the Qualified Bidder. If the Qualified Bidder is a Consortium/Joint Venture, each member of the Consortium/Joint venture should submit a Board resolution authorizing one of its members and such member's representative to make the bid on behalf of the group with full authority to perform such acts necessary or requisite to bind the Qualified Bidder.

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2. BID SECURITY a. The Qualified Bidder should deposit Thirty-Three Million Pesos (P33,000,00), in Philippine currency as Bid Security in the form of: i. Manager's check or unconditional demand draft payable to the "Government Service Insurance System" and issued by a reputable banking institution duly licensed to do business in the Philippines and acceptable to GSIS; or ii. Standby-by letter of credit issued by a reputable banking institution acceptable to the GSIS. b. The GSIS will reject a bid if: i. The bid does not have Bid Security; or ii. The Bid Security accompanying the bid is for less than the required amount. c. If the Bid Security is in the form of a manager's check or unconditional demand draft, the interest earned on the Bid Security will be for the account of GSIS. d. If the Qualified Bidder becomes the winning Bidder/Strategic Partner, the Bid Security will be applied as the downpayment on the Qualified Bidder's offered purchase price. e. The Bid Security of the Qualified Bidder will be returned immediately after the Public Bidding if the Qualified Bidder is not declared the Highest Bidder. f. The Bid Security will be returned by October 23, 1995 if the Highest Bidder is unable to negotiate and execute with GSIS/MHC the Management Contract, International Marketing/Reservation System Contract or other types of contract specified by the Highest Bidder in its strategic plan for The Manila Hotel. g. The Bid Security of the Highest Bidder will be forfeited in favor of GSIS if the Highest Bidder, after negotiating and executing the Management Contract, International Marketing/Reservation System Contract specified by the Highest Bidder or other types of contract in its strategic plan for The Manila Hotel, fails or refuses to: i. Execute the Stock Purchase and Sale Agreement with GSIS not later than October 23, 1995; or ii. Pay the full amount of the offered purchase price not later than October 23, 1995; or iii. Consummate the sale of the Block of Shares for any other reason. G. SUBMISSION OF BIDS 1. The Public Bidding will be held on September 7, 1995 at the following location: New GSIS Headquarters Building Financial Center, Reclamation Area Roxas Boulevard, Pasay City, Metro Manila. 2. The Secretariat of the PBAC will be stationed at the Public Bidding to accept any and all bids and supporting requirements. Representatives from the Commission on Audit and COP will be invited to witness the proceedings. 3. The Qualified Bidder should submit its bid using the Official Bid Form. The accomplished Official Bid Form should be submitted in a sealed envelope marked

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"OFFICIAL BID." 4. The Qualified Bidder should submit the following documents in another sealed envelope marked "SUPPORTING BID DOCUMENTS" a. Written Authority Bid b. Bid Security 5. The two sealed envelopes marked "OFFICIAL BID" and "SUPPORTING BID DOCUMENTS" must be submitted simultaneously to the Secretariat between 9:00 AM and 2:00 PM, Philippine Standard Time, on the date of the Public Bidding. No bid shall be accepted after the closing time. Opened or tampered bids shall not be accepted. 6. The Secretariat will log and record the actual time of submission of the two sealed envelopes. The actual time of submission will also be indicated by the Secretariat on the face of the two envelopes. 7. After Step No. 6, the two sealed envelopes will be dropped in the corresponding bid boxes provided for the purpose. These boxes will be in full view of the invited public. H. OPENING AND READING OF BIDS 1. After the closing time of 2:00 PM on the date of the Public Bidding, the PBAC will open all sealed envelopes marked "SUPPORTING BID DOCUMENTS" for screening, evaluation and acceptance. Those who submitted incomplete/insufficient documents or document/s which is/are not substantially in the form required by PBAC will be disqualified. The envelope containing their Official Bid Form will be immediately returned to the disqualified bidders. 2. The sealed envelopes marked "OFFICIAL BID" will be opened at 3:00 PM. The name of the bidder and the amount of its bid price will be read publicly as the envelopes are opened. 3. Immediately following the reading of the bids, the PBAC will formally announce the highest bid and the Highest Bidder. 4. The highest bid will be, determined on a price per share basis. In the event of a tie wherein two or more bids have the same equivalent price per share, priority will be given to the bidder seeking the larger ownership interest in MHC. 5. The Public Bidding will be declared a failed bidding in case: a. No single bid is submitted within the prescribed period; or b. There is only one (1) bid that is submitted and acceptable to the PBAC. I. EXECUTION OF THE NECESSARY CONTRACTS WITH GSIS/MHC 1. The Highest Bidder must comply with the conditions set forth below by October 23, 1995 or the Highest Bidder will lose the right to purchase the Block of Shares and GSIS will instead offer the Block of Shares to the other Qualified Bidders: a. The Highest Bidder must negotiate and execute with GSIS/MHC the Management Contract, International Marketing Reservation System Contract or other type of contract specified by the Highest Bidder in its strategic plan for The Manila Hotel. If the Highest Bidder is intending to provide only financial support to The Manila Hotel, a separate institution may enter into the aforementioned contract/s with GSIS/MHC. b. The Highest Bidder must execute the Stock Purchase and Sale

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Agreement with GSIS, a copy of which will be distributed to each of the Qualified Bidder after the prequalification process is completed. 2. In the event that the Highest Bidder chooses a Management Contract for The Manila Hotel, the maximum levels for the management fee structure that GSIS/MHC are prepared to accept in the Management Contract are as follows: a. Basic management fee: Maximum of 2.5% of gross revenues.(1) b. Incentive fee: Maximum of 8.0% of gross operating profit(1) after deducting undistributed overhead expenses and the basic management fee. c. Fixed component of the international marketing/reservation system fee: Maximum of 2.0% of gross room revenues.(1) The Applicant should indicate in its Information Package if it is wishes to charge this fee. Note (1): As defined in the uniform system of account for hotels. The GSIS/MHC have indicated above the acceptable parameters for the hotel management fees to facilitate the negotiations with the Highest Bidder for the Management Contract after the Public Bidding. A Qualified Bidder envisioning a Management Contract for The Manila Hotel should determine whether or not the management fee structure above is acceptable before submitting their prequalification documents to GSIS. J. BLOCK SALE TO THE OTHER QUALIFIED BIDDERS 1. If for any reason, the Highest Bidder cannot be awarded the Block of Shares, GSIS may offer this to the other Qualified Bidders that have validly submitted bids provided that these Qualified are willing to match the highest bid in terms of price per share . 2. The order of priority among the interested Qualified Bidders will be in accordance wit the equivalent price per share of their respective bids in their public Bidding, i .e., first and second priority will be given to the Qualified Bidders that submitted the second and third highest bids on the price per share basis, respectively, and so on. K. DECLARATION OF THE WINNING BIDDER/STRATEGIC PARTNER The Highest Bidder will be declared the Winning Bidder/Strategic Partner after the following conditions are met: a. Execution of the necessary contract with GSIS/MHC not later than October 23, 1995; and b. Requisite approvals from the GSIS/MHC and COP/OGCC are obtained. I. FULL PAYMENT FOR THE BLOCK OF SHARES 1. Upon execution of the necessary contracts with GSIS/MHC, the Winning Bidder/Strategic Partner must fully pay, not later than October 23, 1995, the offered purchase price for the Block of Shares after deducting the Bid Security applied as downpayment. 2. All payments should be made in the form of a Manager's Check or unconditional Demand Draft, payable to the "Government Service Insurance System," issued by a reputable banking institution licensed to do business in the Philippines and acceptable to GSIS. M. GENERAL CONDITIONS

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1. The GSIS unconditionally reserves the right to reject any or all applications, waive any formality therein, or accept such application as maybe considered most advantageous to the GSIS. The GSIS similarly reserves the right to require the submission of any additional information from the Applicant as the PBAC may deem necessary. 2. The GSIS further reserves the right to call off the Public Bidding prior to acceptance of the bids and call for a new public bidding under amended rules, and without any liability whatsoever to any or all the Qualified Bidders, except the obligation to return the Bid Security. 3. The GSIS reserves the right to reset the date of the prequalification/bidding conference, the deadline for the submission of the prequalification documents, the date of the Public Bidding or other pertinent activities at least three (3) calendar days prior to the respective deadlines/target dates. 4. The GSIS sells only whatever rights, interest and participation it has on the Block of Shares. 5. All documents and materials submitted by the Qualified Bidders, except the Bid Security, may be returned upon request. 6. The decision of the PBAC/GSIS on the results of the Public Bidding is final. The Qualified Bidders, by participating in the Public Bidding, are deemed to have agreed to accept and abide by these results.
7. The GSIS will be held free and harmless form any liability, suit or allegation arising out of the Public Bidding by the Qualified Bidders who have participated in the Public Bidding. 3

The second public bidding was held on September 18, 1995. Petitioner bidded P41.00 per share for 15,300,000 shares and Renong Berhad bidded P44.00 per share also for 15,300,000 shares. The GSIS declared Renong Berhad the highest bidder and immediately returned petitioner's bid security. On September 28, 1995, ten days after the bidding, petitioner wrote to GSIS offering to match the bid price of Renong Berhad. It requested that the award be made to itself citing the second paragraph of Section 10, Article XII of the Constitution. It sent a manager's check for thirty-three million pesos (P33,000,000.00) as bid security. Respondent GSIS, then in the process of negotiating with Renong Berhad the terms and conditions of the contract and technical agreements in the operation of the hotel, refused to entertain petitioner's request. Hence, petitioner filed the present petition. We issued a temporary restraining order on October 18, 1995. Petitioner anchors its plea on the second paragraph of Article XII, Section 10 of the Constitution 4 on the "National Economy and Patrimony" which provides: xxx xxx xxx In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos. xxx xxx xxx The vital issues can be summed up as follows: (1) Whether section 10, paragraph 2 of Article XII of the Constitution is a self-executing provision and does not need implementing legislation to carry it into effect; (2) Assuming section 10 paragraph 2 of Article XII is self-executing whether the controlling shares of the Manila Hotel Corporation form part of our patrimony as a nation; (3) Whether GSIS is included in the term "State," hence, mandated to implement section 10,

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paragraph 2 of Article XII of the Constitution; (4) Assuming GSIS is part of the State, whether it failed to give preference to petitioner, a qualified Filipino corporation, over and above Renong Berhad, a foreign corporation, in the sale of the controlling shares of the Manila Hotel Corporation; (5) Whether petitioner is estopped from questioning the sale of the shares to Renong Berhad, a foreign corporation. Anent the first issue, it is now familiar learning that a Constitution provides the guiding policies and principles upon which is built the substantial foundation and general framework of the law and government. 5 As a rule, its provisions are deemed self-executing and can be enforced without further legislative action. 6 Some of its provisions, however, can be implemented only through appropriate laws enacted by the Legislature, hence not self-executing. To determine whether a particular provision of a Constitution is self-executing is a hard row to hoe. The key lies on the intent of the framers of the fundamental law oftentimes submerged in its language. A searching inquiry should be made to find out if the provision is intended as a present enactment, complete in itself as a definitive law, or if it needs future legislation for completion and enforcement. 7 The inquiry demands a micro-analysis of the text and the context of the provision in question. 8 Courts as a rule consider the provisions of the Constitution as self-executing, 9 rather than as requiring future legislation for their enforcement. 10 The reason is not difficult to discern. For if they are not treated as selfexecuting, the mandate of the fundamental law ratified by the sovereign people can be easily ignored and nullified by Congress. 11 Suffused with wisdom of the ages is the unyielding rule that legislative actions may give breath to constitutional rights but congressional in action should not suffocate them. 12 Thus, we have treated as self-executing the provisions in the Bill of Rights on arrests, searches and seizures, 13 the rights of a person under custodial investigation, 14 the rights of an accused, 15 and the privilege against selfincrimination, 16 It is recognize a that legislation is unnecessary to enable courts to effectuate constitutional provisions guaranteeing the fundamental rights of life, liberty and the protection of property. 17 The same treatment is accorded to constitutional provisions forbidding the taking or damaging of property for public use without just compensation. 18 Contrariwise, case law lays down the rule that a constitutional provision is not self-executing where it merely announces a policy and its language empowers the Legislature to prescribe the means by which the policy shall be carried into effect. 19 Accordingly, we have held that the provisions in Article II of our Constitution entitled "Declaration of Principles and State Policies" should generally be construed as mere statements of principles of the State. 20 We have also ruled that some provisions of Article XIII on "Social Justice and Human Rights," 21 and Article XIV on "Education Science and Technology, Arts, Culture end Sports" 22 cannot be the basis of judicially enforceable rights. Their enforcement is addressed to the discretion of Congress though they provide the framework for legislation 23 to effectuate their policy content. 24 Guided by this map of settled jurisprudence, we now consider whether Section 10, Article XII of the 1987 Constitution is self-executing or not. It reads: Sec. 10. The Congress shall, upon recommendation of the economic and planning agency, when the national interest dictates, reserve to citizens of the Philippines or to corporations or associations at least sixty per centum of whose capital is owned by such citizens, or such higher percentage as Congress may prescribe, certain areas of investments. The Congress shall enact measures that will encourage the formation and operation of enterprises whose capital is wholly owned by Filipinos. In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos. The State shall regulate and exercise authority over foreign investments within its national jurisdiction
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and in accordance with its national goals and priorities. The first paragraph directs Congress to reserve certain areas of investments in the country 25 to Filipino citizens or to corporations sixty per cent 26 of whose capital stock is owned by Filipinos. It further commands Congress to enact laws that will encourage the formation and operation of one hundred percent Filipino-owned enterprises. In checkered contrast, the second paragraph orders the entire State to give preference to qualified Filipinos in the grant of rights and privileges covering the national economy and patrimony. The third paragraph also directs the State to regulate foreign investments in line with our national goals and well-set priorities. The first paragraph of Section 10 is not self-executing. By its express text, there is a categorical command for Congress to enact laws restricting foreign ownership in certain areas of investments in the country and to encourage the formation and operation of wholly-owned Filipino enterprises. The right granted by the provision is clearly still in esse. Congress has to breathe life to the right by means of legislation. Parenthetically, this paragraph was plucked from section 3, Article XIV of the 1973 Constitution. 27 The provision in the 1973 Constitution affirmed our ruling in the landmark case of Lao Ichong v. Hernandez , 28 where we upheld the discretionary authority of Congress to Filipinize certain areas of investments. 29 By reenacting the 1973 provision, the first paragraph of section 10 affirmed the power of Congress to nationalize certain areas of investments in favor of Filipinos. The second and third paragraphs of Section 10 are different. They are directed to the State and not to Congress alone which is but one of the three great branches of our government. Their coverage is also broader for they cover "the national economy and patrimony" and "foreign investments within [the] national jurisdiction" and not merely "certain areas of investments." Beyond debate, they cannot be read as granting Congress the exclusive power to implement by law the policy of giving preference to qualified Filipinos in the conferral of rights and privileges covering our national economy and patrimony. Their language does not suggest that any of the State agency or instrumentality has the privilege to hedge or to refuse its implementation for any reason whatsoever. Their duty to implement is unconditional and it is now. The second and the third paragraphs of Section 10, Article XII are thus self-executing. This submission is strengthened by Article II of the Constitution entitled "Declaration of Principles and State Policies." Its Section 19 provides that "[T]he State shall develop a self-reliant and independent national economy effectively controlled by Filipinos." It engrafts the all-important Filipino First policy in our fundamental law and by the use of the mandatory word "shall," directs its enforcement by the whole State without any pause or a halfpause in time. The second issue is whether the sale of a majority of the stocks of the Manila Hotel Corporation involves the disposition of part of our national patrimony. The records of the Constitutional Commission show that the Commissioners entertained the same view as to its meaning. According to Commissioner Nolledo, "patrimony" refers not only to our rich natural resources but also to the cultural heritage of our race. 30 By this yardstick, the sale of Manila Hotel falls within the coverage of the constitutional provision giving preferential treatment to qualified Filipinos in the grant of rights involving our national patrimony. The unique value of the Manila Hotel to our history and culture cannot be viewed with a myopic eye. The value of the hotel goes beyond pesos and centavos. As chronicled by Beth Day Romulo, 31 the hotel first opened on July 4, 1912 as a first-class hotel built by the American Insular Government for Americans living in, or passing through, Manila while traveling to the Orient. Indigenous materials and Filipino craftsmanship were utilized in its construction, For sometime, it was exclusively used by American and Caucasian travelers and served as the "official guesthouse" of the American Insular Government for visiting foreign dignitaries. Filipinos began coming to the Hotel as guests during the Commonwealth period. When the Japanese occupied Manila, it served as military headquarters and lodging for the highest-ranking officers from Tokyo. It was at the Hotel and the Intramuros that the Japanese made their last stand during the Liberation of Manila. After the war, the Hotel again served foreign guests and Filipinos alike. Presidents and kings, premiers and potentates, as well as glamorous international film and sports celebrities were housed in the Hotel. It was also the situs of international conventions and conferences. In the local scene, it was the venue of historic meetings, parties and conventions of political parties. The Hotel has reaped and continues reaping numerous recognitions and awards from international hotel and travel award-giving bodies, a fitting acknowledgment of Filipino talent and ingenuity. These are judicially cognizable facts which cannot be bent by a biased mind.

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The Hotel may not, as yet, have been declared a national cultural treasure pursuant to Republic Act No. 4846 but that does not exclude it from our national patrimony. Republic Act No. 4846, "The Cultural Properties Preservation and Protection Act," merely provides a procedure whereby a particular cultural property may be classified a "national cultural treasure" or an "important cultural property. 32 Approved on June 18, 1966 and amended by P.D. 374 in 1974, the law is limited in its reach and cannot be read as the exclusive law implementing section 10, Article XII of the 1987 Constitution. To be sure, the law does not equate cultural treasure and cultural property as synonymous to the phrase "patrimony of the nation." The third issue is whether the constitutional command to the State includes the respondent GSIS. A look at its charter will reveal that GSIS is a government-owned and controlled corporation that administers funds that come from the monthly contributions of government employees and the government. 33 The funds are held in trust for a distinct purpose which cannot be disposed of indifferently. 34 They are to be used to finance the retirement, disability and life insurance benefits of the employees and the administrative and operational expenses of the GSIS, 35 Excess funds, however, are allowed to be invested in business and other ventures for the benefit of the employees. 36 It is thus contended that the GSIS investment in the Manila Hotel Corporation is a simple business venture, hence, an act beyond the contemplation of section 10, paragraph 2 of Article XII of the Constitution. The submission is unimpressive. The GSIS is not a pure private corporation. It is essentially a public corporation created by Congress and granted an original charter to serve a public purpose. It is subject to the jurisdictions of the Civil Service Commission 37 and the Commission on Audit. 38 As state-owned and controlled corporation, it is skin-bound to adhere to the policies spelled out in the general welfare of the people. One of these policies is the Filipino First policy which the people elevated as a constitutional command. The fourth issue demands that we look at the content of phrase "qualified Filipinos" and their "preferential right." The Constitution desisted from defining their contents. This is as it ought to be for a Constitution only lays down flexible policies and principles which can bent to meet today's manifest needs and tomorrow's unmanifested demands. Only a constitution strung with elasticity can grow as a living constitution. Thus, during the deliberations in the Constitutional Commission, Commissioner Nolledo to define the phrase brushed aside a suggestion to define the phrase "qualified Filipinos." He explained that present and prospective "laws" will take care of the problem of its interpretation, viz : xxx xxx xxx THE PRESIDENT. What is the suggestion of Commissioner Rodrigo? Is it to remove the word "QUALIFIED?" MR. RODRIGO. No, no, but say definitely "TO QUALIFIED FILIPINOS" as against whom? As against aliens over aliens? MR. NOLLEDO. Madam President, I think that is understood. We use the word "QUALIFIED" because the existing laws or the prospective laws will always lay down conditions under which business map be done, for example, qualifications on capital, qualifications on the setting up of other financial structures, et cetera. MR. RODRIGO. It is just a matter of style. MR. NOLLEDO Yes. MR. RODRIGO. If we say, "PREFERENCE TO QUALIFIED FILIPINOS," it can be understood as giving preference to qualified Filipinos as against Filipinos who are not qualified. MR. NOLLEDO. Madam President, that was the intention of the proponents. The committee has accepted the amendment. xxx xxx xxx

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As previously discussed, the constitutional command to enforce the Filipino First policy is addressed to the State and not to Congress alone. Hence, the word "laws" should not be understood as limited to legislations but all state actions which include applicable rules and regulations adopted by agencies and instrumentalities of the State in the exercise of their rule-making power. In the case at bar, the bidding rules and regulations set forth the standards to measure the qualifications of bidders Filipinos and foreigners alike. It is not seriously disputed that petitioner qualified to bid as did Renong Berhad. 39 Thus, we come to the critical issue of the degree of preference which GSIS should have accorded petitioner, a qualified Filipino, over Renong Berhad, a foreigner, in the purchase of the controlling shares of the Manila Hotel. Petitioner claims that after losing the bid, this right of preference gives it a second chance to match the highest bid of Renong Berhad. With due respect, I cannot sustain petitioner's submission. I prescind from the premise that the second paragraph of section 10, Article XII of the Constitution is pro-Pilipino but not anti-alien. It is pro-Filipino for it gives preference to Filipinos. It is not, however, anti-alien per se for it does not absolutely bar aliens in the grant of rights, privileges and concessions covering the national economy and patrimony. Indeed, in the absence of qualified Filipinos, the State is not prohibited from granting these rights, privileges and concessions to foreigners if the act will promote the weal of the nation. In implementing the policy articulated in section 10, Article XII of the Constitution, the stellar task of our State policy-makers is to maintain a creative tension between two desiderata first, the need to develop our economy and patrimony with the help of foreigners if necessary, and, second, the need to keep our economy controlled by Filipinos. Rightfully, the framers of the Constitution did not define the degree of the right of preference to be given to qualified Filipinos. They knew that for the right to serve the general welfare, it must have a malleable content that can be adjusted by our policy-makers to meet the changing needs of our people. In fine, the right of preference of qualified Filipinos is to be determined by degree as time dictates and circumstances warrant. The lesser the need for alien assistance, the greater the degree of the right of preference can be given to Filipinos and vice verse. Again, it should be stressed that the right and the duty to determine the degree of this privilege at any given time is addressed to the entire State. While under our constitutional scheme, the right primarily belongs to Congress as the lawmaking department of our government, other branches of government, and all their agencies and instrumentalities, share the power to enforce this state policy. Within the limits of their authority, they can act or promulgate rules and regulations defining the degree of this right of preference in cases where they have to make grants involving the national economy and judicial duty. On the other hand, our duty is to strike down acts of the state that violate the policy. To date, Congress has not enacted a law defining the degree of the preferential right. Consequently, we must turn to the rules and regulations of on respondents Committee Privatization and GSIS to determine the degree of preference that petitioner is entitled to as a qualified Filipino in the subject sale. A tearless look at the rules and regulations will show that they are silent on the degree of preferential right to be accorded qualified Filipino bidder. Despite their silence, however, they cannot be read to mean that they do not grant any degree of preference to petitioner for paragraph 2, section 10, Article XII of the Constitution is deemed part of said rules and regulations. Pursuant to legal hermeneutics which demand that we interpret rules to save them from unconstitutionality, I submit that the right of preference of petitioner arises only if it tied the bid of Benong Berhad. In that instance, all things stand equal, and bidder, as a qualified Pilipino bidder, should be preferred. It is with deep regret that I cannot subscribe to the view that petitioner has a right to match the bid of Renong Berhad. Petitioner's submission must be supported by the rules but even if we examine the rules inside-out .thousand times, they can not justify the claimed right. Under the rules, the right to match the highest bid arises only "if for any reason, the highest bidder cannot be awarded block of shares . . ." No reason has arisen that will prevent the award to Renong Berhad. It qualified as bidder. It complied with the procedure of bidding. It tendered the highest bid. It was declared as the highest bidder by the GSIS and the rules say this decision is final. It deserves the award as a matter of right for the rules clearly did not give to the petitioner as a qualified Filipino privilege to match the higher bid of a foreigner. What the rules did not grant, petitioner cannot demand. Our symphaties may be with petitioner but the court has no power to extend the latitude and longtitude of the right of preference as defined by the rules. The parameters of the right of preference depend on galaxy of facts and factors whose determination belongs to the province of the policy-making branches and agencies of the State. We

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are duty-bound to respect that determination even if we differ with the wisdom of their judgment. The right they grant may be little but we must uphold the grant for as long as the right of preference is not denied. It is only when a State action amounts to a denial of the right that the Court can come in and strike down the denial as unconstitutional. Finally, I submit that petitioner is estopped from assailing the winning bid of Renong Berhad. Petitioner was aware of the rules and regulations of the bidding. It knew that the rules and regulations do not provide that a qualified Filipino bidder can match the winning bid submitting an inferior bid. It knew that the bid was open to foreigners and that foreigners qualified even during the first bidding. Petitioner cannot be allowed to repudiate the rules which it agreed to respect. It cannot be allowed to obey the rules when it wins and disregard them when it loses. If sustained, petitioners' stance will wreak havoc on he essence of bidding. Our laws, rules and regulations require highest bidding to raise as much funds as possible for the government to maximize its capacity to deliver essential services to our people. This is a duty that must be discharged by Filipinos and foreigners participating in a bidding contest and the rules are carefully written to attain this objective. Among others, bidders are prequalified to insure their financial capability. The bidding is secret and the bids are sealed to prevent collusion among the parties. This objective will be undermined if we grant petitioner that privilege to know the winning bid and a chance to match it. For plainly, a second chance to bid will encourage a bidder not to strive to give the highest bid in the first bidding. We support the Filipino First policy without any reservation. The visionary nationalist Don Claro M. Recto has warned us that the greatest tragedy that can befall a Filipino is to be an alien in his own land. The Constitution has embodied Recto's counsel as a state policy. But while the Filipino First policy requires that we incline to a Filipino, it does not demand that we wrong an alien. Our policy makers can write laws and rules giving favored treatment to the Filipino but we are not free to be unfair to a foreigner after writing the laws and the rules. After the laws are written, they must be obeyed as written, by Filipinos and foreigners alike. The equal protection clause of the Constitution protects all against unfairness. We can be pro-Filipino without unfairness to foreigner. I vote to dismiss the petition. Narvasa, C.J., and Melo, J., concur.

PANGANIBAN, J., dissenting: I regret I cannot join the majority. To the incisive Dissenting Opinion of Mr. Justice Reynato S. Puno, may I just add 1. The majority contends the Constitution should be interpreted to mean that, after a bidding process is concluded, the losing Filipino bidder should be given the right to equal the highest foreign bid, and thus to win. However, the Constitution [Sec. 10 (2), Art. XII] simply states that "in the grant of rights . . . covering the national economy and patrimony, the State shall give preference to qualified Filipinos." The majority concedes that there is no law defining the extent or degree of such preference. Specifically, no statute empowers a losing Filipino bidder to increase his bid and equal that of the winning foreigner . In the absence of such empowering law, the majority's strained interpretation, I respectfully submit constitutes unadulterated judicial legislation, which makes bidding a ridiculous sham where no Filipino can lose and where no foreigner can win . Only in the Philippines!. 2. Aside from being prohibited by the Constitution, such judicial is short-sighted and, viewed properly, gravely prejudicial to long-term Filipino interest. It encourages other countries in the guise of reverse comity or worse, unabashed retaliation to discriminate against us in their own jurisdictions by authorizing their own nationals to similarly equal and defeat the higher bids of Filipino enterprises solely, while on the other hand, allowing similar bids of other foreigners to remain unchallenged by their nationals. The majority's thesis will thus marginalize Filipinos as pariahs in the global marketplace with absolute no chance of winning any bidding outside our country. Even authoritarian regimes and hermit kingdoms have long ago found out unfairness, greed and isolation are selfdefeating and in the long-term, self-destructing. The moral lesson here is simple: Do not do unto other what you dont want other to do unto you. 3. In the absence of a law specifying the degree or extent of the "Filipino First" policy of the Constitution, the constitutional preference for the "qualified Filipinos" may be allowed only where all the bids are equal. In this manner, we put the Filipino ahead without self-destructing him and without being unfair to the foreigner.
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In short, the Constitution mandates a victory for the qualified Filipino only when the scores are tied. But not when the ballgame is over and the foreigner clearly posted the highest score.

Separate Opinions PADILLA, J., concurring: I concur with the ponencia of Mr. Justice Bellosillo. At the same time, I would like to expound a bit more on the concept of national patrimony as including within its scope and meaning institutions such as the Manila Hotel. It is argued by petitioner that the Manila Hotel comes under "national patrimony" over which qualified Filipinos have the preference, in ownership and operation. The Constitutional provision on point states: xxx xxx xxx
In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall Give preference to qualified Filipinos. 1

Petitioner's argument, I believe, is well taken. Under the 1987 Constitution, "national patrimony" consists of the natural resources provided by Almighty God (Preamble) in our territory (Article I) consisting of land, sea, and air. 2 study of the 1935 Constitution, where the concept of "national patrimony" originated, would show that its framers decided to adopt the even more comprehensive expression "Patrimony of the Nation" in the belief that the phrase encircles a concept embracing not only their natural resources of the country but practically everything that belongs to the Filipino people, the tangible and the material as well as the intangible and the spiritual assets and possessions of the people. It is to be noted that the framers did not stop with conservation. They knew that conservation alone does not spell progress; and that this may be achieved only through development as a correlative factor to assure to the people not only the exclusive ownership, but also the exclusive benefits of their national patrimony). 3 Moreover, the concept of national patrimony has been viewed as referring not only to our rich natural resources but also to the cultural heritage of our race. 4 There is no doubt in my mind that the Manila Hotel is very much a part of our national patrimony and, as such, deserves constitutional protection as to who shall own it and benefit from its operation. This institution has played an important role in our nation's history, having been the venue of many a historical event, and serving as it did, and as it does, as the Philippine Guest House for visiting foreign heads of state, dignitaries, celebrities, and others.
5

It is therefore our duty to protect and preserve it for future generations of Filipinos. As President Manuel L. Quezon once said, we must exploit the natural resources of our country, but we should do so with. an eye to the welfare of the future generations. In other words, the leaders of today are the trustees of the patrimony of our race. To preserve our national patrimony and reserve it for Filipinos was the intent of the distinguished gentlemen who first framed our Constitution. Thus, in debating the need for nationalization of our lands and natural resources, one expounded that we should "put more teeth into our laws, and; not make the nationalization of our lands and natural resources a subject of ordinary legislation but of constitutional enactment" 6 To quote further: "Let not our children be mere tenants and trespassers in their own country. Let us preserve and bequeath to them what is rightfully theirs, free from all foreign liens and encumbrances". 7 Now, a word on preference. In my view "preference to qualified Filipinos", to be meaningful, must refer not only to things that are peripheral, collateral, or tangential. It must touch and affect the very "heart of the existing order." In the field of public bidding in the acquisition of things that pertain to the national patrimony, preference to qualified Filipinos must allow a qualified Filipino to match or equal the higher bid of a non-Filipino; the preference shall not operate only when the bids of the qualified Filipino and the non-Filipino are equal in which case, the award should undisputedly be made to the qualified Filipino. The Constitutional preference should give the qualified Filipino an

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opportunity to match or equal the higher bid of the non-Filipino bidder if the preference of the qualified Filipino bidder is to be significant at all. It is true that in this present age of globalization of attitude towards foreign investments in our country, stress is on the elimination of barriers to foreign trade and investment in the country. While government agencies, including the courts should re-condition their thinking to such a trend, and make it easy and even attractive for foreign investors to come to our shores, yet we should not preclude ourselves from reserving to us Filipinos certain areas where our national identity, culture and heritage are involved. In the hotel industry, for instance, foreign investors have established themselves creditably, such as in the Shangri-La, the Nikko, the Peninsula, and Mandarin Hotels. This should not stop us from retaining 51% of the capital stock of the Manila Hotel Corporation in the hands of Filipinos. This would be in keeping with the intent of the Filipino people to preserve our national patrimony, including our historical and cultural heritage in the hands of Filipinos. VITUG, J., concurring: I agree with Mr. Justice Josue N. Bellosillo on his clear-cut statements, shared by Mr. Justice Reynato S. Puno in a well written separate (dissenting) opinion, that: First , the provision in our fundamental law which provides that "(I)n the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos" 1 is selfexecutory. The provision verily does not need, although it can obviously be amplified or regulated by, an enabling law or a set of rules. Second , the term "patrimony" does not merely refer to the country's natural resources but also to its cultural heritage. A "historical landmark," to use the words of Mr. Justice Justo P. Torres, Jr., Manila Hotel has now indeed become part of Philippine heritage. Third, the act of the Government Service Insurance System ("GSIS"), a government entity which derives its authority from the State, in selling 51% of its share in MHC should be considered an act of the State subject to the Constitutional mandate. On the pivotal issue of the degree of "preference to qualified Filipinos," I find it somewhat difficult to take the same path traversed by the forceful reasoning of Justice Puno. In the particular case before us, the only meaningful preference, it seems, would really be to allow the qualified Filipino to match the foreign bid for, as a particular matter, I cannot see any bid that literally calls for millions of dollars to be at par (to the last cent) with another. The magnitude of the magnitude of the bids is such that it becomes hardly possible for the competing bids to stand exactly "equal" which alone, under the dissenting view, could trigger the right of preference. It is most unfortunate that Renong Berhad has not been spared this great disappointment, a letdown that it did not deserve, by a simple and timely advise of the proper rules of bidding along with the peculiar constitutional implications of the proposed transaction. It is also regrettable that the Court at time is seen, to instead, be the refuge for bureaucratic inadequate which create the perception that it even takes on non-justiciable controversies. All told, I am constrained to vote for granting the petition. MENDOZA, J., concurring in the judgment: I take the view that in the context of the present controversy the only way to enforce the constitutional mandate that "[i]n the grant of rights, privileges and concessions covering the national patrimony the State shall give preference to qualified Filipinos" 1 is to allow petitioner Philippine corporation to equal the bid of the Malaysian firm Renong Berhad for the purchase of the controlling shares of stocks in the Manila Hotel Corporation. Indeed, it is the only way a qualified Filipino of Philippine corporation can be given preference in the enjoyment of a right, privilege or concession given by the State, by favoring it over a foreign national corporation. Under the rules on public bidding of the Government Service and Insurance System, if petitioner and the Malaysian firm had offered the same price per share, "priority [would be given] to the bidder seeking the larger ownership interest in MHC," 2 so that petitioner bid for more shares, it would be preferred to the Malaysian corporation for that reason and not because it is a Philippine corporation. Consequently, it is only in cases like the present one, where an alien corporation is the highest bidder, that preferential treatment of the Philippine

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corporation is mandated not by declaring it winner but by allowing it "to match the highest bid in terms of price per share" before it is awarded the shares of stocks. 3 That, to me, is what "preference to qualified Filipinos" means in the context of this case by favoring Filipinos whenever they are at a disadvantage vis-a-vis foreigners. This was the meaning given in Co Chiong v. Cuaderno 4 to a 1947 statute giving "preference to Filipino citizens in the lease of public market stalls." 5 This Court upheld the cancellation of existing leases covering market stalls occupied by persons who were not Filipinos and the award thereafter of the stalls to qualified Filipino vendors as ordered by the Department of Finance. Similarly, in Vda. de Salgado v. De la Fuente , 6 this Court sustained the validity of a municipal ordinance passed pursuant to the statute (R.A. No. 37), terminating existing leases of public market stalls and granting preference to Filipino citizens in the issuance of new licenses for the occupancy of the stalls. In Chua Lao v. Raymundo, 7 the preference granted under the statute was held to apply to cases in which Filipino vendors sought the same stalls occupied by alien vendors in the public markets even if there were available other stalls as good as those occupied by aliens. "The law, apparently, is applicable whenever there is a conflict of interest between Filipino applicants and aliens for lease of stalls in public markets, in which situation the right to preference immediately arises." 8 Our legislation on the matter thus antedated by a quarter of a century efforts began only in the 1970s in America to realize the promise of equality, through affirmative action and reverse discrimination programs designed to remedy past discrimination against colored people in such areas as employment, contracting and licensing. 9 Indeed, in vital areas of our national economy, there are situations in which the only way to place Filipinos in control of the national economy as contemplated in the Constitution 10 is to give them preferential treatment where they can at least stand on equal footing with aliens. There need be no fear that thus preferring Filipinos would either invite foreign retaliation or deprive the country of the benefit of foreign capital or know-how. We are dealing here not with common trades of common means of livelihood which are open to aliens in our midst, 11 but with the sale of government property, which is like the grant of government largess of benefits and concessions covering the national economy" and therefore no one should begrudge us if we give preferential treatment to our citizens. That at any rate is the command of the Constitution. For the Manila Hotel is a business owned by the Government. It is being privatized. Privatization should result in the relinquishment of the business in favor of private individuals and groups who are Filipino citizens, not in favor of aliens. Nor should there be any doubt that by awarding the shares of stocks to petitioner we would be trading competence and capability for nationalism. Both petitioner and the Malaysian firm are qualified, having hurdled the prequalification process. 12 It is only the result of the public bidding that is sought to be modified by enabling petitioner to up its bid to equal the highest bid. Nor, finally, is there any basis for the suggestion that to allow a Filipino bidder to match the highest bid of an alien could encourage speculation, since all that a Filipino entity would then do would be not to make a bid or make only a token one and, after it is known that a foreign bidder has submitted the highest bid, make an offer matching that of the foreign firm. This is not possible under the rules on public bidding of the GSIS. Under these rules there is a minimum bid required (P36.87 per share for a range of 9 to 15 million shares). 13 Bids below the minimum will not be considered. On the other hand, if the Filipino entity, after passing the prequalification process, does not submit a bid, he will not be allowed to match the highest bid of the foreign firm because this is a privilege allowed only to those who have "validly submitted bids." 14 The suggestion is, to say the least, fanciful and has no basis in fact. For the foregoing reasons, I vote to grant the petition. TORRES, JR., J., separate opinion: Constancy in law is not an attribute of a judicious mind. I say this as we are not confronted in the case at bar with legal and constitutional issues and yet I am driven so to speak on the side of history. The reason perhaps is due to the belief that in the words of Justice Oliver Wendell Holmes, Jr., a "page of history is worth a volume of logic."

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I will, however, attempt to share my thoughts on whether the Manila Hotel has a historical and cultural aspect within the meaning of the constitution and thus, forming part of the "patrimony of the nation". Section 10, Article XII of the 1987 Constitution provides: xxx xxx xxx In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos. The State shall regulate and exercise authority over foreign investments within its national goals and priorities. The foregoing provisions should be read in conjunction with Article II of the same Constitution pertaining to "Declaration of Principles and State Policies" which ordain The State shall develop a self-reliant and independent national economy effectively by Filipinos. (Sec. 19). Interestingly, the matter of giving preference to "qualified Filipinos" was one of the highlights in the 1987 Constitution Commission proceedings thus: xxx xxx xxx MR. NOLLEDO. The Amendment will read: "IN THE GRANT OF RIGHTS, PRIVILEGES AND CONCESSIONS COVERING THE NATIONAL ECONOMY AND PATRIMONY, THE STATE SHALL GIVE PREFERENCE TO QUALIFIED FILIPINOS". And the word "Filipinos" here, as intended by the proponents, will include not only individual Filipinos but also FilipinoControlled entities fully controlled by Filipinos (Vol. III, Records of the Constitutional Commission, p. 608). MR. MONSOD. We also wanted to add, as Commissioner Villegas said, this committee and this body already approved what is known as the Filipino First policy which was suggested by Commissioner de Castro. So that it is now in our Constitution (Vol. IV, Records of the Constitutional Commission, p. 225). Commissioner Jose Nolledo explaining the provision adverted to above, said: MR. NOLLEDO. In the grant of rights, privileges and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos. MR. FOZ. In connection with that amendment, if a foreign enterprise is qualified and the Filipinos enterprise is also qualified, will the Filipino enterprise still be given a preference? MR. NOLLEDO. Obviously. MR. FOZ. If the foreigner is more qualified in some aspects than the Filipino enterprise, will the Filipino still be preferred:? MR. NOLLEDO. The answer is "yes". (Vol. III, p. 616, Records of the Constitutional Commission). The nationalistic provisions of the 1987 Constitution reflect the history and spirit of the Malolos Constitution of 1898, the 1935 Constitution and the 1973 Constitutions. That we have no reneged on this nationalist policy is articulated in one of the earliest case, this Court said The nationalistic tendency is manifested in various provisions of the Constitution. . . . It cannot

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therefore be said that a law imbued with the same purpose and spirit underlying many of the provisions of the Constitution is unreasonable, invalid or unconstitutional (Ichong, et al. vs. Hernandez, et al., 101 Phil. 1155). I subscribe to the view that history, culture, heritage, and traditions are not legislated and is the product of events, customs, usages and practices. It is actually a product of growth and acceptance by the collective mores of a race. It is the spirit and soul of a people. The Manila Hotel is part of our history, culture and heritage. Every inch of the Manila Hotel is witness to historic events (too numerous to mention) which shaped our history for almost 84 years. As I intimated earlier, it is not my position in this opinion, to examine the single instances of the legal largese which have given rise to this controversy. As I believe that has been exhaustively discussed in the ponencia. Suffice it to say at this point that the history of the Manila Hotel should not be placed in the auction block of a purely business transaction, where profits subverts the cherished historical values of our people. As a historical landmark in this "Pearl of the Orient Seas", it has its enviable tradition which, in the words of the philosopher Salvador de Madarriaga tradition is "more of a river than a stone, it keeps flowing, and one must view the flowing , and one must view the flow of both directions. If you look towards the hill from which the river flows, you see tradition in the form of forceful currents that push the river or people towards the future, and if you look the other way, you progress." Indeed, tradition and progress are the same, for progress depends on the kind of tradition. Let us not jettison the tradition of the Manila Hotel and thereby repeat our colonial history. I grant, of course the men of the law can see the same subject in different lights. I remember, however, a Spanish proverb which says "He is always right who suspects that he makes mistakes". On this note, I say that if I have to make a mistake, I would rather err upholding the belief that the Filipino be first under his Constitution and in his own land. I vote GRANT the petition.

PUNO, J., dissenting: This is a. petition for prohibition and mandamus filed by the Manila Prince Hotel Corporation, a domestic corporation, to stop the Government Service Insurance System (GSIS) from selling the controlling shares of the Manila Hotel Corporation to a foreign corporation. Allegedly, the sale violates the second paragraph of section 10, Article XII of the Constitution. Respondent GSIS is a government-owned and controlled corporation. It is the sole owner of the Manila Hotel which it operates through its subsidiary, the Manila Hotel Corporation. Manila Hotel was included in the privatization program of the government. In 1995, GSIS proposed to sell to interested buyers 30% to 51% of its shares, ranging from 9,000,000 to 15,300,000 shares, in the Manila Hotel Corporation. After the absence of bids at the first public bidding, the block of shares offered for sale was increased from a maximum of 30% to 51%. Also, the winning bidder, or the eventual "strategic partner" of the GSIS was required to "provide management expertise and/or an international marketing/reservation system, and financial support to strengthen the profitability and performance of the Manila Hotel" 1 The proposal was approved by respondent Committee on Privatization. In July 1995, a conference was held where prequalification documents and the bidding rules were furnished interested parties. Petitioner Manila Prince Hotel, a domestic corporation, and Renong Berhad, Malaysian firm with ITT Sheraton as operator, prequalified. 2 The bidding rules and procedures entitled "Guidelines and Procedures: Second Prequalification and Public Bidding of the MHC Privatization" provide: I INTRODUCTION AND HIGHLIGHTS

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DETERMINING THE WINNING BIDDER/STRATEGIC PARTNER The party that accomplishes the steps set forth below will be declared the Winning Bidder/Strategic Partner and will be awarded the Block of Shares: First Pass the prequalification process; Second Submit the highest bid on a price per share basis for the Block of Shares; Third Negotiate and execute the necessary contracts with GSIS/MHC not later than October 23, 1995; xxx xxx xxx IV GUIDELINES FOR PREQUALIFICATION A. PARTIES WHO MAP APPLY FOR PREQUALIFICATION The Winning Bidder/Strategic Partner will be expected to provide management expertise and/or an international marketing reservation system, and financial support to strengthen the profitability and performance of The Manila Hotel. In this context, the GSIS is inviting to the prequalification process any local and/or foreign corporation, consortium/joint venture or juridical entity with at least one of the following qualifications: a. Proven management .expertise in the hotel industry; or b. Significant equity ownership (i .e. board representation) in another hotel company; or c. Overall management and marketing expertise to successfully operate the Manila Hotel. Parties interested in bidding for MHC should be able to provide access to the requisite management expertise and/or international marketing/reservation system for The Manila Hotel. xxx xxx xxx D. PREQUALIFICATION DOCUMENTS xxx xxx xxx E. APPLICATION PROCEDURE 1. DOCUMENTS AVAILABLE AT THE REGISTRATION OFFICE The prequalification documents can be secured at the Registration Office between 9:00 AM to 4:00 PM during working days within the period specified in Section III. Each set of documents consists of the following: a. Guidelines and Procedures: Second Prequalification and Public Bidding of the MHC Privatization b. Confidential Information Memorandum: The Manila Hotel Corporation c. Letter of Invitation. to the Prequalification and Bidding Conference xxx xxx xxx 4. PREQUALIFICATION AND BIDDING CONFERENCE A prequalification and bidding conference will be held at The Manila Hotel on the date

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specified in Section III to allow the Applicant to seek clarifications and further information regarding the guidelines and procedures. Only those who purchased the prequalification documents will be allowed in this conference. Attendance to this conference is strongly advised, although the Applicant will not be penalized if it does not attend. 5. SUBMISSION OF PREQUALIFICATION DOCUMENTS The applicant should submit 5 sets of the prequalification documents (1 original set plus 4 copies) at the Registration Office between 9:00 AM to 4:00 PM during working days within the period specified in Section III. F. PREQUALIFICATION PROCESS 1. The Applicant will be evaluated by the PBAC with the assistance of the TEC based on the Information Package and other information available to the PBAC. 2. If the Applicant is a Consortium/Joint Venture, the evaluation will consider the overall qualifications of the group, taking into account the contribution of each member to the venture. 3. The decision of the PBAC with respect to the results of the PBAC evaluation will be final. 4. The Applicant shall be evaluated according to the criteria set forth below: a. Business experience management expertise, track record, and

b. Financial capability. c. Feasibility and acceptability of the proposed strategic plan for the Manila Hotel 5. The PBAC will shortlist such number of Applicants as it may deem appropriate. 6. The parties that prequalified in the first MHC public bidding ITT Sheraton, Marriot International Inc., Renaissance Hotels International Inc., consortium of RCBC Capital/Ritz Carlton may participate in the Public Bidding without having to undergo the prequalification process again. G. SHORTLIST OF QUALIFIED BIDDERS 1. A notice of prequalification results containing the shortlist of Qualified Bidders will be posted at the Registration Office at the date specified in Section III. 2. In the case of a Consortium/Joint Venture, the withdrawal by member whose qualification was a material consideration for being included in the shortlist is ground for disqualification of the Applicant. V. GUIDELINES FOR THE PUBLIC BIDDING A. PARTIES WHO MAY PARTICIPATE IN THE PUBLIC BIDDING All parties in the shortlist of Qualified Bidders will be eligible to participate in the Public Bidding. B. BLOCK OF SHARES A range of Nine Million (9,000,000) to Fifteen Million Three Hundred Thousand (15,300,000) shares of stock representing Thirty Percent to Fifty-One Percent (30%-

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51%) of the issued and outstanding shares of MHC, will be offered in the Public Bidding by the GSIS. The Qualified Bidders will have the Option of determining the number of shares within the range to bid for. The range is intended to attract bidders with different preferences and objectives for the operation and management of The Manila Hotel. C. MINIMUM BID REQUIRED ON A PRICE PER SHARE BASIS 1. Bids will be evaluated on a price per share basis. The minimum bid required on a price per share basis for the Block of Shares is Thirty-Six Pesos and Sixty-Seven Centavos (P36.67). 2. Bids should be in the Philippine currency payable to the GSIS. 3. Bids submitted with an equivalent price per share below the minimum required will not considered. D. TRANSFER COSTS xxx xxx xxx E. OFFICIAL BID FORM 1. Bids must be contained in the prescribed Official Bid Form, a copy of which is attached as Annex IV. The Official Bid Form must be properly accomplished in all details; improper accomplishment may be a sufficient basis for disqualification. 2. During the Public Bidding, the Qualified Bidder will submit the Official Bid Form, which will indicate the offered purchase price, in a sealed envelope marked "OFFICIAL BID." F. SUPPORTING DOCUMENTS During the Public Bidding, the following documents should be submitted along with the bid in a separate envelop marked "SUPPORTING DOCUMENTS": 1. WRITTEN AUTHORITY TO BID (UNDER OATH) . If the Qualified Bidder is a corporation, the representative of the Qualified Bidder should submit a Board resolution which adequately authorizes such representative to bid for and in behalf of the corporation with full authority to perform such acts necessary or requisite to bind the Qualified Bidder. If the Qualified Bidder is a Consortium/Joint Venture, each member of the Consortium/Joint venture should submit a Board resolution authorizing one of its members and such member's representative to make the bid on behalf of the group with full authority to perform such acts necessary or requisite to bind the Qualified Bidder. 2. BID SECURITY a. The Qualified Bidder should deposit Thirty-Three Million Pesos (P33,000,00), in Philippine currency as Bid Security in the form of: i. Manager's check or unconditional demand draft payable to the "Government Service Insurance System" and issued by a reputable banking institution duly licensed to do business in the Philippines and acceptable to GSIS; or ii. Standby-by letter of credit issued by a reputable banking institution acceptable to the GSIS. b. The GSIS will reject a bid if:

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i. The bid does not have Bid Security; or ii. The Bid Security accompanying the bid is for less than the required amount. c. If the Bid Security is in the form of a manager's check or unconditional demand draft, the interest earned on the Bid Security will be for the account of GSIS. d. If the Qualified Bidder becomes the winning Bidder/Strategic Partner, the Bid Security will be applied as the downpayment on the Qualified Bidder's offered purchase price. e. The Bid Security of the Qualified Bidder will be returned immediately after the Public Bidding if the Qualified Bidder is not declared the Highest Bidder. f. The Bid Security will be returned by October 23, 1995 if the Highest Bidder is unable to negotiate and execute with GSIS/MHC the Management Contract, International Marketing/Reservation System Contract or other types of contract specified by the Highest Bidder in its strategic plan for The Manila Hotel. g. The Bid Security of the Highest Bidder will be forfeited in favor of GSIS if the Highest Bidder, after negotiating and executing the Management Contract, International Marketing/Reservation System Contract specified by the Highest Bidder or other types of contract in its strategic plan for The Manila Hotel, fails or refuses to: i. Execute the Stock Purchase and Sale Agreement with GSIS not later than October 23, 1995; or ii. Pay the full amount of the offered purchase price not later than October 23, 1995; or iii. Consummate the sale of the Block of Shares for any other reason. G. SUBMISSION OF BIDS 1. The Public Bidding will be held on September 7, 1995 at the following location: New GSIS Headquarters Building Financial Center, Reclamation Area Roxas Boulevard, Pasay City, Metro Manila. 2. The Secretariat of the PBAC will be stationed at the Public Bidding to accept any and all bids and supporting requirements. Representatives from the Commission on Audit and COP will be invited to witness the proceedings. 3. The Qualified Bidder should submit its bid using the Official Bid Form. The accomplished Official Bid Form should be submitted in a sealed envelope marked "OFFICIAL BID." 4. The Qualified Bidder should submit the following documents in another sealed envelope marked "SUPPORTING BID DOCUMENTS" a. Written Authority Bid b. Bid Security 5. The two sealed envelopes marked "OFFICIAL BID" and "SUPPORTING BID DOCUMENTS" must be submitted simultaneously to the Secretariat between 9:00 AM and 2:00 PM, Philippine Standard Time, on the date of the Public Bidding. No bid shall be accepted after the closing time. Opened or tampered bids shall not be accepted. 6. The Secretariat will log and record the actual time of submission of the two sealed

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envelopes. The actual time of submission will also be indicated by the Secretariat on the face of the two envelopes. 7. After Step No. 6, the two sealed envelopes will be dropped in the corresponding bid boxes provided for the purpose. These boxes will be in full view of the invited public. H. OPENING AND READING OF BIDS 1. After the closing time of 2:00 PM on the date of the Public Bidding, the PBAC will open all sealed envelopes marked "SUPPORTING BID DOCUMENTS" for screening, evaluation and acceptance. Those who submitted incomplete/insufficient documents or document/s which is/are not substantially in the form required by PBAC will be disqualified. The envelope containing their Official Bid Form will be immediately returned to the disqualified bidders. 2. The sealed envelopes marked "OFFICIAL BID" will be opened at 3:00 PM. The name of the bidder and the amount of its bid price will be read publicly as the envelopes are opened. 3. Immediately following the reading of the bids, the PBAC will formally announce the highest bid and the Highest Bidder. 4. The highest bid will be, determined on a price per share basis. In the event of a tie wherein two or more bids have the same equivalent price per share, priority will be given to the bidder seeking the larger ownership interest in MHC. 5. The Public Bidding will be declared a failed bidding in case: a. No single bid is submitted within the prescribed period; or b. There is only one (1) bid that is submitted and acceptable to the PBAC. I. EXECUTION OF THE NECESSARY CONTRACTS WITH GSIS/MHC 1. The Highest Bidder must comply with the conditions set forth below by October 23, 1995 or the Highest Bidder will lose the right to purchase the Block of Shares and GSIS will instead offer the Block of Shares to the other Qualified Bidders: a. The Highest Bidder must negotiate and execute with GSIS/MHC the Management Contract, International Marketing Reservation System Contract or other type of contract specified by the Highest Bidder in its strategic plan for The Manila Hotel. If the Highest Bidder is intending to provide only financial support to The Manila Hotel, a separate institution may enter into the aforementioned contract/s with GSIS/MHC. b. The Highest Bidder must execute the Stock Purchase and Sale Agreement with GSIS, a copy of which will be distributed to each of the Qualified Bidder after the prequalification process is completed. 2. In the event that the Highest Bidder chooses a Management Contract for The Manila Hotel, the maximum levels for the management fee structure that GSIS/MHC are prepared to accept in the Management Contract are as follows: a. Basic management fee: Maximum of 2.5% of gross revenues.(1) b. Incentive fee: Maximum of 8.0% of gross operating profit(1) after deducting undistributed overhead expenses and the basic management fee. c. Fixed component of the international marketing/reservation system fee: Maximum of 2.0% of gross room revenues.(1) The Applicant should indicate in its Information Package if it is wishes to charge this fee.
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Note (1): As defined in the uniform system of account for hotels. The GSIS/MHC have indicated above the acceptable parameters for the hotel management fees to facilitate the negotiations with the Highest Bidder for the Management Contract after the Public Bidding. A Qualified Bidder envisioning a Management Contract for The Manila Hotel should determine whether or not the management fee structure above is acceptable before submitting their prequalification documents to GSIS. J. BLOCK SALE TO THE OTHER QUALIFIED BIDDERS 1. If for any reason, the Highest Bidder cannot be awarded the Block of Shares, GSIS may offer this to the other Qualified Bidders that have validly submitted bids provided that these Qualified are willing to match the highest bid in terms of price per share . 2. The order of priority among the interested Qualified Bidders will be in accordance wit the equivalent price per share of their respective bids in their public Bidding, i .e., first and second priority will be given to the Qualified Bidders that submitted the second and third highest bids on the price per share basis, respectively, and so on. K. DECLARATION OF THE WINNING BIDDER/STRATEGIC PARTNER The Highest Bidder will be declared the Winning Bidder/Strategic Partner after the following conditions are met: a. Execution of the necessary contract with GSIS/MHC not later than October 23, 1995; and b. Requisite approvals from the GSIS/MHC and COP/OGCC are obtained. I. FULL PAYMENT FOR THE BLOCK OF SHARES 1. Upon execution of the necessary contracts with GSIS/MHC, the Winning Bidder/Strategic Partner must fully pay, not later than October 23, 1995, the offered purchase price for the Block of Shares after deducting the Bid Security applied as downpayment. 2. All payments should be made in the form of a Manager's Check or unconditional Demand Draft, payable to the "Government Service Insurance System," issued by a reputable banking institution licensed to do business in the Philippines and acceptable to GSIS. M. GENERAL CONDITIONS 1. The GSIS unconditionally reserves the right to reject any or all applications, waive any formality therein, or accept such application as maybe considered most advantageous to the GSIS. The GSIS similarly reserves the right to require the submission of any additional information from the Applicant as the PBAC may deem necessary. 2. The GSIS further reserves the right to call off the Public Bidding prior to acceptance of the bids and call for a new public bidding under amended rules, and without any liability whatsoever to any or all the Qualified Bidders, except the obligation to return the Bid Security. 3. The GSIS reserves the right to reset the date of the prequalification/bidding conference, the deadline for the submission of the prequalification documents, the date of the Public Bidding or other pertinent activities at least three (3) calendar days prior to the respective deadlines/target dates.

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4. The GSIS sells only whatever rights, interest and participation it has on the Block of Shares. 5. All documents and materials submitted by the Qualified Bidders, except the Bid Security, may be returned upon request. 6. The decision of the PBAC/GSIS on the results of the Public Bidding is final. The Qualified Bidders, by participating in the Public Bidding, are deemed to have agreed to accept and abide by these results.
7. The GSIS will be held free and harmless form any liability, suit or allegation arising out of the Public Bidding by the Qualified Bidders who have participated in the Public Bidding. 3

The second public bidding was held on September 18, 1995. Petitioner bidded P41.00 per share for 15,300,000 shares and Renong Berhad bidded P44.00 per share also for 15,300,000 shares. The GSIS declared Renong Berhad the highest bidder and immediately returned petitioner's bid security. On September 28, 1995, ten days after the bidding, petitioner wrote to GSIS offering to match the bid price of Renong Berhad. It requested that the award be made to itself citing the second paragraph of Section 10, Article XII of the Constitution. It sent a manager's check for thirty-three million pesos (P33,000,000.00) as bid security. Respondent GSIS, then in the process of negotiating with Renong Berhad the terms and conditions of the contract and technical agreements in the operation of the hotel, refused to entertain petitioner's request. Hence, petitioner filed the present petition. We issued a temporary restraining order on October 18, 1995. Petitioner anchors its plea on the second paragraph of Article XII, Section 10 of the Constitution 4 on the "National Economy and Patrimony" which provides: xxx xxx xxx In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos. xxx xxx xxx The vital issues can be summed up as follows: (1) Whether section 10, paragraph 2 of Article XII of the Constitution is a self-executing provision and does not need implementing legislation to carry it into effect; (2) Assuming section 10 paragraph 2 of Article XII is self-executing whether the controlling shares of the Manila Hotel Corporation form part of our patrimony as a nation; (3) Whether GSIS is included in the term "State," hence, mandated to implement section 10, paragraph 2 of Article XII of the Constitution; (4) Assuming GSIS is part of the State, whether it failed to give preference to petitioner, a qualified Filipino corporation, over and above Renong Berhad, a foreign corporation, in the sale of the controlling shares of the Manila Hotel Corporation; (5) Whether petitioner is estopped from questioning the sale of the shares to Renong Berhad, a foreign corporation. Anent the first issue, it is now familiar learning that a Constitution provides the guiding policies and principles upon which is built the substantial foundation and general framework of the law and government. 5 As a rule, its provisions are deemed self-executing and can be enforced without further legislative action. 6 Some of its provisions, however, can be implemented only through appropriate laws enacted by the Legislature, hence not self-executing.

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To determine whether a particular provision of a Constitution is self-executing is a hard row to hoe. The key lies on the intent of the framers of the fundamental law oftentimes submerged in its language. A searching inquiry should be made to find out if the provision is intended as a present enactment, complete in itself as a definitive law, or if it needs future legislation for completion and enforcement. 7 The inquiry demands a micro-analysis of the text and the context of the provision in question. 8 Courts as a rule consider the provisions of the Constitution as self-executing, 9 rather than as requiring future legislation for their enforcement. 10 The reason is not difficult to discern. For if they are not treated as selfexecuting, the mandate of the fundamental law ratified by the sovereign people can be easily ignored and nullified by Congress. 11 Suffused with wisdom of the ages is the unyielding rule that legislative actions may give breath to constitutional rights but congressional in action should not suffocate them. 12 Thus, we have treated as self-executing the provisions in the Bill of Rights on arrests, searches and seizures, 13 the rights of a person under custodial investigation, 14 the rights of an accused, 15 and the privilege against selfincrimination, 16 It is recognize a that legislation is unnecessary to enable courts to effectuate constitutional provisions guaranteeing the fundamental rights of life, liberty and the protection of property. 17 The same treatment is accorded to constitutional provisions forbidding the taking or damaging of property for public use without just compensation. 18 Contrariwise, case law lays down the rule that a constitutional provision is not self-executing where it merely announces a policy and its language empowers the Legislature to prescribe the means by which the policy shall be carried into effect. 19 Accordingly, we have held that the provisions in Article II of our Constitution entitled "Declaration of Principles and State Policies" should generally be construed as mere statements of principles of the State. 20 We have also ruled that some provisions of Article XIII on "Social Justice and Human Rights," 21 and Article XIV on "Education Science and Technology, Arts, Culture end Sports" 22 cannot be the basis of judicially enforceable rights. Their enforcement is addressed to the discretion of Congress though they provide the framework for legislation 23 to effectuate their policy content. 24 Guided by this map of settled jurisprudence, we now consider whether Section 10, Article XII of the 1987 Constitution is self-executing or not. It reads: Sec. 10. The Congress shall, upon recommendation of the economic and planning agency, when the national interest dictates, reserve to citizens of the Philippines or to corporations or associations at least sixty per centum of whose capital is owned by such citizens, or such higher percentage as Congress may prescribe, certain areas of investments. The Congress shall enact measures that will encourage the formation and operation of enterprises whose capital is wholly owned by Filipinos. In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos. The State shall regulate and exercise authority over foreign investments within its national jurisdiction and in accordance with its national goals and priorities. The first paragraph directs Congress to reserve certain areas of investments in the country 25 to Filipino citizens or to corporations sixty per cent 26 of whose capital stock is owned by Filipinos. It further commands Congress to enact laws that will encourage the formation and operation of one hundred percent Filipino-owned enterprises. In checkered contrast, the second paragraph orders the entire State to give preference to qualified Filipinos in the grant of rights and privileges covering the national economy and patrimony. The third paragraph also directs the State to regulate foreign investments in line with our national goals and well-set priorities. The first paragraph of Section 10 is not self-executing. By its express text, there is a categorical command for Congress to enact laws restricting foreign ownership in certain areas of investments in the country and to encourage the formation and operation of wholly-owned Filipino enterprises. The right granted by the provision is clearly still in esse. Congress has to breathe life to the right by means of legislation.

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Parenthetically, this paragraph was plucked from section 3, Article XIV of the 1973 Constitution. 27 The provision in the 1973 Constitution affirmed our ruling in the landmark case of Lao Ichong v. Hernandez , 28 where we upheld the discretionary authority of Congress to Filipinize certain areas of investments. 29 By reenacting the 1973 provision, the first paragraph of section 10 affirmed the power of Congress to nationalize certain areas of investments in favor of Filipinos. The second and third paragraphs of Section 10 are different. They are directed to the State and not to Congress alone which is but one of the three great branches of our government. Their coverage is also broader for they cover "the national economy and patrimony" and "foreign investments within [the] national jurisdiction" and not merely "certain areas of investments." Beyond debate, they cannot be read as granting Congress the exclusive power to implement by law the policy of giving preference to qualified Filipinos in the conferral of rights and privileges covering our national economy and patrimony. Their language does not suggest that any of the State agency or instrumentality has the privilege to hedge or to refuse its implementation for any reason whatsoever. Their duty to implement is unconditional and it is now. The second and the third paragraphs of Section 10, Article XII are thus self-executing. This submission is strengthened by Article II of the Constitution entitled "Declaration of Principles and State Policies." Its Section 19 provides that "[T]he State shall develop a self-reliant and independent national economy effectively controlled by Filipinos." It engrafts the all-important Filipino First policy in our fundamental law and by the use of the mandatory word "shall," directs its enforcement by the whole State without any pause or a halfpause in time. The second issue is whether the sale of a majority of the stocks of the Manila Hotel Corporation involves the disposition of part of our national patrimony. The records of the Constitutional Commission show that the Commissioners entertained the same view as to its meaning. According to Commissioner Nolledo, "patrimony" refers not only to our rich natural resources but also to the cultural heritage of our race. 30 By this yardstick, the sale of Manila Hotel falls within the coverage of the constitutional provision giving preferential treatment to qualified Filipinos in the grant of rights involving our national patrimony. The unique value of the Manila Hotel to our history and culture cannot be viewed with a myopic eye. The value of the hotel goes beyond pesos and centavos. As chronicled by Beth Day Romulo, 31 the hotel first opened on July 4, 1912 as a first-class hotel built by the American Insular Government for Americans living in, or passing through, Manila while traveling to the Orient. Indigenous materials and Filipino craftsmanship were utilized in its construction, For sometime, it was exclusively used by American and Caucasian travelers and served as the "official guesthouse" of the American Insular Government for visiting foreign dignitaries. Filipinos began coming to the Hotel as guests during the Commonwealth period. When the Japanese occupied Manila, it served as military headquarters and lodging for the highest-ranking officers from Tokyo. It was at the Hotel and the Intramuros that the Japanese made their last stand during the Liberation of Manila. After the war, the Hotel again served foreign guests and Filipinos alike. Presidents and kings, premiers and potentates, as well as glamorous international film and sports celebrities were housed in the Hotel. It was also the situs of international conventions and conferences. In the local scene, it was the venue of historic meetings, parties and conventions of political parties. The Hotel has reaped and continues reaping numerous recognitions and awards from international hotel and travel award-giving bodies, a fitting acknowledgment of Filipino talent and ingenuity. These are judicially cognizable facts which cannot be bent by a biased mind. The Hotel may not, as yet, have been declared a national cultural treasure pursuant to Republic Act No. 4846 but that does not exclude it from our national patrimony. Republic Act No. 4846, "The Cultural Properties Preservation and Protection Act," merely provides a procedure whereby a particular cultural property may be classified a "national cultural treasure" or an "important cultural property. 32 Approved on June 18, 1966 and amended by P.D. 374 in 1974, the law is limited in its reach and cannot be read as the exclusive law implementing section 10, Article XII of the 1987 Constitution. To be sure, the law does not equate cultural treasure and cultural property as synonymous to the phrase "patrimony of the nation." The third issue is whether the constitutional command to the State includes the respondent GSIS. A look at its charter will reveal that GSIS is a government-owned and controlled corporation that administers funds that come from the monthly contributions of government employees and the government. 33 The funds are held in trust for a distinct purpose which cannot be disposed of indifferently. 34 They are to be used to finance the retirement, disability and life insurance benefits of the employees and the administrative and operational expenses of the
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GSIS, 35 Excess funds, however, are allowed to be invested in business and other ventures for the benefit of the employees. 36 It is thus contended that the GSIS investment in the Manila Hotel Corporation is a simple business venture, hence, an act beyond the contemplation of section 10, paragraph 2 of Article XII of the Constitution. The submission is unimpressive. The GSIS is not a pure private corporation. It is essentially a public corporation created by Congress and granted an original charter to serve a public purpose. It is subject to the jurisdictions of the Civil Service Commission 37 and the Commission on Audit. 38 As state-owned and controlled corporation, it is skin-bound to adhere to the policies spelled out in the general welfare of the people. One of these policies is the Filipino First policy which the people elevated as a constitutional command. The fourth issue demands that we look at the content of phrase "qualified Filipinos" and their "preferential right." The Constitution desisted from defining their contents. This is as it ought to be for a Constitution only lays down flexible policies and principles which can bent to meet today's manifest needs and tomorrow's unmanifested demands. Only a constitution strung with elasticity can grow as a living constitution. Thus, during the deliberations in the Constitutional Commission, Commissioner Nolledo to define the phrase brushed aside a suggestion to define the phrase "qualified Filipinos." He explained that present and prospective "laws" will take care of the problem of its interpretation, viz : xxx xxx xxx THE PRESIDENT. What is the suggestion of Commissioner Rodrigo? Is it to remove the word "QUALIFIED?" MR. RODRIGO. No, no, but say definitely "TO QUALIFIED FILIPINOS" as against whom? As against aliens over aliens? MR. NOLLEDO. Madam President, I think that is understood. We use the word "QUALIFIED" because the existing laws or the prospective laws will always lay down conditions under which business map be done, for example, qualifications on capital, qualifications on the setting up of other financial structures, et cetera. MR. RODRIGO. It is just a matter of style. MR. NOLLEDO Yes. MR. RODRIGO. If we say, "PREFERENCE TO QUALIFIED FILIPINOS," it can be understood as giving preference to qualified Filipinos as against Filipinos who are not qualified. MR. NOLLEDO. Madam President, that was the intention of the proponents. The committee has accepted the amendment. xxx xxx xxx As previously discussed, the constitutional command to enforce the Filipino First policy is addressed to the State and not to Congress alone. Hence, the word "laws" should not be understood as limited to legislations but all state actions which include applicable rules and regulations adopted by agencies and instrumentalities of the State in the exercise of their rule-making power. In the case at bar, the bidding rules and regulations set forth the standards to measure the qualifications of bidders Filipinos and foreigners alike. It is not seriously disputed that petitioner qualified to bid as did Renong Berhad. 39 Thus, we come to the critical issue of the degree of preference which GSIS should have accorded petitioner, a qualified Filipino, over Renong Berhad, a foreigner, in the purchase of the controlling shares of the Manila Hotel. Petitioner claims that after losing the bid, this right of preference gives it a second chance to match the highest bid of Renong Berhad. With due respect, I cannot sustain petitioner's submission. I prescind from the premise that the second paragraph

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of section 10, Article XII of the Constitution is pro-Pilipino but not anti-alien. It is pro-Filipino for it gives preference to Filipinos. It is not, however, anti-alien per se for it does not absolutely bar aliens in the grant of rights, privileges and concessions covering the national economy and patrimony. Indeed, in the absence of qualified Filipinos, the State is not prohibited from granting these rights, privileges and concessions to foreigners if the act will promote the weal of the nation. In implementing the policy articulated in section 10, Article XII of the Constitution, the stellar task of our State policy-makers is to maintain a creative tension between two desiderata first, the need to develop our economy and patrimony with the help of foreigners if necessary, and, second, the need to keep our economy controlled by Filipinos. Rightfully, the framers of the Constitution did not define the degree of the right of preference to be given to qualified Filipinos. They knew that for the right to serve the general welfare, it must have a malleable content that can be adjusted by our policy-makers to meet the changing needs of our people. In fine, the right of preference of qualified Filipinos is to be determined by degree as time dictates and circumstances warrant. The lesser the need for alien assistance, the greater the degree of the right of preference can be given to Filipinos and vice verse. Again, it should be stressed that the right and the duty to determine the degree of this privilege at any given time is addressed to the entire State. While under our constitutional scheme, the right primarily belongs to Congress as the lawmaking department of our government, other branches of government, and all their agencies and instrumentalities, share the power to enforce this state policy. Within the limits of their authority, they can act or promulgate rules and regulations defining the degree of this right of preference in cases where they have to make grants involving the national economy and judicial duty. On the other hand, our duty is to strike down acts of the state that violate the policy. To date, Congress has not enacted a law defining the degree of the preferential right. Consequently, we must turn to the rules and regulations of on respondents Committee Privatization and GSIS to determine the degree of preference that petitioner is entitled to as a qualified Filipino in the subject sale. A tearless look at the rules and regulations will show that they are silent on the degree of preferential right to be accorded qualified Filipino bidder. Despite their silence, however, they cannot be read to mean that they do not grant any degree of preference to petitioner for paragraph 2, section 10, Article XII of the Constitution is deemed part of said rules and regulations. Pursuant to legal hermeneutics which demand that we interpret rules to save them from unconstitutionality, I submit that the right of preference of petitioner arises only if it tied the bid of Benong Berhad. In that instance, all things stand equal, and bidder, as a qualified Pilipino bidder, should be preferred. It is with deep regret that I cannot subscribe to the view that petitioner has a right to match the bid of Renong Berhad. Petitioner's submission must be supported by the rules but even if we examine the rules inside-out .thousand times, they can not justify the claimed right. Under the rules, the right to match the highest bid arises only "if for any reason, the highest bidder cannot be awarded block of shares . . ." No reason has arisen that will prevent the award to Renong Berhad. It qualified as bidder. It complied with the procedure of bidding. It tendered the highest bid. It was declared as the highest bidder by the GSIS and the rules say this decision is final. It deserves the award as a matter of right for the rules clearly did not give to the petitioner as a qualified Filipino privilege to match the higher bid of a foreigner. What the rules did not grant, petitioner cannot demand. Our symphaties may be with petitioner but the court has no power to extend the latitude and longtitude of the right of preference as defined by the rules. The parameters of the right of preference depend on galaxy of facts and factors whose determination belongs to the province of the policy-making branches and agencies of the State. We are duty-bound to respect that determination even if we differ with the wisdom of their judgment. The right they grant may be little but we must uphold the grant for as long as the right of preference is not denied. It is only when a State action amounts to a denial of the right that the Court can come in and strike down the denial as unconstitutional. Finally, I submit that petitioner is estopped from assailing the winning bid of Renong Berhad. Petitioner was aware of the rules and regulations of the bidding. It knew that the rules and regulations do not provide that a qualified Filipino bidder can match the winning bid submitting an inferior bid. It knew that the bid was open to foreigners and that foreigners qualified even during the first bidding. Petitioner cannot be allowed to repudiate the rules which it agreed to respect. It cannot be allowed to obey the rules when it wins and disregard them when it loses. If sustained, petitioners' stance will wreak havoc on he essence of bidding. Our laws, rules and regulations require highest bidding to raise as much funds as possible for the government to maximize its capacity to deliver essential services to our people. This is a duty that must be discharged by Filipinos and foreigners participating in a bidding

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contest and the rules are carefully written to attain this objective. Among others, bidders are prequalified to insure their financial capability. The bidding is secret and the bids are sealed to prevent collusion among the parties. This objective will be undermined if we grant petitioner that privilege to know the winning bid and a chance to match it. For plainly, a second chance to bid will encourage a bidder not to strive to give the highest bid in the first bidding. We support the Filipino First policy without any reservation. The visionary nationalist Don Claro M. Recto has warned us that the greatest tragedy that can befall a Filipino is to be an alien in his own land. The Constitution has embodied Recto's counsel as a state policy. But while the Filipino First policy requires that we incline to a Filipino, it does not demand that we wrong an alien. Our policy makers can write laws and rules giving favored treatment to the Filipino but we are not free to be unfair to a foreigner after writing the laws and the rules. After the laws are written, they must be obeyed as written, by Filipinos and foreigners alike. The equal protection clause of the Constitution protects all against unfairness. We can be pro-Filipino without unfairness to foreigner. I vote to dismiss the petition. Narvasa, C.J., and Melo, J., concur.

PANGANIBAN, J., dissenting: I regret I cannot join the majority. To the incisive Dissenting Opinion of Mr. Justice Reynato S. Puno, may I just add 1. The majority contends the Constitution should be interpreted to mean that, after a bidding process is concluded, the losing Filipino bidder should be given the right to equal the highest foreign bid, and thus to win. However, the Constitution [Sec. 10 (2), Art. XII] simply states that "in the grant of rights . . . covering the national economy and patrimony, the State shall give preference to qualified Filipinos." The majority concedes that there is no law defining the extent or degree of such preference. Specifically, no statute empowers a losing Filipino bidder to increase his bid and equal that of the winning foreigner . In the absence of such empowering law, the majority's strained interpretation, I respectfully submit constitutes unadulterated judicial legislation, which makes bidding a ridiculous sham where no Filipino can lose and where no foreigner can win . Only in the Philippines!. 2. Aside from being prohibited by the Constitution, such judicial is short-sighted and, viewed properly, gravely prejudicial to long-term Filipino interest. It encourages other countries in the guise of reverse comity or worse, unabashed retaliation to discriminate against us in their own jurisdictions by authorizing their own nationals to similarly equal and defeat the higher bids of Filipino enterprises solely, while on the other hand, allowing similar bids of other foreigners to remain unchallenged by their nationals. The majority's thesis will thus marginalize Filipinos as pariahs in the global marketplace with absolute no chance of winning any bidding outside our country. Even authoritarian regimes and hermit kingdoms have long ago found out unfairness, greed and isolation are selfdefeating and in the long-term, self-destructing. The moral lesson here is simple: Do not do unto other what you dont want other to do unto you. 3. In the absence of a law specifying the degree or extent of the "Filipino First" policy of the Constitution, the constitutional preference for the "qualified Filipinos" may be allowed only where all the bids are equal. In this manner, we put the Filipino ahead without self-destructing him and without being unfair to the foreigner. In short, the Constitution mandates a victory for the qualified Filipino only when the scores are tied. But not when the ballgame is over and the foreigner clearly posted the highest score. Footnotes 1 See Sec. 10, par. 2, Art. XII, 1987 Constitution 2 Par I. Introduction and Highlights; Guidelines and Procedures: Second Prequailifications and Public Bidding of the MHC Privatization; Annex "A," Consolidated Reply to Comments of Respondents; Rollo, p. 142.

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3 Par. V. Guidelines for the Public Bidding, id., pp. 153-154. 4 Annex "A," Petition for Prohibition and Mandamus with Temporary Restraining Order; Rollo, pp. 1314. 5 Annex "B," Petition for Prohibition and Mandamus with Temporary Restraining Order; id., p. 15. 6 Petition for Prohibition and Mandamus with Temporary Restraining Order, pp. 5-6; id., pp. 6-7. 7 Consolidated Reply to Comments of Respondents , p. 17; id., p. 133. 8 Par. V.J. 1, Guidelines for Public Bidding, Guidelines and Procedures: second Prequalifications and Public Bidding of the MHC Privatization, Annex "A," Consolidated Reply to Comments of Respondents; id., p. 154. 9 Respondents' Joint Comment with Urgent Motion to Lift Temporary Restraining Order, p. 9; Rollo, p. 44. 10 Marbury v. Madison, 5, U.S. 138 (1803). 11 Am Jur. 606. 12 16 Am Jur. 2d 281. 13 Id., p. 282. 14 See Note 12. 15 Cruz, Isagani A., Constitutional Law, 1993 ed., pp. 8-10. 16 Record of the Constitutional Commission, Vol. 3, 22 August 1986, p. 608. 17 16 Am Jur 2d 283-284. 18 Sec. 10, first par., reads: The Congress shall, upon recommendation of the economic and planning agency, when the national interest dictates, reserve to citizens of the Philippines or to corporations or associations at least sixty per centum of whose capital is owned by such citizens, or such higher percentage as Congress may prescribe, certain areas of investments. The Congress shall enact measures that will encourage the formation and operation of enterprises whose capital is wholly owned by Filipinos. Sec. 10, third par., reads: The State shall regulate and exercise authority over foreign investments within its national jurisdiction and in accordance with its national goals and priorities. 19 State ex rel. Miller v. O'Malley, 342 Mo. 641, 117 SW2d 319. 20 G.R. No. 91649, 14 May 1991, 197 SCRA 52. 21 Sec. 11, Art. II (Declaration of Principles and State Policies), provides that [t]he State values the dignity of every human person and guarantees full respect for human rights. 22 Sec. 12, Art. II, provides that [t]he State recognizes the sanctity of family life and shall protect and strengthen the family as a basic autonomous social institution. It shall equally protect the life of the mother and the life of the unborn from conception. The natural and primary right and duty of parents in the rearing of the youth for civic efficiency and the development of moral character shall receive the support of the government. 23 Sec. 13, Art. II, provides that [t]he State recognizes the vital role of the youth in nation-building and shall promote and protect their physical, moral, spiritual, intellectual, and social well-being. It shall inculcate in the youth patriotism and nationalism, and encourage their involvement in public and civic affairs.

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24 Sec. 1, Art. XIII (Social Justice and Human Rights), provides that [t]he Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, reduce social, economic and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good. To this end, the State shall regulate the acquisition, ownership, use, and disposition of property and its increments. Sec. 2, Art. XIII, provides that [t]he promotion of social justice shall include the commitment to create economic opportunities based on freedom of initiative and self-reliance. 25 Sec. 2, Art. XIV (Education, Science and Technology, Arts, Culture, and Sports), provides that [t]he State shall: (1) Establish, maintain, and support a complete, adequate, and integrated system of education relevant to the needs of the people and society; (2) Establish and maintain a system of free public education in the elementary and high school levels. Without limiting the natural right of parents to rear their children, elementary education is compulsory for all children of school age; (3) Establish and maintain a system of scholarship grants, student loan programs, subsidies, and other incentives which shall be available to deserving students in both public and private schools, especially to the underprivileged. (4) Encourage non-formal, informal, and indegenous learning, independent, and out-of-school study programs particularly those that respond to community needs; and (5) Provide adult citizens, the disabled, and out-of-school youth with training in civics, vocational efficiency, and other skills. 26 G.R. 115455, 25 August 1994, 235 SCRA 630. 27 See Note 25. 28 Sec. 1 Art. XIV, provides that [t]he State shall protect and promote the right of all citizens to quality education at all levels of education and shall take appropriate steps to make such education accessible to all. 29 G.R. No. 118910, 17 July 1995. 30 Sec. 5 Art. II (Declaration of Principles and State Policies), provides that [t]he maintenance of peace and order, the protection of life, liberty, and property, and the promotion of the general welfare are essential for the enjoyment by all the people of the blessings of democracy. 31 See Note 23. 32 See Note 24. 33 Sec. 17, Art II, provides that [t]he State shall give priority to education, science and technology, arts, culture, and sports to foster patriotism and nationalism, accelerate social progress, and promote total human liberation and development. 34 Nolledo, Jose N., The New Constitution of the Philippines Annotated, 1990 ed., p. 72. 35 Webster's Third New International Dictionary, 1986 ed., p. 1656. 36 The guest list of the Manila Hotel includes Gen. Douglas MacArthur, the Duke of Windsor, President Richard Nixon of U.S.A., Emperor Akihito of Japan, President Dwight Eisenhower of U.S.A, President Nguyen Van Thieu of Vietnam, President Park Chung Hee of Korea, Prime Minister Richard Holt of Australia, Prime Minister Keith Holyoake of New Zealand, President Lyndon Johnson

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of U.S.A., President Jose Lopez Portillo of Mexico, Princess Margaret of England, Prime Minister Malcolm Fraser of Australia, Prime Minister Yasuhiro Nakasone of Japan, Prime Minister Pierre Elliot Trudeau of Canada, President Raul Alfonsin of Argentina, President Felipe Gonzalez of Spain, Prime Minister Noboru Takeshita of Japan, Prime Minister Hussain Muhammad Ershad of Bangladesh, Prime Minister Bob Hawke of Australia, Prime Minister Yasuhiro Nakasone of Japan, Premier Li Peng of China, Sultan Hassanal Bolkiah of Brunei, President Ramaswani Venkataraman of India, Prime Minister Go Chok Tong of Singapore, Prime Minister Enrique Silva Cimma of Chile, Princess Chulaborn and Mahacharri Sirindhorn of Thailand, Prime Minister Tomiichi Murayama of Japan, Sultan Azlan Shah and Raja Permaisuri Agong of Malaysia, President Kim President Young Sam of Korea, Princess Infanta Elena of Spain, President William Clinton of U.S.A., Prime Minister Mahathir Mohamad of Malaysia, King Juan Carlos I and Queen Sofia of Spain, President Carlos Saul Menem of Argentina, Prime Ministers Chatichai Choonvan and Prem Tinsulanonda of Thailand, Prime Minister Benazir Bhutto of Pakistan, President Vaclav Havel of Czech Republic, Gen. Norman Schwarzcopf of U.S.A, President Ernesto Perez Balladares of Panama, Prime Minister Adolfas Slezevicius of Lithuania, President Akbar Hashemi Rafsanjani of Iran, President Frei Ruiz Tagle of Chile, President Le Duc Anh of Vietnam, and Prime Minister Julius Chan of Papua New Guinea, see Memorandum for Petitioner, pp. 16-19. 37 Authored by Beth Day Romulo. 38 See Note 9, pp. 15-16; Rollo, pp. 50-51. 39 Record of the Constitutional Commission. Vol. 3, 22 August 1986. p. 607. 40 Id., p. 612. 41 Id., p. 616. 42 Id., p. 606. 43 Nolledo, J.N., The New Constitution of the Philippines Annotated, 1990 ed., pp. 930-931. 44 Bidders were required to have at least one of the these qualifications to be able to participate in the bidding process; see Note 2. 45 Memorandum of Fr. Joaquin G. Bernas, S.J., p. 6. 46 Id., pp. 3-4. 47 See Note 8. 48 Keynote Address at the ASEAN Regional Symposium of Enforcement of Industrial Property Rights held 23 October 1995 at New World Hotel, Makati City. 49 Speech of Senior Associate Justice Teodoro R. Padilla at the Induction of Officers and Directors of the PHILCONSA for 1996 held 16 January 1996 at the Sky-Top, Hotel Intercontinental, Makati City. 50 Memorandum of Authorities submitted by former Chief Justice Enrique M. Fernando, p. 5. 51 8 March 1996 issue of Philippine Daily Inquirer, p. B13. PADILLA, J., concurring: 1 Article XII, Section 10, par. 2, 1987 Constitution. 2 Padilla, The 1987 Constitution of the Republic of the Philippines, Volume III, p. 89. 3 Sinco, Philippine Political Law, 11th ed, p. 112. 4 Nolledo, The New Constitution of the Philippines, Announced, 1990 ed., p. 72.

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5 Memorandum for Petitioner, p. 1. 6 Laurel, Proceedings of the Philippine Constitutional Convention (1934-1935), p. 507. 7 Id., p. 562. VITUG, J., concurring: 1 Second par. Section 10, Art. XII, 1987 Constitution. MENDOZA, J., concurring: 1 Art. XII, 10, second paragraph. 2 GUIDELINES AND PROCEDURES: SECOND PREQUALIFICATION AND PUBLIC BIDDING OF THE MHC PRIVATIZATION (hereafter referred to as GUIDELINES), Part. V, par. H(4).. 3 Id. 4 83 Phil. 242 (1949). 5 R.A. No. 37, 1. 6 87 Phil. 343 (1950). 7 104 Phil. 302 (1958). 8 Id, at 309. 9 For an excellent analysis of American cases on reverse discrimination in these areas, see GERALD GUNTHER, CONSTITUTIONAL LAW 780-819 (1991). 10 Art. II, 19: "The State shall develop a self-reliant and independent national economy effectively controlled by Filipinos ." (Emphasis added) 11 See Villegas v. Hiu Chiung Tsai Pao Ho, 86 SCRA 270 (1978) (invalidating an ordinance imposing a flat fee of P500 on aliens for the privilege of earning a livelihood). 12 Petitioner passed the criteria set forth in the GUIDELINES, Part IV, par. F(4), of the GSIS, relating to the following: a. Business management expertise, tract record, and experience b. Financial capability c. Feasibility and acceptability of the proposed strategic plan for the Manila Hotel. 13 GUIDELINES, Part V, par. (1)(3), in relation to Part. I. 14 Id., Part V, par. V (1). PUNO, J., dissenting: 1 Introduction and Highlights, Guidelines and Procedures: Second Prequalification and Public Bidding of the MHC Privatization, Annex "A" to Petitioner's Consolidated Reply to Comments of Respondents, Rollo, p. 142. 2 The four bidders who previously prequalified for the first bidding, namely, ITT Sheraton, Marriot International, Inc., Renaissance Hotel International, Inc., and the consortium of RCBC and the Ritz Carlton, were deemed prequalified for the second bidding. 3 Annex "A" to the Consolidated Reply to Comments of Respondents, Rollo, pp. 140-155.

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4 Former Chief Justice Enrique Fernando and Commissioner Joaquin Bernas were invited by the Court as amicus curiae to shed light on its meaning. 5 Lopez v. de los Reyes, 55 Phil. 170, 190 [1930]. 6 16 Am Jur 2d, Constitutional Law, Sec. 139 p. 510 [1979 ed. ]; 6 R.C.L. Sec. 52 p. 57 [1915]; see also Willis v. St. Paul Sanitation Co. 48 Minn. 140, 50 N.W. 1110, 31 A.J.R. 626, 16 L.R.A. 281 [1892]; State ex rel. Schneider v. Kennedy, 587 P. 2d 844, 225 Kan [1978]. 7 Willis v. St. Paul Sanitation, supra , at 1110-1111; see also Cooley, A Treatise on Constitutional Limitations 167, vol. 1 [1927]. 8 16 C.J.S., Constitutional Law, Sec. 48, p. 100. 9 Cooley, supra , at 171; 6 R.C.L. Sec. 53, pp. 57-58; Brice v. McDow, 116 S.C. 324, 108 S.E. 84, 87 [1921]; see also Gonzales, Philippine Constitutional Law p. 26 [1969]. 10 16 C.J.S., Constitutional Law, Sec. 48, p. 101. 11 Way v. Barney, 116 Minn. 285, 133 N.W. 801, 804 38 L.R.A. (N.S.) 648, Ann. Cas. 1913 A, 719 [1911]; Brice v. McDow, supra , at 87; Morgan v. Board of Supervisors, 67 Ariz. 133, 192 P. 2d 236, 241 [1948]; Gonzales, supra .. 12 Ninth Decennial Digest Part I, Constitutional Law, (Key No. 28), p. 1638. 13 Article III, Section 2; see Webb v. de Leon, 247 SCRA 652 [1995]; People v. Saycon, 236 SCRA 325 (1994]; Allado v. Diokno, 232 SCRA 192 (1994]; Burgos v. Chief of Staff, 133 SCRA 800 [1984]; Yee Sue Kuy v. Almeda, 70 Phil. 141 [1940]; Pasion Vda. de Garcia v. Locsin, 65 Phil. 689 [1938]; and a host of other cases. 14 Article III, Section 12, pars. 1 to 3; People v. Alicando, 251 SCRA 293 [1995]; People v. Bandula 232 SCRA 566 [1994]; People v. Nito 228 SCRA 442 [1993]; People v. Duero, 104 SCRA 379 [1981]; People v. Galit, 135 SCRA 465 [1985]; and a host of other cases. 15 Article III, Section 14; People v. Digno, 250 SCRA 237 [1995]; People v. Godoy, 250 SCRA 676 [1995]; People v. Colcol 219 SCRA [1993]; Borja v. Mendoza, 77 SCRA 422 [1977]; People v. Dramayo, 42 SCRA 59 [1971]; and a host of other cases. 16 Galman v. Pamaran, 138 SCRA 274 [1985]; Chavez v. Court of Appeals 24 SCRA 663 [1968]; People v. Otadura, 86 Phil. 244 [1950]; Bermudez v. Castillo, 64 Phil, 485 [1937]; and a host of other cases. 17 Harley v. Schuylkill County, 476 F. Supp, 191, 195-196 [1979]; Erdman v. Mitchell, 207 Pa. St. 79, 56 Atl. 327, 99 A.S.R. 783 63 L.R.A. 534 [1903]; see Ninth Decennial Digest Part I, Constitutional Law, (Key No. 28), pp. 1638-1639. 18 City of Chicago v. George F. Harding Collection, 217 N.E. 2d 381, 383, 70 Ill. App. 2d 254 [1966]; People v. Buellton Dev. Co., 136 P. 2d 793, 796, 58 Cal. App. 2d 178 [1943]; Bordy v. State, 7 N.W. 2d 632, 635, 142 Neb. 714 [1943]; Cohen v. City of Chicago, 36 N.E. 2d 220, 224, 377 Ill 221 [1941]. 19 16 Am Jur 2d, Constitutional Law, Sec. 143, p. 514; 16 C.J.S. Constitutional Law, Sec. 48, p. 100; 6 R.C.L. Sec. 54, p. 59; see also State ex rel. Noe v. Knop La. App. 190 So. 135, 142 [1939]; State ex rel. Walker v. Board of Comm'rs. for Educational Lands and Funds, 3 N.W. 2d 196, 200, 141 Neb. 172 [1942]; Maddox v. Hunt, 83 P. 2d 553, 556, 83 Okl. 465 [1938]. 20 Article II, Sections 11, 12 and 13 (Basco v. Phil. Amusements and Gaming Corporation, 197 SCRA 52, 68 [1991]); Sections 5, 12, 13 and 17 (Kilosbayan, Inc. v. Morato, 246 SCRA 540, 564 [1995]). 21 Article XIII, Section 13 (Basco, supra ).

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22 Article XIV, Section 2 (Basco, supra ). 23 Kilosbayan v. Morato, supra , at 564. 24 Basco v. Phil. Amusements and Gaming Corporation, supra , at 68. 25 Congress had previously passed the Retail Trade Act (R.A. 1180); the Private Security Agency Act (R.A. 5487; the law on engaging in the rice and corn industry (R.A. 3018, P.D. 194), etc. 26 Or such higher percentage as Congress may prescribe. 27 Article XIV, section 3 of the 1973 Constitution reads: "Sec . 3. The Batasang Pambansa shall, upon recommendation of the National Economic and Development Authority, reserve to citizens of the Philippines or to corporations or associations wholly owned by such citizens, certain traditional areas of investments when the national interest so dictates," 28 101 Phil. 1155 [1957]. 29 See Bernas, The Constitution of the Republic of the Philippines 450, vol. II [1988]. The Lao Ichong case upheld the Filipinization of the retail trade and implied that particular areas of business may be Filipinized without doing violence to the equal protection clause of the Constitution. 30 Nolledo The New Constitution of the Philippines, Annotated, 1990 ed., p. 72. The word "patrimony" first appeared in the preamble of the 1935 Constitution and was understood to cover everything that belongs to the Filipino people, the tangible and the material as well as the intangible and the spiritual assets and possessions of the nation (Sinco, Philippine Political Law, Principles and Concepts [1962 ed.], p. 112; Speech of Delegate of Conrado Benitez defending the draft preamble of the 1935 Constitution in Laurel, Proceedings of the Constitutional Convention, vol. III, p. 325 [1966]). 31 Commissioned by the Manila Hotel Corporation for the Diamond Jubilee celebration of the Hotel in 1987; see The Manila Hotel: The Heart and Memory of a City.any 32 Section 7 of R.A. 4846 provides: Sec . 7. In the designation of a particular cultural property as a .national cultural treasure," the following procedure shall be observed: (a) Before the actual designation, the owner, if the property is privately owned, shall be notified at least fifteen days prior to the intended designation, and he shall be invited to attend the deliberation and given a chance to be heard. Failure on the part of the owner to attend the deliberation shall not bar the panel to render its decision. Decision shall be given by the panel within a week after its deliberation. In the event that the owner desires to seek reconsideration of the designation made by the panel, he may do so within thirty days from the date that the decision has been rendered. If no request for reconsideration is filed after this period, the designation is then considered final and executory. Any request for reconsideration filed within thirty days and subsequently again denied by the panel, may be further appealed to another panel chairmanned by the Secretary of Education with two experts as members appointed by the Secretary of Education. Their decision shall final and binding. (b) Within each kind or class of objects, only the rare and unique objects may be designated as "National Cultural Treasures." The remainder, if any shall be treated as cultural property. xxx xxx xxx 33 P.D. 1146, Sec, 5; P.D, 1146, known as "The Revised Government Service Insurance Act of 1977" amended Commonwealth Act No. 186, the "Government Service Insurance Act" of 1936. 34 Beronilla v. Government Service Insurance System, 36 SCRA 44, 53 [1970]; Social Security System Employees Association v. Soriano, 7 SCRA 1016, 1023 [1963].
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35 Id. , secs. 28 and 29. 36 Id. , Sec. 30. 37 Constitution, Article IX (B), section 2 (1). 38 Constitution, Article IX (D), section 2 (1). 39 It is meet to note that our laws do not debar foreigners from engaging in the hotel business. Republic Act No. 7042, entitled the "Foreign Investments Act of 1991" was enacted by Congress to "attract, promote and welcome . . . foreign investments . . . in activities which significantly contribute to national industrialization and socio-economic development to the extent that foreign investment is allowed by the Constitution and relevant laws." The law contains a list, called the Negative List specifying areas of economic activity where foreign participation is limited or prohibited. Areas of economic activity not included in the Negative List are open to foreign participation up to one hundred per cent (Sees. 6 and 7). Foreigners now own and run a great number of our five-star hotels.
The Lawphil Project - Arellano Law Foundation

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G.R. No. 195097

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 195097 August 13, 2012

REPUBLIC OF THE PHILIPPINES, Petitioner, vs. MARLON MEDIDA, Respondent. DECISION REYES, J.: This resolves the petition for review on certiorari filed by petitioner Republic of the Philippines (Republic) to assail the Decision1 dated December 16, 20 I 0 of the Court of Appeals (CA) in CA-G.R. CV No. 01870, entitled Marlon Medida, Petitioner-appellee, v. Republic of the Philippines, Oppositor-appellant. On October 22, 2004, herein respondent Marlon Medida (Medida) filed with the Regional Trial Court (RTC), Argao, Cebu a petition for registration of title over two parcels of land situated in Poblacion, Boljoon, Cebu, identified as Lot Nos. 817 and 597 of Boljoon Cad. 1049-D and measuring 5,972 and 533 square meters, respectively. The petition was docketed as LRA Case No. AL-31 and raffled to Branch 26 of the RTC, Argao, Cebu. The initial hearing on the petition was conducted on September 22, 2005, with the attendance of the public prosecutor. The RTC delegated the reception of evidence to its Clerk of Court. Before the court, Medida testified that he purchased the subject properties in February 1997 from one Eufemia Romero (Romero), who had previously obtained the lots from Nabor Derama (Derama). At the time of the lots purchase by Medida, the properties were covered by Tax Declaration No. 08774 under the name of Romero. Medida started occupying the properties in 1997, and had since then declared the properties for tax purposes under his name.2 Also among the witnesses presented during the proceedings a quo were Asuncion Derama Binagatan (Binagatan) and Engineer Rafaela A. Belleza (Engr. Belleza). Binagatan, daughter of Derama, testified that her father had inherited the subject properties from his uncle, one Florencio Villareal, who possessed the lots even prior to the Second World War. She presented the old Tax Declaration No. 08590 under the name of her father and covering the subject properties. 3 Engr. Belleza, the Chief of the Technical Services of the Land Management Services Department of Environment and Natural Resources (DENR), Region VII, testified that the lots survey conducted by Geodetic Engineer Jose V. Dumaguing (Engr. Dumaguing) was approved by their office. Per the Advance Survey Plans for Lot Nos. 817 4 and 597 5 identified by Engr. Belleza, the subject properties had already been declared alienable and disposable portions of the public domain. On June 21, 2006, the trial court ruled in favor of Medida via a Decision6 with dispositive portion that reads: WHEREFORE, finding the petitioner to have sufficient title proper for registration, the petition is hereby GRANTED and judgment is hereby rendered confirming the title of petitioner Marlon D. Medida, married to Patricia F. Medida, over the following parcels of land: 1. A parcel of land, Lot 817, Cad. 1049-D, under AP-07-003683, situated in Barangay Poblacion, Municipality of Boljoon, Province of Cebu, containing an area of FIVE THOUSAND NINE HUNDRED SEVENTY-TWO (5,972) SQUARE METERS; and

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2. A parcel of land, Lot 597, Cad. 1049-D, under AP 07-003653, situated in Barangay Poblacion, Municipality of Boljoon, Province of Cebu, containing an area of FIVE HUNDRED THIRTYTHREE (533) SQUARE METERS. IT IS SO DECIDED.7 Unsatisfied with the decision of the RTC, petitioner Republic, through the Office of the Solicitor General (OSG), filed an appeal before the CA based on a lone assignment of error, to wit: The trial court erred in granting appellees petition for registration because the subject lands were not occupied and possessed for the period required by law.8 In support of its appeal, the OSG argued that it was only from the subject lands date of alienability and disposability that the reckoning of the thirty (30)-year statutory requirement of possession should begin. Based on the Advance Survey Plans submitted by the respondent, Lot Nos. 817 and 597 were declared alienable and disposable in 1987 and 1980, respectively.9 The OSG then argued that Medidas possession of the properties prior to 1987 and 1980, as the case may be, should not be credited as part of the period of possession required from him as an applicant for land registration. On December 16, 2010, the CA rendered the assailed Decision10 dismissing the appeal. It ruled that the doctrine invoked by the OSG had been abandoned by recent jurisprudence. The appellate court emphasized that the more reasonable interpretation of Section 14(1) of Presidential Decree No. 1529 (P.D. No. 1529), otherwise known as the Property Registration Decree, now merely requires the property for registration to be already declared alienable and disposable at the time that the application for registration of title is filed in court. The dispositive portion of the CA decision reads: WHEREFORE, premises considered, the present Appeal is hereby DISMISSED and the Decision dated June 21, 2006, rendered by the Regional Trial Court, Branch 26, Laoang Northern Argao, Cebu, in LRA Case No. AL-31 is hereby AFFIRMED. SO ORDERED.11 Hence, this petition for review on certiorari. The Republic invokes in its petition a lone ground, to wit: THE COURT OF APPEALS CONCLUSION THAT THE SUBJECT LANDS ARE PART OF THE ALIENABLE AND DISPOSABLE PORTION OF THE PUBLIC DOMAIN IS WITHOUT BASIS. 12 Citing jurisprudence on the matter, the Republic argues that the alienable and disposable character of the subject parcels of land has not been sufficiently proved by the mere presentation of the surveyors notations on the Advance Survey Plans for Lot Nos. 817 and 597. Petitioner Republic claims that such requirement must be established by the existence of a positive act of the government, such as a presidential proclamation or an executive order, an administrative action, investigation reports of Bureau of Lands investigators, and a legislative act or statute. In his Comment, 13 Medida maintains that he has sufficiently proved that the subject properties have been declared alienable and disposable. To further support this assertion, he submitted with his Comment the following certifications issued by the DENR-Community Environment and Natural Resources Office (CENRO) of Argao, Cebu: (1) the Certification14 dated June 22, 2011 which states that the parcel of land described as Lot No. 817, Cad/Pls 1049-D, C-1 located at Poblacion, Boljoon, Cebu with an area of 5,972 square meters is within the alienable and disposable area, Proj. No. 59-A, L.C. Map No. 3280, certified on August 6, 1987, as verified by actual ground verification; and (2) the Certification15 dated July 5, 2011 which states that the parcel of land described as Lot No. 597, Cad/Pls 1049-D, C-1 located at Poblacion, Boljoon, Cebu with an area of 533 square meters is within the alienable and disposable area, Proj. No. 59 L.C. Map No. 2876, certified on January 11, 1980, as verified by actual ground verification.

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G.R. No. 195097

Medida also seeks the petitions denial on the ground that it raises a question of fact, which is not allowed in petitions for review under Rule 45. Medida further argues that the OSG is bound conclusively by its declaration before the CA that the subject parcels of land have been declared alienable and disposable. Prescinding from the foregoing, the main issue for this Courts resolution is: whether or not the CA erred in ruling that the parcels of land subject of the application for registration are part of the alienable and disposable portions of the public domain. The petition is meritorious. First, we address Medidas argument that the present petition raises a question of fact which is beyond the coverage of a petition for review on certiorari . The distinction between a "question of law" and a "question of fact" is settled. There is a "question of law" when the doubt or difference arises as to what the law is on a certain state of facts, and which does not call for an examination of the probative value of the evidence presented by the parties-litigants. On the other hand, there is a "question of fact" when the doubt or controversy arises as to the truth or falsity of the alleged facts. Simply put, when there is no dispute as to fact, the question of whether or not the conclusion drawn therefrom is correct, is a question of law.16 Judging by the arguments that are raised by the OSG in its petition, the issue delves on the alleged insufficiency of the documents presented by the respondent to support the CAs conclusion that the subject parcels of land have been validly declared alienable and disposable. In Republic v. Vega, 17 we explained that when a petitioner seeks the review of a lower courts ruling based on the evidence presented, without delving into their probative value but only on their sufficiency to support the legal conclusions made, then a question of law is raised. We explained: The Petition raises a question of law, and not a question of fact. Petitioner Republic simply takes issue against the conclusions made by the trial and the appellate courts regarding the nature and character of the subject parcel of land, based on the evidence presented. When petitioner asks for a review of the decisions made by a lower court based on the evidence presented, without delving into their probative value but simply on their sufficiency to support the legal conclusions made, then a question of law is raised. xxxx Petitioner Republic is not calling for an examination of the probative value or truthfulness of the evidence presented, x x x. It, however, questions whether the evidence on record is sufficient to support the lower court's conclusion that the subject land is alienable and disposable. Otherwise stated, considering the evidence presented by respondents Vegas in the proceedings below, were the trial and the appellate courts justified under the law and jurisprudence in their findings on the nature and character of the subject land? Undoubtedly, this is a pure question of law, which calls for a resolution of what is the correct and applicable law to a given set of facts. 18 (Emphasis ours) The issue in the present petition has been limited by the Republic, as it merely concerns the merit of notations in survey plans to prove that the properties sought to be registered have been declared alienable and disposable. Similar to the Vega case, the contest rests on the matter of sufficiency of evidence, an issue on a conclusion that was made by the appellate court without necessarily raising an attack on the authenticity of the documents that were presented in the proceedings before the RTC. The issue being invoked by the Republic to support its petition is then a question of law, a matter that is within the purview of Rule 45 of the Rules of Court. We now resolve the petitions substantial issue. Under the Regalian Doctrine, which is embodied in our Constitution, all lands of the public domain belong to the State, which is the source of any asserted right to any ownership of land. All lands not appearing to be clearly within private ownership are presumed to belong to the State. Accordingly, public lands not shown to have been reclassified or released as alienable agricultural land, or alienated to a private person by the State, remain part of the inalienable public domain. The burden of proof in overcoming the presumption of State ownership of the lands of the public domain is on the person applying for registration, who must prove that the land subject of the application is alienable or disposable. To overcome this presumption, incontrovertible evidence must be presented to establish that the land subject of the application is alienable or disposable.19

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G.R. No. 195097

On this requirement of proof to establish that a land has become alienable and disposable, the respondent argues that the Advance Survey Plans 20 that were prepared by Engr. Dumaguing and approved by the DENR-Land Management Bureau, providing notations that the lots indicated therein are within the alienable and disposable properties of the State, should suffice. We disagree. As the rule now stands, an applicant must prove that the land subject of an application for registration is alienable and disposable by establishing the existence of a positive act of the government such as a presidential proclamation or an executive order; an administrative action; investigation reports of Bureau of Lands investigators; and a legislative act or a statute. The applicant may also secure a certification from the government that the land claimed to have been possessed for the required number of years is alienable and disposable.21 In a line of cases, we have ruled that mere notations appearing in survey plans are inadequate proof of the covered properties alienable and disposable character. Our ruling in Republic of the Philippines v. Tri-Plus Corporation 22 is particularly instructive: It must be stressed that incontrovertible evidence must be presented to establish that the land subject of the application is alienable or disposable. In the present case, the only evidence to prove the character of the subject lands as required by law is the notation appearing in the Advance Plan stating in effect that the said properties are alienable and disposable. However, this is hardly the kind of proof required by law. To prove that the land subject of an application for registration is alienable, an applicant must establish the existence of a positive act of the government such as a presidential proclamation or an executive order, an administrative action, investigation reports of Bureau of Lands investigators, and a legislative act or statute. The applicant may also secure a certification from the Government that the lands applied for are alienable and disposable. In the case at bar, while the Advance Plan bearing the notation was certified by the Lands Management Services of the DENR, the certification refers only to the technical correctness of the survey plotted in the said plan and has nothing to do whatsoever with the nature and character of the property surveyed. Respondents failed to submit a certification from the proper government agency to prove that the lands subject for registration are indeed alienable and disposable.23 (Citations omitted and emphasis ours) Clearly, even the testimony of Engr. Belleza fails to satisfy the required proof. Before us, Medida attempts to remedy the deficiency in his application by submitting the Certifications24 of the CENRO of Argao, Cebu, attached to his Comment to further substantiate his claim that the subject properties were already declared alienable and disposable. Unfortunately for the respondent, the said CENRO Certifications remain inadequate to support his intended purpose. In Republic v. T.A.N. Properties, Inc., 25 this Court explained that a Provincial Environment and Natural Resources Office (PENRO) or CENRO certification, by itself, fails to prove the alienable and disposable character of a parcel of land. We ruled: It is not enough for the PENRO or CENRO to certify that a land is alienable and disposable. The applicant for land registration must prove that the DENR Secretary had approved the land classification and released the land of the public domain as alienable and disposable, and that the land subject of the application for registration falls within the approved area per verification through survey by the PENRO or CENRO. In addition, the applicant for land registration must present a copy of the original classification approved by the DENR Secretary and certified as a true copy by the legal custodian of the official records. These facts must be established to prove that the land is alienable and disposable. Respondents failed to do so because the certifications presented by respondent do not, by themselves, prove that the land is alienable and disposable.26 (Emphasis ours) We further explained why a CENRO or PENRO certification cannot be considered prima facie evidence of the facts stated therein: Public documents are defined under Section 19, Rule 132 of the Revised Rules on Evidence as follows:

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G.R. No. 195097

(a) The written official acts, or records of the official acts of the sovereign authority, official bodies and tribunals, and public officers, whether of the Philippines, or of a foreign country; (b) Documents acknowledged before a notary public except last wills and testaments; and (c) Public records, kept in the Philippines, of private documents required by law to be entered therein. Applying Section 24 of Rule 132, the record of public documents referred to in Section 19(a), when admissible for any purpose, may be evidenced by an official publication thereof or by a copy attested by the officer having legal custody of the record, or by his deputy x x x. The CENRO is not the official repository or legal custodian of the issuances of the DENR Secretary declaring public lands as alienable and disposable. The CENRO should have attached an official publication of the DENR Secretarys issuance declaring the land alienable and disposable. Section 23, Rule 132 of the Revised Rules on Evidence provides: "Sec. 23. Public documents as evidence. Documents consisting of entries in public records made in the performance of a duty by a public officer are prima facie evidence of the facts stated therein. All other public documents are evidence, even against a third person, of the fact which gave rise to their execution and of the date of the latter." The CENRO and Regional Technical Director, FMS-DENR, certifications do not fall within the class of public documents contemplated in the first sentence of Section 23 of Rule 132. The certifications do not reflect "entries in public records made in the performance of a duty by a public officer," such as entries made by the Civil Registrar in the books of registries, or by a ship captain in the ships logbook. The certifications are not the certified copies or authenticated reproductions of original official records in the legal custody of a government office. The certifications are not even records of public documents. x x x.27 (Citations omitted and italics ours) The present rule on the matter then requires that an application for original registration be accompanied by: (1) CENRO or PENRO Certification; and (2) a copy of the original classification approved by the DENR Secretary and certified as a true copy by the legal custodian of the official records. 28 Medida failed in this respect. The records only include CENRO Certifications on the subject properties alienability and disposability, but not a copy of the original classification approved by the DENR Secretary and certified as true copy by its legal custodian. Furthermore, even the CENRO Certifications filed before this Court deserve scant consideration since these were not presented during the trial. The genuineness and due execution of these documents had not been duly proven in the manner required by law.29 In view of the failure of the respondent to establish by sufficient proof that the subject parcels of land had been classified as part of the alienable and disposable land of the public domain, his application for registration of title should be denied. There is even no merit in the petitioners argument that the Republic is bound by an alleged judicial admission on the subject properties alienability and disposability, when the latter included the following statement in its Brief30 filed before the CA: The Advance Survey Plan clearly shows that the Lot No. 817 and Lot No. 597, albeit alienable and disposable land, were declared only as such in 1987 and 1980, respectively.31 (Citation omitted) Said statement cannot be construed as an admission on the alienable and disposable character of the subject properties, as the Republic merely cited the contents of the Advance Survey Plans to lay its basis in saying that Medida had not satisfied the required number of years of possession. Furthermore, the afore-quoted statement should not be interpreted in isolation or taken out of context, as the statements prior to the alleged judicial admission in fact provide: Under the Regalian Doctrine, all lands of the public domain belong to the State, and the State is the source of any asserted right to ownership in land and charged with the conversion of such patrimony.

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G.R. No. 195097

The same doctrine also states that all lands not otherwise appearing within private ownership are presumed to belong to the State. Hence, anyone who applies for registration of ownership over a parcel of land has the burden of overcoming the presumption that the land sought to be registered forms part of the public domain. Such burden was not discharged in the present case. x x x.32 (Citations omitted and emphasis ours) This Court also holds that the alienability and disposability of land are not among the matters that can be established by mere admissions, or even the agreement of parties. The law and jurisprudence provide stringent requirements to prove such fact. Our Constitution,33 no less, embodies the Regalian doctrine that all lands of the public domain belong to the State, which is the source of any asserted right to ownership of land. The courts are then empowered, as we are duty-bound, to ensure that such ownership of the State is duly protected by the proper observance by parties of the rules and requirements on land registration.
1wphi1

WHEREFORE, premises considered, the petition is GRANTED . The Decision dated December 16, 20 I 0 of the Court of Appeals in CA-G.R. CV No. 01870 is hereby SET ASIDE . The application for registration filed by Marlon Medida is DENIED . SO ORDERED. BENVENIDO L. REYES Associate Justice WE CONCUR: PRESBITERO J. VELASCO, JR.* Associate Justice ARTURO D. BRION Associate Justice Acting Chairperson MARTIN S. VILLARAMA, JR.** Associate Justice

JOSE PORTUGAL PEREZ Associate Justice ATTESTATION l attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. ARTURO D. BRION Associate Justice Acting Chairperson CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution and the Division Acting Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. ANTONIO T. CARPIO Senior Associate Justice (Per Section 12, R.A. 296, The Judiciary Act of 1948, as amended)

Footnotes
* Additional member per Raffle dated March 9, 20 II vice Senior Associate Justice Antonio T. Carpio.

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G.R. No. 195097 ** Additional member per Special Order No. 1274 dated July 30, 2012 vice Associate Justice Maria Lourdes

P.A. Sereno.
1 Penned by Associate Justice Edgardo L. Delos Santos, with Associate Justices Agnes Reyes-Carpio and

Eduardo B. Peralta. Jr., concurring; rollo. pp. 31-40.


2 Id. at 77. 3 Id. at 79. 4 Id. at 60. 5 Id. at 63. 6 Id. at 76-84. 7 Id. at 84. 8 Id. at 87. 9 Id. at 90. 10 Id. at 31-40. 11 Id. at 39. 12 Id. at 14. 13 Id. at 116-124. 14 Id. at 125. 15 Id. at 126. 16 Sarsaba v. Vda. de Te, G.R. No. 175910, July 30, 2009, 594 SCRA 410, 420. 17 G.R. No. 177790, January 17, 2011, 639 SCRA 541. 18 Id. at 547-548. 19 Republic v. Dela Paz, G.R. No. 171631, November 15, 2010, 634 SCRA 610, 621-622. 20 Rollo, pp. 74-75. 21 Valiao v. Republic, G.R. No. 170757, November 28, 2011. 22 534 Phil. 181 (2006). 23 Id. at 194-195. 24 Rollo, pp. 125-126. 25 G.R. No. 154953, June 26, 2008, 555 SCRA 477. 26 Id. at 489.

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G.R. No. 195097 27 Id. at 489-491. 28 Republic v. Bantigue Point Development Corporation, G.R. No. 162322, March 14, 2012. 29 See Republic v. Gomez, G.R. No. 189021, February 22, 2012. 30 Rollo, pp. 85-94. 31 Id. at 90. 32 Id. at 89-90. 33 THE 1987 CONSTITUTION, Article XII, Section 2.

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G.R. No. L-58867

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-58867 June 22, 1984 DIRECTOR OF LANDS and DIRECTOR OF FOREST DEVELOPMENT, petitioners, vs. HON. COURT OF APPEALS and ANTONIO VALERIANO, GABRIELA VALERIANO VDA. DE LA CRUZ, LETICIA A. VALERIANO and MARISSA VALERIANO DE LA ROSA, respondents. The Solicitor General for petitioners. Carlos C. Serapio for private respondents.

MELENCIO-HERRERA, J.: Petitioners-public officials, through the Solicitor General, seek a review of the Decision and Resolution of the then Court of Appeals affirming the judgment of the former Court of First Instance of Bulacan, Branch III, decreeing registration of a parcel of land in private respondents' favor. The land in question, Identified as Lot 2347, Cad-302D, Case 3, Obando Cadastre, under Plan Ap-03-000535, is situated in Obando, Bulacan, and has an area of approximately 9.3 hectares. It adjoins the Kailogan River and private respondents have converted it into a fishpond. In their application for registration filed on May 10, 1976, private respondents (Applicants, for brevity) claimed that they are the co-owners in fee simple of the land applied for partly through inheritance in 1918 and partly by purchase on May 2, 1958; that it is not within any forest zone or military reservation; and that the same is assessed for taxation purposes in their names. The Republic of the Philippines, represented by the Director of the Bureau of Forest Development opposed the application on the principal ground that the land applied for is within the unclassified region of Obando, Bulacan, per BF Map LC No. 637 dated March 1, 1927; and that areas within the unclassified region are denominated as forest lands and do not form part of the disposable and alienable portion of the public domain. After hearing, the Trial Court ordered registration of the subject land in favor of the Applicants. This was affirmed on appeal by respondent Appellate Court, which found that "through indubitable evidence (Applicants) and their predecessors-in-interest have been in open, public, continuous, peaceful and adverse possession of the subject parcel of land under a bona fide claim of ownership for more than 30 years prior to the filing of the application" and are, therefore, entitled to registration. It further opined that "since the subject property is entirely devoted to fishpond purposes, it cannot be categorized as part of forest lands. " Before this instance, the principal issues posed are: (1) whether or not Courts can reclassify the subject public land; and (2) whether or not applicants are entitled to judicial confirmation of title. The parties, through their respective counsel, stipulated that the land is within an unclassified region of Obando, Bulacan, as shown by BF Map LC No. 637, dated March 1, 1927. 1 No evidence has been submitted that the land has been released or subsequently classified despite an Indorsement, dated November 17, 1976, of the District Forester, to the Director of Forest Development, containing the following recommendation: Subject area requested for release was verified and found to be within the Unclassified Region of Obando, Bulacan per BF LC Map No. 637, certified March 1, 1927. However, on-the-spot inspection conducted by a representative of this Office, it disclosed that the same was devoid of any forest growth and forms part of a well-developed and 100 percent producing fishponds. Two houses of light

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G.R. No. L-58867

materials were erected within the area for the caretakers temporary dwelling. In view thereof, and in fairness to the applicant considering the investment introduced therein this Office believes that the release is in order,
Recommended for approval and be disposed of in accordance with the Public Land Law. 2

The Government's case is meritorious. In effect, what the Courts a quo have done is to release the subject property from the unclassified category, which 1 is beyond their competence and jurisdiction. The classification of public lands is an exclusive prerogative of the Executive Department of the Government and not of the Courts. In the absence of such classification, the land remains as unclassified land until it is released therefrom and rendered open to disposition. 3 This should be so under time-honored Constitutional precepts. This is also in consonance with the Regalian doctrine that all lands of the public domain belong to the State, 4 and that the State is the source of any asserted right to ownership in land and charged with the conservation of such patrimony. 5

2 The recommendation of the District Forester for release of subject property from the unclassified region is not the
ultimate word on the matter. And the fact that BF Map LC No. 637 dated March 1, 1927 showing subject property to be within the unclassified region was not presented in evidence will not operate against the State considering the stipulation between the parties and under the well-settled rule that the State cannot be estopped by the omission, mistake or error of its officials or agents, 6 if omission there was, in fact. While it may be that the Municipality of Obando has been cadastrally surveyed in 1961, it does not follow that an lands comprised therein are automatically released as alienable. A survey made in a cadastral proceeding merely Identifies each lot preparatory to a judicial proceeding for adjudication of title to any of the lands upon claim of interested parties. Besides, if land is within the jurisdiction of the Bureau of Forest Development, it would be beyond the jurisdiction of the Cadastral Court to register it under the Torrens System.

3 Since the subject property is still unclassified, whatever possession Applicants may have had, and, however long,
cannot ripen into private ownership. 7

4 The conversion of subject property into a fishpond by Applicants, or the alleged titling of properties around it, does
not automatically render the property as alienable and disposable. Applicants' remedy lies in the release of the property from its present classification. In fairness to Applicants, and it appearing that there are titled lands around the subject property, petitioners-officials should give serious consideration to the matter of classification of the land in question. WHEREFORE, the appealed Decision is reversed and the application for registration in Land Registration Case No. N299-V-76 of the former Court of First Instance of Bulacan, Branch III, is hereby dismissed, without prejudice to the availment by the applicants of the proper administrative remedy. No costs. SO ORDERED. Teehankee (Chairman), Plana, Relova and De la Fuente, JJ., concur. Gutierrez, Jr., J., took no part

Footnotes 1. T.S.N., January 7, 1977, p.2 2. Original Record, p. 53. 3. Sec. 8, Commonwealth Act No. 141, as amended; vide Yngson vs. Secretary of Agriculture and Natural Resources. 123 SCRA 441 1983); Republic vs. Court of Appeals, 99 SCRA 74 2 (1980).

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G.R. No. L-58867

4. Secs. 8 & 10, Art. XIV, 1973 Constitution. 5. Republic vs. Court of Appeals, 89 SCRA 648 i 1979). 6. Republic vs. Court of Appeals, 89 SCRA 648 (1979). 7. Adorable vs. Director of Lands, 107 Phil. 401; Director of Forestry vs. Muoz 23 SCRA 1184- 1216 (1968); Director of Lands vs. Abanzado, 65 SCRA 5 (1975); Republic vs. Court of Appeals, 89 SCRA 648, 656 (1979).
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G.R. No. 130906

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 130906 February 11, 1999 REPUBLIC OF THE PHILIPPINES represented by the DIRECTOR, LANDS MANAGEMENT BUREAU, petitioner, vs. FELIX S. IMPERIAL JR., FELIZA S. IMPERIAL, ELIAS S. IMPERIAL, MIRIAM S. IMPERIAL, LOLITA ALCAZAR, SALVADOR ALCAZAR, EANCRA CORPORATION, and the REGISTER OF DEEDS of LEGASPI CITY, respondents.

DAVIDE, JR., C.J.: In this petition for review on certiorari , petitioner seeks to reverse and set aside the (1) Resolution 1 of 30 July 1997 of the Court Appeals in CA-G.R. CV No. 53972 granting petitioner until 11 August 1997 within which to file its appellant's brief, and the (2) Resolution 2 of 29 September 1997 dismissing petitioner's appeal. The appeal was taken from the Order 3 of Branch I,. Regional Trial Court of Legaspi City in Civil Case No. 9176, which petitioner instituted to cancel the title to some lots issued to private respondents for the reversion thereof to the mass of the public domain. The facts of the case, as found by the trial court, are as follows: On September 12, 1917, the late Elias Imperial was issued Original. Certificate of Title (OCT) 408 (500) pursuant to Decree No. 55173 of the then Court of First Instance of Albay, covering a parcel of land identified as Lot No. 1113 of the Cadastral Survey of Legazpi, G.L. Cad. Rec. No. 88, containing an area of fifty eight thousand and twenty six square meters (58,026), more or less, situated in Legazpi City. Original Certificate of Title No. 408 (500) was subdivided and further subdivided resulting in the issuance of several titles, which are now the subject of this case, in the name of the following defendants: TCT NO. LOT NO. AREA(sq. m.) REGISTERED OWNER 1. 978 1113-M-3 5,853 Ellias S. Imperial 2. 31054 1113-M-4-A 1,200 Felix S. Imperial 3. 213055 1113-M-4-