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PROPERTY CASES

G.R. No. L-55729 March 28, 1983


ANTONIO PUNSALAN, JR., petitioner,
vs.
REMEDIOS VDA. DE LACSAMANA and THE HONORABLE JUDGE RODOLFO A. ORTIZ,
respondents.
Benjamin S. Benito & Associates for petitioner.
Expedito Yummul for private respondent.

MELENCIO-HERRERA, J .:
The sole issue presented by petitioner for resolution is whether or not respondent Court erred in
denying the Motion to Set Case for Pre-trial with respect to respondent Remedios Vda. de
Lacsamana as the case had been dismissed on the ground of improper venue upon motion of co-
respondent Philippine National Bank (PNB).
It appears that petitioner, Antonio Punsalan, Jr., was the former registered owner of a parcel of land
consisting of 340 square meters situated in Bamban, Tarlac. In 1963, petitioner mortgaged said land
to respondent PNB (Tarlac Branch) in the amount of P10,000.00, but for failure to pay said amount,
the property was foreclosed on December 16, 1970. Respondent PNB (Tarlac Branch) was the
highest bidder in said foreclosure proceedings. However, the bank secured title thereto only on
December 14, 1977.
In the meantime, in 1974, while the properly was still in the alleged possession of petitioner and with
the alleged acquiescence of respondent PNB (Tarlac Branch), and upon securing a permit from the
Municipal Mayor, petitioner constructed a warehouse on said property. Petitioner declared said
warehouse for tax purposes for which he was issued Tax Declaration No. 5619. Petitioner then
leased the warehouse to one Hermogenes Sibal for a period of 10 years starting January 1975.
On July 26, 1978, a Deed of Sale was executed between respondent PNB (Tarlac Branch) and
respondent Lacsamana over the property. This contract was amended on July 31, 1978, particularly
to include in the sale, the building and improvement thereon. By virtue of said instruments,
respondent - Lacsamana secured title over the property in her name (TCT No. 173744) as well as
separate tax declarations for the land and building.
1

On November 22, 1979, petitioner commenced suit for "Annulment of Deed of Sale with Damages" against herein
respondents PNB and Lacsamana before respondent Court of First Instance of Rizal, Branch XXXI, Quezon City,
essentially impugning the validity of the sale of the building as embodied in the Amended Deed of Sale. In this connection,
petitioner alleged:
xxx xxx xxx
22. That defendant, Philippine National Bank, through its Branch Manager ... by virtue of the request of
defendant ... executed a document dated July 31, 1978, entitled Amendment to Deed of Absolute Sale ...
wherein said defendant bank as Vendor sold to defendant Lacsamana the building owned by the plaintiff
under Tax Declaration No. 5619, notwithstanding the fact that said building is not owned by the bank
either by virtue of the public auction sale conducted by the Sheriff and sold to the Philippine National
Bank or by virtue of the Deed of Sale executed by the bank itself in its favor on September 21, 1977 ...;
23. That said defendant bank fraudulently mentioned ... that the sale in its favor should likewise have
included the building, notwithstanding no legal basis for the same and despite full knowledge that the
Certificate of Sale executed by the sheriff in its favor ... only limited the sale to the land, hence, by selling
the building which never became the property of defendant, they have violated the principle against
'pactum commisorium'.
Petitioner prayed that the Deed of Sale of the building in favor of respondent Lacsamana be declared null and void and
that damages in the total sum of P230,000.00, more or less, be awarded to him.
2

In her Answer filed on March 4, 1980,-respondent Lacsamana averred the affirmative defense of lack of cause of action in
that she was a purchaser for value and invoked the principle in Civil Law that the "accessory follows the principal".
3

On March 14, 1980, respondent PNB filed a Motion to Dismiss on the ground that venue was improperly laid considering
that the building was real property under article 415 (1) of the New Civil Code and therefore section 2(a) of Rule 4 should
apply.
4

Opposing said Motion to Dismiss, petitioner contended that the action for annulment of deed of sale with damages is in
the nature of a personal action, which seeks to recover not the title nor possession of the property but to compel payment
of damages, which is not an action affecting title to real property.
On April 25, 1980, respondent Court granted respondent PNB's Motion to Dismiss as follows:
Acting upon the 'Motion to Dismiss' of the defendant Philippine National Bank dated March 13, 1980,
considered against the plaintiff's opposition thereto dated April 1, 1980, including the reply therewith of
said defendant, this Court resolves to DISMISS the plaintiff's complaint for improper venue considering
that the plaintiff's complaint which seeks for the declaration as null and void, the amendment to Deed of
Absolute Sale executed by the defendant Philippine National Bank in favor of the defendant Remedios T.
Vda. de Lacsamana, on July 31, 1978, involves a warehouse allegedly owned and constructed by the
plaintiff on the land of the defendant Philippine National Bank situated in the Municipality of Bamban,
Province of Tarlac, which warehouse is an immovable property pursuant to Article 415, No. 1 of the New
Civil Code; and, as such the action of the plaintiff is a real action affecting title to real property which,
under Section 2, Rule 4 of the New Rules of Court, must be tried in the province where the property or
any part thereof lies.
5

In his Motion for Reconsideration of the aforestated Order, petitioner reiterated the argument that the action to annul does
not involve ownership or title to property but is limited to the validity of the deed of sale and emphasized that the case
should proceed with or without respondent PNB as respondent Lacsamana had already filed her Answer to the Complaint
and no issue on venue had been raised by the latter.
On September 1, 1980,.respondent Court denied reconsideration for lack of merit.
Petitioner then filed a Motion to Set Case for Pre-trial, in so far as respondent Lacsamana was concerned, as the issues
had already been joined with the filing of respondent Lacsamana's Answer.
In the Order of November 10, 1980 respondent Court denied said Motion to Set Case for Pre-trial as the case was already
dismissed in the previous Orders of April 25, 1980 and September 1, 1980.
Hence, this Petition for Certiorari, to which we gave due course.
We affirm respondent Court's Order denying the setting for pre-trial.
The warehouse claimed to be owned by petitioner is an immovable or real property as provided in article 415(l) of the Civil
Code.
6
Buildings are always immovable under the Code.
7
A building treated separately from the land on which it stood is
immovable property and the mere fact that the parties to a contract seem to have dealt with it separate and apart from the
land on which it stood in no wise changed its character as immovable property.
8

While it is true that petitioner does not directly seek the recovery of title or possession of the property in question, his
action for annulment of sale and his claim for damages are closely intertwined with the issue of ownership of the building
which, under the law, is considered immovable property, the recovery of which is petitioner's primary objective. The
prevalent doctrine is that an action for the annulment or rescission of a sale of real property does not operate to efface the
fundamental and prime objective and nature of the case, which is to recover said real property. It is a real action.
9

Respondent Court, therefore, did not err in dismissing the case on the ground of improper venue (Section 2, Rule 4)
10
,
which was timely raised (Section 1, Rule 16)
11
.
Petitioner's other contention that the case should proceed in so far as respondent Lacsamana is concerned as she had
already filed an Answer, which did not allege improper venue and, therefore, issues had already been joined, is likewise
untenable. Respondent PNB is an indispensable party as the validity of the Amended Contract of Sale between the former
and respondent Lacsamana is in issue. It would, indeed, be futile to proceed with the case against respondent
Lacsamana alone.
WHEREFORE, the petition is hereby denied without prejudice to the refiling of the case by petitioner Antonio Punsalan,
Jr. in the proper forum.
Costs against petitioner.
SO ORDERED.

G.R. No. L-50008 August 31, 1987

PRUDENTIAL BANK, petitioner,
vs.
HONORABLE DOMINGO D. PANIS, Presiding Judge of Branch III, Court of First Instance of Zambales and Olongapo City;
FERNANDO MAGCALE & TEODULA BALUYUT-MAGCALE, respondents.



PARAS, J.:

This is a petition for review on certiorari of the November 13, 1978 Decision * of the then Court of First Instance of
Zambales and Olongapo City in Civil Case No. 2443-0 entitled "Spouses Fernando A. Magcale and Teodula Baluyut-
Magcale vs. Hon. Ramon Y. Pardo and Prudential Bank" declaring that the deeds of real estate mortgage executed by
respondent spouses in favor of petitioner bank are null and void.

The undisputed facts of this case by stipulation of the parties are as follows:

... on November 19, 1971, plaintiffs-spouses Fernando A. Magcale and Teodula Baluyut Magcale secured a loan in the
sum of P70,000.00 from the defendant Prudential Bank. To secure payment of this loan, plaintiffs executed in favor of
defendant on the aforesaid date a deed of Real Estate Mortgage over the following described properties:

l. A 2-STOREY, SEMI-CONCRETE, residential building with warehouse spaces containing a total floor area of 263 sq.
meters, more or less, generally constructed of mixed hard wood and concrete materials, under a roofing of cor. g. i.
sheets; declared and assessed in the name of FERNANDO MAGCALE under Tax Declaration No. 21109, issued by the
Assessor of Olongapo City with an assessed value of P35,290.00. This building is the only improvement of the lot.

2. THE PROPERTY hereby conveyed by way of MORTGAGE includes the right of occupancy on the lot where the above
property is erected, and more particularly described and bounded, as follows:

A first class residential land Identffied as Lot No. 720, (Ts-308, Olongapo Townsite Subdivision) Ardoin Street, East
Bajac-Bajac, Olongapo City, containing an area of 465 sq. m. more or less, declared and assessed in the name of
FERNANDO MAGCALE under Tax Duration No. 19595 issued by the Assessor of Olongapo City with an assessed value
of P1,860.00; bounded on the

NORTH: By No. 6, Ardoin Street

SOUTH: By No. 2, Ardoin Street

EAST: By 37 Canda Street, and

WEST: By Ardoin Street.

All corners of the lot marked by conc. cylindrical monuments of the Bureau of Lands as visible limits. ( Exhibit "A, "
also Exhibit "1" for defendant).

Apart from the stipulations in the printed portion of the aforestated deed of mortgage, there appears a rider typed at
the bottom of the reverse side of the document under the lists of the properties mortgaged which reads, as follows:

AND IT IS FURTHER AGREED that in the event the Sales Patent on the lot applied for by the Mortgagors as herein
stated is released or issued by the Bureau of Lands, the Mortgagors hereby authorize the Register of Deeds to hold
the Registration of same until this Mortgage is cancelled, or to annotate this encumbrance on the Title upon authority
from the Secretary of Agriculture and Natural Resources, which title with annotation, shall be released in favor of the
herein Mortgage.

From the aforequoted stipulation, it is obvious that the mortgagee (defendant Prudential Bank) was at the outset
aware of the fact that the mortgagors (plaintiffs) have already filed a Miscellaneous Sales Application over the lot,
possessory rights over which, were mortgaged to it.

Exhibit "A" (Real Estate Mortgage) was registered under the Provisions of Act 3344 with the Registry of Deeds of
Zambales on November 23, 1971.

On May 2, 1973, plaintiffs secured an additional loan from defendant Prudential Bank in the sum of P20,000.00. To
secure payment of this additional loan, plaintiffs executed in favor of the said defendant another deed of Real Estate
Mortgage over the same properties previously mortgaged in Exhibit "A." (Exhibit "B;" also Exhibit "2" for defendant).
This second deed of Real Estate Mortgage was likewise registered with the Registry of Deeds, this time in Olongapo
City, on May 2,1973.

On April 24, 1973, the Secretary of Agriculture issued Miscellaneous Sales Patent No. 4776 over the parcel of land,
possessory rights over which were mortgaged to defendant Prudential Bank, in favor of plaintiffs. On the basis of the
aforesaid Patent, and upon its transcription in the Registration Book of the Province of Zambales, Original Certificate
of Title No. P-2554 was issued in the name of Plaintiff Fernando Magcale, by the Ex-Oficio Register of Deeds of
Zambales, on May 15, 1972.

For failure of plaintiffs to pay their obligation to defendant Bank after it became due, and upon application of said
defendant, the deeds of Real Estate Mortgage (Exhibits "A" and "B") were extrajudicially foreclosed. Consequent to
the foreclosure was the sale of the properties therein mortgaged to defendant as the highest bidder in a public
auction sale conducted by the defendant City Sheriff on April 12, 1978 (Exhibit "E"). The auction sale aforesaid was
held despite written request from plaintiffs through counsel dated March 29, 1978, for the defendant City Sheriff to
desist from going with the scheduled public auction sale (Exhibit "D")." (Decision, Civil Case No. 2443-0, Rollo, pp. 29-
31).

Respondent Court, in a Decision dated November 3, 1978 declared the deeds of Real Estate Mortgage as null and void
(Ibid., p. 35).

On December 14, 1978, petitioner filed a Motion for Reconsideration (Ibid., pp. 41-53), opposed by private
respondents on January 5, 1979 (Ibid., pp. 54-62), and in an Order dated January 10, 1979 (Ibid., p. 63), the Motion for
Reconsideration was denied for lack of merit. Hence, the instant petition (Ibid., pp. 5-28).

The first Division of this Court, in a Resolution dated March 9, 1979, resolved to require the respondents to comment
(Ibid., p. 65), which order was complied with the Resolution dated May 18,1979, (Ibid., p. 100), petitioner filed its
Reply on June 2,1979 (Ibid., pp. 101-112).

Thereafter, in the Resolution dated June 13, 1979, the petition was given due course and the parties were required to
submit simultaneously their respective memoranda. (Ibid., p. 114).

On July 18, 1979, petitioner filed its Memorandum (Ibid., pp. 116-144), while private respondents filed their
Memorandum on August 1, 1979 (Ibid., pp. 146-155).

In a Resolution dated August 10, 1979, this case was considered submitted for decision (Ibid., P. 158).

In its Memorandum, petitioner raised the following issues:

1. WHETHER OR NOT THE DEEDS OF REAL ESTATE MORTGAGE ARE VALID; AND

2. WHETHER OR NOT THE SUPERVENING ISSUANCE IN FAVOR OF PRIVATE RESPONDENTS OF MISCELLANEOUS SALES
PATENT NO. 4776 ON APRIL 24, 1972 UNDER ACT NO. 730 AND THE COVERING ORIGINAL CERTIFICATE OF TITLE NO. P-
2554 ON MAY 15,1972 HAVE THE EFFECT OF INVALIDATING THE DEEDS OF REAL ESTATE MORTGAGE. (Memorandum
for Petitioner, Rollo, p. 122).

This petition is impressed with merit.

The pivotal issue in this case is whether or not a valid real estate mortgage can be constituted on the building erected
on the land belonging to another.

The answer is in the affirmative.

In the enumeration of properties under Article 415 of the Civil Code of the Philippines, this Court ruled that, "it is
obvious that the inclusion of "building" separate and distinct from the land, in said provision of law can only mean
that a building is by itself an immovable property." (Lopez vs. Orosa, Jr., et al., L-10817-18, Feb. 28, 1958; Associated
Inc. and Surety Co., Inc. vs. Iya, et al., L-10837-38, May 30,1958).

Thus, while it is true that a mortgage of land necessarily includes, in the absence of stipulation of the improvements
thereon, buildings, still a building by itself may be mortgaged apart from the land on which it has been built. Such a
mortgage would be still a real estate mortgage for the building would still be considered immovable property even if
dealt with separately and apart from the land (Leung Yee vs. Strong Machinery Co., 37 Phil. 644). In the same manner,
this Court has also established that possessory rights over said properties before title is vested on the grantee, may be
validly transferred or conveyed as in a deed of mortgage (Vda. de Bautista vs. Marcos, 3 SCRA 438 [1961]).

Coming back to the case at bar, the records show, as aforestated that the original mortgage deed on the 2-storey
semi-concrete residential building with warehouse and on the right of occupancy on the lot where the building was
erected, was executed on November 19, 1971 and registered under the provisions of Act 3344 with the Register of
Deeds of Zambales on November 23, 1971. Miscellaneous Sales Patent No. 4776 on the land was issued on April 24,
1972, on the basis of which OCT No. 2554 was issued in the name of private respondent Fernando Magcale on May
15, 1972. It is therefore without question that the original mortgage was executed before the issuance of the final
patent and before the government was divested of its title to the land, an event which takes effect only on the
issuance of the sales patent and its subsequent registration in the Office of the Register of Deeds (Visayan Realty Inc.
vs. Meer, 96 Phil. 515; Director of Lands vs. De Leon, 110 Phil. 28; Director of Lands vs. Jurado, L-14702, May 23, 1961;
Pena "Law on Natural Resources", p. 49). Under the foregoing considerations, it is evident that the mortgage
executed by private respondent on his own building which was erected on the land belonging to the government is to
all intents and purposes a valid mortgage.

As to restrictions expressly mentioned on the face of respondents' OCT No. P-2554, it will be noted that Sections 121,
122 and 124 of the Public Land Act, refer to land already acquired under the Public Land Act, or any improvement
thereon and therefore have no application to the assailed mortgage in the case at bar which was executed before
such eventuality. Likewise, Section 2 of Republic Act No. 730, also a restriction appearing on the face of private
respondent's title has likewise no application in the instant case, despite its reference to encumbrance or alienation
before the patent is issued because it refers specifically to encumbrance or alienation on the land itself and does not
mention anything regarding the improvements existing thereon.

But it is a different matter, as regards the second mortgage executed over the same properties on May 2, 1973 for an
additional loan of P20,000.00 which was registered with the Registry of Deeds of Olongapo City on the same date.
Relative thereto, it is evident that such mortgage executed after the issuance of the sales patent and of the Original
Certificate of Title, falls squarely under the prohibitions stated in Sections 121, 122 and 124 of the Public Land Act and
Section 2 of Republic Act 730, and is therefore null and void.

Petitioner points out that private respondents, after physically possessing the title for five years, voluntarily
surrendered the same to the bank in 1977 in order that the mortgaged may be annotated, without requiring the bank
to get the prior approval of the Ministry of Natural Resources beforehand, thereby implicitly authorizing Prudential
Bank to cause the annotation of said mortgage on their title.

However, the Court, in recently ruling on violations of Section 124 which refers to Sections 118, 120, 122 and 123 of
Commonwealth Act 141, has held:

... Nonetheless, we apply our earlier rulings because we believe that as in pari delicto may not be invoked to defeat
the policy of the State neither may the doctrine of estoppel give a validating effect to a void contract. Indeed, it is
generally considered that as between parties to a contract, validity cannot be given to it by estoppel if it is prohibited
by law or is against public policy (19 Am. Jur. 802). It is not within the competence of any citizen to barter away what
public policy by law was to preserve (Gonzalo Puyat & Sons, Inc. vs. De los Amas and Alino supra). ... (Arsenal vs. IAC,
143 SCRA 54 [1986]).

This pronouncement covers only the previous transaction already alluded to and does not pass upon any new
contract between the parties (Ibid), as in the case at bar. It should not preclude new contracts that may be entered
into between petitioner bank and private respondents that are in accordance with the requirements of the law. After
all, private respondents themselves declare that they are not denying the legitimacy of their debts and appear to be
open to new negotiations under the law (Comment; Rollo, pp. 95-96). Any new transaction, however, would be
subject to whatever steps the Government may take for the reversion of the land in its favor.

PREMISES CONSIDERED, the decision of the Court of First Instance of Zambales & Olongapo City is hereby MODIFIED,
declaring that the Deed of Real Estate Mortgage for P70,000.00 is valid but ruling that the Deed of Real Estate
Mortgage for an additional loan of P20,000.00 is null and void, without prejudice to any appropriate action the
Government may take against private respondents.

SO ORDERED.

G.R. No. L-11658 February 15, 1918
LEUNG YEE, plaintiff-appellant,
vs.
FRANK L. STRONG MACHINERY COMPANY and J. G. WILLIAMSON, defendants-appellees.
Booram and Mahoney for appellant.
Williams, Ferrier and SyCip for appellees.
CARSON, J .:
The "Compaia Agricola Filipina" bought a considerable quantity of rice-cleaning machinery company from the
defendant machinery company, and executed a chattel mortgage thereon to secure payment of the purchase
price. It included in the mortgage deed the building of strong materials in which the machinery was installed,
without any reference to the land on which it stood. The indebtedness secured by this instrument not having
been paid when it fell due, the mortgaged property was sold by the sheriff, in pursuance of the terms of the
mortgage instrument, and was bought in by the machinery company. The mortgage was registered in the chattel
mortgage registry, and the sale of the property to the machinery company in satisfaction of the mortgage was
annotated in the same registry on December 29, 1913.
A few weeks thereafter, on or about the 14th of January, 1914, the "Compaia Agricola Filipina" executed a
deed of sale of the land upon which the building stood to the machinery company, but this deed of sale,
although executed in a public document, was not registered. This deed makes no reference to the building
erected on the land and would appear to have been executed for the purpose of curing any defects which might
be found to exist in the machinery company's title to the building under the sheriff's certificate of sale. The
machinery company went into possession of the building at or about the time when this sale took place, that is
to say, the month of December, 1913, and it has continued in possession ever since.
At or about the time when the chattel mortgage was executed in favor of the machinery company, the
mortgagor, the "Compaia Agricola Filipina" executed another mortgage to the plaintiff upon the building,
separate and apart from the land on which it stood, to secure payment of the balance of its indebtedness to the
plaintiff under a contract for the construction of the building. Upon the failure of the mortgagor to pay the
amount of the indebtedness secured by the mortgage, the plaintiff secured judgment for that amount, levied
execution upon the building, bought it in at the sheriff's sale on or about the 18th of December, 1914, and had
the sheriff's certificate of the sale duly registered in the land registry of the Province of Cavite.
At the time when the execution was levied upon the building, the defendant machinery company, which was in
possession, filed with the sheriff a sworn statement setting up its claim of title and demanding the release of the
property from the levy. Thereafter, upon demand of the sheriff, the plaintiff executed an indemnity bond in
favor of the sheriff in the sum of P12,000, in reliance upon which the sheriff sold the property at public auction
to the plaintiff, who was the highest bidder at the sheriff's sale.
This action was instituted by the plaintiff to recover possession of the building from the machinery company.
The trial judge, relying upon the terms of article 1473 of the Civil Code, gave judgment in favor of the
machinery company, on the ground that the company had its title to the building registered prior to the date of
registry of the plaintiff's certificate.
Article 1473 of the Civil Code is as follows:
If the same thing should have been sold to different vendees, the ownership shall be transfer to the
person who may have the first taken possession thereof in good faith, if it should be personal property.
Should it be real property, it shall belong to the person acquiring it who first recorded it in the registry.
Should there be no entry, the property shall belong to the person who first took possession of it in good
faith, and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.
The registry her referred to is of course the registry of real property, and it must be apparent that the annotation
or inscription of a deed of sale of real property in a chattel mortgage registry cannot be given the legal effect of
an inscription in the registry of real property. By its express terms, the Chattel Mortgage Law contemplates and
makes provision for mortgages of personal property; and the sole purpose and object of the chattel mortgage
registry is to provide for the registry of "Chattel mortgages," that is to say, mortgages of personal property
executed in the manner and form prescribed in the statute. The building of strong materials in which the rice-
cleaning machinery was installed by the "Compaia Agricola Filipina" was real property, and the mere fact that
the parties seem to have dealt with it separate and apart from the land on which it stood in no wise changed its
character as real property. It follows that neither the original registry in the chattel mortgage of the building and
the machinery installed therein, not the annotation in that registry of the sale of the mortgaged property, had any
effect whatever so far as the building was concerned.
We conclude that the ruling in favor of the machinery company cannot be sustained on the ground assigned by
the trial judge. We are of opinion, however, that the judgment must be sustained on the ground that the agreed
statement of facts in the court below discloses that neither the purchase of the building by the plaintiff nor his
inscription of the sheriff's certificate of sale in his favor was made in good faith, and that the machinery
company must be held to be the owner of the property under the third paragraph of the above cited article of the
code, it appearing that the company first took possession of the property; and further, that the building and the
land were sold to the machinery company long prior to the date of the sheriff's sale to the plaintiff.
It has been suggested that since the provisions of article 1473 of the Civil Code require "good faith," in express
terms, in relation to "possession" and "title," but contain no express requirement as to "good faith" in relation to
the "inscription" of the property on the registry, it must be presumed that good faith is not an essential requisite
of registration in order that it may have the effect contemplated in this article. We cannot agree with this
contention. It could not have been the intention of the legislator to base the preferential right secured under this
article of the code upon an inscription of title in bad faith. Such an interpretation placed upon the language of
this section would open wide the door to fraud and collusion. The public records cannot be converted into
instruments of fraud and oppression by one who secures an inscription therein in bad faith. The force and effect
given by law to an inscription in a public record presupposes the good faith of him who enters such inscription;
and rights created by statute, which are predicated upon an inscription in a public registry, do not and cannot
accrue under an inscription "in bad faith," to the benefit of the person who thus makes the inscription.
Construing the second paragraph of this article of the code, the supreme court of Spain held in its sentencia of
the 13th of May, 1908, that:
This rule is always to be understood on the basis of the good faith mentioned in the first paragraph;
therefore, it having been found that the second purchasers who record their purchase had knowledge of
the previous sale, the question is to be decided in accordance with the following paragraph. (Note 2, art.
1473, Civ. Code, Medina and Maranon [1911] edition.)
Although article 1473, in its second paragraph, provides that the title of conveyance of ownership of the
real property that is first recorded in the registry shall have preference, this provision must always be
understood on the basis of the good faith mentioned in the first paragraph; the legislator could not have
wished to strike it out and to sanction bad faith, just to comply with a mere formality which, in given
cases, does not obtain even in real disputes between third persons. (Note 2, art. 1473, Civ. Code, issued
by the publishers of the La Revista de los Tribunales, 13th edition.)
The agreed statement of facts clearly discloses that the plaintiff, when he bought the building at the sheriff's sale
and inscribed his title in the land registry, was duly notified that the machinery company had bought the
building from plaintiff's judgment debtor; that it had gone into possession long prior to the sheriff's sale; and
that it was in possession at the time when the sheriff executed his levy. The execution of an indemnity bond by
the plaintiff in favor of the sheriff, after the machinery company had filed its sworn claim of ownership, leaves
no room for doubt in this regard. Having bought in the building at the sheriff's sale with full knowledge that at
the time of the levy and sale the building had already been sold to the machinery company by the judgment
debtor, the plaintiff cannot be said to have been a purchaser in good faith; and of course, the subsequent
inscription of the sheriff's certificate of title must be held to have been tainted with the same defect.
Perhaps we should make it clear that in holding that the inscription of the sheriff's certificate of sale to the
plaintiff was not made in good faith, we should not be understood as questioning, in any way, the good faith and
genuineness of the plaintiff's claim against the "Compaia Agricola Filipina." The truth is that both the plaintiff
and the defendant company appear to have had just and righteous claims against their common debtor. No
criticism can properly be made of the exercise of the utmost diligence by the plaintiff in asserting and exercising
his right to recover the amount of his claim from the estate of the common debtor. We are strongly inclined to
believe that in procuring the levy of execution upon the factory building and in buying it at the sheriff's sale, he
considered that he was doing no more than he had a right to do under all the circumstances, and it is highly
possible and even probable that he thought at that time that he would be able to maintain his position in a
contest with the machinery company. There was no collusion on his part with the common debtor, and no
thought of the perpetration of a fraud upon the rights of another, in the ordinary sense of the word. He may have
hoped, and doubtless he did hope, that the title of the machinery company would not stand the test of an action
in a court of law; and if later developments had confirmed his unfounded hopes, no one could question the
legality of the propriety of the course he adopted.
But it appearing that he had full knowledge of the machinery company's claim of ownership when he executed
the indemnity bond and bought in the property at the sheriff's sale, and it appearing further that the machinery
company's claim of ownership was well founded, he cannot be said to have been an innocent purchaser for
value. He took the risk and must stand by the consequences; and it is in this sense that we find that he was not a
purchaser in good faith.
One who purchases real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has
acquired title thereto in good faith as against the true owner of the land or of an interest therein; and the same
rule must be applied to one who has knowledge of facts which should have put him upon such inquiry and
investigation as might be necessary to acquaint him with the defects in the title of his vendor. A purchaser
cannot close his eyes to facts which should put a reasonable man upon his guard, and then claim that he acted in
good faith under the belief that there was no defect in the title of the vendor. His mere refusal to believe that
such defect exists, or his willful closing of his eyes to the possibility of the existence of a defect in his vendor's
title, will not make him an innocent purchaser for value, if afterwards develops that the title was in fact
defective, and it appears that he had such notice of the defects as would have led to its discovery had he acted
with that measure of precaution which may reasonably be acquired of a prudent man in a like situation. Good
faith, or lack of it, is in its analysis a question of intention; but in ascertaining the intention by which one is
actuated on a given occasion, we are necessarily controlled by the evidence as to the conduct and outward acts
by which alone the inward motive may, with safety, be determined. So it is that "the honesty of intention," "the
honest lawful intent," which constitutes good faith implies a "freedom from knowledge and circumstances
which ought to put a person on inquiry," and so it is that proof of such knowledge overcomes the presumption
of good faith in which the courts always indulge in the absence of proof to the contrary. "Good faith, or the
want of it, is not a visible, tangible fact that can be seen or touched, but rather a state or condition of mind
which can only be judged of by actual or fancied tokens or signs." (Wilder vs. Gilman, 55 Vt., 504, 505; Cf.
Cardenas Lumber Co. vs. Shadel, 52 La. Ann., 2094-2098; Pinkerton Bros. Co. vs. Bromley, 119 Mich., 8, 10,
17.)
We conclude that upon the grounds herein set forth the disposing part of the decision and judgment entered in
the court below should be affirmed with costs of this instance against the appellant. So ordered.

G.R. No. L-40411 August 7, 1935
DAVAO SAW MILL CO., INC., plaintiff-appellant,
vs.
APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO., INC., defendants-appellees.
Arsenio Suazo and Jose L. Palma Gil and Pablo Lorenzo and Delfin Joven for appellant.
J.W. Ferrier for appellees.
MALCOLM, J .:
The issue in this case, as announced in the opening sentence of the decision in the trial court and as set forth by
counsel for the parties on appeal, involves the determination of the nature of the properties described in the
complaint. The trial judge found that those properties were personal in nature, and as a consequence absolved
the defendants from the complaint, with costs against the plaintiff.
The Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the Philippine
Islands. It has operated a sawmill in the sitio of Maa, barrio of Tigatu, municipality of Davao, Province of
Davao. However, the land upon which the business was conducted belonged to another person. On the land the
sawmill company erected a building which housed the machinery used by it. Some of the implements thus used
were clearly personal property, the conflict concerning machines which were placed and mounted on
foundations of cement. In the contract of lease between the sawmill company and the owner of the land there
appeared the following provision:
That on the expiration of the period agreed upon, all the improvements and buildings introduced and
erected by the party of the second part shall pass to the exclusive ownership of the party of the first part
without any obligation on its part to pay any amount for said improvements and buildings; also, in the
event the party of the second part should leave or abandon the land leased before the time herein
stipulated, the improvements and buildings shall likewise pass to the ownership of the party of the first
part as though the time agreed upon had expired: Provided, however, That the machineries and
accessories are not included in the improvements which will pass to the party of the first part on the
expiration or abandonment of the land leased.
In another action, wherein the Davao Light & Power Co., Inc., was the plaintiff and the Davao, Saw, Mill Co.,
Inc., was the defendant, a judgment was rendered in favor of the plaintiff in that action against the defendant in
that action; a writ of execution issued thereon, and the properties now in question were levied upon as
personalty by the sheriff. No third party claim was filed for such properties at the time of the sales thereof as is
borne out by the record made by the plaintiff herein. Indeed the bidder, which was the plaintiff in that action,
and the defendant herein having consummated the sale, proceeded to take possession of the machinery and
other properties described in the corresponding certificates of sale executed in its favor by the sheriff of Davao.
As connecting up with the facts, it should further be explained that the Davao Saw Mill Co., Inc., has on a
number of occasions treated the machinery as personal property by executing chattel mortgages in favor of third
persons. One of such persons is the appellee by assignment from the original mortgages.
Article 334, paragraphs 1 and 5, of the Civil Code, is in point. According to the Code, real property consists of

1. Land, buildings, roads and constructions of all kinds adhering to the soil;
x x x x x x x x x
5. Machinery, liquid containers, instruments or implements intended by the owner of any building or
land for use in connection with any industry or trade being carried on therein and which are expressly
adapted to meet the requirements of such trade of industry.
Appellant emphasizes the first paragraph, and appellees the last mentioned paragraph. We entertain no doubt
that the trial judge and appellees are right in their appreciation of the legal doctrines flowing from the facts.
In the first place, it must again be pointed out that the appellant should have registered its protest before or at
the time of the sale of this property. It must further be pointed out that while not conclusive, the characterization
of the property as chattels by the appellant is indicative of intention and impresses upon the property the
character determined by the parties. In this connection the decision of this court in the case of Standard Oil Co.
of New York vs. Jaramillo ( [1923], 44 Phil., 630), whether obiter dicta or not, furnishes the key to such a
situation.
It is, however not necessary to spend overly must time in the resolution of this appeal on side issues. It is
machinery which is involved; moreover, machinery not intended by the owner of any building or land for use in
connection therewith, but intended by a lessee for use in a building erected on the land by the latter to be
returned to the lessee on the expiration or abandonment of the lease.
A similar question arose in Puerto Rico, and on appeal being taken to the United States Supreme Court, it was
held that machinery which is movable in its nature only becomes immobilized when placed in a plant by the
owner of the property or plant, but not when so placed by a tenant, a usufructuary, or any person having only a
temporary right, unless such person acted as the agent of the owner. In the opinion written by Chief Justice
White, whose knowledge of the Civil Law is well known, it was in part said:
To determine this question involves fixing the nature and character of the property from the point of
view of the rights of Valdes and its nature and character from the point of view of Nevers & Callaghan
as a judgment creditor of the Altagracia Company and the rights derived by them from the execution
levied on the machinery placed by the corporation in the plant. Following the Code Napoleon, the Porto
Rican Code treats as immovable (real) property, not only land and buildings, but also attributes
immovability in some cases to property of a movable nature, that is, personal property, because of the
destination to which it is applied. "Things," says section 334 of the Porto Rican Code, "may be
immovable either by their own nature or by their destination or the object to which they are applicable."
Numerous illustrations are given in the fifth subdivision of section 335, which is as follows:
"Machinery, vessels, instruments or implements intended by the owner of the tenements for the
industrial or works that they may carry on in any building or upon any land and which tend directly to
meet the needs of the said industry or works." (See also Code Nap., articles 516, 518 et seq. to and
inclusive of article 534, recapitulating the things which, though in themselves movable, may be
immobilized.) So far as the subject-matter with which we are dealing machinery placed in the plant
it is plain, both under the provisions of the Porto Rican Law and of the Code Napoleon, that
machinery which is movable in its nature only becomes immobilized when placed in a plant by the
owner of the property or plant. Such result would not be accomplished, therefore, by the placing of
machinery in a plant by a tenant or a usufructuary or any person having only a temporary right.
(Demolombe, Tit. 9, No. 203; Aubry et Rau, Tit. 2, p. 12, Section 164; Laurent, Tit. 5, No. 447; and
decisions quoted in Fuzier-Herman ed. Code Napoleon under articles 522 et seq.) The distinction rests,
as pointed out by Demolombe, upon the fact that one only having a temporary right to the possession or
enjoyment of property is not presumed by the law to have applied movable property belonging to him so
as to deprive him of it by causing it by an act of immobilization to become the property of another. It
follows that abstractly speaking the machinery put by the Altagracia Company in the plant belonging to
Sanchez did not lose its character of movable property and become immovable by destination. But in the
concrete immobilization took place because of the express provisions of the lease under which the
Altagracia held, since the lease in substance required the putting in of improved machinery, deprived the
tenant of any right to charge against the lessor the cost such machinery, and it was expressly stipulated
that the machinery so put in should become a part of the plant belonging to the owner without
compensation to the lessee. Under such conditions the tenant in putting in the machinery was acting but
as the agent of the owner in compliance with the obligations resting upon him, and the immobilization of
the machinery which resulted arose in legal effect from the act of the owner in giving by contract a
permanent destination to the machinery.
x x x x x x x x x
The machinery levied upon by Nevers & Callaghan, that is, that which was placed in the plant by the
Altagracia Company, being, as regards Nevers & Callaghan, movable property, it follows that they had
the right to levy on it under the execution upon the judgment in their favor, and the exercise of that right
did not in a legal sense conflict with the claim of Valdes, since as to him the property was a part of the
realty which, as the result of his obligations under the lease, he could not, for the purpose of collecting
his debt, proceed separately against. (Valdes vs. Central Altagracia [192], 225 U.S., 58.)
Finding no reversible error in the record, the judgment appealed from will be affirmed, the costs of this instance
to be paid by the appellant.

G.R. No. L-17870 September 29, 1962
MINDANAO BUS COMPANY, petitioner,
vs.
THE CITY ASSESSOR & TREASURER and the BOARD OF TAX APPEALS of Cagayan de Oro City,
respondents.
Binamira, Barria and Irabagon for petitioner.
Vicente E. Sabellina for respondents.

LABRADOR, J .:
This is a petition for the review of the decision of the Court of Tax Appeals in C.T.A. Case No. 710 holding that
the petitioner Mindanao Bus Company is liable to the payment of the realty tax on its maintenance and repair
equipment hereunder referred to.
Respondent City Assessor of Cagayan de Oro City assessed at P4,400 petitioner's above-mentioned equipment.
Petitioner appealed the assessment to the respondent Board of Tax Appeals on the ground that the same are not
realty. The Board of Tax Appeals of the City sustained the city assessor, so petitioner herein filed with the
Court of Tax Appeals a petition for the review of the assessment.
In the Court of Tax Appeals the parties submitted the following stipulation of facts:
Petitioner and respondents, thru their respective counsels agreed to the following stipulation of facts:
1. That petitioner is a public utility solely engaged in transporting passengers and cargoes by motor
trucks, over its authorized lines in the Island of Mindanao, collecting rates approved by the Public
Service Commission;
2. That petitioner has its main office and shop at Cagayan de Oro City. It maintains Branch Offices
and/or stations at Iligan City, Lanao; Pagadian, Zamboanga del Sur; Davao City and Kibawe, Bukidnon
Province;
3. That the machineries sought to be assessed by the respondent as real properties are the following:
(a) Hobart Electric Welder Machine, appearing in the attached photograph, marked Annex "A";
(b) Storm Boring Machine, appearing in the attached photograph, marked Annex "B";
(c) Lathe machine with motor, appearing in the attached photograph, marked Annex "C";
(d) Black and Decker Grinder, appearing in the attached photograph, marked Annex "D";
(e) PEMCO Hydraulic Press, appearing in the attached photograph, marked Annex "E";
(f) Battery charger (Tungar charge machine) appearing in the attached photograph, marked
Annex "F"; and
(g) D-Engine Waukesha-M-Fuel, appearing in the attached photograph, marked Annex "G".
4. That these machineries are sitting on cement or wooden platforms as may be seen in the attached
photographs which form part of this agreed stipulation of facts;
5. That petitioner is the owner of the land where it maintains and operates a garage for its TPU motor
trucks; a repair shop; blacksmith and carpentry shops, and with these machineries which are placed
therein, its TPU trucks are made; body constructed; and same are repaired in a condition to be
serviceable in the TPU land transportation business it operates;
6. That these machineries have never been or were never used as industrial equipments to produce
finished products for sale, nor to repair machineries, parts and the like offered to the general public
indiscriminately for business or commercial purposes for which petitioner has never engaged in, to
date.1awphl.nt
The Court of Tax Appeals having sustained the respondent city assessor's ruling, and having denied a motion
for reconsideration, petitioner brought the case to this Court assigning the following errors:
1. The Honorable Court of Tax Appeals erred in upholding respondents' contention that the questioned
assessments are valid; and that said tools, equipments or machineries are immovable taxable real
properties.
2. The Tax Court erred in its interpretation of paragraph 5 of Article 415 of the New Civil Code, and
holding that pursuant thereto the movable equipments are taxable realties, by reason of their being
intended or destined for use in an industry.
3. The Court of Tax Appeals erred in denying petitioner's contention that the respondent City Assessor's
power to assess and levy real estate taxes on machineries is further restricted by section 31, paragraph
(c) of Republic Act No. 521; and
4. The Tax Court erred in denying petitioner's motion for reconsideration.
Respondents contend that said equipments, tho movable, are immobilized by destination, in accordance with
paragraph 5 of Article 415 of the New Civil Code which provides:
Art. 415. The following are immovable properties:
x x x x x x x x x
(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an
industry or works which may be carried on in a building or on a piece of land, and which tend directly to
meet the needs of the said industry or works. (Emphasis ours.)
Note that the stipulation expressly states that the equipment are placed on wooden or cement platforms. They
can be moved around and about in petitioner's repair shop. In the case of B. H. Berkenkotter vs. Cu Unjieng, 61
Phil. 663, the Supreme Court said:
Article 344 (Now Art. 415), paragraph (5) of the Civil Code, gives the character of real property to
"machinery, liquid containers, instruments or implements intended by the owner of any building or land
for use in connection with any industry or trade being carried on therein and which are expressly
adapted to meet the requirements of such trade or industry."
If the installation of the machinery and equipment in question in the central of the Mabalacat Sugar Co.,
Inc., in lieu of the other of less capacity existing therein, for its sugar and industry, converted them into
real property by reason of their purpose, it cannot be said that their incorporation therewith was not
permanent in character because, as essential and principle elements of a sugar central, without them the
sugar central would be unable to function or carry on the industrial purpose for which it was
established. Inasmuch as the central is permanent in character, the necessary machinery and equipment
installed for carrying on the sugar industry for which it has been established must necessarily be
permanent. (Emphasis ours.)
So that movable equipments to be immobilized in contemplation of the law must first be "essential and principal
elements" of an industry or works without which such industry or works would be "unable to function or carry
on the industrial purpose for which it was established." We may here distinguish, therefore, those movable
which become immobilized by destination because they are essential and principal elements in the industry for
those which may not be so considered immobilized because they are merely incidental, not essential and
principal. Thus, cash registers, typewriters, etc., usually found and used in hotels, restaurants, theaters, etc. are
merely incidentals and are not and should not be considered immobilized by destination, for these businesses
can continue or carry on their functions without these equity comments. Airline companies use forklifts, jeep-
wagons, pressure pumps, IBM machines, etc. which are incidentals, not essentials, and thus retain their movable
nature. On the other hand, machineries of breweries used in the manufacture of liquor and soft drinks, though
movable in nature, are immobilized because they are essential to said industries; but the delivery trucks and
adding machines which they usually own and use and are found within their industrial compounds are merely
incidental and retain their movable nature.
Similarly, the tools and equipments in question in this instant case are, by their nature, not essential and
principle municipal elements of petitioner's business of transporting passengers and cargoes by motor trucks.
They are merely incidentals acquired as movables and used only for expediency to facilitate and/or improve
its service. Even without such tools and equipments, its business may be carried on, as petitioner has carried on,
without such equipments, before the war. The transportation business could be carried on without the repair or
service shop if its rolling equipment is repaired or serviced in another shop belonging to another.
The law that governs the determination of the question at issue is as follows:
Art. 415. The following are immovable property:
x x x x x x x x x
(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an
industry or works which may be carried on in a building or on a piece of land, and which tend directly to
meet the needs of the said industry or works; (Civil Code of the Phil.)
Aside from the element of essentiality the above-quoted provision also requires that the industry or works be
carried on in a building or on a piece of land. Thus in the case of Berkenkotter vs. Cu Unjieng, supra, the
"machinery, liquid containers, and instruments or implements" are found in a building constructed on the land.
A sawmill would also be installed in a building on land more or less permanently, and the sawing is conducted
in the land or building.
But in the case at bar the equipments in question are destined only to repair or service the transportation
business, which is not carried on in a building or permanently on a piece of land, as demanded by the law. Said
equipments may not, therefore, be deemed real property.
Resuming what we have set forth above, we hold that the equipments in question are not absolutely essential to
the petitioner's transportation business, and petitioner's business is not carried on in a building, tenement or on a
specified land, so said equipment may not be considered real estate within the meaning of Article 415 (c) of the
Civil Code.
WHEREFORE, the decision subject of the petition for review is hereby set aside and the equipment in question
declared not subject to assessment as real estate for the purposes of the real estate tax. Without costs.
So ordered.

G.R. No. L-58469 May 16, 1983
MAKATI LEASING and FINANCE CORPORATION, petitioner,
vs.
WEAREVER TEXTILE MILLS, INC., and HONORABLE COURT OF APPEALS, respondents.
Loreto C. Baduan for petitioner.
Ramon D. Bagatsing & Assoc. (collaborating counsel) for petitioner.
Jose V. Mancella for respondent.

DE CASTRO, J .:
Petition for review on certiorari of the decision of the Court of Appeals (now Intermediate Appellate
Court) promulgated on August 27, 1981 in CA-G.R. No. SP-12731, setting aside certain Orders later
specified herein, of Judge Ricardo J. Francisco, as Presiding Judge of the Court of First instance of
Rizal Branch VI, issued in Civil Case No. 36040, as wen as the resolution dated September 22, 1981
of the said appellate court, denying petitioner's motion for reconsideration.
It appears that in order to obtain financial accommodations from herein petitioner Makati Leasing and
Finance Corporation, the private respondent Wearever Textile Mills, Inc., discounted and assigned
several receivables with the former under a Receivable Purchase Agreement. To secure the
collection of the receivables assigned, private respondent executed a Chattel Mortgage over certain
raw materials inventory as well as a machinery described as an Artos Aero Dryer Stentering Range.
Upon private respondent's default, petitioner filed a petition for extrajudicial foreclosure of the
properties mortgage to it. However, the Deputy Sheriff assigned to implement the foreclosure failed to
gain entry into private respondent's premises and was not able to effect the seizure of the
aforedescribed machinery. Petitioner thereafter filed a complaint for judicial foreclosure with the Court
of First Instance of Rizal, Branch VI, docketed as Civil Case No. 36040, the case before the lower
court.
Acting on petitioner's application for replevin, the lower court issued a writ of seizure, the enforcement
of which was however subsequently restrained upon private respondent's filing of a motion for
reconsideration. After several incidents, the lower court finally issued on February 11, 1981, an order
lifting the restraining order for the enforcement of the writ of seizure and an order to break open the
premises of private respondent to enforce said writ. The lower court reaffirmed its stand upon private
respondent's filing of a further motion for reconsideration.
On July 13, 1981, the sheriff enforcing the seizure order, repaired to the premises of private
respondent and removed the main drive motor of the subject machinery.
The Court of Appeals, in certiorari and prohibition proceedings subsequently filed by herein private
respondent, set aside the Orders of the lower court and ordered the return of the drive motor seized
by the sheriff pursuant to said Orders, after ruling that the machinery in suit cannot be the subject of
replevin, much less of a chattel mortgage, because it is a real property pursuant to Article 415 of the
new Civil Code, the same being attached to the ground by means of bolts and the only way to remove
it from respondent's plant would be to drill out or destroy the concrete floor, the reason why all that
the sheriff could do to enfore the writ was to take the main drive motor of said machinery. The
appellate court rejected petitioner's argument that private respondent is estopped from claiming that
the machine is real property by constituting a chattel mortgage thereon.
A motion for reconsideration of this decision of the Court of Appeals having been denied, petitioner
has brought the case to this Court for review by writ of certiorari. It is contended by private
respondent, however, that the instant petition was rendered moot and academic by petitioner's act of
returning the subject motor drive of respondent's machinery after the Court of Appeals' decision was
promulgated.
The contention of private respondent is without merit. When petitioner returned the subject motor
drive, it made itself unequivocably clear that said action was without prejudice to a motion for
reconsideration of the Court of Appeals decision, as shown by the receipt duly signed by respondent's
representative.
1
Considering that petitioner has reserved its right to question the propriety of the Court of Appeals'
decision, the contention of private respondent that this petition has been mooted by such return may not be sustained.
The next and the more crucial question to be resolved in this Petition is whether the machinery in suit is real or personal
property from the point of view of the parties, with petitioner arguing that it is a personality, while the respondent claiming
the contrary, and was sustained by the appellate court, which accordingly held that the chattel mortgage constituted
thereon is null and void, as contended by said respondent.
A similar, if not Identical issue was raised in Tumalad v. Vicencio, 41 SCRA 143 where this Court, speaking through
Justice J.B.L. Reyes, ruled:
Although there is no specific statement referring to the subject house as personal property, yet by ceding,
selling or transferring a property by way of chattel mortgage defendants-appellants could only have meant
to convey the house as chattel, or at least, intended to treat the same as such, so that they should not
now be allowed to make an inconsistent stand by claiming otherwise. Moreover, the subject house stood
on a rented lot to which defendants-appellants merely had a temporary right as lessee, and although this
can not in itself alone determine the status of the property, it does so when combined with other factors to
sustain the interpretation that the parties, particularly the mortgagors, intended to treat the house as
personality. Finally, unlike in the Iya cases, Lopez vs. Orosa, Jr. & Plaza Theatre, Inc. & Leung Yee vs.
F.L. Strong Machinery & Williamson, wherein third persons assailed the validity of the chattel mortgage, it
is the defendants-appellants themselves, as debtors-mortgagors, who are attacking the validity of the
chattel mortgage in this case. The doctrine of estoppel therefore applies to the herein defendants-
appellants, having treated the subject house as personality.
Examining the records of the instant case, We find no logical justification to exclude the rule out, as the appellate court
did, the present case from the application of the abovequoted pronouncement. If a house of strong materials, like what
was involved in the above Tumalad case, may be considered as personal property for purposes of executing a chattel
mortgage thereon as long as the parties to the contract so agree and no innocent third party will be prejudiced thereby,
there is absolutely no reason why a machinery, which is movable in its nature and becomes immobilized only by
destination or purpose, may not be likewise treated as such. This is really because one who has so agreed is estopped
from denying the existence of the chattel mortgage.
In rejecting petitioner's assertion on the applicability of the Tumalad doctrine, the Court of Appeals lays stress on the fact
that the house involved therein was built on a land that did not belong to the owner of such house. But the law makes no
distinction with respect to the ownership of the land on which the house is built and We should not lay down distinctions
not contemplated by law.
It must be pointed out that the characterization of the subject machinery as chattel by the private respondent is indicative
of intention and impresses upon the property the character determined by the parties. As stated in Standard Oil Co. of
New York v. Jaramillo, 44 Phil. 630, it is undeniable that the parties to a contract may by agreement treat as personal
property that which by nature would be real property, as long as no interest of third parties would be prejudiced thereby.
Private respondent contends that estoppel cannot apply against it because it had never represented nor agreed that the
machinery in suit be considered as personal property but was merely required and dictated on by herein petitioner to sign
a printed form of chattel mortgage which was in a blank form at the time of signing. This contention lacks persuasiveness.
As aptly pointed out by petitioner and not denied by the respondent, the status of the subject machinery as movable or
immovable was never placed in issue before the lower court and the Court of Appeals except in a supplemental
memorandum in support of the petition filed in the appellate court. Moreover, even granting that the charge is true, such
fact alone does not render a contract void ab initio, but can only be a ground for rendering said contract voidable, or
annullable pursuant to Article 1390 of the new Civil Code, by a proper action in court. There is nothing on record to show
that the mortgage has been annulled. Neither is it disclosed that steps were taken to nullify the same. On the other hand,
as pointed out by petitioner and again not refuted by respondent, the latter has indubitably benefited from said contract.
Equity dictates that one should not benefit at the expense of another. Private respondent could not now therefore, be
allowed to impugn the efficacy of the chattel mortgage after it has benefited therefrom,
From what has been said above, the error of the appellate court in ruling that the questioned machinery is real, not
personal property, becomes very apparent. Moreover, the case of Machinery and Engineering Supplies, Inc. v. CA, 96
Phil. 70, heavily relied upon by said court is not applicable to the case at bar, the nature of the machinery and equipment
involved therein as real properties never having been disputed nor in issue, and they were not the subject of a Chattel
Mortgage. Undoubtedly, the Tumalad case bears more nearly perfect parity with the instant case to be the more
controlling jurisprudential authority.
WHEREFORE, the questioned decision and resolution of the Court of Appeals are hereby reversed and set aside, and the
Orders of the lower court are hereby reinstated, with costs against the private respondent.
SO ORDERED.

G.R. No. L-50466 May 31, 1982
CALTEX (PHILIPPINES) INC., petitioner,
vs.
CENTRAL BOARD OF ASSESSMENT APPEALS and CITY ASSESSOR OF PASAY, respondents.

AQUINO, J .:
This case is about the realty tax on machinery and equipment installed by Caltex (Philippines) Inc. in
its gas stations located on leased land.
The machines and equipment consists of underground tanks, elevated tank, elevated water tanks,
water tanks, gasoline pumps, computing pumps, water pumps, car washer, car hoists, truck hoists, air
compressors and tireflators. The city assessor described the said equipment and machinery in this
manner:
A gasoline service station is a piece of lot where a building or shed is erected, a water
tank if there is any is placed in one corner of the lot, car hoists are placed in an adjacent
shed, an air compressor is attached in the wall of the shed or at the concrete wall fence.
The controversial underground tank, depository of gasoline or crude oil, is dug deep
about six feet more or less, a few meters away from the shed. This is done to prevent
conflagration because gasoline and other combustible oil are very inflammable.
This underground tank is connected with a steel pipe to the gasoline pump and the
gasoline pump is commonly placed or constructed under the shed. The footing of the
pump is a cement pad and this cement pad is imbedded in the pavement under the
shed, and evidence that the gasoline underground tank is attached and connected to
the shed or building through the pipe to the pump and the pump is attached and affixed
to the cement pad and pavement covered by the roof of the building or shed.
The building or shed, the elevated water tank, the car hoist under a separate shed, the
air compressor, the underground gasoline tank, neon lights signboard, concrete fence
and pavement and the lot where they are all placed or erected, all of them used in the
pursuance of the gasoline service station business formed the entire gasoline service-
station.
As to whether the subject properties are attached and affixed to the tenement, it is clear
they are, for the tenement we consider in this particular case are (is) the pavement
covering the entire lot which was constructed by the owner of the gasoline station and
the improvement which holds all the properties under question, they are attached and
affixed to the pavement and to the improvement.
The pavement covering the entire lot of the gasoline service station, as well as all the
improvements, machines, equipments and apparatus are allowed by Caltex
(Philippines) Inc. ...
The underground gasoline tank is attached to the shed by the steel pipe to the pump, so
with the water tank it is connected also by a steel pipe to the pavement, then to the
electric motor which electric motor is placed under the shed. So to say that the gasoline
pumps, water pumps and underground tanks are outside of the service station, and to
consider only the building as the service station is grossly erroneous. (pp. 58-60, Rollo).
The said machines and equipment are loaned by Caltex to gas station operators under an
appropriate lease agreement or receipt. It is stipulated in the lease contract that the operators, upon
demand, shall return to Caltex the machines and equipment in good condition as when received,
ordinary wear and tear excepted.
The lessor of the land, where the gas station is located, does not become the owner of the machines
and equipment installed therein. Caltex retains the ownership thereof during the term of the lease.
The city assessor of Pasay City characterized the said items of gas station equipment and machinery
as taxable realty. The realty tax on said equipment amounts to P4,541.10 annually (p. 52, Rollo). The
city board of tax appeals ruled that they are personalty. The assessor appealed to the Central Board
of Assessment Appeals.
The Board, which was composed of Secretary of Finance Cesar Virata as chairman, Acting Secretary
of Justice Catalino Macaraig, Jr. and Secretary of Local Government and Community Development
Jose Roo, held in its decision of June 3, 1977 that the said machines and equipment are real
property within the meaning of sections 3(k) & (m) and 38 of the Real Property Tax Code, Presidential
Decree No. 464, which took effect on June 1, 1974, and that the definitions of real property and
personal property in articles 415 and 416 of the Civil Code are not applicable to this case.
The decision was reiterated by the Board (Minister Vicente Abad Santos took Macaraig's place) in its
resolution of January 12, 1978, denying Caltex's motion for reconsideration, a copy of which was
received by its lawyer on April 2, 1979.
On May 2, 1979 Caltex filed this certiorari petition wherein it prayed for the setting aside of the
Board's decision and for a declaration that t he said machines and equipment are personal property
not subject to realty tax (p. 16, Rollo).
The Solicitor General's contention that the Court of Tax Appeals has exclusive appellate jurisdiction
over this case is not correct. When Republic act No. 1125 created the Tax Court in 1954, there was
as yet no Central Board of Assessment Appeals. Section 7(3) of that law in providing that the Tax
Court had jurisdiction to review by appeal decisions of provincial or city boards of assessment
appeals had in mind the local boards of assessment appeals but not the Central Board of
Assessment Appeals which under the Real Property Tax Code has appellate jurisdiction over
decisions of the said local boards of assessment appeals and is, therefore, in the same category as
the Tax Court.
Section 36 of the Real Property Tax Code provides that the decision of the Central Board of
Assessment Appeals shall become final and executory after the lapse of fifteen days from the receipt
of its decision by the appellant. Within that fifteen-day period, a petition for reconsideration may be
filed. The Code does not provide for the review of the Board's decision by this Court.
Consequently, the only remedy available for seeking a review by this Court of the decision of the
Central Board of Assessment Appeals is the special civil action of certiorari, the recourse resorted to
herein by Caltex (Philippines), Inc.
The issue is whether the pieces of gas station equipment and machinery already enumerated are
subject to realty tax. This issue has to be resolved primarily under the provisions of the Assessment
Law and the Real Property Tax Code.
Section 2 of the Assessment Law provides that the realty tax is due "on real property, including land,
buildings, machinery, and other improvements" not specifically exempted in section 3 thereof. This
provision is reproduced with some modification in the Real Property Tax Code which provides:
SEC. 38.Incidence of Real Property Tax. There shall be levied, assessed and
collected in all provinces, cities and municipalities an annual ad valorem tax on real
property, such as land, buildings, machinery and other improvements affixed or
attached to real property not hereinafter specifically exempted.
The Code contains the following definitions in its section 3:
k) Improvements is a valuable addition made to property or an amelioration in its
condition, amounting to more than mere repairs or replacement of waste, costing labor
or capital and intended to enhance its value, beauty or utility or to adapt it for new or
further purposes.
m) Machinery shall embrace machines, mechanical contrivances, instruments,
appliances and apparatus attached to the real estate. It includes the physical facilities
available for production, as well as the installations and appurtenant service facilities,
together with all other equipment designed for or essential to its manufacturing,
industrial or agricultural purposes (See sec. 3[f], Assessment Law).
We hold that the said equipment and machinery, as appurtenances to the gas station building or shed
owned by Caltex (as to which it is subject to realty tax) and which fixtures are necessary to the
operation of the gas station, for without them the gas station would be useless, and which have been
attached or affixed permanently to the gas station site or embedded therein, are taxable
improvements and machinery within the meaning of the Assessment Law and the Real Property Tax
Code.
Caltex invokes the rule that machinery which is movable in its nature only becomes immobilized when
placed in a plant by the owner of the property or plant but not when so placed by a tenant, a
usufructuary, or any person having only a temporary right, unless such person acted as the agent of
the owner (Davao Saw Mill Co. vs. Castillo, 61 Phil 709).
That ruling is an interpretation of paragraph 5 of article 415 of the Civil Code regarding machinery that
becomes real property by destination. In the Davao Saw Mills case the question was whether the
machinery mounted on foundations of cement and installed by the lessee on leased land should be
regarded as real property for purposes of execution of a judgment against the lessee. The sheriff
treated the machinery as personal property. This Court sustained the sheriff's action. (Compare with
Machinery & Engineering Supplies, Inc. vs. Court of Appeals, 96 Phil. 70, where in a replevin case
machinery was treated as realty).
Here, the question is whether the gas station equipment and machinery permanently affixed by
Caltex to its gas station and pavement (which are indubitably taxable realty) should be subject to the
realty tax. This question is different from the issue raised in the Davao Saw Mill case.
Improvements on land are commonly taxed as realty even though for some purposes they might be
considered personalty (84 C.J.S. 181-2, Notes 40 and 41). "It is a familiar phenomenon to see things
classed as real property for purposes of taxation which on general principle might be considered
personal property" (Standard Oil Co. of New York vs. Jaramillo, 44 Phil. 630, 633).
This case is also easily distinguishable from Board of Assessment Appeals vs. Manila Electric Co.,
119 Phil. 328, where Meralco's steel towers were considered poles within the meaning of paragraph 9
of its franchise which exempts its poles from taxation. The steel towers were considered personalty
because they were attached to square metal frames by means of bolts and could be moved from
place to place when unscrewed and dismantled.
Nor are Caltex's gas station equipment and machinery the same as tools and equipment in the repair
shop of a bus company which were held to be personal property not subject to realty tax (Mindanao
Bus Co. vs. City Assessor, 116 Phil. 501).
The Central Board of Assessment Appeals did not commit a grave abuse of discretion in upholding
the city assessor's is imposition of the realty tax on Caltex's gas station and equipment.
WHEREFORE, the questioned decision and resolution of the Central Board of Assessment Appeals
are affirmed. The petition for certiorari is dismissed for lack of merit. No costs.
SO ORDERED.

G.R. No. L-47943 May 31, 1982
MANILA ELECTRIC COMPANY, petitioner,
vs.
CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF ASSESSMENT APPEALS OF
BATANGAS and PROVINCIAL ASSESSOR OF BATANGAS, respondents.

AQUINO, J .:
This case is about the imposition of the realty tax on two oil storage tanks installed in 1969 by Manila
Electric Company on a lot in San Pascual, Batangas which it leased in 1968 from Caltex (Phil.), Inc.
The tanks are within the Caltex refinery compound. They have a total capacity of 566,000 barrels.
They are used for storing fuel oil for Meralco's power plants.
According to Meralco, the storage tanks are made of steel plates welded and assembled on the spot.
Their bottoms rest on a foundation consisting of compacted earth as the outermost layer, a sand pad
as the intermediate layer and a two-inch thick bituminous asphalt stratum as the top layer. The
bottom of each tank is in contact with the asphalt layer,
The steel sides of the tank are directly supported underneath by a circular wall made of concrete,
eighteen inches thick, to prevent the tank from sliding. Hence, according to Meralco, the tank is not
attached to its foundation. It is not anchored or welded to the concrete circular wall. Its bottom plate is
not attached to any part of the foundation by bolts, screws or similar devices. The tank merely sits on
its foundation. Each empty tank can be floated by flooding its dike-inclosed location with water four
feet deep. (pp. 29-30, Rollo.)
On the other hand, according to the hearing commissioners of the Central Board of Assessment
Appeals, the area where the two tanks are located is enclosed with earthen dikes with electric steel
poles on top thereof and is divided into two parts as the site of each tank. The foundation of the tanks
is elevated from the remaining area. On both sides of the earthen dikes are two separate concrete
steps leading to the foundation of each tank.
Tank No. 2 is supported by a concrete foundation with an asphalt lining about an inch thick. Pipelines
were installed on the sides of each tank and are connected to the pipelines of the Manila Enterprises
Industrial Corporation whose buildings and pumping station are near Tank No. 2.
The Board concludes that while the tanks rest or sit on their foundation, the foundation itself and the
walls, dikes and steps, which are integral parts of the tanks, are affixed to the land while the pipelines
are attached to the tanks. (pp. 60-61, Rollo.) In 1970, the municipal treasurer of Bauan, Batangas, on
the basis of an assessment made by the provincial assessor, required Meralco to pay realty taxes on
the two tanks. For the five-year period from 1970 to 1974, the tax and penalties amounted to
P431,703.96 (p. 27, Rollo). The Board required Meralco to pay the tax and penalties as a condition
for entertaining its appeal from the adverse decision of the Batangas board of assessment appeals.
The Central Board of Assessment Appeals (composed of Acting Secretary of Finance Pedro M.
Almanzor as chairman and Secretary of Justice Vicente Abad Santos and Secretary of Local
Government and Community Development Jose Roo as members) in its decision dated November
5, 1976 ruled that the tanks together with the foundation, walls, dikes, steps, pipelines and other
appurtenances constitute taxable improvements.
Meralco received a copy of that decision on February 28, 1977. On the fifteenth day, it filed a motion
for reconsideration which the Board denied in its resolution of November 25, 1977, a copy of which
was received by Meralco on February 28, 1978.
On March 15, 1978, Meralco filed this special civil action of certiorari to annul the Board's decision
and resolution. It contends that the Board acted without jurisdiction and committed a grave error of
law in holding that its storage tanks are taxable real property.
Meralco contends that the said oil storage tanks do not fall within any of the kinds of real property
enumerated in article 415 of the Civil Code and, therefore, they cannot be categorized as realty by
nature, by incorporation, by destination nor by analogy. Stress is laid on the fact that the tanks are not
attached to the land and that they were placed on leased land, not on the land owned by Meralco.
This is one of those highly controversial, borderline or penumbral cases on the classification of
property where strong divergent opinions are inevitable. The issue raised by Meralco has to be
resolved in the light of the provisions of the Assessment Law, Commonwealth Act No. 470, and the
Real Property Tax Code, Presidential Decree No. 464 which took effect on June 1, 1974.
Section 2 of the Assessment Law provides that the realty tax is due "on real property, including land,
buildings, machinery, and other improvements" not specifically exempted in section 3 thereof. This
provision is reproduced with some modification in the Real Property Tax Code which provides:
Sec. 38.Incidence of Real Property Tax. They shall be levied, assessed and
collected in all provinces, cities and municipalities an annual ad valorem tax on real
property, such as land, buildings, machinery and other improvements affixed or
attached to real property not hereinafter specifically exempted.
The Code contains the following definition in its section 3:
k) Improvements is a valuable addition made to property or an amelioration in its
condition, amounting to more than mere repairs or replacement of waste, costing labor
or capital and intended to enhance its value, beauty or utility or to adapt it for new or
further purposes.
We hold that while the two storage tanks are not embedded in the land, they may, nevertheless, be
considered as improvements on the land, enhancing its utility and rendering it useful to the oil
industry. It is undeniable that the two tanks have been installed with some degree of permanence as
receptacles for the considerable quantities of oil needed by Meralco for its operations.
Oil storage tanks were held to be taxable realty in Standard Oil Co. of New Jersey vs. Atlantic City, 15
Atl. 2nd 271.
For purposes of taxation, the term "real property" may include things which should generally be
regarded as personal property(84 C.J.S. 171, Note 8). It is a familiar phenomenon to see things
classed as real property for purposes of taxation which on general principle might be considered
personal property (Standard Oil Co. of New York vs. Jaramillo, 44 Phil. 630, 633).
The case of Board of Assessment Appeals vs. Manila Electric Company, 119 Phil. 328, wherein
Meralco's steel towers were held not to be subject to realty tax, is not in point because in that case
the steel towers were regarded as poles and under its franchise Meralco's poles are exempt from
taxation. Moreover, the steel towers were not attached to any land or building. They were removable
from their metal frames.
Nor is there any parallelism between this case and Mindanao Bus Co. vs. City Assessor, 116 Phil.
501, where the tools and equipment in the repair, carpentry and blacksmith shops of a transportation
company were held not subject to realty tax because they were personal property.
WHEREFORE, the petition is dismissed. The Board's questioned decision and resolution are
affirmed. No costs.
SO ORDERED.

G.R. No. L-15334 January 31, 1964
BOARD OF ASSESSMENT APPEALS, CITY ASSESSOR and CITY TREASURER OF QUEZON
CITY, petitioners,
vs.
MANILA ELECTRIC COMPANY, respondent.
Assistant City Attorney Jaime R. Agloro for petitioners.
Ross, Selph and Carrascoso for respondent.
PAREDES, J .:
From the stipulation of facts and evidence adduced during the hearing, the following appear:
On October 20, 1902, the Philippine Commission enacted Act No. 484 which authorized the Municipal Board
of Manila to grant a franchise to construct, maintain and operate an electric street railway and electric light, heat
and power system in the City of Manila and its suburbs to the person or persons making the most favorable bid.
Charles M. Swift was awarded the said franchise on March 1903, the terms and conditions of which were
embodied in Ordinance No. 44 approved on March 24, 1903. Respondent Manila Electric Co. (Meralco for
short), became the transferee and owner of the franchise.
Meralco's electric power is generated by its hydro-electric plant located at Botocan Falls, Laguna and is
transmitted to the City of Manila by means of electric transmission wires, running from the province of Laguna
to the said City. These electric transmission wires which carry high voltage current, are fastened to insulators
attached on steel towers constructed by respondent at intervals, from its hydro-electric plant in the province of
Laguna to the City of Manila. The respondent Meralco has constructed 40 of these steel towers within Quezon
City, on land belonging to it. A photograph of one of these steel towers is attached to the petition for review,
marked Annex A. Three steel towers were inspected by the lower court and parties and the following were the
descriptions given there of by said court:
The first steel tower is located in South Tatalon, Espaa Extension, Quezon City. The findings were as
follows: the ground around one of the four posts was excavated to a depth of about eight (8) feet, with
an opening of about one (1) meter in diameter, decreased to about a quarter of a meter as it we deeper
until it reached the bottom of the post; at the bottom of the post were two parallel steel bars attached to
the leg means of bolts; the tower proper was attached to the leg three bolts; with two cross metals to
prevent mobility; there was no concrete foundation but there was adobe stone underneath; as the bottom
of the excavation was covered with water about three inches high, it could not be determined with
certainty to whether said adobe stone was placed purposely or not, as the place abounds with this kind of
stone; and the tower carried five high voltage wires without cover or any insulating materials.
The second tower inspected was located in Kamuning Road, K-F, Quezon City, on land owned by the
petitioner approximate more than one kilometer from the first tower. As in the first tower, the ground
around one of the four legs was excavate from seven to eight (8) feet deep and one and a half (1-)
meters wide. There being very little water at the bottom, it was seen that there was no concrete
foundation, but there soft adobe beneath. The leg was likewise provided with two parallel steel bars
bolted to a square metal frame also bolted to each corner. Like the first one, the second tower is made up
of metal rods joined together by means of bolts, so that by unscrewing the bolts, the tower could be
dismantled and reassembled.
The third tower examined is located along Kamias Road, Quezon City. As in the first two towers given
above, the ground around the two legs of the third tower was excavated to a depth about two or three
inches beyond the outside level of the steel bar foundation. It was found that there was no concrete
foundation. Like the two previous ones, the bottom arrangement of the legs thereof were found to be
resting on soft adobe, which, probably due to high humidity, looks like mud or clay. It was also found
that the square metal frame supporting the legs were not attached to any material or foundation.
On November 15, 1955, petitioner City Assessor of Quezon City declared the aforesaid steel towers for real
property tax under Tax declaration Nos. 31992 and 15549. After denying respondent's petition to cancel these
declarations, an appeal was taken by respondent to the Board of Assessment Appeals of Quezon City, which
required respondent to pay the amount of P11,651.86 as real property tax on the said steel towers for the years
1952 to 1956. Respondent paid the amount under protest, and filed a petition for review in the Court of Tax
Appeals (CTA for short) which rendered a decision on December 29, 1958, ordering the cancellation of the said
tax declarations and the petitioner City Treasurer of Quezon City to refund to the respondent the sum of
P11,651.86. The motion for reconsideration having been denied, on April 22, 1959, the instant petition for
review was filed.
In upholding the cause of respondents, the CTA held that: (1) the steel towers come within the term "poles"
which are declared exempt from taxes under part II paragraph 9 of respondent's franchise; (2) the steel towers
are personal properties and are not subject to real property tax; and (3) the City Treasurer of Quezon City is held
responsible for the refund of the amount paid. These are assigned as errors by the petitioner in the brief.
The tax exemption privilege of the petitioner is quoted hereunder:
PAR 9. The grantee shall be liable to pay the same taxes upon its real estate, buildings, plant (not
including poles, wires, transformers, and insulators), machinery and personal property as other persons
are or may be hereafter required by law to pay ... Said percentage shall be due and payable at the time
stated in paragraph nineteen of Part One hereof, ... and shall be in lieu of all taxes and assessments of
whatsoever nature and by whatsoever authority upon the privileges, earnings, income, franchise, and
poles, wires, transformers, and insulators of the grantee from which taxes and assessments the grantee is
hereby expressly exempted. (Par. 9, Part Two, Act No. 484 Respondent's Franchise; emphasis supplied.)
The word "pole" means "a long, comparatively slender usually cylindrical piece of wood or timber, as typically
the stem of a small tree stripped of its branches; also by extension, a similar typically cylindrical piece or object
of metal or the like". The term also refers to "an upright standard to the top of which something is affixed or by
which something is supported; as a dovecote set on a pole; telegraph poles; a tent pole; sometimes, specifically
a vessel's master (Webster's New International Dictionary 2nd Ed., p. 1907.) Along the streets, in the City of
Manila, may be seen cylindrical metal poles, cubical concrete poles, and poles of the PLDT Co. which are made
of two steel bars joined together by an interlacing metal rod. They are called "poles" notwithstanding the fact
that they are no made of wood. It must be noted from paragraph 9, above quoted, that the concept of the "poles"
for which exemption is granted, is not determined by their place or location, nor by the character of the electric
current it carries, nor the material or form of which it is made, but the use to which they are dedicated. In
accordance with the definitions, pole is not restricted to a long cylindrical piece of wood or metal, but includes
"upright standards to the top of which something is affixed or by which something is supported. As heretofore
described, respondent's steel supports consists of a framework of four steel bars or strips which are bound by
steel cross-arms atop of which are cross-arms supporting five high voltage transmission wires (See Annex A)
and their sole function is to support or carry such wires.
The conclusion of the CTA that the steel supports in question are embraced in the term "poles" is not a novelty.
Several courts of last resort in the United States have called these steel supports "steel towers", and they
denominated these supports or towers, as electric poles. In their decisions the words "towers" and "poles" were
used interchangeably, and it is well understood in that jurisdiction that a transmission tower or pole means the
same thing.
In a proceeding to condemn land for the use of electric power wires, in which the law provided that wires shall
be constructed upon suitable poles, this term was construed to mean either wood or metal poles and in view of
the land being subject to overflow, and the necessary carrying of numerous wires and the distance between
poles, the statute was interpreted to include towers or poles. (Stemmons and Dallas Light Co. (Tex) 212 S.W.
222, 224; 32-A Words and Phrases, p. 365.)
The term "poles" was also used to denominate the steel supports or towers used by an association used to
convey its electric power furnished to subscribers and members, constructed for the purpose of fastening high
voltage and dangerous electric wires alongside public highways. The steel supports or towers were made of iron
or other metals consisting of two pieces running from the ground up some thirty feet high, being wider at the
bottom than at the top, the said two metal pieces being connected with criss-cross iron running from the bottom
to the top, constructed like ladders and loaded with high voltage electricity. In form and structure, they are like
the steel towers in question. (Salt River Valley Users' Ass'n v. Compton, 8 P. 2nd, 249-250.)
The term "poles" was used to denote the steel towers of an electric company engaged in the generation of
hydro-electric power generated from its plant to the Tower of Oxford and City of Waterbury. These steel towers
are about 15 feet square at the base and extended to a height of about 35 feet to a point, and are embedded in the
cement foundations sunk in the earth, the top of which extends above the surface of the soil in the tower of
Oxford, and to the towers are attached insulators, arms, and other equipment capable of carrying wires for the
transmission of electric power (Connecticut Light and Power Co. v. Oxford, 101 Conn. 383, 126 Atl. p. 1).
In a case, the defendant admitted that the structure on which a certain person met his death was built for the
purpose of supporting a transmission wire used for carrying high-tension electric power, but claimed that the
steel towers on which it is carried were so large that their wire took their structure out of the definition of a pole
line. It was held that in defining the word pole, one should not be governed by the wire or material of the
support used, but was considering the danger from any elevated wire carrying electric current, and that
regardless of the size or material wire of its individual members, any continuous series of structures intended
and used solely or primarily for the purpose of supporting wires carrying electric currents is a pole line
(Inspiration Consolidation Cooper Co. v. Bryan 252 P. 1016).
It is evident, therefore, that the word "poles", as used in Act No. 484 and incorporated in the petitioner's
franchise, should not be given a restrictive and narrow interpretation, as to defeat the very object for which the
franchise was granted. The poles as contemplated thereon, should be understood and taken as a part of the
electric power system of the respondent Meralco, for the conveyance of electric current from the source thereof
to its consumers. If the respondent would be required to employ "wooden poles", or "rounded poles" as it used
to do fifty years back, then one should admit that the Philippines is one century behind the age of space. It
should also be conceded by now that steel towers, like the ones in question, for obvious reasons, can better
effectuate the purpose for which the respondent's franchise was granted.
Granting for the purpose of argument that the steel supports or towers in question are not embraced within the
term poles, the logical question posited is whether they constitute real properties, so that they can be subject to
a real property tax. The tax law does not provide for a definition of real property; but Article 415 of the Civil
Code does, by stating the following are immovable property:
(1) Land, buildings, roads, and constructions of all kinds adhered to the soil;
x x x x x x x x x
(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated
therefrom without breaking the material or deterioration of the object;
x x x x x x x x x
(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an
industry or works which may be carried in a building or on a piece of land, and which tends directly to
meet the needs of the said industry or works;
x x x x x x x x x
The steel towers or supports in question, do not come within the objects mentioned in paragraph 1, because they
do not constitute buildings or constructions adhered to the soil. They are not construction analogous to buildings
nor adhering to the soil. As per description, given by the lower court, they are removable and merely attached to
a square metal frame by means of bolts, which when unscrewed could easily be dismantled and moved from
place to place. They can not be included under paragraph 3, as they are not attached to an immovable in a fixed
manner, and they can be separated without breaking the material or causing deterioration upon the object to
which they are attached. Each of these steel towers or supports consists of steel bars or metal strips, joined
together by means of bolts, which can be disassembled by unscrewing the bolts and reassembled by screwing
the same. These steel towers or supports do not also fall under paragraph 5, for they are not machineries,
receptacles, instruments or implements, and even if they were, they are not intended for industry or works on
the land. Petitioner is not engaged in an industry or works in the land in which the steel supports or towers are
constructed.
It is finally contended that the CTA erred in ordering the City Treasurer of Quezon City to refund the sum of
P11,651.86, despite the fact that Quezon City is not a party to the case. It is argued that as the City Treasurer is
not the real party in interest, but Quezon City, which was not a party to the suit, notwithstanding its capacity to
sue and be sued, he should not be ordered to effect the refund. This question has not been raised in the court
below, and, therefore, it cannot be properly raised for the first time on appeal. The herein petitioner is indulging
in legal technicalities and niceties which do not help him any; for factually, it was he (City Treasurer) whom
had insisted that respondent herein pay the real estate taxes, which respondent paid under protest. Having acted
in his official capacity as City Treasurer of Quezon City, he would surely know what to do, under the
circumstances.
IN VIEW HEREOF, the decision appealed from is hereby affirmed, with costs against the petitioners.

G.R. No. 6295 September 1, 1911
THE UNITED STATES, plaintiff-appellee,
vs.
IGNACIO CARLOS, defendant-appellant.
A. D. Gibbs for appellant.
Acting Attorney-General Harvey for appellee.
PER CURIAM:
The information filed in this case is as follows:
The undersigned accuses Ignacio Carlos of the crime of theft, committed as follows:
That on, during, and between the 13th day of February, 1909, and the 3d day of March, 1910, in the city
of Manila, Philippine Islands, the said Ignacio Carlos, with intent of gain and without violence or
intimidation against the person or force against the thing, did then and there, willfully, unlawfully, and
feloniously, take, steal , and carry away two thousand two hundred and seventy-three (2,273) kilowatts
of electric current, of the value of nine hundred and nine (909) pesos and twenty (20) cents Philippine
currency, the property of the Manila Electric Railroad and Light Company, a corporation doing business
in the Philippine Islands, without the consent of the owner thereof; to the damage and prejudice of the
said Manila Electric Railroad and Light Company in the said sum of nine hundred and nine (909) pesos
and twenty (20) cents Philippine currency, equal to and equivalent of 4,546 pesetas Philippine currency.
All contrary to law.
(Sgd.)L. M. SOUTWORTH,
Prosecuting Attorney.
Subscribed and sworn to before me this 4th day of March, 1910, in the city of Manila, Philippine
Islands, by L. M. Southworth, prosecuting attorney for the city of Manila.
(Sgd.) CHARLES S. LOBINGIER,
Judge, First Instance.
A preliminary investigation has heretofore been conducted in this case, under my direction, having
examined the witness under oath, in accordance with the provisions of section 39 of Act No. 183 of the
Philippine Commission, as amended by section 2 of Act No. 612 of the Philippine Commission.
(Sgd) L. M. SOUTHWORTH,
Prosecuting Attorney.
Subscribed and sworn to before me this 4th day of March, 1910, in the city of Manila, Philippine
Islands, by L. M. Southworth, prosecuting attorney for the city of Manila.
(Sgd.) CHARLES LOBINGIER,
Judge, First Instance.
A warrant for the arrest of the defendant was issued by the Honorable J. C. Jenkins on the 4th of March and
placed in the hands of the sheriff. The sheriff's return shows that the defendant gave bond for his appearance.
On the 14th of the same month counsel for the defendant demurrer to the complaint on the following grounds:
1 That the court has no jurisdiction over the person of the accused nor of the offense charged because
the accused has not been accorded a preliminary investigation or examination as required by law and no
court, magistrate, or other competent authority has determined from a sworn complaint or evidence
adduced that there is probable cause to believe that a crime has been committed, or that this defendant
has committed any crime.
2 That the facts charged do not constitute a public offense.
The demurrer was overruled on the same day and the defendant having refused to plead, a plea of not guilty was
entered by direction of the court for him and the trial proceeded.
After due consideration of all the proofs presented and the arguments of counsel the trial court found the
defendant guilty of the crime charged and sentenced him to one year eight months and twenty-one days'
presidio correccional, to indemnify the offended party, The Manila Electric Railroad and Light Company, in
the sum of P865.26, to the corresponding subsidiary imprisonment in case of insolvency and to the payment of
the costs. From this judgment the defendant appealed and makes the following assignments of error:
I.
The court erred in overruling the objection of the accused to the jurisdiction of the court, because he was
not given a preliminary investigation as required by law, and in overruling his demurrer for the same
reason.
II.
The court erred in declaring the accused to be guilty, in view of the evidence submitted.
III.
The court erred in declaring that electrical energy may be stolen.
IV.
The court erred in not declaring that the plaintiff consented to the taking of the current.
V.
The court erred in finding the accused guilty of more than one offense.
VI.
The court erred in condemning the accused to pay P865.26 to the electric company as damages.
Exactly the same question as that raised in the first assignment of error, was after a through examination and
due consideration, decided adversely to appellant's contention in the case of U. S. vs. Grant and Kennedy (18
Phil. Rep., 122). No sufficient reason is presented why we should not follow the doctrine enunciated in that
case.
The question raised in the second assignment of error is purely one fact. Upon this point the trial court said:
For considerably more than a year previous to the filing of this complaint the accused had been a
consumer of electricity furnished by the Manila Electric Railroad and Light Company for a building
containing the residence of the accused and three other residences, and which was equipped, according
to the defendant's testimony, with thirty electric lights. On March 15, 1909, the representatives of the
company, believing that more light was being used than their meter showed, installed an additional
meter (Exhibit A) on a pole outside of defendant's house, and both it and the meter (Exhibit B) which
had been previously installed in the house were read on said date. Exhibit A read 218 kilowatt hours;
Exhibit B, 745 kilowatt hours. On March 3, 1910 each was read again, Exhibit A showing 2,718
kilowatt hours and Exhibit B, 968. It is undisputed that the current which supplied the house passed
through both meters and the city electrician testifies that each meter was tested on the date of the last
reading and was "in good condition." The result of this registration therefore is that while the outsider
meter (Exhibit A) showed a consumption in defendant's building of 2,500 kilowatt hours of electricity,
this inside meter (Exhibit B) showed but 223 kilowatt hours. In other words the actual consumption,
according to the outside meter, was more than ten times as great as that registered by the one inside.
Obviously this difference could not be due to normal causes, for while the electrician called by the
defense (Lanusa) testifies to the possibility of a difference between two such meters, he places the
extreme limit of such difference between them 5 per cent. Here, as we have seen, the difference is more
than 900 per cent. Besides, according to the defendant's electrician, the outside meter should normally
run faster, while according to the test made in this case the inside meter (Exhibit B) ran the faster. The
city electrician also testifies that the electric current could have been deflected from the inside meter by
placing thereon a device known as a "jumper" connecting the two outside wires, and there is other
testimony that there were marks on the insulation of the meter Exhibit B which showed the use of such a
device. There is a further evidence that the consumption of 223 kilowatt hours, registered by the inside
meter would not be a reasonable amount for the number of lights installed in defendant's building during
the period in question, and the accused fails to explain why he should have had thirty lights installed if
he needed but four or five.
On the strength of this showing a search warrant was issued for the examination of defendant's premises
and was duly served by a police officer (Hartpence). He was accompanied at the time by three
employees of the Manila Electric Railroad and Light Company, and he found there the accused, his wife
and son, and perhaps one or two others. There is a sharp conflict between the several spectators on some
points but on one there is no dispute. All agree that the "jumper" (Exhibit C) was found in a drawer of a
small cabinet in the room of defendant's house where the meter was installed and not more than 20 feet
therefrom. In the absence of a satisfactory explanation this constituted possession on defendant's part,
and such possession, under the Code of Civil Procedure, section 334 (10), raises the presumption that
the accused was the owner of a device whose only use was to deflect the current from the meter.
Is there any other "satisfactory explanation" of the "jumper's" presence? The only one sought to be
offered is the statement by the son of the accused, a boy of twelve years, that he saw the "jumper" placed
there by the witness Porter, an employee of the Light Company. The boy is the only witness who so
testifies and Porter himself squarely denies it. We can not agree with counsel for the defense that the
boy's interest in the outcome of this case is less than that of the witness for the prosecution. It seems to
us that his natural desire to shield his father would far outweight any interest such an employee like
Porter would have and which, at most, would be merely pecuniary.
There is, however, one witness whom so far as appears, has no interest in the matter whatsoever. This is
officer Hartpence, who executed the search warrant. He testifies that after inspecting other articles and
places in the building as he and the other spectators, including the accused, approached the cabinet in
which the "jumper" was found, the officer's attention was called to the defendant's appearance and the
former noticed that the latter was becoming nervous. Where the only two witnesses who are supposed to
know anything of the matter thus contradict each other this item of testimony by the officer is of more
than ordinary significance; for if, as the accused claims, the "jumper" was placed in the cabinet for the
first time by Porter there would be no occasion for any change of demeanor on the part of the accused.
We do not think that the officer's declination to wait until defendant should secure a notary public shows
bias. The presence of such an official was neither required nor authorized by law and the very efficacy
of a search depends upon its swiftness.
We must also agree with the prosecuting attorney that the attending circumstances do not strengthen the
story told by the boy; that the latter would have been likely to call out at the time he saw the "jumper"
being placed in the drawer, or at least directed his father's attention to it immediately instead of waiting,
as he says, until the latter was called by the officer. Finally, to accept the boy's story we must believe
that this company or its representatives deliberately conspired not merely to lure the defendant into the
commission of a crime but to fasten upon him a crime which he did not commit and thus convict an
innocent man by perjured evidence. This is a much more serious charge than that contained in the
complaint and should be supported by very strong corroborating circumstances which we do not find
here. We are, accordingly, unable to consider as satisfactory defendant's explanation of the "jumper's"
presence.
The only alternative is the conclusion that the "jumper" was placed there by the accused or by some one
acting for him and that it was the instrument by which the current was deflected from the matter Exhibit
B and the Light Company deprived of its lawful compensation.
After a careful examination of the entire record we are satisfied beyond peradventure of a doubt that the proofs
presented fully support the facts as set forth in the foregoing finding.
Counsel for the appellant insists that the only corporeal property can be the subject of the crime of larceny, and
in the support of this proposition cites several authorities for the purpose of showing that the only subjects of
larceny are tangible, movable, chattels, something which could be taken in possession and carried away, and
which had some, although trifling, intrinsic value, and also to show that electricity is an unknown force and can
not be a subject of larceny.
In the U. S. vs. Genato (15 Phi. Rep., 170) the defendant, the owner of the store situated at No. 154 Escolta,
Manila, was using a contrivance known as a "jumper" on the electric meter installed by the Manila Electric
Railroad and the Light Company. As a result of the use of this "jumper" the meter, instead of making one
revolution in every four seconds, registered one in seventy-seven seconds, thereby reducing the current
approximately 95 per cent. Genato was charged in the municipal court with a violation of a certain ordinance of
the city of Manila, and was sentenced to pay a fine of P200. He appealed to the Court of First Instance, was
again tried and sentenced to pay the same fine. An appeal was taken from the judgment of the Court of First
Instance to the Supreme Court on the ground that the ordinance in question was null and void. It is true that the
only question directly presented was of the validity of the city ordinance. The court, after holding that said
ordinance was valid, said:
Even without them (ordinances), the right of ownership of electric current is secured by articles 517 and
518 of the Penal Code; the application of these articles in case of subtraction of gas, a fluid used for
lighting, and in some respects resembling electricity, is confirmed by the rule laid down in the decisions
of the supreme court of Spain January 20, 1887, and April 1, 1897, construing and enforcing the
provisions of articles 530 and 531 of the penal code of that country, articles identical with articles 517
and 518 of the code in force in these Islands.
Article 517 of the Penal Code above referred to reads as follows:
The following are guilty of larceny:
(1) Those who with intent of gain and without violence or intimidation against the person, or force
against things, shall take another's personal property without the owner's consent.
And article 518 fixes the penalty for larceny in proportion to the value of the personal property stolen.
It is true that electricity is no longer, as formerly, regarded by electricians as a fluid, but its manifestation and
effects, like those of gas, may be seen and felt. The true test of what is a proper subject of larceny seems to be
not whether the subject is corporeal, but whether it is capable of appropriation by another than the owner.
It is well-settled that illuminating gas may be the subject of larceny, even in the absence of a statute so
providing. (Decisions of supreme court of Spain, January 20, 1887, and April 1, 1897, supra; also (England)
Queen vs. Firth, L. R. 1 C. C., 172, 11 Cox C. C., 234; Queen vs. White, 3 C. & K., 363, 6 Cox C. C., 213;
Woods vs. People, 222 III., 293, 7 L. R. A., 520; Commonwealth vs. Shaw, 4 Allen (Mass), 308; State vs.
Wellman, 34 Minn., 221, N. W. Rep., 385, and 25 Cyc., p. 12, note 10.)
In the case of Commonwealth vs. Shaw, supra, the court, speaking through Chief Justice Bigelow, said:
There is nothing in the nature of gas used for illuminating purposes which renders it incapable of being
feloniously taken and carried away. It is a valuable article of merchandise, bought and sold like other
personal property, susceptible of being severed from a mass or larger quantity, and of being transported
from place to place. In the present case it appears that it was the property of the Boston Gas Light
Company; that it was in their possession by being confined in conduits and tubes which belonged to
them, and that the defendant severed a portion of that which was in the pipes of the company by taking it
into her house and there consuming it. All this being proved to have been done by her secretly and with
intent to deprive the company of their property and to appropriate it to her own use, clearly constitutes
the crime of larceny.
Electricity, the same as gas, is a valuable article of merchandise, bought and sold like other personal property
and is capable of appropriation by another. So no error was committed by the trial court in holding that
electricity is a subject of larceny.
It is urged in support of the fourth assignment of error that if it be true that the appellant did appropriate to his
own use the electricity as charged he can not be held guilty of larceny for any part of the electricity thus
appropriated, after the first month, for the reason that the complaining party, the Manila Electric Road and Light
Company, knew of this misappropriation and consented thereto.
The outside meter was installed on March 15, 1909, and read 218 kilowatt hours. On the same day the inside
meter was read and showed 745 kilowatt hours. Both meters were again read on March 3, 1910, and the outside
one showed 2,718 kilowatt hours while the one on the inside only showed 968, the difference in consumption
during this time being 2,277 kilowatt hours. The taking of this current continued over a period of one year, less
twelve days. Assuming that the company read both meters at the end of each month; that it knew the defendant
was misappropriating the current to that extent; and that t continued to furnish the current, thereby giving the
defendant an opportunity to continue the misppropriation, still, we think, that the defendant is criminally
responsible for the taking of the whole amount, 2,277 kilowatt hours. The company had a contract with the
defendant to furnish him with current for lighting purposes. It could not stop the misappropriation without
cutting off the current entirely. It could not reduce the current so as to just furnish sufficient for the lighting of
two, three, or five lights, as claimed by the defendant that he used during the most of this time, but the current
must always be sufficiently strong to furnish current for the thirty lights, at any time the defendant desired to
use them.
There is no pretense that the accused was solicited by the company or any one else to commit the acts charged.
At most there was a mere passive submission on the part of the company that the current should be taken and no
indication that it wished it to be taken, and no knowledge by the defendant that the company wished him to take
the current, and no mutual understanding between the company and the defendant, and no measures of
inducement of any kind were employed by the company for the purpose of leading the defendant into
temptation, and no preconcert whatever between him and company. The original design to misappropriate this
current was formed by the defendant absolutely independent of any acts on the part of the company or its
agents. It is true, no doubt, as a general proposition, that larceny is not committed when the property is taken
with the consent of its owner. It may be difficult in some instances to determine whether certain acts constitute,
in law, such "consent." But under the facts in the case at bar it is not difficult to reach a conclusion that the acts
performed by the plaintiff company did not constitute a consent on its part the defendant take its property. We
have been unable to find a well considered case holding contrary opinion under similar facts, but, there are
numerous cases holding that such acts do not constitute such consent as would relieve the taker of criminal
responsibility. The fourth assignment of error is, therefore, not well founded.
It is also contended that since the "jumper" was not used continuously, the defendant committed not a single
offense but a series of offenses. It is, no doubt, true that the defendant did not allow the "jumper" to remain in
place continuously for any number of days as the company inspected monthly the inside meter. So the "jumper"
was put on and taken off at least monthly, if not daily, in order to avoid detection, and while the "jumper" was
off the defendant was not misappropriating the current. The complaint alleged that the defendant did on, during,
and between the 13th day of February, 1909, and the 3d of March, 1910. willfully, unlawfully, and feloniously
take, steal, and carry away 2,277 kilowatts of electric current of the value of P909. No demurrer was presented
against this complaint on the ground that more than one crime was charged. The Government had no
opportunity to amend or correct this error, if error at all. In the case of U. S. vs. Macaspac (12 Phil. Rep., 26),
the defendant received from one Joquina Punu the sum of P31.50, with the request to deliver it to Marcelina
Dy-Oco. The defendant called upon Marcelina, but instead of delivering the said amount she asked Marcelina
for P30 in the name of Joaquina who had in no way authorized her to do so. Marcelina gave her P30, believing
that Joaquina had sent for it. Counsel for the defendant insisted that the complaint charged his client with two
different crimes of estafa in violation of section 11 of General Orders, No. 58. In disposing of this question this
court said:
The said defect constitutes one of the dilatory pleas indicated by section 21, and the accused ought to
have raised the point before the trial began. Had this been done, the complaint might have been amended
in time, because it is merely a defect of form easily remedied. . . . Inasmuch as in the first instance the
accused did not make the corresponding dilatory plea to the irregularity of the complaint, it must be
understood that has waived such objection, and is not now entitled to raise for the first time any question
in reference thereto when submitting to this court her assignment of errors. Apart from the fact that the
defense does not pretend that any of the essential rights of the accused have been injured, the allegation
of the defect above alluded to, which in any case would only affect form of the complaint, can not
justify a reversal of the judgment appealed from, according to the provisions of section 10 of General
Orders, No. 58.
In the case at bar it is not pointed out wherein any of the essential rights of the defendant have been prejudiced
by reason of the fact that the complaint covered the entire period. If twelve distinct and separate complaints had
been filed against the defendant, one for each month, the sum total of the penalties imposed might have been
very much greater than that imposed by the court in this case. The covering of the entire period by one charge
has been beneficial, if anything, and not prejudicial to the rights of the defendant. The prosecuting attorney
elected to cover the entire period with one charge and the accused having been convicted for this offense, he can
not again be prosecuted for the stealing of the current at any time within that period. Then, again, we are of the
opinion that the charge was properly laid. The electricity was stolen from the same person, in the same manner,
and in the same place. It was substantially one continuous act, although the "jumper" might have been removed
and replaced daily or monthly. The defendant was moved by one impulse to appropriate to his own use the
current, and the means adopted by him for the taking of the current were in the execution of a general fraudulent
plan.
A person stole gas for the use of a manufactory by means of pipe, which drew off the gas from the main
without allowing it to pass through the meter. The gas from this pipe was burnt every day, and turned off
at night. The pipe was never closed at this junction with the main, and consequently always remained
full of gas. It was held, that if the pipe always remained full, there was, in fact, a continuous taking of
the gas and not a series of separate talkings. It was held also that even if the pipe had not been kept full,
the taking would have been continuous, as it was substantially all one transaction. (Regina vs. Firth, L.
R., 1 C. C., 172; 11 Cox C. C., 234. Cited on p. 758 of Wharton's Criminal Law, vol. 1, 10th ed.)
The value of the electricity taken by the defendant was found by the trial court to be P865.26. This finding is
fully in accordance with the evidence presented. So no error was committed in sentencing the defendant to
indemnify the company in this amount, or to suffer the corresponding subsidiary imprisonment in case of
insolvency.
The judgment being strictly in accordance with the law and the merits of the case, same is hereby affirmed, with
costs against the appellant.
Arellano, C.J., Torres, Mapa and Carson, JJ.

Separate Opinions
MORELAND, J ., dissenting:
I feel myself compelled to dissent because, in my judgment, there is no evidence before this court, and there
was none before the court below, establishing the most essential element of the crime of larceny, namely, the
taking without the consent of the owner. As I read the record, there is no evidence showing that the electricity
alleged to have been stolen was taken without the consent of the complaining company. The fact is that there
was not a witness who testified for the prosecution who was authorized in law, or who claimed to be authorized
in fact, to testify as to whether or not the alleged taking of the electricity was without the consent of the
company or, even that said company had not been paid for all electricity taken. Not one of them was, as a matter
of law, competent to either of those facts. Not one of them was an officer of the company. The leading witness
for the people, Kay, was only an inspector of electric lights. Another, McGeachim was an electrical engineer in
the employ of the company. Another, Garcia, was an electrician of the company. These witness all confined
their testimony to technical descriptions of meters, their nature and function, of electric light wires, the writing
of defendant's house, the placing of a meter therein, the placing of the meter outside of the house in order to
detect, by comparing the readings of the two, whether the accused was actually using more electricity than the
house meter registered, the discovery that more electricity was being used than said meter registered, and of the
finding of a "jumper" in defendant's possession. One of these witnesses testified also that he had suspected for a
long time that the accused was "stealing" electricity and that later he was "positive of it."
In order to sustain a charge of larceny under section 517 of Penal Code, it is necessary to prove that there was a
taking without the consent of the owner. This is unquestioned. The question is: Has the prosecution proved that
fact? Has it proved that the electricity alleged to have been stolen was used without the consent of the
company? Has it proved that the accused did not have a right to use electricity whether it went through the
meter or not? Has it proved, even, that the accused did not have a right to use a "jumper?" Has it been proved
that the company has not been fully paid for all the electricity which defendant used, however obtained? Not
one of these facts has been proved. The only way to determine those questions was to ascertain the relations
which existed between the accused and the company at the time the electricity alleged to have been stolen was
used by the accused. There was certainly some relation, some contract, either express or implied, between the
company and the accused or the company would not have been supplying him the electric current. What was
that relation, that contract? No one can possibly tell by reading the record. There is not a single word in all the
evidence even referring to it. Not one of the people's witnesses mentioned it. Not one of them, very likely, knew
what it really was. The relation which a corporation bears to private persons for whom they are rendering
service is determined by the corporation itself through the acts of its officials, and not by its employees. While
an employee might, as the act of a servant, have caused the contract between the company and the accused to be
signed by the accused, it was nevertheless a contract determined and prepared by the company through its
officers and not one made by the employee; and unless the employee actually knew the terms of the contract
signed by the accused, either by having read it, if in writing, or by having heard it agreed upon, if verbal, he
would not be competent to testify to its terms except rendered so by admission of the party to be charged by it.
It nowhere appears that any of the witnesses for the prosecution had any knowledge whatever of the terms of
the contract between the company and the accused. It does not appear that any of them had ever seen it or heard
it talked about by either party thereto. The company has offered no testimony whatever on the matter. The
record is absolutely silent on that point.
This being true, how can we say that the accused committed a crime? How can we say that a given act is
criminal unless we know the relation of the parties to whom the act refers? Are we to presume an act wrong
when it may be right? Are we to say that the accused committed a wrong when we do not know whether he did
or not? If we do not know the arrangements under which the company undertook to furnish electricity to the
defendant, how do we know that the accused has not lived up to them? If we do not know their contract, how do
we know that the accused violated it?
It may be urged that the very fact that a meter was put in by the company is evidence that it was for the
company's protection. This may be true. But is it not just as proper to presume that it was put in for defendant's
protection also? Besides, it does not appear that the company really put in the matter, nor does not appear that
the company really put in the meter, nor does it even appear to whom it belonged. No more does it appear on
whose application it was put in. The witness who installed the meter in defendant's house did not say to whom it
belonged and was unable to identify the one presented by the prosecution on the trial as the one he installed. But
however these things may be, courts are not justified in "assuming" men into state prison. The only inferences
that courts are justified in drawing are those springing from facts which are not only proved but which are of
themselves sufficient to warrant the inference. The mere fact, it is a fact, that the company placed a meter in
defendant's house is not sufficient to sustain the conclusion in a criminal case that the defendant did not have
the right to use electricity which did not have the right to use electricity which did not pass through the meter.
Much less would it warrant the inference that, in so using electricity, the defendant feloniously and criminally
took, sole, and carried it away without the consent of the company. An accused is presumed innocent until
contrary is proved. His guilt must be established beyond a reasonable doubt. It is incumbent on the state to
prove every fact which is essential to the guilt of the accused, and to prove every such fact as though the whole
issue rested on it. The evidence of the prosecution must exclude every reasonable hypothesis of innocence as
with his guilt, he can not be convicted.
But what was the necessity of all this uncertainty? What was the force which prevented the company from
proving clearly and explicitly the contract between itself and the accused? What prevented it from proving
clearly, explicitly, and beyond all cavil that the electricity was taken (used) without its consent? Why did not
some competent official testify? Why did the company stand by wholly silent? Why did it leave its case to be
proved by servants who were competent to testify, and who did actually testify, so far as legal evidence goes,
only in relation to technical matters relating to meters and electric currents? Why did the prosecution place upon
this court the necessity of deducing and inferring and concluding relative to the lack of consent of the company
when a single word from the company itself would have avoided that necessity? We have only one answer to all
these questions: We do not know.
In the case of Bubster vs. Nebraska (33 Neb., 663), the accused was charged with the larceny of buggy of the
value of $75. He was found guilty. On appeal the judgment of conviction was reversed, the court saying:
There are two serious objections to this verdict. First, the owner of the buggy, although apparently
within reach of the process of the court, was not called as a witness. Her son-in-law, who resided with
her, testifies that he did not give his consent, and very freely testifies that his mother-in-law did not. She
was within reach of the process of the court and should have been called as a witness to prove her
nonconsent.
The rule is very clearly stated in note 183, volume 1, Philips on Evidence (4th Am. ed.). A conviction of
larceny ought not to be permitted or sustained unless it appears that the property was taken without the
consent of the owner, and the owner himself should be called, particularly in a case like that under
consideration, when the acts complained of may be consistent with the utmost goodfaith. There is a
failure of proof therefore on this point.
In the case of State vs. Moon (41 Wis., 684), the accused was charged with the larceny of a mare. He was
convicted. On appeal the court reversed the judgment of conviction, saying:
In State vs. Morey (2 Wis., 494) it was held that in prosecutions of lacerny, if the owner of the property
alleged to have been stolen is known, and his attendance as a witness can be procured, his testimony that
the property was taken from him without his consent is indispensable to a conviction. This is upon the
principle that his testimony is the primary and the best evidence that the property was taken without his
consent, and hence, that secondary evidence of the fact cannot be resorted to, until the prosecution
shows it inability, after due diligence, to procure the attendance of the owner.
In volume 1, Phillips on Evidence (5th Am., ed., note 183 sec. 635), the author says:
In all cases, and especially in this, the lacerny itself must be proved by the evidence the nature of the
case admits. . . . This should be by the testimony of the owner himself if the property was taken from his
immediate possession, or if from the actual possession of another, though a mere servant or child of the
owner, that the immediate possession was violated, and this, too, without the consent of the person
holding it. Where nonconsent is an essential ingredient in the offense, as it is here, direct proof alone,
from the person whose nonconsent is necessary, can satisfy the rule. You are to prove a negative, and
the very person who can swear directly to the necessary negative must, if possible, always be produced.
(Citing English authorities.) Other and inferior proof cannot be resorted to till it be impossible to procure
this best evidence. If one person be dead who can swear directly to the negative, and another be alive
who can yet swear to the same thing, he must be produced. In such cases, mere presumption, prima facie
or circumstantial evidence is secondary in degree, and cannot be used until all the sources of direct
evidence are exhausted.
I quote these authorities not because I agree with the doctrine as therein set forth. I quote them because there is
a principle inherent in the doctrine laid down which is recognized by all courts as having value and effect. It is
this: Failure to call an available witness possessing peculiar knowledge concerning facts essential to a party's
case, direct or rebutting, or to examine such witness as to facts covered by his special knowledge, especially if
the witness be naturally favorable to the party's contention, relying instead upon the evidence of witnesses less
familiar with the matter, gives rise to an inference, sometimes denominated a strong presumption of law, that
the testimony of such uninterrogated witness would not sustain the contention of the party. Where the party
himself is the one who fails to appear or testify, the inference is still stronger. The nonappearance of a litigant or
his failure to testify as to facts material to his case and as to which he has especially full knowledge creates an
inference that he refrains from appearing or testifying because the truth, if made to appear, would not aid his
contention; and, in connection with an equivocal statement on the other side, which if untrue could be
disapproved by his testimony, often furnishes strong evidence of the facts asserted. As to this proposition the
authorities are substantially uniform. They differ only in the cases to which the principles are applied. A
substantially full list of the authorities is given in 16 Cyclopedia of Law and Procedure (pp. 1062 to 1064,
inclusive) from which the rules as stated above are taken.
This court has recognized the value of this principle and has permitted it strongly to influence its view of the
evidence in certain cases. In the case of United States vs. Magsipoc (20 Phil. Rep., 604) one of the vital facts
which the prosecution was required to establish in order to convict the accused was that a certain letter which
the accused alleged he mailed to his daughter, who was attending a boarding school in Iloilo, and which the
daughter testified she had received, had not really been sent by the accused and received by the daughter but,
instead, had been purloined by him from the post-office after he had duly placed it therein and after it had been
taken into custody and control of the postal authorities. It was conceded that the directress of the boarding
school which the daughter was at the time attending knew positively whether the daughter was at the time
attending knew positively whether the daughter had received the letter in question or not. This court held that, in
weighing the evidence, it would take into consideration the failure of the prosecution to produce the directress
of the school as a witness in the case, she being the only person, apart from the daughter herself, who really
knew the fact.
Another those cases was that of U. S. vs. Casipong (20 Phil. Rep., 178) charged with maintaining a concubine
outside his home with public scandal. To prove the scandalous conduct charged and its publicity, the
prosecution introduced testimony, not of witnesses in the vicinity where the accused resided and where the
scandal was alleged to have occurred, but those from another barrio. No Witness living in the locality where the
public scandal was alleged to have occurred was produced. This court, in the decision of that case on appeal,
allowed itself, in weighing the evidence of the prosecution, to be strongly influenced by the failure to produce
as witnesses persons who, if there had really been public scandal, would have been the first, if not the only ones,
to know it. The court said:
In this case it would have been easy to have submitted abundant evidence that Juan Casipong forsook
his lawful wife and lived in concubinage in the village of Bolocboc with his paramour Gregoria Hongoy,
for there would have been an excess of witnesses to testify regarding the actions performed by the
defendants, actions not of isolated occurrence but carried on for many days in slight of numerous
residents scandalized by their bad example. But it is impossible to conclude from the result of the trial
that the concubinage with scandal charged against the defendants has been proved, and therefore
conviction of the alleged concubine Gregoria Hongoy is not according to law.
In the case at bar the question of the consent of the company to the us of the electricity was the essence of the
charge. The defendant denied that he had taken the electricity without the consent of the company. The
prosecution did not present any officer of the corporation to offset this denial and the company itself, although
represented on the trial by its own private counsel, did not produce a single witness upon that subject.
In the case of Standard Oil Co. vs. State (117 Tenn., 618), the court (p.672) said:
But the best evidence of what his instructions to Holt were and the information he had of the transaction
at the time was made were the letters which he wrote to Holt directing him to go to Gallatin, and the
daily and semi-weekly reports made to him by Holt and Rutherford of what was done there, which were
not produced, although admitted to be then in his possession. He was aware of the value of such
evidence, as he produced a copy of his letter to Holt, condemning the transaction, as evidence in behalf
of the plaintiffs in error. The presumption always is that competent and pertinent evidence within the
knowledge or control of a party which he withholds is against his interest and insistence. (Dunlap vs.
Haynes, 4 Heisk., 476; Kirby vs. Tallmadge, 160 U. S., 379, 16 Sup. Ct., 349, 40 L. ed., 463; Pacific
Constr. Co. vs. B. W. Co., 94 Fed,, 180, 36 C. C. A., 153)
In the case of Succession of Drysdale (127 La., 890), the court held:
When a will presented for probate is attacked on the ground that it is a forgery, and there are pertinent
facts relating to the will in the possession of the proponent, and he repeatedly fails to testify when his
testimony could clear up many clouded and doubtful things, his failure to testify casts suspicion upon
the will, especially when the one asking for the probate of the will is a principal legatee.
In the case of Belknap vs. Sleeth (77 Kan., 164), the court (p. 172) said:
What effect should such conduct have in the consideration of a case, where the successful party thus
living beyond the jurisdiction of the court has refused to testify in a material matter in behalf of the
opposing party? It must be conceded that the benefit of all reasonable presumptions arising from his
refusal should be given to the other party. The conduct of a party in omitting to produce evidence
peculiarly within his knowledge frequently affords occasion for presumptions against him. (Kirby vs.
Tallmadge, 160 U. S., 379, 16 Sup. Ct., 349, 14 L. Ed., 463.) This rule has been often applied where a
party withholds evidence within his exclusive possession and the circumstances are such as to impel an
honest man to produce the testimony. In this case the witness not only failed but refused to testify
concerning material matters that must have been within his knowledge.
In the case of Heath vs. Waters (40 Mich., 457), it was held that:
It is to be presumed that when a witness refuses to explain what he can explain, the explanation would
be to his prejudice.
In case of Frick vs. Barbour (64 Pa. St., 120, 121), the court said:
It has been more than once said that testimony in a case often consists in what is not proved as well as in
what is proved. Where withholding testimony raises a violent presumption that a fact not clearly proved
or disproved exists, it is not error to allude to the fact of withholding, as a circumstance strengthening
the proof. That was all that was done here.
In the case of Funda vs. St. Paul City Railway Co. (71 Minn., 438), the court held:
The defendant having omitted to call its motorman as a witness, although within reach and available, the
court was, under the circumstances, justified in instructing the jury that, in weighing the effect of the
evidence actually introduced, they were at liberty to presume that the testimony of the motorman, if
introduced, would not have been favorable to the cause of defendant.
In the case of Gulf, C. & S. F. Ry. Co. vs. Ellis (54 Fed. Rep., 481), the circuit court of appeals held that:
Failure to produce the engineer as a witness to rebut the inferences raised by the circumstancial evidence
would justify the jury in assuming that his evidence, instead of rebutting such inference, would support
them.
In Wigmore on Evidence (vol. 1, sec. 285), it is said:
The consciousness indicated by the conduct may be, not an indefinite one affecting the weakness of the
cause at large, but a specific one concerning the defects of a particular element in the cause. The failure
to bring before the tribunal some circumstances, document, or witness, when either the party himself or
his opponent claims that the facts would thereby be elucidated, serves to indicate, as the most natural
inference, that the party fears to do so, and this fear is some evidence that circumstances or document or
witness, if brought, would have exposed facts unfavorable to the party. These inferences, to be sure,
cannot fairly be made except upon certain conditions; and they are also open always to explanation by
circumstances which make some other hypothesis a more natural one than the party's fear of exposure.
But the propriety of such an inference in general is not doubted. The nonproduction of evidence that
would naturally have been produced by an honest and therefore fearless claimant permits the inference
that its tenor is unfavorable to the party's cause. . . .
Continuing this same subject the same author says:
At common law the party-opponent in a civil case was ordinarily privileged from taking the stand (post,
sec. 2217); but he was also disqualified; and hence the question could rarely arise whether his failure to
testify could justify any inference against him. But since the general abolition of both of the privilege
and the disqualification (post, secs. 2218, 577), the party has become both competent and compellable
like other witnesses; and the question plainly arises whether his conduct is to be judged by the same
standards of inference. This question naturally be answered in the affirmative. . . . (See Aragon Coffee
Co., vs. Rogers, 105 Va., 51.)
As I stated at the outset, I have been unable to find in the record of this case any proof of legal value showing or
tending to show that the electricity alleged to have been stolen was taken or used without the consent of the
company. The defendant, therefore, should be acquitted.
There are other reasons why I cannot agree to the conviction of the accused. Even though the accused to be
found to have committed the acts charged against him, it stands conceded in this case that there is a special law
passed particularly and especially to meet cases of this very kind, in which the offense is mentioned by name
and described in detail and is therein made a misdemeanor and punished as such. It is undisputed and admitted
that heretofore and ever since said act was passed cases such as the one at bar have uniformly and invariably
been cognized and punished under said act; and that this is the first attempt ever made in these Islands to
disregard utterly the plain provisions of this act, and to punish this class of offenses under the provisions of
Penal Code relating to larceny. The applicability of those provisions is, to say the very least, extremely
doubtful, even admitting that they are still in force. Even though originally applicable, these provisions must
now be held to be repealed by implication, at least so far as the city of Manila is concerned, by the passage of
the subsequent act defining the offense in question and punishing it altogether differently.
Moreover, I do not believe that electricity, in the for in which it was delivered to the accused, is susceptible of
being stolen under the definition given by the law of these Islands to the crime of larceny.
Concisely, then, I dissent because (a) this court, by its decision in this case, has, in my judgment, disregarded
the purpose of the Legislature, clearly expressed; because (b) it has applied a general law, of at least very
doubtful application, to a situation completely dealt with, and admittedly so by a later statute conceived and
enacted solely and expressly to cover that very situation; because (c) the court makes such application in spite of
the fact that, under the general law, if it is applicable, the crime in hand is a felony while under the later statute
it is only a misdemeanor; because (d), in my judgment, the court modifies the definition given by the
Legislature to the crime of lacerny, which has been the same and has received the same interpretation in this
country and in Spain for more than two centuries; because (e) the decision disregards, giving no importance to a
positive statute which is not only the last expression of the legislative will on the particular subject in hand, but
was admittedly passed for the express purpose of covering the very situation to which the court refuses to apply
it. While the statute referred to is an act of the Municipal Board of the city of Manila, this court has held in a
recent case that said board was authorized by the legislature to pass it. Therefore it is an Act of the Legislature
of the Philippine Islands.
In this dissent I shall assert, and, I think, demonstrate three propositions, to wit:
First. That an electric current is not a tangible thing, a chattel, but is a condition, a state in which a thing or
chattel finds itself; and that a condition or state can not be stolen independently of the thing or chattel of which
it is a condition or state. That it is chattels which are subjects of lacerny and not conditions.
Second. That, even if an electric current is a tangible thing, a chattel, and capable of being stolen, in the case at
bar no electric current was taken by the defendant, and therefore none was stolen. The defendant simply made
use of the electric current, returning to the company exactly the same amount that he received.
Third. That, even if an electric current is a tangible thing, a chattel, and capable of being stolen, the contract
between the company and the defendant was one for use and not for consumption; and all the defendant is
shown to have done, which is all he could possibly have done, was to make use of a current of electricity and
not to take or consume electricity itself .
I shall therefore maintain that there is no lacerny even though the defendant committed all the acts charged
against him.
In discussing the question whether, under the law of the Philippine Islands, an electric current is the subject of
larceny, I shall proceed upon the theory, universally accepted to-day, that electricity is nothing more or less than
energy. As Mr. Meadowcroft says in his A B C of Electricity, indorsed by Mr. Edison, "electricity is a form of
energy, or force, and is obtained by transforming some other form of energy into electrical energy."
In this I do not forget the theory of the "Electron" which is now being quietly investigated and studied, which
seems to tend to the conclusion that there is no difference between energy and matter, and that all matter is
simply a manifestation of energy. This theory is not established, has not been announced by any scientist as
proved, and would probably have no effect on the present discussion if it were.
Based on this accepted theory I draw the conclusion in the following pages that electricity is not the subject of
larceny under the law of the Philippine Islands.
Partida 3, title 29, law 4, thus defines "cosas muebles:"
The term muebles is applied to all the things that men can move from one place to another, and all those
that can naturally move themselves: those that men can move from one place to another are such as
cloths, books, provisions, wine or oil, and all other things like them; and those that can naturally move
themselves are such as horses, mules, and the other beast, and cattle, fowls and other similar things.
Partida 5 title 5, law 29, contains the following:
But all the other things which are muebles and are not annexed to the house or do not appeartain thereto
belong to the vendor and he can take them away and do what he likes with them: such are the
wardrobes, casks and the jars not fixed in the ground, and other similar things.
Article 517 of the Penal Code, in that portion defining larceny, as charged against the accused in the case at bar,
reads:
ART. 517. The following are guilty of theft:
1. Those who, with intent of gain and without violence or intimidation against the person or force
against things, shall take another's personal property (cosas muebles) without the owner's consent.
This article of the Penal Code, as is seen, employs precisely the words defined in the Partidas. The definition of
the word is clear in the law as written. It is also clear in the law as interpreted. I have not been able to find a
writer on Spanish or Roman criminal law who does not say clearly and positively that the only property subject
to lacerny is tangible movable chattels, those which occupy space, have three dimensions, have a separate and
independent existence of their own apart from everything else, and can be manually seized and carried from one
place to another. This was the unquestioned theory of the Roman criminal law and it is the undoubted and
unquestioned theory of the Spanish criminal law. Nor do I find a writer or commentator on the Spanish or
Roman Civil Law who does not define a cosa mueble in the same way.
One of the leading commentators of Spain on criminal law writes thus concerning the property subject to
robbery and lacerny:
Personal property belonging to another. If robbery consists in the taking of a thing for the purpose
and by the means indicated in the article in question, it follows from the very nature of this class of
crimes, that only personal or movable property can be the subject thereof, because none but such
property can be the subject of the correctatio of the Romans; "Furtum since contrectatione non fiat,"
says Ulpian. The abstraction, the rapine, the taking, and all the analogous terms and expressions used in
the codes, imply the necessity that the things abstracted or taken can be carried from one place to
another. Hence the legal maxim: Real property "non contractantur, sed invaduntur." (6 Groizard, p. 47)
The act of taking is what constitutes the contrectatio and the invito domino which all the great ancient
and modern jurists consider as the common ingredient (in addition to the fraudulent intention of gain), of
the crimes of robbery and theft. From what has been said it follows that the taking, the act of taking
without violence or intimidation to the persons, or force upon the things, for the purpose of gain and
against the will of the owner, is what determines the nature of the crime of theft as defined in paragraph
1 of this section. (6 Groizard, pp. 261, 262.)
The material act of taking is, therefore, an element of the crime which cannot be replaced by any other
equivalent element. From this principle important consequences follow which we need not now stop to
consider for the reason that in speaking of the crime of robbery we have already discussed the subject at
great length. Immovable and incorporeal things cannot be the subject of the theft for the reason that in
neither the one or the other is it possible to effect the contrectatio, that is to say, the material act of
laying hands on them for the purpose of removing the same, taxing the same or abstracting the same.
Hence the legal maxims: "Furtum non committitur in rebus immobilibus and Res incorporales nec tradi
possideri possunt, ita contectavit nec aufferri." (6 Groizard, p. 266.)
Criticising an opinion of the supreme court of Spain which held that illuminating gas was a subject of lacerny,
the same writer says:
The owner of a certain store who had entered into a contract with a gas company whereby he
substantially agreed to pay for the consumption of the amount of gas which passed through a meter,
surreptitiously placed a pipe which he connected with the branch from the main pipe before it reached
the meter and used the same for burning more lights than those for which he actually paid. The supreme
court of Madrid convicted the defendant of the crime of estafa but the supreme court of Spain reversed
the judgment, holding that he should be convicted of theft. The only reason which the supreme court had
for so deciding was that the owner of the store had taken personal property belonging to another without
the latter's consent, thereby committing the crime not of estafa but of consummated theft. But in our
judgment, considering the sense and import of the section under consideration, it cannot be properly said
that the owner of the store took the gas because in order to do this it would have been necessary that the
said fluid were capable of being taken or transported, in other words, that the contrectatio, the meaning
of which we have already sufficiently explained, should have taken place.
Gas is not only intangible and therefore impossible of being the subject of contrectatio, of being seized,
removed, or transported from one place to another by the exercise of the means purely natural which
man employs in taking possession of property belonging to another, but, by reason of its nature, it is
necessary that it be kept in tank, or that it be transmitted through tubes or pipes which by reason of their
construction, or by reason of the building to which the same may be attached, partake of the nature of
immovable property. There is no means, therefore, of abstracting gas from a tank, from a tunnel or from
a pipe which conveys the fluid to a building, for the purpose of being consumed therein, unless the
receptacle containing the same is broken, or the tank or pipe bored, and other tubes or pipes are
connected therewith at the point of the opening or fracture by means of which the gas can conveyed to a
place different from that for which it was originally intended.
This exposition, interpretation, if you choose to call it such, has a further foundation in our old laws
which have not been changed but rather preserved in the definition of movable an immovable property
given by the Civil Code. According to Law, I Title XVII, Partida II, personal property means those
things which live and move naturally by themselves, and those which are neither living nor can naturally
move, but which may be removed; and Law IV, Title XXIX, Partida III, defines personal property as
that which man can move or take from one place to another, and those things which naturally by
themselves can move. Finally, corporeal things, according to Law I, Title III, Partida III, are those which
may be the subject of possession with the assistance of the body, and incorporeal those which cannot be
physically seized, and cannot be properly possessed. From these definitions it follows that unless we do
violence to the plain language of these definitions, it would be impossible to admit that gas is a
corporeal thing, and much less that it is movable property. (6 Groizard, pp. 268, 269.)
If the holding that gas, which is unquestionably a physical entity having a separate and independent existence
and occupying space, has approached the verge of unstealable property so closely that the ablest of Spain
commentators believes that there is grave danger of the complete destruction of the ancient legislative definition
of stealable property by judicial interpretation, what would be said in regard to a decision holding that an
electric current is a subject of lacerny?
It may be well to add just here, although it may be somewhat out of its regular order, what the author above
quoted regards was the crime actually committed in the case he was discussing. He says:
For us, for the reasons hereinbefore set out, it would be more in harmony with the principles and legal
texts which determine the nature of the crimes of theft and estafa, to assign the latter designation to the
fraudulent act which he have heretofore examined and which substantially consists in the alteration, by
means of a fraudulent method, of the system established by an agreement to supply a store with
illuminating gas and to determine the amount consumed for lighting and heating and pay its just value.
We respect, however, the reasons to the contrary advanced in the hope that the supreme court in
subsequent judgments will definitely fix the jurisprudence on the subject.
Nor can the abusive use of a thing determine the existence of the crime under consideration. A bailee or
pledgee who disposes of the thing, bail or pledge entrusted to his custody for his own benefit is not
guilty of lacerny for the reason that both contracts necessarily imply the voluntary delivery of the thing
by the owner thereof and a lawful possession of the same prior to the abusive use of it.
Not even a denial of the existence of the bailment or contract of pledge with of gain constitutes the
crime of lacerny for the reason that the material act of taking possession of the property without the
consent of the owner is lacking. (6 Groizard, p. 269.)
That under the Roman and Spanish law property to be the subject of lacerny must be a tangible chattel which
has a separate independent existence of its own apart from everything else, which has three dimensions an
occupies space so that it may of itself be bodily seized and carried away, is not an open question. That that was
also the doctrine of the common law is equally beyond question.
In the consideration of this case the great difficulty lies in confusing the appearance with the thing, in
confounding the analogy with the things analogous. It is said that the analogy between electricity and real
liquids or gas is absolutely complete; that liquids and gases pass through pipes from the place of manufacture to
the place of use; and the electric current, in apparently the same manner, passes through a wire from the plant to
the lamp; that it is measured by a meter like liquids and gas; that it can be diverted or drawn from the wire in
which the manufacturer has placed it, to the light in the possession of another; that a designing and
unscrupulous person may, by means of a wire surreptiously and criminally transfer from a wire owned by
another all the electricity which it contains precisely as he might draw molasses from a barrel for his personal
use. And the question is triumphantly put, "how can you escape the inevitable results of this analogy?" The
answer is that it is an analogy and nothing more. It is an appearance. The wire from which the electricity was
drawn has lost nothing. It is exactly the same entity. It weighs the same, has just as many atoms, arranged in
exactly the same way, is just as hard and just as durable. It exactly the same thing as it was before it received
the electricity, at the time it had it, and after it was withdrawn from it. The difference between a wire before and
after the removal of the electricity is simply a difference of condition. Being charged with electricity it had a
quality or condition which was capable of being transferred to some other body and, in the course of that
transfer, of doing work or performing service. A body in an elevated position is in a condition different from a
body at sea level or at the center of the earth. It has the quality of being able to do something, to perform some
service by the mere change of location. It has potential energy, measured by the amount of work required to
elevated it. The weight or monkey of a pile driver is the same weight when elevated 50 feet in air as it is when it
lies on top of the pile 50 feet below, but it has altogether a different quality. When elevated it is capable of
working for man by driving a pile. When lying on top of the pile, or at sea level, it has no such quality. The
question is, "can you steal that quality?"
Two pile drivers, owned by different persons, are located near each other. The one owner has, by means of his
engine and machinery, raised his weight to its highest elevation, ready to deliver a blow. While this owner is
absent over night the owner of the other pile driver, surreptiously and with evil design and intent, unlocks the
weight and, by means of some mechanical contrivance, takes advantage of its fall in such a way that the energy
thus produced raised the weight of his own pile driver to an elevation of forty feet, where it remains ready,
when released, to perform service for him. What has happened? Exactly the same thing, essentially, as
happened when the electric charge of one battery is transferred to another. The condition which was inherent in
the elevated weight was transferred to the weight which was not elevated; that is, the potential energy which
was a condition or quality of the elevated weight was by a wrongful act transferred to another. But was that
condition or quality stolen in the sense that it was a subject of lacerny as that crime is defined the world over?
Would the one who stole the battery after it had been elevated to the ceiling, or the weight of the pile driver
after it had been elevated 50 feet in the air, be guilty of a different offense than if he stole those chattels before
such elevation? Not at all. The weight elevated had more value, in a sense, than one not elevated; and the
quality of elevation is considered only in fixing value. It has nothing whatever to do with the nature of the
crime committed. It is impossible to steal a quality or condition apart from the thing or chattel of which it is a
quality or condition of a thing affects the value of the thing. It is impossible to steal value. The thing, the chattel
is that which is stolen. Its quality or condition is that which, with other circumstances, goes to make the value.
A mill owner has collected a large amount of water in a dam at such an elevation as to be capable of running his
mill for a given time. A neighboring mill owner secretly introduces a pipe in the dam and conveys the water to
his own mill, using it for his own benefit. He may have stolen the water, but did he steal the head, the elevation
of the water above the wheel? The fact that the water had a head made it more valuable and that fact would be
taken into consideration in fixing the penalty which ought to be imposed for the offense; but it has nothing
whatever to do with determining the nature of the offense of which the man would be charged.
Larceny cannot be committed against qualities or conditions. It is committed solely against chattels, tangible
things. A given chattel is a compromise result of all its properties, qualities, or conditions. None of the qualities
which go make up the complete thing is the subject of larceny. One cannot steal from a roof the quality of
shedding rain, although he may bore it full of holes and thus spoil that quality; and this, no matter how much he
might be benefit thereby himself. If, in a country where black horses were very dear and white horses very
cheap, one, by a subtle process, took from a black horse the quality of being black and transferred that quality to
his own horse, which formerly was white, thereby greatly increasing its value and correspondingly decreasing
the value of the other horse which by the process was made white, would he be guilty of larceny? Would he be
guilty of larceny who, with intent to gain, secretly and furtively and with the purpose of depriving the true
owner of his property, took from a bar of steal belonging to another the quality of being hard, stiff and
unyielding and transferred that quality to a willow wand belonging to himself? Is he guilty of larceny who, with
intent to defraud and to benefit himself correspondingly, takes from a copper wire belonging to another the
quality of being electrified and transfers that quality to an electric light? An electric current is either a tangible
thing, a chattel of and by itself, with a perfect, separate and independent existence, or else it is a mere quality,
property or condition of some tangible thing or chattel which does have such an existence. The accepted theory
to-day is, and it is that which must control, that electricity is not a tangible thing or chattel, that it has no
qualities of its own, that it has no dimensions, that it is imponderable, impalpable, intangible, invisible,
unweighable, weightless, colorless, tasteless, odorless, has no form, no mass, cannot be measured, does not
occupy space, and has no separate existence. It is, must be, therefore, simply a quality, a condition, a property
of some tangible thing or chattel which has all or most of those qualities which electricity has not. Being merely
the quality of a thing and not the thing itself , it cannot be the subject of larceny.
To repeat" As we know it, electricity is nothing more or less than a condition of matter. It has no existence apart
from the thing of which it is condition. In other words, it has no separate, independent existence. It is
immaterial, imponderable, impalpable, intangible, invisible, weightless and immeasurable, is tasteless, odorless,
and colorless. It has no dimensions and occupies no space. It is the energy latent in a live herself is the power
potential in the arm of a laborer. It is the force stored in the wound-up spring. It is an agency, not a "cosa
mueble." It is a movement and not a chattel. It is energy and not a body. It is what the laborer expends and not
what he produces. It is strength striped by an unknown process from arms of men and atoms of coal, collected
and marshalled at a given place under the mysterious leash of metal, ready to spring like a living servant to the
work of its master. It is not a chattel, it is life. It is as incapable of being stolen, by itself, as the energy latent in
a live horse. It is as impossible to steal an electric current as it is to steal the energy hidden in a wound-up watch
spring. One may steal the horse and with it the energy which is a quality of the horse. One may steal a watch
and with it the energy which is a property of the wound-up. But can we say that one can steal the energy in the
watch spring separate from the spring itself, or electricity apart from the wire of which it is a quality or
condition?
A laborer was stored up in his muscles the capacity to do a day's work. He has potential energy packed away in
little cells or batteries all through his body. With the proper mechanism he can enter a room which it is desired
to light with electricity and, by using the stored-up energy of his body on the mechanism, light the room by
transforming the energy of his muscles into the electricity which illuminates the room. We have, then, a laborer
who, by moving his hands and arms in connection with the appropriate machinery, is able to light the room in
which he is at the time. What causes the light? The energy in the laborer's muscles is transformed into light by
means of the intermediate phenomenon known as electricity. As a concrete result, we have the energy in the
laborer's muscles transmuted into light. Now, is the energy passing through the wire, more capable of being
stolen than the energy in the muscles of the laborer? Or is the light or heat any more or less a subject of larceny
than the electric current of which they are a manifestation? Could the energy which performed the day's work be
stolen? Could the electric current which lighted the room be stolen apart from the wire of which it was a
quality? One might kidnap the laborer and with him the energy which constitutes his life; but can we say that
the energy, of itself, is the subject of separate larceny? But, it the laborer's energy cannot be stolen while it
resides in and is a quality of his arm, can the same energy any more be stolen when it resides in and is a quality
of a wire in the form of electricity? If so, just where is the dividing line, where is the point at which this kinetic
energy ceases to be incapable of being separately stolen and becomes a subject to theft? Is it at the crank by
which the laborer turns the machine? Is it at the armature, the conductor, the fields coils, the field magnet, the
commutator, the brushes, the driving pulley, or the belt tightener? Is it where the current enters what is called
the electric-light wire, or is it where it enters the bulb or arc and produces the light? In other words, at what
point does the untealable laborer's energy become stealable electric energy?
An electric-light wire placed in a house for the purpose of furnishing light for the same has its precise
counterpart in a laborer placed therein for the same purpose. Like the laborer, it is filled with energy which will,
when released, perform the service intended. The wire is simply a means of transmitting the energy of the
laborer's muscles, and that stored in tons of coal which he handles, from the electric plant or factory to the house
where the light is produced. The wire simply avoids the necessity of the laborer being in the very house where
he produces the light. Instead of being there, he, by means of the so-called electric-light wire, is located at a
distance, but produces the light in exactly the same way, transmitting his energy for that purpose. The wire
stands in exactly the same relation to the person in whose house it is put as would a laborer who had been sent
to that house to render services. The energy may be diverted from the purpose for which it was intended, or a
wrong account given of the amount of work performed by that energy; but it is impossible to steal, take and
carry the energy away. One cannot steal days' works; and that is all an electric current is. One may use those
days' works in hoeing corn when it has been agreed that they shall be used in picking cotton; but that is not
larceny of the days' works, as larceny has been defined by the jurisprudence of every country, Or, one may
report to the owner of those days' works that he had used three of them when in reality he used thirty and pay
him accordingly, but that is not larceny of the twenty-seven.
But, it is argued, the illustration is not a fair one; energy in a laborer's arm or in the muscles of a horse or in a
wound-up spring is, so far as its capability of being stolen is concerned, quite different from energy which has
been separated from the arms of the laborer or the muscles of the horse and driven through a wire; from such
wire electricity may be drawn like water from a barrel; and while it is impossible to steal the energy of a man or
a horse because it would destroy the life of the animal, an entirely different question is presented when the
energy has actually been separated from those animals and confined in a wire.
This argument has several fundamental defects. In the first place, it assumes the whole question at issue. By
asserting that electricity is separable from the object of which it is a quality or state is to assume that electricity
is a material thing, which the real question to be resolved. In the second place, if electricity is in the real sense
of that term, separable from the object to which it belongs, then it must be admitted that it is capable of separate
and independent existence apart from any other object. This is not so. It is not only admitted but contended by
every scientist who has touched this subject that electricity is incapable of an independent existence apart from
some given material object. In the third place, this argument overlooks the fact, even if we assume that it can be
separated, that the thing when separated is not the same thing that it was before separation; in other words,
when the so-called separation occurs there is not only a transference of energy from the horse to the battery but
there is also a transformation. In the horse it is muscular energy. In the wire it is electrical energy. In the horse
it is potential. In the wire kinetic. It is not the same thing in the wire that it was in the horse. In the fourth place,
the argument makes the stealability of a thing depend not on its nature but on where it is located. This is an
assumption wholly unwarranted and impossible under the law. To say that whether or not a thing is stealable
depends not on its nature but on where it is located is absurd. A diamond ring in a burglar-proof safe is as much
a subject of larceny, under the definition of the law, as if it lay in an open showcase. If energy is stealable at all,
and it must be remembered that I am proceeding, as we must necessarily proceed upon the accepted theory that
electricity is nothing more or less than energy, it is so by reason of its nature and by reason of its residing in a
battery rather than in a horse; and if it is stealable by virtue of its nature it can be stolen from the horse as well
as from the battery or wire. A thing is subject to larceny because, and only because, it is a cosa mueble, not
because it is inside a horse, a wire or a safe. If it is a cosa mueble it is the subject of larceny although it be
located on the moon; and if it is not a cosa mueble it is not subject to lacerny although it be placed in a den of
thieves. The difficulty or ease of getting at a thing has nothing whatever to do with its stealability. In the fifth
place, this argument overlooks the very important fact, to be dealt with more at length later, that the electric
current used by the accused was returned to the company, after use, absolutely undiminished in quantity.
What, then, is the difference between corn, for example, and an electric current? It is this. One is a cosa mueble
while the other is not; one is produced by a wholly different process from the other and from wholly different
materials, if we may call materials those changes which result in the immaterial thing called an electric current;
in the case of corn we deal not with the quality or energy of corn, but with corn as a composite and concrete
result of all its qualities and uses; we deal with a tangible thing, a chattel, and not with a condition or quality of
a tangible thing; we deal with things instead of ideas, with things which exist separate and independent and
which do not depend, as does electricity, wholly upon some body not only for the capability of manifesting its
existence, but also for very existence itself ; because we deal with something which changes its form but never
its nature as a physical entity. It is always a chattel, a tangible thing, a cosa mueble.
On the other hand, in the case of the electric current we deal not with a thing, a chattel a cosa mueble, but with a
condition or quality, a property of a cosa mueble; with an idea which always, before it has any significance of
meaning whatever, associates itself with an entity, a body or chattel, as a characteristic or quality of such body
or chattel; with lines of force which are merely and solely a quality, a property, a characteristic of the magnet,
instead of which grains of corn which are absolute entities, independent of and apart from everything else, and
not mere characteristic or qualities of some entity of body which does not exist as an absolute physical entity in
itself; with the horse and the violet and not their perfume; with the lily and not its beauty; with the clouds and
not their color; with entities and not accidents; with realities and not the imponderable, impalpable ideas and
qualities which make up the reality.
As he already been said, the difficulty in the elucidation of the question comes from the confusion of qualities
with things, of appearances with realities. Apparently an electric current does things. It produces phenomena.
It, therefore, appears to be something. But it must not be forgotten that many times appearances are deceitful.
They do not always insure realities. It is not judicial to say that, because a thing looks so, it is so. It is not
judicial to say that, simply because it looks as if one committed larceny, therefore he is guilty of larceny. Before
we may legally convict one of larceny, we must know exactly what he did. Justice is not founded on guess work
nor on appearances. Men's right are preserved by definitions, and definitions are founded on facts, not fancies,
on realities, not appearances. Because, when one taps an electrically charged wire belonging to another and, by
means of a contrivance, transfers the charge to his own uses, it looks as if he was stealing something, is not
sufficient to convict him of larceny. We must first know what larceny is, as well as what an electric current is,
and what is meant by its use in producing light. To know what larceny is we must know what legislators and
judges during the development of jurisprudence have always said and agreed it is. In other words, we must
know its definition. It approaches tyranny to convict one of murder when is actually guilty of homicide only.
Yet the only thing which separates the two crimes is a definition. It is wrong to convict one of robbery who is
guilty only of larceny. Yet these two crimes are distinguished only by a definition. If, as in the case at bar,
whether or not one is declared a felon and is sent to prison for one year eight months and twenty-one days, is
forever disqualified from holding public office and of exercising the right of suffrage, or whether, instead, he is
declared guilty of a misdemeanor simply and punished lightly with no accompanying disqualifications, depends
upon whether he has committed larceny as defined by the Penal Code or whether he has merely violated a city
ordinance, the question whether he actually committed larceny or not begins to assume importance. It assumes
importance not only to him but to society as well. If a court to-day palpably modifies a definition in order to
convict an offender of larceny, how can society be assured that tomorrow the same court will not modify some
other definition to convict a citizen of treason? When definitions are destroyed no man is secure in his person or
his property. When men act on appearances instead of realities justice will be shortlived. A whale looks like a
fish, acts like a fish, swims like a fish and lives all its life in the water like a fish. But it is not a fish. It is an
animal. It is air-breathing, warm-blooded, and viviparous, and suckles its young. Now, if whether or not a whale
is a fish or an animal is the potent factor determining whether a man goes to state prison as a felon with all the
deplorable consequences resulting, or whether he is lightly sentenced as a mere misdemeanant, is it not of the
supremest importance to determine whether a whale is a fish or an animal? I am informed that it used to be a
common sight in The New York Zoological Gardens to see Mr. Crowley, the large and extremely intelligent
chimpanzee, dressed in faultless attire, sit at the table and take his food and wine like a gentleman. Children
believed him to be a man; and many intelligent grown people honestly believed that he was as much man as
chimpanzee. But if the officials of the city of New York had been indicted for kidnapping, based upon the
seizure and forcible detention of Mr. Crowley, would it not have been of the most solemn importance to them to
throw away appearances and determine accurately what Mr. Crowley really was? And in case of doubt as to
what he was, could they not justly have demanded the benefit of that doubt?
So, where one who diverted an electric current has been accused by reason thereof of the crime of larceny,
which crime, it being admitted, can be committed only against tangible things, chattels, is it not of the very
greatest importance to determine what an electric current is, that is, whether it is a tangible thing, a chattel, or
not and what is the nature and meaning of the process by which it transforms itself into electric light? And in
case of doubt as what it is, cannot the accused justly demand the benefit of that doubt? To convict one of
larceny it is not sufficient to show merely that a wrongful act has been done; but it must appear that a wrongful
act of a particular kind has been committed. To constitute larceny it must be proved that the wrongful act was
committed against chattels, against tangible things, which were seized upon and asported by the one accused. In
the case at bar it has not been shown that the accused laid unlawful hands upon and asported a tangible thing, a
chattel, una cosa mueble. The very least that the prosecution must necessarily admit is that no one knows what
electricity really is.That being so, it seems to me to be a contradiction of terms to say that larceny, which must
admittedly be committed against a known thing, can be committed against a thing absolutely unknown. At least
it would seem that there is a grave doubt about the definition of larceny covering wrongful acts relative to an
electric current; and by reason of that doubt the conviction ought not to be sustained. And if it is true, as I have
herein attempted to show, that, under the prevailing and generally accepted theory, electricity is nothing more or
less than a condition, a quality, a property of some tangible thing, some chattel or body, then, certainly, the
charge of larceny must fall, as that crime can be committed only against the thing and not against a quality of
the thing.
Although the only question in this case is whether electricity is such a tangible thing, as can, under the
definition of lacerny contained in the Penal Code, be the subject of lacerny, nevertheless the court dismissed
that question substantially without discussion, the only reference thereto being the following:
I is true that electricity is no longer, as formerly, regarded by electricians as a fluid, but its
manifestations and effects, like those of gas, may be seen and felt. The true test of what is a proper
subject of lacerny seems to be not whether the subject is incorporeal, but whether it is capable of
appropriation by another than the owner.
xxx xxx xxx
Electricity, the same as gas, is a valuable article of merchandise, bought and sold like other personal
property and is capable of appropriation by another. So no error was committed by the trial court in
holding that electricity is a subject of lacerny.
The statement fail to touch the essential question involved and is wholly beside the point for the following
reasons, lying aside for the moment the nature of the act which the accused actually committed, assuming that
he committed the act described by the witnesses for the prosecution:
In the first place, as I understand the law , the statement is not quite correct that, in the Philippine Islands, "the
true test of what is a proper subject of lacerny seems to be not whether the subject is corporeal or incorporeal,
but whether it is capable of appropriation," unless the word "appropriation" has the same meaning as the word
"taking" used in the article of the Penal Code defining larceny. If the court intended to use the word
"appropriation" in the sense of "taking," then its use was unnecessary and may be misleading. If it did not so
intend, then the rule of law laid down by the court is not as I understand the law to be. An appropriation in
addition to or different from the taking is not an essential of lacerny anywhere. Wharton says that "lacerny id is
the fraudulent taking and carrying away of a thing without claim of right, with the intention of converting it to a
use other than that of the owner and without his consent." Article 517 of the Penal Code provides that they shall
be guilty of lacerny "who . . . take (toman) (not appropriate) another's cosas muebles (movable chattels) without
the owner's consent." Unless, therefore, the word "appropriation" is used in the same sense as "taking," the
paragraph in the court's decision above quoted does not contain a correct statement of the law. If it means the
same thing then the use of the word in no way enlightens the situation; for it is just as difficult to determine
whether a cosa mueble can be appropriated as it is to determine whether it can be taken. The question before us
is whether or not electricity is such a cosa mueble that it can be taken under the law of lacerny. To substitute in
that problem the word "appropriation" for the word "taking" does not laid in its solution in the slightest degree
when it is admitted that the word substituted means exactly the same thing as the word in the place of which it
was substituted.
An illustration will serve further to show the fallacy inherent in the statement quoted: Let us suppose that the
Penal Code defined larceny thus: "Any person who, with intent to gain, takes from another his cake without his
consent shall be guilty of lacerny." Let us suppose that some one should then defined the subject of lacerny as
anything, corporeal or incorporeal, which can be "appropriated." It would be obvious that such definition would
be erroneous, for the reason that, while pie is as capable of being "appropriated" as cake, still, under the terms
of the law, lacerny cannot be committed against pie. So that where the statute prescribes that the only thing
subject to larceny is a cosa mueble and the definition of the subject of larceny is claimed to be anything that can
be "appropriated," the answer at once is that such definition is inaccurate under the law as it may be too broad.
There may be some things which can be "appropriated" that are not cosas muebles.
In the second place, the quoted paragraph from the court's decision contains another error in the statement of the
law. I am of the opinion that, under the common law, and I am sure under the Spanish law, the statement that
"the true test of what is a proper subject of larceny seems to be not whether the subject is corporeal or
incorporeal . . ." is not accurate. Professor Beale, of Harvard, says in his article on larceny that
At common law the only subjects of larceny were tangible, movable chattels; something which could be
taken in possession and carried away, and which had some, although trifling, intrinsic value. Any
substance which has length, breadth, and thickness may be the subject of larceny. . . . A chose in action
being in its essence intangible could not be the subject of larceny at common law and the paper evidence
of the chose in action was considered merged with it.
Wharton says:
Choses in action, including bonds and notes of all classes according to the common law are not the
subject of larceny, being mere rights of action, having no corporeal existence; . . . .
I have already quoted at length from writers on the Spanish and Roman law to show that only tangible,
corporeal chattels can be the subject of larceny.
In the third place, by entirely begging the question, it leaves the whole proposition of whether electricity is a
subject of larceny not only unsolved but wholly untouched. As we have already seen, the word "appropriation"
nowhere appears in subdivision 1 of the Penal Code in connection with larceny. But if it were there used in
connection with such crime, it would necessarily refer entirely to a cosa mueble as that is the only thing under
that article which is the subject of larceny and, therefore of "appropriation." So that, before we can possibly
know whether a thing is capable of appropriation or not under the Penal Code, we must know whether that thing
is or is not a cosa mueble, as that, as we have said, is the only thing that can be taken or appropriated in
committing the crime of larceny. But, as is readily seen, that brings us right back to the question we started
with, What is a cosa mueble? It is more than apparent, therefore, that the quoted paragraph adds nothing
whatever to the discussion.
In the fourth place, the word "appropriation" in the paragraph quoted is there used with a complete
misapprehension of its meaning as found in the article of the Civil Code from which it is taken. Articles 334 and
335 of the Civil Code seek to divide all property capable of appropriation into classes. They read:
ART. 334. Son bienes immuebles:
1. Las tierras, edificios, caminos y construcciones de todo genero adheridas al suelo.
xxx xxx xxx
This article has ten subdivision dealing with all kinds of real property. It is not necessary to quote it all at this
time.
The English of the part quoted is as follows:
ART. 334. Real property consists of
1. Lands, buildings, roads, and constructions of all kinds adherent to the soil.
xxx xxx xxx
ART. 335. Se reputan bienes muebles los susceptibles de apropiacion no comprendidos en el capitulo
anterior, y en general todos los que se pueden transportar de un punto a otro sin menoscabo de la cosa
immueble a que estuvieron unidos.
This article in English is as follows:
ART. 335. Personal property is considered anything susceptible of appropriation and not included in the
foregoing chapter, and, in general, all that which can be carried from one place to another without
damage to the real estate to which it may be attached.
As is seen from the terms of the articles, two expressions are used in defining "bienes muebles," one of
elimination and other of description. The clause of elimination provides that all property subject to
appropriation shall be personal property except that property described in article 334. But this description was
found to be too broad. It included too much; and it was, therefore, necessary to make use of a limiting or
restricting clause in connection with the exclusion clause. To that the article further provided that appropriable
property shall be, "in general, all property which can be carried from one place to another." Under this
restricting clause, then, property to be personal property must be not only property not included in article 334
but also property which can be transported from one place to another. It must fulfill two requirements instead
of one. Besides, under the Spanish law, real property is as much subject to appropriation as personal property.
The word in Spanish seems to be broader than its legal use in English.
From the foregoing it is plain that property to be personal property must not only be susceptible of
appropriation, which the court in the quoted paragraph claims is the only requirement, but it must also be
capable of being of itself manually seized and transported from one place to another.
This presents the fourth reason why I say that the proposition laid down by the court in the quoted paragraph is
laid down under a complete misapprehension of the definition of una cosa mueble.
And finally, the word "appropriate" which the court has used is found in subdivision 2 of article 517 of the
Penal Code. It provides that those are guilty of larceny, "who, finding a thing (una cosa mueble) lost and
knowing its owner, appropriate it with intent to gain." The signification which the word here has is quite
different from that of the word "take" (toman) used in the first subdivision, being considerably limited in its
reach. As used here it is very like "convert." There is no removal from the possession of the owner, as in the
first paragraph. In the Penal Code the word "taking" means something more than "appropriation." It means a
removal from the possession of the owner a transportation or asportation of the thing from one place to
another from the possession of the owner to the possession of the theft; while "appropriation" means, rather,
the making use of the converting of the property after the taking is complete, or without any "taking" at all.
Under the Spanish law, while real estate is not, of course, subject to asportation, to "taking," and, therefore, not
the subject of larceny, it is subject to "appropriation." In the same way while electricity is, under the Spanish
and Roman laws, wholly incapable of seizure and asportation, of the manual "taking" the trespass essential to
larceny, it may possibly, in one or another sense of the word, be subject to appropriation." If at one extreme of
the scale of things, namely, real estate, the thing is too tangible to be stolen, is it not logical to expect that at the
opposite extreme the thing, electricity, for example, may be found too intangible to be stolen?
We have seen that, in all the history of Roman and Spanish jurisprudence, the crime of larceny has been
confined to tangible things, to chattels, which have an independent existence of their own; which have three
dimensions; which occupy space; which are capable of having a trespass committed against themselves; which
can be, of themselves and alone, taken physically into possession and carried away (asported).
We have that the fact that electricity is not such a thing is admitted by all.
And we have asked the question, "How, then, can the charge of larceny be sustained?"
But let as assume, for the sake of argument, that electricity is a tangible thing, like water, for instance. Still the
crime committed, if any, is not lacerny. Let us modify the illustration already given of the surreptitious removal
by A of water stored in a dam by B for milling purposes. Let us suppose that B has built a reservoir on an
elevated portion of his farm for the storage of water for irrigating purposes. He has built ditches or conduits
from the reservoir to every part of his farm to carry the water to the places needed. During the dry season while
B is engaged in irrigating his lands A surreptitiously and with intent to gain, constructs a small mill upon one of
the conduits and utilizes the rapid fall and swift flow of the water to operate his mill. For many months A thus
takes advantages of B's conduit and water and enriches himself by reason thereof. Did A commit the crime
larceny? The water, every drop of it, after being used by A, went to its work of irrigating the lands of B, pausing
only long enough to turn the water wheel of A's mill. Certainly then, no water was stolen. A simply made use of
the "head," the fall of the water. If anything was stolen it was the "head," the elevation of the water, the energy
developed by its passage from high to low ground. This is precisely what happens when an electric current
passes through an electric bulb or arc and produces light. Whether the current operates one light of one hundred,
the volume, the amperage, of the current, that is, the quantity of it, if we may use the term (and it must be
remembered that I am assuming electricity to be a tangible thing and will speak accordingly) remains exactly
the same. The volume or quantity of the electricity is just the same when it comes out of the hundredth light as it
was when it entered the first. While there is a difference between the current as it comes from the last light and
as it entered the first, it is simply one of condition, or state. All of the electricity is still there. Like the water; it
has simply lost its "head," its energy. It has been deprived of its pressure, of its electro-motive force; but it is the
same old electricity, in the same old quantity. So that, when the accused in the case at bar, by means of a
"jumper," burned thirty lights, instead of the three for which he paid the company, he was not stealing
electricity. Exactly as much electricity went back into the company's wire after serving the twenty-seven lights
for which he did not pay as came out of that wire in the first place. The defendant took nothing; he used
something. In larceny there must be a taking. Here there is only a use. Electricity is a utility, not a thing. The
company, in the cease at bar, lost no more than did the owner of the irrigation system in the example heretofore
given. As no water was taken, so no electricity was taken. The same amount of water remained to the owner
after its use by A. The same amount of electricity remained to the company after its use by the defendant.
The well-known Italian author, Avv. Umberto Pipia, in his very able work entitled "L' Electricita nel Diritto"
puts the question thus (translation of Mr. Percy R. Angell, Manila, 1911):
From the point of view of the jurist can electricity be stolen? A person connects a deflecting wire to the
main conduit of electricity; he thus makes a secondary circuit in which he introduces a resistance and
profits by the electro-motive power which is developed, to supply his lamps or put his motor in
movement. In such case can we apply article 402 of the Penal Code, which provides that whoever takes
possession of movable property of another in order to derive profit thereby, taking it from the place
where he finds it without the consent of the owner, is punished with reclusion up to three years?
The author then refers to the decisions of certain course of Europe which hold that electricity is stealable, and
continues:
The Roman court of cassation has lost sight of that fundamental principle of interpretation of law (a
principle which it ought to have had well in mind before applying to a new manifestations of force
legislative provisions enacted in view of totally different cases) by which penal laws do not extend
beyond the cases and the times in them expressed. Nulla poena sine lege, is the rule in terms of penal
law, unless we wish to bring about a deplorable confusion of powers, and the judiciary desires to usurp
the authority of the legislator. If in the written laws gaps or breaks are encountered, it is the duty of the
court to point them out to the legislator, to the end that he take the necessary measures; but it is not
lawful for him by analogous interpretation to apply a penal provision where such has not been explicitly
enacted.
In the unanimous opinion of jurist, two elements are necessary to constitute the crime of theft, legally
speaking; the first is the taking possession of the personal (movable) property of another, contrectatio,
and the taking away of the thing from the place where it is found without the consent of the person to
whom it belongs, ablatio.
Now we have conclusively shown that electric current is not a thing, but a state, a vibration following
certain converging waves. It can not therefore be taken possession of as the personal property of another.
A person who unlawfully uses electric current for his personal enjoyment places himself in a state of
unlawful enjoyment of a utility, but he does not take possession of personal property. It was a grave
error, that of the court of cassation, in holding electric current to be a thing imprisoned in wires, and
composed of particles that can be subtracted. In connecting a second circuit one does not subtract
electric current; not a particle of electric energy enters into the possession of the so-called thief ; the
same amount in amperes that was found and derived on connecting the second circuit, is found at the
end of this circuit. The current has only suffered a diminution of potential; while continuing to be of the
same volume, it becomes less adapted for the use intended, because having overcome a resistance, it has
lost in potential, its electro-motive power.
. . . It leaves the circuit in the same amount in which it entered. Only its power for work has diminished.
Not a single particle or molecule of electric current is taken by such abusive use, only the state of
undulation. The movement that first follows the principal, and then the second circuit, and by these
undulations the so-called thief illegally derives benefit. But the extraordinary provisions of crime are not
applicable to all illegal actions.
Another powerful argument in favor of my position is this: That in no case of usurpation, the using of
things protected by law (diritto) that are not material things , do we speak of theft. To repress abuses the
legislator has been obliged to establish special provisions of law, but has explicitly recognized those
relating to theft to be inapplicable. A trade-mark, trade-name, modello de fabrica, a scientific or artistic
work, undoubtedly constitute objects of law similar to things; form the contents of various juridical
relations; have more or less economic value; pertain to the patrimony of the person who has produced
them or brought them into being. If a third person makes use of the trade-mark or trade-name, the
scientific work or artistic production of another, nobody denies that he takes possession of a utility that
does not belong to him; that by the very illegal act he derives profit, and at the same time diminishes the
patrimony of the person having legitimate rights herein. But with all that, it has never occurred to
anyone to bring an action for theft against the usurper of the firm name, the counterfeit of the trade-mark
or the plagiarist. The legislator, desiring to protect this new species of property, has provided special
repressive measures; but in their absence, the courts can not apply the actio furti, because it is not
applicable to cases and conditions other than those provided for.
If this be so, why different conceptions on the score of electricity? Here likewise, there is no subtraction
of personal property, but the illegal use of an advantage, of the right pertaining to another, which remain
however unchanged. Hence the legal solution should be the same.
The second and not less essential condition of theft is that of the ablatio, the necessity of taking the thing
from the place where it is found. But here we have nothing of that; the current is deviated from its
course, true, but it returns to the place where it was undiminished. The statement in the foregoing
decision that there are particles transportable from place to place is exact; the undulation is in itself, it
has its own efficiency, but it is neither taken away nor subtracted. It has been justly said that all that is
done is to erect a bridge over which the undulations of the particles are transported in the wire attached,
but nothing corporeal passes from one wire to another, since not one of the vibrating particles moves
with the current which flows through the connected wire.
Consequently, in whatever aspect the question is considered the presumption of theft grows less. In fine,
although there be a usurpation of a utility to the prejudice of another, it should not be held to constitute
theft, because that is the vulgar, not the legal conception. That in civil and commercial law we may
resort to analogous interpretation, and that, in the absence of special provisions we should apply the
rules which govern similar matters and analogous cases, there is no doubt. The courts can not refuse to
say what the law is (dire ie diritto) nor dismiss the litigants on the pretext that the law had made no
provision for their case; and it is from this concept that electricity, as a rule, in the various relations
where it constitutes the object, is considered to be a thing, with all the attributes of such. But the penal
law is restrictive; under certain aspects it is exceptional. Here we have to do with limitations and
restrictions on the most sacred rights of persons, the right to liberty, the right to honor. And these rights
can not be abridged without definite and explicit provisions of the law. Where these are lacking we can
pray, as I do, that they be supplied, but a decision in such case is an arbitrary act (arbitro), not justice:
nulla poena sine lege.
xxx xxx xxx
So on the wrongful use of electric current; profit is derived from its high potential which is produced by
the work and expenditure of money on the part of the furnishing company; the current is returned
exactly as it was delivered except it has lost a certain amount of electromotive power that was illegally
(antigiuridicamente) employed to overcome the resistance introduced by the third party.
xxx xxx xxx
. . . Penal law must be strictly construed (e di interpretazione restrittiva). It punishes the contractatio of a
movable thing which is taken from the place where it is found without the consent of the owner. In the
proposition under discussion, we have not to do with movable things, there is no true transporting to
another place; therefore the figura giuridica of theft is wanting.
It can not be doubted that by movable things is meant even liquids and fluids, because these are material,
concrete, and corporeal things, but their physical external manifestations can not affect the juridical
relation . But in our case there is not a thing, fluid or liquid; there is a state of undulation, of movement,
which one uses illegally, assuming however the obligation to indemnify for all the damages resulting
from his illicit action, but there is no theft, any more than there would be where a person applied a
pulley to the shaft of an engine in order to put his own machinery in motion, so far as there would be no
appropriation. The current which injuriously traverse the lamp or electric motor is not appropriated or
destroyed by the person who uses it; it flows out from the lights and continues its course in the circuit
undiminished in intensity; it has only lost part of its power, because, having encountered a resistance, it
has developed certain energy to overcome it, energy which has produced light, traction, or mechanical
work.
Nor may it be said that electricity would then be deprived of any legal protection. Do we not have
articles 1511 et seq. of the Civil Code that provide for fraud? Is there not the civil crime and quasi
crime? To protect electric energy is it necessary to imprison one who uses it antigiuridicamente, while
the letter of the law does not consent? In any case it is known that adducere inconveniens non est
solvere argumentum. As in the laws of our country provision is made for the illegal use of a firm name,
trade-mark and works of genius (l' ingegno); in England, where provision has been made for the matter
we are discussing they have enacted a law imposing severe penalties upon persons who illegally use
electric energy, and I am of the first to applaud them. But let there be laws, not merely judicial opinion
(arbitria di interpretati).
Nor does it avail to urge that when we have to do with benefits that are useful to man, which serve his
ends, that he can appropriate, these benefits are considered as things in the eyes of the law. But it is
necessary to make a distinction. From the standpoint of the civil law, they are, because a wide and
analogous construction is permissible and permitted; but from that of the penal law, they are not,
because such construction is expressly forbidden by article 4 of the preliminary provisions of the Civil
Code.
If a trade-mark is not a benefit to man, in what does it serve him? Is not a literary or artistic production
such? Does not the counterfeiter illegally appropriate such benefits? But if it is required to inflict
criminal penalties upon him, a special law must be enacted; the provisions relative to theft can be
applied in his case.
xxx xxx xxx
Nor is it a conclusive argument to say that the manufacturer spends large sums of money and erects
costly machinery to generate the electricity, and when others steal it from him, such action, according to
juridical conscience and social morals, constitutes theft.
Let us suppose an individual acquires a ticket of admission, and enters a hall where there is being
produced a play of some sort. He, on the strength of the legal negotiation with the impresario and the
acquisition of the ticket has a right to the most ample enjoyment that his optical and acoustic senses are
able to realize. But he arranges a phonograph and a cinematograph, and surreptitiously fixes and
appropriates part of the acoustic and visual enjoyment that does not belong to him, takes it outside of the
theater and later avails himself thereof to his benefit by reproducing the harmony of the sounds and the
optical illusion of the scene. Is he liable for theft?
From the standpoint of the doctrine I am combating, he is. The impresario has sacrificed money or work
to produce the spectacle. Our friend has the right to enjoy it to the limit of the capacity of his organs of
vision and hearing, but beyond that. By means of suitable instruments he has caught up the sounds,
movements, and colors for the purpose of gain, and he commits a theft because there enter the
correctatio and the ablatio.
From the point of view of the law he is not. He would be held to reimburse the impresario for all
damages, but he can not be called a thieft, nor be punished as such. The sounds and forms of light are
states, not things; therefore they can not form subjects of theft.
And if this is so, the same conclusion must be reached with respect to electricity.
The supreme court of the German Empire, sitting at Leipsic, October 20, 1896, in a decision holding that
electricity was not a subject of larceny, said:
The court below found that the act did not constitute theft or unlawful appropriation, because electricity
is not to be considered a thing within the meaning of paragraph 242 of the Penal Code, and because by
things the law means portions of material nature; that corporeal existence is an essential ingredient of the
thing. Even the Penal Code starts from this principle. Incorporeal things, as for example rights,
intellectual products and machine power are not subjects of theft. The same must be said of electricity.
Experts say that the science is not yet determined. We well know what must be done to produce electric
energy, but we do not comprehend these vital operations, any more than we understand what is that
makes the muscles of the human arm capable of exerting force. In the conclusions of the Court of First
Instance there is no error of law. That court starts from the principle that the corporal existence of the
thing must be the essential element to come within the meaning of article 242. This assumption is not
based upon the precepts of the Civil Code, but, rather, upon the idea which is at the bottom of the Penal
Code, namely, the movable and independent thing, which presupposes the corporeality of the object. If
then, under articles 242 and 245, the condition precedent to the commission of larceny is that the object
of theft or unlawful appropriation be a piece or portion of material substance in either a solid or liquid
state, or in form of gas, the Court of First Instance committed no error in finding there was neither theft
nor illegal appropriation. Whether or not the notation of a thing, in the sense of the penal laws, requires
something corporeal, is a question of law; but the question whether electricity is a substance, a corporeal
thing, or a force, a movement of a minute particles, is a question of fact that can not be decided by the
rules of law, but by physical research alone. The consideration of the great importance of electricity in
commercial life and the place awaiting it among the vital conveniences and the fact of its having
commercial value, is not an argument to prove that electricity is a corporeal thing, because the quality of
being a vital convenience and having commercial value does not constitute a necessary standard of
corporelity, since force, operations, intellectual products are vital conveniences (beni) and have
commercial value. When, in the jurisprudence of the day the need for penal laws for punishment of
unjust appropriation of electric current becomes apparent, the legislator should provide them. The courts
can not be called upon to supply the lack of legal provisions by analogous applications of rules not made
to fit the circumstance. In penal law the principle nulla poena sine is supreme.
These authorities fully support my contention that electricity is not stealable under the provisions of the Spanish
Penal Code. They also support the proposition that even if electricity is a tangible thing, like water, and
therefore stealable, the crime, if any, committed by the defendant in this case is not larceny, because the
company had just as much electricity after the illegal act as it had before. In other words, it has lost no
electricity. Having lost no electricity it can not charge anyone with stealing it. If a thousand lights were burned,
no more electricity would be consumed than if one light were burned, just as, no more water is consumed in
running a thousand water wheels placed one below another than in running one. Just as much water flows over
the thousandth wheel as flowed over the first. In the same manner there is just as much electricity flowing out of
the thousandth light as flowed into the first. Just as in using the water, nothing is consumed but the head, the
quantity of water remaining the same, so, in using electricity, nothing is consumed but the head (the pressure,
the potential, the electro-motive force), the electricity itself remaining undiminished. No electricity was taken. It
was used and then returned to its owner.
For a clear understanding of this problem, and a logical and philosophical, as well as legal, solution thereof, we
must never, for a moment, forget the fact that the real contract between the company and the defendant was one
to furnish labor and services; a lease, if you please, of an agency, a contract of precisely the same nature as one
by which the company lets to the defendant the use of one of the company's workmen to turn by hand, in the
defendant's own house, an electrical machine and thereby produce light for defendant's use. This is the crux of
the whole question. While no contract was proved we know of necessity, from the principles which underlie and
govern electric lighting, that the contract must have been as above stated. If the defendant should require the
laborer thus placed in his house to work overtime and should not pay the company therefor, thus taking
advantage of the situation, there would be no larceny. To be sure, the defendant would return the workman to
the company fatigued and reduced in strength by reason of the overtime he had required him to put in, but it
would be the same workman which he had received. It is this which shows the absurdity of the claim that the
defendant in this case is guilty of larceny. The company never intended to sell the workman to the defendant
and the defendant never expected to buy him. It was the use that was the basis of the contract. In exactly the
same manner the company never intended to sell electricity to the defendant and the defendant never intended
to buy electricity. The basis of the contract was the use of electricity. Just as the laborer was returned by
defendant to the company fatigued and reduced in strength by reason of the overtime which the defendant had
wrongfully and illegally required him to put in, so the current of electricity was returned by the defendant to the
company fatigued and reduced in strength by reason of the lights which the defendant had wrongfully and
illegally caused it to supply; and just as, notwithstanding the reduction in strength, it was the same identical
workman returned that was sent out, so the electric current returned to the company after the illegal use by
defendant was the same identical current which the company had furnished him. Where then, is the foundation
for the charge of larceny?
Let us now see what are the results of the holding of the court that electricity is subject to larceny.
The Spanish Law of the Philippine Islands has not been changed by any legislative enactment. A cosa mueble is
the same now as it was in the days of the Partidas. No legislature has changed the law of larceny as it came
from the jurisprudence of Rome and Spain. Nor has any legislature touched the law of the personal chattel to
give it a new definition or one which changes its ancient signification. Its present definition is the same as that
given by Sanchez Roman, Pacheco, Scaevola, Manresa, and Groizard as drawn form the decrees of kings and
acts of legislatures. That definition having been framed by the lawmaking power of Spain, from the Partidas
down to the Penal Code, it ought not to be changed by any agency short of the lawmaking power of the United
States. The substance and nature of crime ought not to be changed by courts in a country where crimes are
purely statutory. It has the appearance of a usurpation of the functions of the lawmaking body, an unwarrantable
assumption of the legislative attributes.
The holding of the court in this case is, in effect, an amendment to the Penal Code. It has changed materially the
definition of a cosa mueble and, therefore, of the crime of larceny, as made by the lawmaking bodies of Spain
and the United States. I do not assert that the courts have not the right to determine whether a given set of facts
do or do not fulfill the definition of a given crime. What I do say is that the very greatest care should be
exercised in cases which may involved as a consequence of their decision the changing of the scope of the
substantive law of crime. The fact, admitted by all, that whether the phenomenon which we call electricity
really is a "cosa mueble," under the accepted definition of that word, is open to doubt, should give us pause.
Before holding that electricity is a cosa mueble, the fact whether it is or not ought to be substantially free from
doubt, This is particularly true in a country where crimes are purely statutory, and in which, therefore, the
legislature is presumed to have had in mind in framing its definition of "cosas muebles" only such chattels, or
those of the same nature, as were known to the legislature at the time it acted. At the time the Penal Code
became operative substantially nothing was known by those who created if of the phenomenon, electricity. It is
more than clear that at the time of the enactment of the laws relating to larceny, of which article 517 of the
Penal Code is a reproduction, nothing whatever was known of that phenomenon. We have, therefore, no means
of knowing what would have been the legislative action in relation thereto. The legislative authorities of those
times might have treated it as substantially every other legislative body has treated it that has touched the
question; namely, as a thing separate and distinct from chattels, and unlawful acts affecting it and its use as
crimes distinct from the crimes against tangible property, such as robbery and larceny. In this jurisdiction the
legislature is the only authority for the definition of the crime. Where a new situation arises by virtue of
discoveries which reveal agencies never known before, and whose real nature is unknown even to the
discoverers the legislature is the body to take the initiative in determining the position of such agencies among
the affairs of men, unless they clearly fall within a class already established and defined; and it appears that
some legislative bodies have done that very thing and have passed special laws touching the place which should
be given electricity in the civil and criminal law. This was done here by the passage of the ordinance of the city
of Manila. The fact that legislatures in many jurisdictions have enacted special laws relative to electricity is the
very clearest proof that there was the gravest doubt among learned men of the applicability of existing laws to
acts committed against the rights of producers of electricity. The legislature of the Islands having acted through
the council of the city of Manila and by such action made illegal acts against the producers of electricity a
special crime wholly distinct from larceny, such act should be conclusive on this court as to the legislative
intent.
Section 649 of the Revised Ordinance of the city of Manila provides in part:
No person shall, for any purpose whatsoever, use or enjoy the benefits of any device by means of which
he may fraudulently obtain any current of electricity or any telephone or telegraph service; and the
existence in any building or premises of any such device shall, in the absence of satisfactory
explanation, be deemed sufficient evidence of such use by the person benefiting thereby.
This section was enacted under the authority of the Legislature of the Philippine Islands, as was section 930 of
said ordinances, by the terms of which one was violates the provisions of section 649 "shall be punished by a
fine of not more than two hundred pesos or by imprisonment for not more than six months, or both such fine
and imprisonment, in the discretion of the court, for each offense."
Articles 517 and 518 of the Penal Code read in part as follows:
ART. 517. The following are guilty of theft:
1. Those who, with intent of gain and without violence or intimidation against the person or force
against the things, shall take another's personal property (cosa mueble) without the owner's consent.
xxx xxx xxx
ART. 518. Those guilty of theft shall be punished:
1. With the penalty of presidio correccional in its medium and maximum degrees if the value of the
stolen property should exceed 6,250 pesetas.
2. With the penalty of presidio correccional in its minimum and medium degrees should it not exceed
6,250, pesetas and be more than 1,250 pesetas.
3. With arresto mayor in its medium degree to presidio correccional in its minimum degree should it
not exceed 1,250 pesetas and be more than 250 pesetas.
4. With arresto mayor to its fullest extent should it be more than 25 but not exceed 250 pesetas.
5. With arresto mayor in its minimum and medium degrees if it should not exceed 25 pesetas; if
exceeding 25 and not more than 65 pesetas, a theft of nutritious grains, fruits, or wood shall be punished
with a fine of room 325 to 500 pesetas.
Under subdivision 2 of the article last quoted, which is the paragraph under which the accused is punished in the
case at bar, the penalty prescribed is from six months and one day to four years and two months. The accused in
this case was actually sentenced to one year eight months and twenty-one days of presidio correccional, to
indemnify the company in the sum of P865.26, to the corresponding subsidiary imprisonment in case of failure
to pay said sum, and to the accessory penalties provided by law.
Having before us these two laws, we may now see to what untoward and unfortunate results the majority
opinion leads us in holding that a person who commits a crime against an electric current can be punished under
either, or both, of two different statutes. As we have seen already there is, relatively speaking, an enormous
difference in the penalties prescribed by said law. That imposed by the ordinance of the city of Manila can not
in any event exceed six months' imprisonment and a fine of P200; while that provided in the Penal Code may be
as severe as four years and two months imprisonment, with indemnity equal to the value of the property stolen,
with corresponding subsidiary imprisonment in case of nonpayment. To this must be added all those accessory
penalties prescribed by the code, such as suspension from any public office, profession or trade, and from the
right the suffrage. To me it is wholly unbelievable that, under the circumstances of this case and the nature of
the offense itself, it was the intention of the legislative authority to permit the concurrent existence of two laws,
both in force, punishing the same crime with penalties which bear no relation to each other and which are
widely different in severity. Note what results from such a holding. Prosecution under the ordinance must be in
the municipal court. Prosecution under the Penal Code may be in the municipal court or it may be and generally
must be, as in this case, in the Court of First Instance. But it is certain that, under the ordinance, every case may
be prosecuted in the municipal court, whatever the value of the electricity taken; or, if the value is sufficient, the
prosecution may be brought in the Court of First Instance. The selection of the court is left to the complaint.
This means that the complaint is able to say within certain limits what punishment shall be inflicted; for, if he
desires that the accused shall be lightly punished he will bring the action in the municipal court, which he
always can do if he wish, and if he desires to punish him very severely he will bring it in the Court of First
Instance, which he can generally do if he cares to. It is incoceivable that the legislature intended that such a
condition should exist. It is in violation of every sense of fairness, is against every rule of statutory construction,
and is clearly inimical to public policy. To assert that the complaining in which he shall prosecute the accused
but also, in effect, the crime of which he shall be charged, as the decision in this case holds in effect, is to assert
a proposition, the bare statement of which is its own completest refutation.
For these reasons the judgment of conviction should be reversed.

G.R. No. 155076 January 13, 2009
LUIS MARCOS P. LAUREL, Petitioner,
vs.
HON. ZEUS C. ABROGAR, Presiding Judge of the Regional Trial Court, Makati City, Branch 150,
PEOPLE OF THE PHILIPPINES & PHILIPPINE LONG DISTANCE TELEPHONE COMPANY
Respondents.
R E S O L U T I O N
YNARES-SANTIAGO, J .:
On February 27, 2006, this Courts First Division rendered judgment in this case as follows:
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The assailed Orders of the Regional Trial
Court and the Decision of the Court of Appeals are REVERSED and SET ASIDE. The Regional Trial Court is
directed to issue an order granting the motion of the petitioner to quash the Amended Information.
SO ORDERED.
1

By way of brief background, petitioner is one of the accused in Criminal Case No. 99-2425, filed with the
Regional Trial Court of Makati City, Branch 150. The Amended Information charged the accused with theft
under Article 308 of the Revised Penal Code, committed as follows:
On or about September 10-19, 1999, or prior thereto in Makati City, and within the jurisdiction of this
Honorable Court, the accused, conspiring and confederating together and all of them mutually helping and
aiding one another, with intent to gain and without the knowledge and consent of the Philippine Long Distance
Telephone (PLDT), did then and there willfully, unlawfully and feloniously take, steal and use the international
long distance calls belonging to PLDT by conducting International Simple Resale (ISR), which is a method of
routing and completing international long distance calls using lines, cables, antenae, and/or air wave frequency
which connect directly to the local or domestic exchange facilities of the country where the call is destined,
effectively stealing this business from PLDT while using its facilities in the estimated amount of
P20,370,651.92 to the damage and prejudice of PLDT, in the said amount.
CONTRARY TO LAW.
2

Petitioner filed a "Motion to Quash (with Motion to Defer Arraignment)," on the ground that the factual
allegations in the Amended Information do not constitute the felony of theft. The trial court denied the Motion
to Quash the Amended Information, as well petitioners subsequent Motion for Reconsideration.
Petitioners special civil action for certiorari was dismissed by the Court of Appeals. Thus, petitioner filed the
instant petition for review with this Court.
In the above-quoted Decision, this Court held that the Amended Information does not contain material
allegations charging petitioner with theft of personal property since international long distance calls and the
business of providing telecommunication or telephone services are not personal properties under Article 308 of
the Revised Penal Code.
Respondent Philippine Long Distance Telephone Company (PLDT) filed a Motion for Reconsideration with
Motion to Refer the Case to the Supreme Court En Banc. It maintains that the Amended Information charging
petitioner with theft is valid and sufficient; that it states the names of all the accused who were specifically
charged with the crime of theft of PLDTs international calls and business of providing telecommunication or
telephone service on or about September 10 to 19, 1999 in Makati City by conducting ISR or International
Simple Resale; that it identifies the international calls and business of providing telecommunication or
telephone service of PLDT as the personal properties which were unlawfully taken by the accused; and that it
satisfies the test of sufficiency as it enabled a person of common understanding to know the charge against him
and the court to render judgment properly.
PLDT further insists that the Revised Penal Code should be interpreted in the context of the Civil Codes
definition of real and personal property. The enumeration of real properties in Article 415 of the Civil Code is
exclusive such that all those not included therein are personal properties. Since Article 308 of the Revised Penal
Code used the words "personal property" without qualification, it follows that all "personal properties" as
understood in the context of the Civil Code, may be the subject of theft under Article 308 of the Revised Penal
Code. PLDT alleges that the international calls and business of providing telecommunication or telephone
service are personal properties capable of appropriation and can be objects of theft.
PLDT also argues that "taking" in relation to theft under the Revised Penal Code does not require "asportation,"
the sole requisite being that the object should be capable of "appropriation." The element of "taking" referred to
in Article 308 of the Revised Penal Code means the act of depriving another of the possession and dominion of
a movable coupled with the intention, at the time of the "taking," of withholding it with the character of
permanency. There must be intent to appropriate, which means to deprive the lawful owner of the thing. Thus,
the term "personal properties" under Article 308 of the Revised Penal Code is not limited to only personal
properties which are "susceptible of being severed from a mass or larger quantity and of being transported from
place to place."
PLDT likewise alleges that as early as the 1930s, international telephone calls were in existence; hence, there is
no basis for this Courts finding that the Legislature could not have contemplated the theft of international
telephone calls and the unlawful transmission and routing of electronic voice signals or impulses emanating
from such calls by unlawfully tampering with the telephone device as within the coverage of the Revised Penal
Code.
According to respondent, the "international phone calls" which are "electric currents or sets of electric impulses
transmitted through a medium, and carry a pattern representing the human voice to a receiver," are personal
properties which may be subject of theft. Article 416(3) of the Civil Code deems "forces of nature" (which
includes electricity) which are brought under the control by science, are personal property.
In his Comment to PLDTs motion for reconsideration, petitioner Laurel claims that a telephone call is a
conversation on the phone or a communication carried out using the telephone. It is not synonymous to electric
current or impulses. Hence, it may not be considered as personal property susceptible of appropriation.
Petitioner claims that the analogy between generated electricity and telephone calls is misplaced. PLDT does
not produce or generate telephone calls. It only provides the facilities or services for the transmission and
switching of the calls. He also insists that "business" is not personal property. It is not the "business" that is
protected but the "right to carry on a business." This right is what is considered as property. Since the services
of PLDT cannot be considered as "property," the same may not be subject of theft.
The Office of the Solicitor General (OSG) agrees with respondent PLDT that "international phone calls and the
business or service of providing international phone calls" are subsumed in the enumeration and definition of
personal property under the Civil Code hence, may be proper subjects of theft. It noted that the cases of United
States v. Genato,
3
United States v. Carlos
4
and United States v. Tambunting,
5
which recognized intangible
properties like gas and electricity as personal properties, are deemed incorporated in our penal laws. Moreover,
the theft provision in the Revised Penal Code was deliberately couched in broad terms precisely to be all-
encompassing and embracing even such scenario that could not have been easily anticipated.
According to the OSG, prosecution under Republic Act (RA) No. 8484 or the Access Device Regulations Act of
1998 and RA 8792 or the Electronic Commerce Act of 2000 does not preclude prosecution under the Revised
Penal Code for the crime of theft. The latter embraces unauthorized appropriation or use of PLDTs
international calls, service and business, for personal profit or gain, to the prejudice of PLDT as owner thereof.
On the other hand, the special laws punish the surreptitious and advanced technical means employed to illegally
obtain the subject service and business. Even assuming that the correct indictment should have been under RA
8484, the quashal of the information would still not be proper. The charge of theft as alleged in the Information
should be taken in relation to RA 8484 because it is the elements, and not the designation of the crime, that
control.
Considering the gravity and complexity of the novel questions of law involved in this case, the Special First
Division resolved to refer the same to the Banc.
We resolve to grant the Motion for Reconsideration but remand the case to the trial court for proper clarification
of the Amended Information.
Article 308 of the Revised Penal Code provides:
Art. 308. Who are liable for theft. Theft is committed by any person who, with intent to gain but without
violence against, or intimidation of persons nor force upon things, shall take personal property of another
without the latters consent.
The elements of theft under Article 308 of the Revised Penal Code are as follows: (1) that there be taking of
personal property; (2) that said property belongs to another; (3) that the taking be done with intent to gain; (4)
that the taking be done without the consent of the owner; and (5) that the taking be accomplished without the
use of violence against or intimidation of persons or force upon things.
Prior to the passage of the Revised Penal Code on December 8, 1930, the definition of the term "personal
property" in the penal code provision on theft had been established in Philippine jurisprudence. This Court, in
United States v. Genato, United States v. Carlos, and United States v. Tambunting, consistently ruled that any
personal property, tangible or intangible, corporeal or incorporeal, capable of appropriation can be the object of
theft.
Moreover, since the passage of the Revised Penal Code on December 8, 1930, the term "personal property" has
had a generally accepted definition in civil law. In Article 335 of the Civil Code of Spain, "personal property" is
defined as "anything susceptible of appropriation and not included in the foregoing chapter (not real property)."
Thus, the term "personal property" in the Revised Penal Code should be interpreted in the context of the Civil
Code provisions in accordance with the rule on statutory construction that where words have been long used in
a technical sense and have been judicially construed to have a certain meaning, and have been adopted by the
legislature as having a certain meaning prior to a particular statute, in which they are used, the words used in
such statute should be construed according to the sense in which they have been previously used.
6
In fact, this
Court used the Civil Code definition of "personal property" in interpreting the theft provision of the penal code
in United States v. Carlos.
Cognizant of the definition given by jurisprudence and the Civil Code of Spain to the term "personal property"
at the time the old Penal Code was being revised, still the legislature did not limit or qualify the definition of
"personal property" in the Revised Penal Code. Neither did it provide a restrictive definition or an exclusive
enumeration of "personal property" in the Revised Penal Code, thereby showing its intent to retain for the term
an extensive and unqualified interpretation.1avvphi1.zw+ Consequently, any property which is not included in
the enumeration of real properties under the Civil Code and capable of appropriation can be the subject of theft
under the Revised Penal Code.
The only requirement for a personal property to be the object of theft under the penal code is that it be capable
of appropriation. It need not be capable of "asportation," which is defined as "carrying away."
7
Jurisprudence is
settled that to "take" under the theft provision of the penal code does not require asportation or carrying away.
8

To appropriate means to deprive the lawful owner of the thing.
9
The word "take" in the Revised Penal Code
includes any act intended to transfer possession which, as held in the assailed Decision, may be committed
through the use of the offenders own hands, as well as any mechanical device, such as an access device or card
as in the instant case. This includes controlling the destination of the property stolen to deprive the owner of the
property, such as the use of a meter tampering, as held in Natividad v. Court of Appeals,
10
use of a device to
fraudulently obtain gas, as held in United States v. Tambunting, and the use of a jumper to divert electricity, as
held in the cases of United States v. Genato, United States v. Carlos, and United States v. Menagas.
11

As illustrated in the above cases, appropriation of forces of nature which are brought under control by science
such as electrical energy can be achieved by tampering with any apparatus used for generating or measuring
such forces of nature, wrongfully redirecting such forces of nature from such apparatus, or using any device to
fraudulently obtain such forces of nature. In the instant case, petitioner was charged with engaging in
International Simple Resale (ISR) or the unauthorized routing and completing of international long distance
calls using lines, cables, antennae, and/or air wave frequency and connecting these calls directly to the local or
domestic exchange facilities of the country where destined.
As early as 1910, the Court declared in Genato that ownership over electricity (which an international long
distance call consists of), as well as telephone service, is protected by the provisions on theft of the Penal Code.
The pertinent provision of the Revised Ordinance of the City of Manila, which was involved in the said case,
reads as follows:
Injury to electric apparatus; Tapping current; Evidence. No person shall destroy, mutilate, deface, or
otherwise injure or tamper with any wire, meter, or other apparatus installed or used for generating, containing,
conducting, or measuring electricity, telegraph or telephone service, nor tap or otherwise wrongfully deflect or
take any electric current from such wire, meter, or other apparatus.
No person shall, for any purpose whatsoever, use or enjoy the benefits of any device by means of which he may
fraudulently obtain any current of electricity or any telegraph or telephone service; and the existence in any
building premises of any such device shall, in the absence of satisfactory explanation, be deemed sufficient
evidence of such use by the persons benefiting thereby.
It was further ruled that even without the above ordinance the acts of subtraction punished therein are covered
by the provisions on theft of the Penal Code then in force, thus:
Even without them (ordinance), the right of the ownership of electric current is secured by articles 517 and 518
of the Penal Code; the application of these articles in cases of subtraction of gas, a fluid used for lighting, and in
some respects resembling electricity, is confirmed by the rule laid down in the decisions of the supreme court of
Spain of January 20, 1887, and April 1, 1897, construing and enforcing the provisions of articles 530 and 531 of
the Penal Code of that country, articles 517 and 518 of the code in force in these islands.
The acts of "subtraction" include: (a) tampering with any wire, meter, or other apparatus installed or used for
generating, containing, conducting, or measuring electricity, telegraph or telephone service; (b) tapping or
otherwise wrongfully deflecting or taking any electric current from such wire, meter, or other apparatus; and (c)
using or enjoying the benefits of any device by means of which one may fraudulently obtain any current of
electricity or any telegraph or telephone service.
In the instant case, the act of conducting ISR operations by illegally connecting various equipment or apparatus
to private respondent PLDTs telephone system, through which petitioner is able to resell or re-route
international long distance calls using respondent PLDTs facilities constitutes all three acts of subtraction
mentioned above.
The business of providing telecommunication or telephone service is likewise personal property which can be
the object of theft under Article 308 of the Revised Penal Code. Business may be appropriated under Section 2
of Act No. 3952 (Bulk Sales Law), hence, could be object of theft:
Section 2. Any sale, transfer, mortgage, or assignment of a stock of goods, wares, merchandise, provisions, or
materials otherwise than in the ordinary course of trade and the regular prosecution of the business of the
vendor, mortgagor, transferor, or assignor, or any sale, transfer, mortgage, or assignment of all, or substantially
all, of the business or trade theretofore conducted by the vendor, mortgagor, transferor or assignor, or all, or
substantially all, of the fixtures and equipment used in and about the business of the vendor, mortgagor,
transferor, or assignor, shall be deemed to be a sale and transfer in bulk, in contemplation of the Act. x x x.
In Strochecker v. Ramirez,
12
this Court stated:
With regard to the nature of the property thus mortgaged which is one-half interest in the business above
described, such interest is a personal property capable of appropriation and not included in the enumeration of
real properties in article 335 of the Civil Code, and may be the subject of mortgage.
Interest in business was not specifically enumerated as personal property in the Civil Code in force at the time
the above decision was rendered. Yet, interest in business was declared to be personal property since it is
capable of appropriation and not included in the enumeration of real properties. Article 414 of the Civil Code
provides that all things which are or may be the object of appropriation are considered either real property or
personal property. Business is likewise not enumerated as personal property under the Civil Code. Just like
interest in business, however, it may be appropriated. Following the ruling in Strochecker v. Ramirez, business
should also be classified as personal property. Since it is not included in the exclusive enumeration of real
properties under Article 415, it is therefore personal property.
13

As can be clearly gleaned from the above disquisitions, petitioners acts constitute theft of respondent PLDTs
business and service, committed by means of the unlawful use of the latters facilities. In this regard, the
Amended Information inaccurately describes the offense by making it appear that what petitioner took were the
international long distance telephone calls, rather than respondent PLDTs business.
A perusal of the records of this case readily reveals that petitioner and respondent PLDT extensively discussed
the issue of ownership of telephone calls. The prosecution has taken the position that said telephone calls belong
to respondent PLDT. This is evident from its Comment where it defined the issue of this case as whether or not
"the unauthorized use or appropriation of PLDT international telephone calls, service and facilities, for the
purpose of generating personal profit or gain that should have otherwise belonged to PLDT, constitutes theft."
14

In discussing the issue of ownership, petitioner and respondent PLDT gave their respective explanations on how
a telephone call is generated.
15
For its part, respondent PLDT explains the process of generating a telephone call
as follows:
38. The role of telecommunication companies is not limited to merely providing the medium (i.e. the electric
current) through which the human voice/voice signal of the caller is transmitted. Before the human voice/voice
signal can be so transmitted, a telecommunication company, using its facilities, must first break down or decode
the human voice/voice signal into electronic impulses and subject the same to further augmentation and
enhancements. Only after such process of conversion will the resulting electronic impulses be transmitted by a
telecommunication company, again, through the use of its facilities. Upon reaching the destination of the call,
the telecommunication company will again break down or decode the electronic impulses back to human
voice/voice signal before the called party receives the same. In other words, a telecommunication company both
converts/reconverts the human voice/voice signal and provides the medium for transmitting the same.
39. Moreover, in the case of an international telephone call, once the electronic impulses originating from a
foreign telecommunication company country (i.e. Japan) reaches the Philippines through a local
telecommunication company (i.e. private respondent PLDT), it is the latter which decodes, augments and
enhances the electronic impulses back to the human voice/voice signal and provides the medium (i.e. electric
current) to enable the called party to receive the call. Thus, it is not true that the foreign telecommunication
company provides (1) the electric current which transmits the human voice/voice signal of the caller and (2) the
electric current for the called party to receive said human voice/voice signal.
40. Thus, contrary to petitioner Laurels assertion, once the electronic impulses or electric current originating
from a foreign telecommunication company (i.e. Japan) reaches private respondent PLDTs network, it is
private respondent PLDT which decodes, augments and enhances the electronic impulses back to the human
voice/voice signal and provides the medium (i.e. electric current) to enable the called party to receive the call.
Without private respondent PLDTs network, the human voice/voice signal of the calling party will never reach
the called party.
16

In the assailed Decision, it was conceded that in making the international phone calls, the human voice is
converted into electrical impulses or electric current which are transmitted to the party called. A telephone call,
therefore, is electrical energy. It was also held in the assailed Decision that intangible property such as electrical
energy is capable of appropriation because it may be taken and carried away. Electricity is personal property
under Article 416 (3) of the Civil Code, which enumerates "forces of nature which are brought under control by
science."
17

Indeed, while it may be conceded that "international long distance calls," the matter alleged to be stolen in the
instant case, take the form of electrical energy, it cannot be said that such international long distance calls were
personal properties belonging to PLDT since the latter could not have acquired ownership over such calls.
PLDT merely encodes, augments, enhances, decodes and transmits said calls using its complex communications
infrastructure and facilities. PLDT not being the owner of said telephone calls, then it could not validly claim
that such telephone calls were taken without its consent. It is the use of these communications facilities without
the consent of PLDT that constitutes the crime of theft, which is the unlawful taking of the telephone services
and business.
Therefore, the business of providing telecommunication and the telephone service are personal property under
Article 308 of the Revised Penal Code, and the act of engaging in ISR is an act of "subtraction" penalized under
said article. However, the Amended Information describes the thing taken as, "international long distance calls,"
and only later mentions "stealing the business from PLDT" as the manner by which the gain was derived by the
accused. In order to correct this inaccuracy of description, this case must be remanded to the trial court and the
prosecution directed to amend the Amended Information, to clearly state that the property subject of the theft
are the services and business of respondent PLDT. Parenthetically, this amendment is not necessitated by a
mistake in charging the proper offense, which would have called for the dismissal of the information under Rule
110, Section 14 and Rule 119, Section 19 of the Revised Rules on Criminal Procedure. To be sure, the crime is
properly designated as one of theft. The purpose of the amendment is simply to ensure that the accused is fully
and sufficiently apprised of the nature and cause of the charge against him, and thus guaranteed of his rights
under the Constitution.
ACCORDINGLY, the motion for reconsideration is GRANTED. The assailed Decision dated February 27,
2006 is RECONSIDERED and SET ASIDE. The Decision of the Court of Appeals in CA-G.R. SP No. 68841
affirming the Order issued by Judge Zeus C. Abrogar of the Regional Trial Court of Makati City, Branch 150,
which denied the Motion to Quash (With Motion to Defer Arraignment) in Criminal Case No. 99-2425 for theft,
is AFFIRMED. The case is remanded to the trial court and the Public Prosecutor of Makati City is hereby
DIRECTED to amend the Amended Information to show that the property subject of the theft were services and
business of the private offended party.
SO ORDERED.

G.R. No. 92013 July 25, 1990

SALVADOR H. LAUREL, petitioner,
vs.
RAMON GARCIA, as head of the Asset Privatization Trust, RAUL MANGLAPUS, as Secretary of Foreign Affairs, and
CATALINO MACARAIG, as Executive Secretary, respondents.

G.R. No. 92047 July 25, 1990

DIONISIO S. OJEDA, petitioner,
vs.
EXECUTIVE SECRETARY MACARAIG, JR., ASSETS PRIVATIZATION TRUST CHAIRMAN RAMON T. GARCIA, AMBASSADOR
RAMON DEL ROSARIO, et al., as members of the PRINCIPAL AND BIDDING COMMITTEES ON THE
UTILIZATION/DISPOSITION PETITION OF PHILIPPINE GOVERNMENT PROPERTIES IN JAPAN, respondents.

Arturo M. Tolentino for petitioner in 92013.



GUTIERREZ, JR., J.:

These are two petitions for prohibition seeking to enjoin respondents, their representatives and agents from
proceeding with the bidding for the sale of the 3,179 square meters of land at 306 Roppongi, 5-Chome Minato-ku
Tokyo, Japan scheduled on February 21, 1990. We granted the prayer for a temporary restraining order effective
February 20, 1990. One of the petitioners (in G.R. No. 92047) likewise prayes for a writ of mandamus to compel the
respondents to fully disclose to the public the basis of their decision to push through with the sale of the Roppongi
property inspire of strong public opposition and to explain the proceedings which effectively prevent the participation
of Filipino citizens and entities in the bidding process.

The oral arguments in G.R. No. 92013, Laurel v. Garcia, et al. were heard by the Court on March 13, 1990. After G.R.
No. 92047, Ojeda v. Secretary Macaraig, et al. was filed, the respondents were required to file a comment by the
Court's resolution dated February 22, 1990. The two petitions were consolidated on March 27, 1990 when the
memoranda of the parties in the Laurel case were deliberated upon.

The Court could not act on these cases immediately because the respondents filed a motion for an extension of thirty
(30) days to file comment in G.R. No. 92047, followed by a second motion for an extension of another thirty (30) days
which we granted on May 8, 1990, a third motion for extension of time granted on May 24, 1990 and a fourth motion
for extension of time which we granted on June 5, 1990 but calling the attention of the respondents to the length of
time the petitions have been pending. After the comment was filed, the petitioner in G.R. No. 92047 asked for thirty
(30) days to file a reply. We noted his motion and resolved to decide the two (2) cases.

I

The subject property in this case is one of the four (4) properties in Japan acquired by the Philippine government
under the Reparations Agreement entered into with Japan on May 9, 1956, the other lots being:

(1) The Nampeidai Property at 11-24 Nampeidai-machi, Shibuya-ku, Tokyo which has an area of approximately
2,489.96 square meters, and is at present the site of the Philippine Embassy Chancery;

(2) The Kobe Commercial Property at 63 Naniwa-cho, Kobe, with an area of around 764.72 square meters and
categorized as a commercial lot now being used as a warehouse and parking lot for the consulate staff; and

(3) The Kobe Residential Property at 1-980-2 Obanoyama-cho, Shinohara, Nada-ku, Kobe, a residential lot which is
now vacant.

The properties and the capital goods and services procured from the Japanese government for national development
projects are part of the indemnification to the Filipino people for their losses in life and property and their suffering
during World War II.

The Reparations Agreement provides that reparations valued at $550 million would be payable in twenty (20) years in
accordance with annual schedules of procurements to be fixed by the Philippine and Japanese governments (Article 2,
Reparations Agreement). Rep. Act No. 1789, the Reparations Law, prescribes the national policy on procurement and
utilization of reparations and development loans. The procurements are divided into those for use by the government
sector and those for private parties in projects as the then National Economic Council shall determine. Those intended
for the private sector shall be made available by sale to Filipino citizens or to one hundred (100%) percent Filipino-
owned entities in national development projects.

The Roppongi property was acquired from the Japanese government under the Second Year Schedule and listed
under the heading "Government Sector", through Reparations Contract No. 300 dated June 27, 1958. The Roppongi
property consists of the land and building "for the Chancery of the Philippine Embassy" (Annex M-D to Memorandum
for Petitioner, p. 503). As intended, it became the site of the Philippine Embassy until the latter was transferred to
Nampeidai on July 22, 1976 when the Roppongi building needed major repairs. Due to the failure of our government
to provide necessary funds, the Roppongi property has remained undeveloped since that time.

A proposal was presented to President Corazon C. Aquino by former Philippine Ambassador to Japan, Carlos J. Valdez,
to make the property the subject of a lease agreement with a Japanese firm - Kajima Corporation which shall
construct two (2) buildings in Roppongi and one (1) building in Nampeidai and renovate the present Philippine
Chancery in Nampeidai. The consideration of the construction would be the lease to the foreign corporation of one (1)
of the buildings to be constructed in Roppongi and the two (2) buildings in Nampeidai. The other building in Roppongi
shall then be used as the Philippine Embassy Chancery. At the end of the lease period, all the three leased buildings
shall be occupied and used by the Philippine government. No change of ownership or title shall occur. (See Annex "B"
to Reply to Comment) The Philippine government retains the title all throughout the lease period and thereafter.
However, the government has not acted favorably on this proposal which is pending approval and ratification
between the parties. Instead, on August 11, 1986, President Aquino created a committee to study the
disposition/utilization of Philippine government properties in Tokyo and Kobe, Japan through Administrative Order
No. 3, followed by Administrative Orders Numbered 3-A, B, C and D.

On July 25, 1987, the President issued Executive Order No. 296 entitling non-Filipino citizens or entities to avail of
separations' capital goods and services in the event of sale, lease or disposition. The four properties in Japan including
the Roppongi were specifically mentioned in the first "Whereas" clause.

Amidst opposition by various sectors, the Executive branch of the government has been pushing, with great vigor, its
decision to sell the reparations properties starting with the Roppongi lot. The property has twice been set for bidding
at a minimum floor price of $225 million. The first bidding was a failure since only one bidder qualified. The second
one, after postponements, has not yet materialized. The last scheduled bidding on February 21, 1990 was restrained
by his Court. Later, the rules on bidding were changed such that the $225 million floor price became merely a
suggested floor price.

The Court finds that each of the herein petitions raises distinct issues. The petitioner in G.R. No. 92013 objects to the
alienation of the Roppongi property to anyone while the petitioner in G.R. No. 92047 adds as a principal objection the
alleged unjustified bias of the Philippine government in favor of selling the property to non-Filipino citizens and
entities. These petitions have been consolidated and are resolved at the same time for the objective is the same - to
stop the sale of the Roppongi property.

The petitioner in G.R. No. 92013 raises the following issues:

(1) Can the Roppongi property and others of its kind be alienated by the Philippine Government?; and

(2) Does the Chief Executive, her officers and agents, have the authority and jurisdiction, to sell the Roppongi
property?

Petitioner Dionisio Ojeda in G.R. No. 92047, apart from questioning the authority of the government to alienate the
Roppongi property assails the constitutionality of Executive Order No. 296 in making the property available for sale to
non-Filipino citizens and entities. He also questions the bidding procedures of the Committee on the Utilization or
Disposition of Philippine Government Properties in Japan for being discriminatory against Filipino citizens and
Filipino-owned entities by denying them the right to be informed about the bidding requirements.

II

In G.R. No. 92013, petitioner Laurel asserts that the Roppongi property and the related lots were acquired as part of
the reparations from the Japanese government for diplomatic and consular use by the Philippine government. Vice-
President Laurel states that the Roppongi property is classified as one of public dominion, and not of private
ownership under Article 420 of the Civil Code (See infra).

The petitioner submits that the Roppongi property comes under "property intended for public service" in paragraph 2
of the above provision. He states that being one of public dominion, no ownership by any one can attach to it, not
even by the State. The Roppongi and related properties were acquired for "sites for chancery, diplomatic, and
consular quarters, buildings and other improvements" (Second Year Reparations Schedule). The petitioner states that
they continue to be intended for a necessary service. They are held by the State in anticipation of an opportune use.
(Citing 3 Manresa 65-66). Hence, it cannot be appropriated, is outside the commerce of man, or to put it in more
simple terms, it cannot be alienated nor be the subject matter of contracts (Citing Municipality of Cavite v. Rojas, 30
Phil. 20 [1915]). Noting the non-use of the Roppongi property at the moment, the petitioner avers that the same
remains property of public dominion so long as the government has not used it for other purposes nor adopted any
measure constituting a removal of its original purpose or use.

The respondents, for their part, refute the petitioner's contention by saying that the subject property is not governed
by our Civil Code but by the laws of Japan where the property is located. They rely upon the rule of lex situs which is
used in determining the applicable law regarding the acquisition, transfer and devolution of the title to a property.
They also invoke Opinion No. 21, Series of 1988, dated January 27, 1988 of the Secretary of Justice which used the lex
situs in explaining the inapplicability of Philippine law regarding a property situated in Japan.

The respondents add that even assuming for the sake of argument that the Civil Code is applicable, the Roppongi
property has ceased to become property of public dominion. It has become patrimonial property because it has not
been used for public service or for diplomatic purposes for over thirteen (13) years now (Citing Article 422, Civil Code)
and because the intention by the Executive Department and the Congress to convert it to private use has been
manifested by overt acts, such as, among others: (1) the transfer of the Philippine Embassy to Nampeidai (2) the
issuance of administrative orders for the possibility of alienating the four government properties in Japan; (3) the
issuance of Executive Order No. 296; (4) the enactment by the Congress of Rep. Act No. 6657 [the Comprehensive
Agrarian Reform Law] on June 10, 1988 which contains a provision stating that funds may be taken from the sale of
Philippine properties in foreign countries; (5) the holding of the public bidding of the Roppongi property but which
failed; (6) the deferment by the Senate in Resolution No. 55 of the bidding to a future date; thus an acknowledgment
by the Senate of the government's intention to remove the Roppongi property from the public service purpose; and
(7) the resolution of this Court dismissing the petition in Ojeda v. Bidding Committee, et al., G.R. No. 87478 which
sought to enjoin the second bidding of the Roppongi property scheduled on March 30, 1989.

III

In G.R. No. 94047, petitioner Ojeda once more asks this Court to rule on the constitutionality of Executive Order No.
296. He had earlier filed a petition in G.R. No. 87478 which the Court dismissed on August 1, 1989. He now avers that
the executive order contravenes the constitutional mandate to conserve and develop the national patrimony stated
in the Preamble of the 1987 Constitution. It also allegedly violates:

(1) The reservation of the ownership and acquisition of alienable lands of the public domain to Filipino citizens.
(Sections 2 and 3, Article XII, Constitution; Sections 22 and 23 of Commonwealth Act 141).itc-asl

(2) The preference for Filipino citizens in the grant of rights, privileges and concessions covering the national economy
and patrimony (Section 10, Article VI, Constitution);

(3) The protection given to Filipino enterprises against unfair competition and trade practices;

(4) The guarantee of the right of the people to information on all matters of public concern (Section 7, Article III,
Constitution);

(5) The prohibition against the sale to non-Filipino citizens or entities not wholly owned by Filipino citizens of capital
goods received by the Philippines under the Reparations Act (Sections 2 and 12 of Rep. Act No. 1789); and

(6) The declaration of the state policy of full public disclosure of all transactions involving public interest (Section 28,
Article III, Constitution).

Petitioner Ojeda warns that the use of public funds in the execution of an unconstitutional executive order is a
misapplication of public funds He states that since the details of the bidding for the Roppongi property were never
publicly disclosed until February 15, 1990 (or a few days before the scheduled bidding), the bidding guidelines are
available only in Tokyo, and the accomplishment of requirements and the selection of qualified bidders should be
done in Tokyo, interested Filipino citizens or entities owned by them did not have the chance to comply with Purchase
Offer Requirements on the Roppongi. Worse, the Roppongi shall be sold for a minimum price of $225 million from
which price capital gains tax under Japanese law of about 50 to 70% of the floor price would still be deducted.

IV

The petitioners and respondents in both cases do not dispute the fact that the Roppongi site and the three related
properties were through reparations agreements, that these were assigned to the government sector and that the
Roppongi property itself was specifically designated under the Reparations Agreement to house the Philippine
Embassy.

The nature of the Roppongi lot as property for public service is expressly spelled out. It is dictated by the terms of the
Reparations Agreement and the corresponding contract of procurement which bind both the Philippine government
and the Japanese government.

There can be no doubt that it is of public dominion unless it is convincingly shown that the property has become
patrimonial. This, the respondents have failed to do.

As property of public dominion, the Roppongi lot is outside the commerce of man. It cannot be alienated. Its
ownership is a special collective ownership for general use and enjoyment, an application to the satisfaction of
collective needs, and resides in the social group. The purpose is not to serve the State as a juridical person, but the
citizens; it is intended for the common and public welfare and cannot be the object of appropration. (Taken from 3
Manresa, 66-69; cited in Tolentino, Commentaries on the Civil Code of the Philippines, 1963 Edition, Vol. II, p. 26).

The applicable provisions of the Civil Code are:

ART. 419. Property is either of public dominion or of private ownership.

ART. 420. The following things are property of public dominion

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

(2) Those which belong to the State, without being for public use, and are intended for some public service or for the
development of the national wealth.

ART. 421. All other property of the State, which is not of the character stated in the preceding article, is patrimonial
property.

The Roppongi property is correctly classified under paragraph 2 of Article 420 of the Civil Code as property belonging
to the State and intended for some public service.

Has the intention of the government regarding the use of the property been changed because the lot has been Idle for
some years? Has it become patrimonial?

The fact that the Roppongi site has not been used for a long time for actual Embassy service does not automatically
convert it to patrimonial property. Any such conversion happens only if the property is withdrawn from public use
(Cebu Oxygen and Acetylene Co. v. Bercilles, 66 SCRA 481 [1975]). A property continues to be part of the public
domain, not available for private appropriation or ownership until there is a formal declaration on the part of the
government to withdraw it from being such (Ignacio v. Director of Lands, 108 Phil. 335 [1960]).

The respondents enumerate various pronouncements by concerned public officials insinuating a change of intention.
We emphasize, however, that an abandonment of the intention to use the Roppongi property for public service and
to make it patrimonial property under Article 422 of the Civil Code must be definite Abandonment cannot be inferred
from the non-use alone specially if the non-use was attributable not to the government's own deliberate and
indubitable will but to a lack of financial support to repair and improve the property (See Heirs of Felino Santiago v.
Lazaro, 166 SCRA 368 [1988]). Abandonment must be a certain and positive act based on correct legal premises.

A mere transfer of the Philippine Embassy to Nampeidai in 1976 is not relinquishment of the Roppongi property's
original purpose. Even the failure by the government to repair the building in Roppongi is not abandonment since as
earlier stated, there simply was a shortage of government funds. The recent Administrative Orders authorizing a
study of the status and conditions of government properties in Japan were merely directives for investigation but did
not in any way signify a clear intention to dispose of the properties.

Executive Order No. 296, though its title declares an "authority to sell", does not have a provision in its text expressly
authorizing the sale of the four properties procured from Japan for the government sector. The executive order does
not declare that the properties lost their public character. It merely intends to make the properties available to
foreigners and not to Filipinos alone in case of a sale, lease or other disposition. It merely eliminates the restriction
under Rep. Act No. 1789 that reparations goods may be sold only to Filipino citizens and one hundred (100%) percent
Filipino-owned entities. The text of Executive Order No. 296 provides:

Section 1. The provisions of Republic Act No. 1789, as amended, and of other laws to the contrary notwithstanding,
the above-mentioned properties can be made available for sale, lease or any other manner of disposition to non-
Filipino citizens or to entities owned by non-Filipino citizens.

Executive Order No. 296 is based on the wrong premise or assumption that the Roppongi and the three other
properties were earlier converted into alienable real properties. As earlier stated, Rep. Act No. 1789 differentiates the
procurements for the government sector and the private sector (Sections 2 and 12, Rep. Act No. 1789). Only the
private sector properties can be sold to end-users who must be Filipinos or entities owned by Filipinos. It is this
nationality provision which was amended by Executive Order No. 296.

Section 63 (c) of Rep. Act No. 6657 (the CARP Law) which provides as one of the sources of funds for its
implementation, the proceeds of the disposition of the properties of the Government in foreign countries, did not
withdraw the Roppongi property from being classified as one of public dominion when it mentions Philippine
properties abroad. Section 63 (c) refers to properties which are alienable and not to those reserved for public use or
service. Rep Act No. 6657, therefore, does not authorize the Executive Department to sell the Roppongi property. It
merely enumerates possible sources of future funding to augment (as and when needed) the Agrarian Reform Fund
created under Executive Order No. 299. Obviously any property outside of the commerce of man cannot be tapped as
a source of funds.

The respondents try to get around the public dominion character of the Roppongi property by insisting that Japanese
law and not our Civil Code should apply.

It is exceedingly strange why our top government officials, of all people, should be the ones to insist that in the sale of
extremely valuable government property, Japanese law and not Philippine law should prevail. The Japanese law - its
coverage and effects, when enacted, and exceptions to its provision is not presented to the Court It is simply
asserted that the lex loci rei sitae or Japanese law should apply without stating what that law provides. It is a ed on
faith that Japanese law would allow the sale.

We see no reason why a conflict of law rule should apply when no conflict of law situation exists. A conflict of law
situation arises only when: (1) There is a dispute over the title or ownership of an immovable, such that the capacity
to take and transfer immovables, the formalities of conveyance, the essential validity and effect of the transfer, or the
interpretation and effect of a conveyance, are to be determined (See Salonga, Private International Law, 1981 ed., pp.
377-383); and (2) A foreign law on land ownership and its conveyance is asserted to conflict with a domestic law on
the same matters. Hence, the need to determine which law should apply.

In the instant case, none of the above elements exists.

The issues are not concerned with validity of ownership or title. There is no question that the property belongs to the
Philippines. The issue is the authority of the respondent officials to validly dispose of property belonging to the State.
And the validity of the procedures adopted to effect its sale. This is governed by Philippine Law. The rule of lex situs
does not apply.

The assertion that the opinion of the Secretary of Justice sheds light on the relevance of the lex situs rule is misplaced.
The opinion does not tackle the alienability of the real properties procured through reparations nor the existence in
what body of the authority to sell them. In discussing who are capable of acquiring the lots, the Secretary merely
explains that it is the foreign law which should determine who can acquire the properties so that the constitutional
limitation on acquisition of lands of the public domain to Filipino citizens and entities wholly owned by Filipinos is
inapplicable. We see no point in belaboring whether or not this opinion is correct. Why should we discuss who can
acquire the Roppongi lot when there is no showing that it can be sold?

The subsequent approval on October 4, 1988 by President Aquino of the recommendation by the investigating
committee to sell the Roppongi property was premature or, at the very least, conditioned on a valid change in the
public character of the Roppongi property. Moreover, the approval does not have the force and effect of law since the
President already lost her legislative powers. The Congress had already convened for more than a year.

Assuming for the sake of argument, however, that the Roppongi property is no longer of public dominion, there is
another obstacle to its sale by the respondents.

There is no law authorizing its conveyance.

Section 79 (f) of the Revised Administrative Code of 1917 provides

Section 79 (f ) Conveyances and contracts to which the Government is a party. In cases in which the Government of
the Republic of the Philippines is a party to any deed or other instrument conveying the title to real estate or to any
other property the value of which is in excess of one hundred thousand pesos, the respective Department Secretary
shall prepare the necessary papers which, together with the proper recommendations, shall be submitted to the
Congress of the Philippines for approval by the same. Such deed, instrument, or contract shall be executed and signed
by the President of the Philippines on behalf of the Government of the Philippines unless the Government of the
Philippines unless the authority therefor be expressly vested by law in another officer. (Emphasis supplied)

The requirement has been retained in Section 48, Book I of the Administrative Code of 1987 (Executive Order No.
292).

SEC. 48. Official Authorized to Convey Real Property. Whenever real property of the Government is authorized by
law to be conveyed, the deed of conveyance shall be executed in behalf of the government by the following:

(1) For property belonging to and titled in the name of the Republic of the Philippines, by the President, unless the
authority therefor is expressly vested by law in another officer.

(2) For property belonging to the Republic of the Philippines but titled in the name of any political subdivision or of
any corporate agency or instrumentality, by the executive head of the agency or instrumentality. (Emphasis supplied)

It is not for the President to convey valuable real property of the government on his or her own sole will. Any such
conveyance must be authorized and approved by a law enacted by the Congress. It requires executive and legislative
concurrence.

Resolution No. 55 of the Senate dated June 8, 1989, asking for the deferment of the sale of the Roppongi property
does not withdraw the property from public domain much less authorize its sale. It is a mere resolution; it is not a
formal declaration abandoning the public character of the Roppongi property. In fact, the Senate Committee on
Foreign Relations is conducting hearings on Senate Resolution No. 734 which raises serious policy considerations and
calls for a fact-finding investigation of the circumstances behind the decision to sell the Philippine government
properties in Japan.

The resolution of this Court in Ojeda v. Bidding Committee, et al., supra, did not pass upon the constitutionality of
Executive Order No. 296. Contrary to respondents' assertion, we did not uphold the authority of the President to sell
the Roppongi property. The Court stated that the constitutionality of the executive order was not the real issue and
that resolving the constitutional question was "neither necessary nor finally determinative of the case." The Court
noted that "[W]hat petitioner ultimately questions is the use of the proceeds of the disposition of the Roppongi
property." In emphasizing that "the decision of the Executive to dispose of the Roppongi property to finance the CARP
... cannot be questioned" in view of Section 63 (c) of Rep. Act No. 6657, the Court did not acknowledge the fact that
the property became alienable nor did it indicate that the President was authorized to dispose of the Roppongi
property. The resolution should be read to mean that in case the Roppongi property is re-classified to be patrimonial
and alienable by authority of law, the proceeds of a sale may be used for national economic development projects
including the CARP.

Moreover, the sale in 1989 did not materialize. The petitions before us question the proposed 1990 sale of the
Roppongi property. We are resolving the issues raised in these petitions, not the issues raised in 1989.

Having declared a need for a law or formal declaration to withdraw the Roppongi property from public domain to
make it alienable and a need for legislative authority to allow the sale of the property, we see no compelling reason
to tackle the constitutional issues raised by petitioner Ojeda.

The Court does not ordinarily pass upon constitutional questions unless these questions are properly raised in
appropriate cases and their resolution is necessary for the determination of the case (People v. Vera, 65 Phil. 56
[1937]). The Court will not pass upon a constitutional question although properly presented by the record if the case
can be disposed of on some other ground such as the application of a statute or general law (Siler v. Louisville and
Nashville R. Co., 213 U.S. 175, [1909], Railroad Commission v. Pullman Co., 312 U.S. 496 [1941]).

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

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

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

Roppongi is no ordinary property. It is one ceded by the Japanese government in atonement for its past belligerence
for the valiant sacrifice of life and limb and for deaths, physical dislocation and economic devastation the whole
Filipino people endured in World War II.

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

Roppongi is a reminder that cannot should not be dissipated ... (Rollo-92047, p. 9)

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

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

SO ORDERED.

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
Decision
1
of the Court of Appeals (CA) affirming that
2
of the Regional Trial Court (RTC) in Kalibo, Aklan,
which granted the petition for declaratory relief filed by respondents-claimants Mayor Jose Yap, et al. and
ordered the survey of Boracay for titling purposes. The second is G.R. No. 173775, a petition for prohibition,
mandamus, and nullification of Proclamation No. 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 inhabitants
4
who
live in the bone-shaped islands three barangays.
5

On April 14, 1976, the Department of Environment and Natural Resources (DENR) approved the National
Reservation Survey of Boracay
Island,
6
which identified several lots as being occupied or claimed by named persons.
7

On November 10, 1978, then President Ferdinand Marcos issued Proclamation No. 1801
8
declaring Boracay
Island, among other islands, caves and peninsulas in the Philippines, as tourist zones and marine reserves
under the administration of the Philippine Tourism Authority (PTA). President Marcos later approved the
issuance of PTA Circular 3-82
9
dated September 3, 1982, to implement Proclamation No. 1801.
Claiming that Proclamation No. 1801 and PTA Circular No 3-82 precluded them from filing an application for
judicial confirmation of imperfect title or survey of land for titling purposes, respondents-claimants
Mayor Jose S. Yap, Jr., Libertad Talapian, Mila Y. Sumndad, and Aniceto Yap filed a petition for declaratory
relief with the RTC in Kalibo, Aklan.
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.
SO ORDERED.
17

The RTC upheld respondents-claimants right to have their occupied lands titled in their name. It ruled that
neither Proclamation No. 1801 nor PTA Circular No. 3-82 mentioned that lands in Boracay were inalienable or
could not be the subject of disposition.
18
The Circular itself recognized private ownership of lands.
19
The trial
court cited Sections 87
20
and 53
21
of the Public Land Act as basis for acknowledging private ownership of lands
in Boracay and that only those forested areas in public lands were declared as part of the forest reserve.
22

The OSG moved for reconsideration but its motion was denied.
23
The Republic then appealed to the CA.
On December 9, 2004, the appellate court affirmed in toto the RTC decision, disposing as follows:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us DENYING the appeal
filed in this case and AFFIRMING the decision of the lower court.
24

The CA held that respondents-claimants could not be prejudiced by a declaration that the lands they occupied
since time immemorial were part of a forest reserve.
Again, the OSG sought reconsideration but it was similarly denied.
25
Hence, the present petition under Rule 45.
G.R. No. 173775
On May 22, 2006, during the pendency of G.R. No. 167707, President Gloria Macapagal-Arroyo issued
Proclamation No. 1064
26
classifying Boracay Island into four hundred (400) hectares of reserved forest land
(protection purposes) and six hundred twenty-eight and 96/100 (628.96) hectares of agricultural land (alienable
and disposable). The Proclamation likewise provided for a fifteen-meter buffer zone on each side of the
centerline of roads and trails, reserved for right-of-way and which shall form part of the area reserved for forest
land protection purposes.
On August 10, 2006, petitioners-claimants Dr. Orlando Sacay,
27
Wilfredo Gelito,
28
and other landowners
29
in
Boracay filed with this Court an original petition for prohibition, mandamus, and nullification of Proclamation
No. 1064.
30
They allege that the Proclamation infringed on their "prior vested rights" over portions of Boracay.
They have been in continued possession of their respective lots in Boracay since time immemorial. They have
also invested billions of pesos in developing their lands and building internationally renowned first class resorts
on their lots.
31

Petitioners-claimants contended that there is no need for a proclamation reclassifying Boracay into agricultural
land. Being classified as neither mineral nor timber land, the island is deemed agricultural pursuant to the
Philippine Bill of 1902 and Act No. 926, known as the first Public Land Act.
32
Thus, their possession in the
concept of owner for the required period entitled them to judicial confirmation of imperfect title.
Opposing the petition, the OSG argued that petitioners-claimants do not have a vested right over their occupied
portions in the island. Boracay is an unclassified public forest land pursuant to Section 3(a) of PD No. 705.
Being public forest, the claimed portions of the island are inalienable and cannot be the subject of judicial
confirmation of imperfect title. It is only the executive department, not the courts, which has authority to
reclassify lands of the public domain into alienable and disposable lands. There is a need for a positive
government act in order to release the lots for disposition.
On November 21, 2006, this Court ordered the consolidation of the two petitions as they principally involve the
same issues on the land classification of 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
Island.
34

G.R. No. 173775
Petitioners-claimants hoist five (5) issues, namely:
I.
AT THE TIME OF THE ESTABLISHED POSSESSION OF PETITIONERS IN CONCEPT OF OWNER
OVER THEIR RESPECTIVE AREAS IN BORACAY, SINCE TIME IMMEMORIAL OR AT THE LATEST
SINCE 30 YRS. PRIOR TO THE FILING OF THE PETITION FOR DECLARATORY RELIEF ON NOV. 19,
1997, WERE THE AREAS OCCUPIED BY THEM PUBLIC AGRICULTURAL LANDS AS DEFINED BY
LAWS THEN ON JUDICIAL CONFIRMATION OF IMPERFECT TITLES OR PUBLIC FOREST AS
DEFINED BY SEC. 3a, PD 705?
II.
HAVE PETITIONERS OCCUPANTS ACQUIRED PRIOR VESTED RIGHT OF PRIVATE OWNERSHIP
OVER THEIR OCCUPIED PORTIONS OF BORACAY LAND, DESPITE THE FACT THAT THEY HAVE
NOT APPLIED YET FOR JUDICIAL CONFIRMATION OF IMPERFECT TITLE?
III.
IS THE EXECUTIVE DECLARATION OF THEIR AREAS AS ALIENABLE AND DISPOSABLE UNDER
SEC 6, CA 141 [AN] INDISPENSABLE PRE-REQUISITE FOR PETITIONERS TO OBTAIN TITLE
UNDER THE TORRENS SYSTEM?
IV.
IS THE ISSUANCE OF PROCLAMATION 1064 ON MAY 22, 2006, VIOLATIVE OF THE PRIOR
VESTED RIGHTS TO PRIVATE OWNERSHIP OF PETITIONERS OVER THEIR LANDS IN BORACAY,
PROTECTED BY THE DUE PROCESS CLAUSE OF THE CONSTITUTION OR IS PROCLAMATION
1064 CONTRARY TO SEC. 8, CA 141, OR SEC. 4(a) OF RA 6657.
V.
CAN RESPONDENTS BE COMPELLED BY MANDAMUS TO ALLOW THE SURVEY AND TO
APPROVE THE SURVEY PLANS FOR PURPOSES OF THE APPLICATION FOR TITLING OF THE
LANDS OF PETITIONERS IN BORACAY?
35
(Underscoring supplied)
In capsule, the main issue is whether private claimants (respondents-claimants in G.R. No. 167707 and
petitioners-claimants in G.R. No. 173775) have a right to secure titles over their occupied portions in Boracay.
The twin petitions pertain to their right, if any, to judicial confirmation of imperfect title under CA No. 141, as
amended. They do not involve their right to secure title under other pertinent laws.
Our Ruling
Regalian Doctrine and power of the executive
to reclassify lands of the public domain
Private claimants rely on three (3) laws and executive acts in their bid for judicial confirmation of imperfect
title, namely: (a) Philippine Bill of 1902
36
in relation to Act No. 926, later amended and/or superseded by Act
No. 2874 and CA No. 141;
37
(b) Proclamation No. 1801
38
issued by then President Marcos; and (c)
Proclamation No. 1064
39
issued by President Gloria Macapagal-Arroyo. We shall proceed to determine their
rights to apply for judicial confirmation of imperfect title under these laws and executive acts.
But first, a peek at the Regalian principle and the power of the executive to reclassify lands of the public
domain.
The 1935 Constitution classified lands of the public domain into agricultural, forest or timber.
40
Meanwhile, the
1973 Constitution provided the following divisions: agricultural, industrial or commercial, residential,
resettlement, mineral, timber or forest and grazing lands, and such other classes as may be provided by law,
41

giving the government great leeway for classification.
42
Then the 1987 Constitution reverted to the 1935
Constitution classification with one addition: national parks.
43
Of these, only agricultural lands may be
alienated.
44
Prior to Proclamation No. 1064 of May 22, 2006, Boracay Island had never been expressly and
administratively classified under any of these grand divisions. Boracay was an unclassified land of the public
domain.
The Regalian Doctrine dictates that all lands of the public domain belong to the State, that the State is the
source of any asserted right to ownership of land and charged with the conservation of such patrimony.
45
The
doctrine has been consistently adopted under the 1935, 1973, and 1987 Constitutions.
46

All lands not otherwise appearing to be clearly within private ownership are presumed to belong to the State.
47

Thus, all lands that have not been acquired from the government, either by purchase or by grant, belong to the
State as part of the inalienable public domain.
48
Necessarily, it is up to the State to determine if lands of the
public domain will be disposed of for private ownership. The government, as the agent of the state, is possessed
of the plenary power as the persona in law to determine who shall be the favored recipients of public lands, as
well as under what terms they may be granted such privilege, not excluding the placing of obstacles in the way
of their exercise of what otherwise would be ordinary acts of ownership.
49

Our present land law traces its roots to the Regalian Doctrine. Upon the Spanish conquest of the Philippines,
ownership of all lands, territories and possessions in the Philippines passed to the Spanish Crown.
50
The
Regalian doctrine was first introduced in the Philippines through the Laws of the Indies and the Royal Cedulas,
which laid the foundation that "all lands that were not acquired from the Government, either by purchase or by
grant, belong to the public domain."
51

The Laws of the Indies was followed by the Ley Hipotecaria or the Mortgage Lawof 1893. The Spanish
Mortgage Law provided for the systematic registration of titles and deeds as well as possessory claims.
52

The Royal Decree of 1894 or the Maura Law
53
partly amended the Spanish Mortgage Law and the Laws of the
Indies. It established possessory information as the method of legalizing possession of vacant Crown land,
under certain conditions which were set forth in said decree.
54
Under Section 393 of the Maura Law, an
informacion posesoria or possessory information title,
55
when duly inscribed in the Registry of Property, is
converted into a title of ownership only after the lapse of twenty (20) years of uninterrupted possession which
must be actual, public, and adverse,
56
from the date of its inscription.
57
However, possessory information title
had to be perfected one year after the promulgation of the Maura Law, or until April 17, 1895. Otherwise, the
lands would revert to the State.
58

In sum, private ownership of land under the Spanish regime could only be founded on royal concessions which
took various forms, namely: (1) titulo real or royal grant; (2) concesion especial or special grant; (3)
composicion con el estado or adjustment title; (4) titulo de compra or title by purchase; and (5) informacion
posesoria or possessory information title.
59
>
The first law governing the disposition of public lands in the Philippines under American rule was embodied in
the Philippine Bill of 1902.
60
By this law, lands of the public domain in the Philippine Islands were classified
into three (3) grand divisions, to wit: agricultural, mineral, and timber or forest lands.
61
The act provided for,
among others, the disposal of mineral lands by means of absolute grant (freehold system) and by lease
(leasehold system).
62
It also provided the definition by exclusion of "agricultural public lands."
63
Interpreting
the meaning of "agricultural lands" under the Philippine Bill of 1902, the Court declared in Mapa v. Insular
Government:
64

x x x In other words, that the phrase "agricultural land" as used in Act No. 926 means those public lands
acquired from Spain which are not timber or mineral lands. x x x
65
(Emphasis Ours)
On February 1, 1903, the Philippine Legislature passed Act No. 496, otherwise known as the Land Registration
Act. The act established a system of registration by which recorded title becomes absolute, indefeasible, and
imprescriptible. This is known as the Torrens system.
66

Concurrently, on October 7, 1903, the Philippine Commission passed Act No. 926, which was the first Public
Land Act. The Act introduced the homestead system and made provisions for judicial and administrative
confirmation of imperfect titles and for the sale or lease of public lands. It permitted corporations regardless of
the nationality of persons owning the controlling stock to lease or purchase lands of the public domain.
67
Under
the Act, open, continuous, exclusive, and notorious possession and occupation of agricultural lands for the next
ten (10) years preceding July 26, 1904 was sufficient for judicial confirmation of imperfect title.
68

On November 29, 1919, Act No. 926 was superseded by Act No. 2874, otherwise known as the second Public
Land Act. This new, more comprehensive law limited the exploitation of agricultural lands to Filipinos and
Americans and citizens of other countries which gave Filipinos the same privileges. For judicial confirmation of
title, possession and occupation en concepto dueo since time immemorial, or since July 26, 1894, was
required.
69

After the passage of the 1935 Constitution, CA No. 141 amended Act No. 2874 on December 1, 1936. To this
day, CA No. 141, as amended, remains as the existing general law governing the classification and disposition
of lands of the public domain other than timber and mineral lands,
70
and privately owned lands which reverted
to the State.
71

Section 48(b) of CA No. 141 retained the requirement under Act No. 2874 of possession and occupation of
lands of the public domain since time immemorial or since July 26, 1894. However, this provision was
superseded by Republic Act (RA) No. 1942,
72
which provided for a simple thirty-year prescriptive period for
judicial confirmation of imperfect title. The provision was last amended by PD No. 1073,
73
which now provides
for possession and occupation of the land applied for since June 12, 1945, or earlier.
74

The issuance of PD No. 892
75
on February 16, 1976 discontinued the use of Spanish titles as evidence in land
registration proceedings.
76
Under the decree, all holders of Spanish titles or grants should apply for registration
of their lands under Act No. 496 within six (6) months from the effectivity of the decree on February 16, 1976.
Thereafter, the recording of all unregistered lands
77
shall be governed by Section 194 of the Revised
Administrative Code, as amended by Act No. 3344.
On June 11, 1978, Act No. 496 was amended and updated by PD No. 1529, known as the Property Registration
Decree. It was enacted to codify the various laws relative to registration of property.
78
It governs registration of
lands under the Torrens system as well as unregistered lands, including chattel mortgages.
79

A positive act declaring land as alienable and disposable is required. In keeping with the presumption of State
ownership, the Court has time and again emphasized that there must be a positive act of the government, such
as an official proclamation,
80
declassifying inalienable public land into disposable land for agricultural or other
purposes.
81
In fact, Section 8 of CA No. 141 limits alienable or disposable lands only to those lands which have
been "officially delimited and classified."
82

The burden of proof in overcoming the presumption of State ownership of the lands of the public domain is on
the person applying for registration (or claiming ownership), who must prove that the land subject of the
application is alienable or disposable.
83
To overcome this presumption, incontrovertible evidence must be
established that the land subject of the application (or claim) is alienable or disposable.
84
There must still be a
positive act declaring land of the public domain as alienable and disposable. To prove that the land subject of an
application for registration is alienable, the applicant must establish the existence of a positive act of the
government such as a presidential proclamation or an executive order; an administrative action; investigation
reports of Bureau of Lands investigators; and a legislative act or a statute.
85
The applicant may also secure a
certification from the government that the land claimed to have been possessed for the required number of years
is alienable and disposable.
86

In the case at bar, no such proclamation, executive order, administrative action, report, statute, or certification
was presented to the Court. The records are bereft of evidence showing that, prior to 2006, the portions of
Boracay occupied by private claimants were subject of a government proclamation that the land is alienable and
disposable. Absent such well-nigh incontrovertible evidence, the Court cannot accept the submission that lands
occupied by private claimants were already open to disposition before 2006. Matters of land classification or
reclassification cannot be assumed. They call for proof.
87

Ankron and De Aldecoa did not make the whole of Boracay I sland, 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 DeAldecoa 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.
x x x x
Petitioners reliance upon Ramos v. Director of Lands and Ankron v. Government is misplaced. These cases
were decided under the Philippine Bill of 1902 and the first Public Land Act No. 926 enacted by the Philippine
Commission on October 7, 1926, under which there was no legal provision vesting in the Chief Executive or
President of the Philippines the power to classify lands of the public domain into mineral, timber and
agricultural so that the courts then were free to make corresponding classifications in justiciable cases, or were
vested with implicit power to do so, depending upon the preponderance of the evidence.
93

To aid the courts in resolving land registration cases under Act No. 926, it was then necessary to devise a
presumption on land classification. Thus evolved the dictum in Ankron that "the courts have a right to presume,
in the absence of evidence to the contrary, that in each case the lands are agricultural lands until the contrary is
shown."
94

But We cannot unduly expand the presumption in Ankron and De Aldecoa to an argument that all lands of the
public domain had been automatically reclassified as disposable and alienable agricultural lands. By no stretch
of imagination did the presumption convert all lands of the public domain into agricultural lands.
If We accept the position of private claimants, the Philippine Bill of 1902 and Act No. 926 would have
automatically made all lands in the Philippines, except those already classified as timber or mineral land,
alienable and disposable lands. That would take these lands out of State ownership and worse, would be utterly
inconsistent with and totally repugnant to the long-entrenched Regalian doctrine.
The presumption in Ankron and De Aldecoa attaches only to land registration cases brought under the
provisions of Act No. 926, or more specifically those cases dealing with judicial and administrative
confirmation of imperfect titles. The presumption applies to an applicant for judicial or administrative
conformation of imperfect title under Act No. 926. It certainly cannot apply to landowners, such as private
claimants or their predecessors-in-interest, who failed to avail themselves of the benefits of Act No. 926. As to
them, their land remained unclassified and, by virtue of the Regalian doctrine, continued to be owned by the
State.
In any case, the assumption in Ankron and De Aldecoa was not absolute. Land classification was, in the end,
dependent on proof. If there was proof that the land was better suited for non-agricultural uses, the courts could
adjudge it as a mineral or timber land despite the presumption. In Ankron, this Court stated:
In the case of Jocson vs. Director of Forestry (supra), the Attorney-General admitted in effect that whether the
particular land in question belongs to one class or another is a question of fact. The mere fact that a tract of land
has trees upon it or has mineral within it is not of itself sufficient to declare that one is forestry land and the
other, mineral land. There must be some proof of the extent and present or future value of the forestry and of the
minerals. While, as we have just said, many definitions have been given for "agriculture," "forestry," and
"mineral" lands, and that in each case it is a question of fact, we think it is safe to say that in order to be forestry
or mineral land the proof must show that it is more valuable for the forestry or the mineral which it contains
than it is for agricultural purposes. (Sec. 7, Act No. 1148.) It is not sufficient to show that there exists some
trees upon the land or that it bears some mineral. Land may be classified as forestry or mineral today, and, by
reason of the exhaustion of the timber or mineral, be classified as agricultural land tomorrow. And vice-versa,
by reason of the rapid growth of timber or the discovery of valuable minerals, lands classified as agricultural
today may be differently classified tomorrow.Each case must be decided upon the proof in that particular
case, having regard for its present or future value for one or the other purposes. We believe, however,
considering the fact that it is a matter of public knowledge that a majority of the lands in the Philippine Islands
are agricultural lands that the courts have a right to presume, in the absence of evidence to the contrary, that in
each case the lands are agricultural lands until the contrary is shown. Whatever the land involved in a
particular land registration case is forestry or mineral land must, therefore, be a matter of proof. Its
superior value for one purpose or the other is a question of fact to be settled by the proof in each
particular case. The fact that the land is a manglar [mangrove swamp] is not sufficient for the courts to decide
whether it is agricultural, forestry, or mineral land. It may perchance belong to one or the other of said classes
of land. The Government, in the first instance, under the provisions of Act No. 1148, may, by reservation,
decide for itself what portions of public land shall be considered forestry land, unless private interests have
intervened before such reservation is made. In the latter case, whether the land is agricultural, forestry, or
mineral, is a question of proof. Until private interests have intervened, the Government, by virtue of the terms of
said Act (No. 1148), may decide for itself what portions of the "public domain" shall be set aside and reserved
as forestry or mineral land. (Ramos vs. Director of Lands, 39 Phil. 175; Jocson vs. Director of Forestry, supra)
95

(Emphasis ours)
Since 1919, courts were no longer free to determine the classification of lands from the facts of each case,
except those that have already became private lands.
96
Act No. 2874, promulgated in 1919 and reproduced in
Section 6 of CA No. 141, gave the Executive Department, through the President, the exclusive prerogative to
classify or reclassify public lands into alienable or disposable, mineral or forest.
96-a
Since then, courts no longer
had the authority, whether express or implied, to determine the classification of lands of the public domain.
97

Here, private claimants, unlike the Heirs of Ciriaco Tirol who were issued their title in 1933,
98
did not present a
justiciable case for determination by the land registration court of the propertys land classification. Simply put,
there was no opportunity for the courts then to resolve if the land the Boracay occupants are now claiming were
agricultural lands. When Act No. 926 was supplanted by Act No. 2874 in 1919, without an application for
judicial confirmation having been filed by private claimants or their predecessors-in-interest, the courts were no
longer authorized to determine the propertys land classification. Hence, private claimants cannot bank on Act
No. 926.
We note that the RTC decision
99
in G.R. No. 167707 mentioned Krivenko v. Register of Deeds of Manila,
100

which was decided in 1947 when CA No. 141, vesting the Executive with the sole power to classify lands of the
public domain was already in effect. Krivenko cited the old cases Mapa v. Insular Government,
101
De Aldecoa
v. The Insular Government,
102
and Ankron v. Government of the Philippine Islands.
103

Krivenko, however, is not controlling here because it involved a totally different issue. The pertinent issue in
Krivenko was whether residential lots were included in the general classification of agricultural lands; and if so,
whether an alien could acquire a residential lot. This Court ruled that as an alien, Krivenko was prohibited by
the 1935 Constitution
104
from acquiring agricultural land, which included residential lots. Here, the issue is
whether unclassified lands of the public domain are automatically deemed agricultural.
Notably, the definition of "agricultural public lands" mentioned in Krivenko relied on the old cases decided
prior to the enactment of Act No. 2874, including Ankron and De Aldecoa.
105
As We have already stated, those
cases cannot apply here, since they were decided when the Executive did not have the authority to classify lands
as agricultural, timber, or mineral.
Private claimants continued possession under Act No. 926 does not create a presumption that the land is
alienable. Private claimants also contend that their continued possession of portions of Boracay Island for the
requisite period of ten (10) years under Act No. 926
106
ipso facto converted the island into private ownership.
Hence, they may apply for a title in their name.
A similar argument was squarely rejected by the Court in Collado v. Court of Appeals.
107
Collado, citing the
separate opinion of now Chief Justice Reynato S. Puno in Cruz v. Secretary of Environment and Natural
Resources,
107-a
ruled:
"Act No. 926, the first Public Land Act, was passed in pursuance of the provisions of the Philippine Bill of
1902. The law governed the disposition of lands of the public domain. It prescribed rules and regulations for the
homesteading, selling and leasing of portions of the public domain of the Philippine Islands, and prescribed the
terms and conditions to enable persons to perfect their titles to public lands in the Islands. It also provided for
the "issuance of patents to certain native settlers upon public lands," for the establishment of town sites and sale
of lots therein, for the completion of imperfect titles, and for the cancellation or confirmation of Spanish
concessions and grants in the Islands." In short, the Public Land Act operated on the assumption that title to
public lands in the Philippine Islands remained in the government; and that the governments title to public
land sprung from the Treaty of Paris and other subsequent treaties between Spain and the United States. The
term "public land" referred to all lands of the public domain whose title still remained in the government and are
thrown open to private appropriation and settlement, and excluded the patrimonial property of the government
and the friar lands."
Thus, it is plain error for petitioners to argue that under the Philippine Bill of 1902 and Public Land Act
No. 926, mere possession by private individuals of lands creates the legal presumption that the lands are
alienable and disposable.
108
(Emphasis Ours)
Except for lands already covered by existing titles, Boracay was an unclassified land of the public domain
prior to Proclamation No. 1064. Such unclassified lands are considered public forest under PD No. 705. The
DENR
109
and the National Mapping and Resource Information Authority
110
certify that Boracay Island is an
unclassified land of the public domain.
PD No. 705 issued by President Marcos categorized all unclassified lands of the public domain as public forest.
Section 3(a) of PD No. 705 defines a public forest as "a mass of lands of the public domain which has not been
the subject of the present system of classification for the determination of which lands are needed for forest
purpose and which are not." Applying PD No. 705, all unclassified lands, including those in Boracay Island, are
ipso facto considered public forests. PD No. 705, however, respects titles already existing prior to its effectivity.
The Court notes that the classification of Boracay as a forest land under PD No. 705 may seem to be out of
touch with the present realities in the island. Boracay, no doubt, has been partly stripped of its forest cover to
pave the way for commercial developments. As a premier tourist destination for local and foreign tourists,
Boracay appears more of a commercial island resort, rather than a forest land.
Nevertheless, that the occupants of Boracay have built multi-million peso beach resorts on the island;
111
that the
island has already been stripped of its forest cover; or that the implementation of Proclamation No. 1064 will
destroy the islands tourism industry, do not negate its character as public forest.
Forests, in the context of both the Public Land Act and the Constitution
112
classifying lands of the public
domain into "agricultural, forest or timber, mineral lands, and national parks," do not necessarily refer to large
tracts of wooded land or expanses covered by dense growths of trees and underbrushes.
113
The discussion in
Heirs of Amunategui v. Director of Forestry
114
is particularly instructive:
A forested area classified as forest land of the public domain does not lose such classification simply because
loggers or settlers may have stripped it of its forest cover. Parcels of land classified as forest land may actually
be covered with grass or planted to crops by kaingin cultivators or other farmers. "Forest lands" do not have to
be on mountains or in out of the way places. Swampy areas covered by mangrove trees, nipa palms, and other
trees growing in brackish or sea water may also be classified as forest land. The classification is descriptive of
its legal nature or status and does not have to be descriptive of what the land actually looks like. Unless
and until the land classified as "forest" is released in an official proclamation to that effect so that it may form
part of the disposable agricultural lands of the public domain, the rules on confirmation of imperfect title do not
apply.
115
(Emphasis supplied)
There is a big difference between "forest" as defined in a dictionary and "forest or timber land" as a
classification of lands of the public domain as appearing in our statutes. One is descriptive of what appears on
the land while the other is a legal status, a classification for legal purposes.
116
At any rate, the Court is tasked to
determine the legal status of Boracay Island, and not look into its physical layout. Hence, even if its forest cover
has been replaced by beach resorts, restaurants and other commercial establishments, it has not been
automatically converted from public forest to alienable agricultural land.
Private claimants cannot rely on Proclamation No. 1801 as basis for judicial confirmation of imperfect title.
The proclamation did not convert Boracay into an agricultural land. However, private claimants argue that
Proclamation No. 1801 issued by then President Marcos in 1978 entitles them to judicial confirmation of
imperfect title. The Proclamation classified Boracay, among other islands, as a tourist zone. Private claimants
assert that, as a tourist spot, the island is susceptible of private ownership.
Proclamation No. 1801 or PTA Circular No. 3-82 did not convert the whole of Boracay into an agricultural
land. There is nothing in the law or the Circular which made Boracay Island an agricultural land. The reference
in Circular No. 3-82 to "private lands"
117
and "areas declared as alienable and disposable"
118
does not by itself
classify the entire island as agricultural. Notably, Circular No. 3-82 makes reference not only to private lands
and areas but also to public forested lands. Rule VIII, Section 3 provides:
No trees in forested private lands may be cut without prior authority from the PTA. All forested areas in public
lands are declared forest reserves. (Emphasis supplied)
Clearly, the reference in the Circular to both private and public lands merely recognizes that the island can be
classified by the Executive department pursuant to its powers under CA No. 141. In fact, Section 5 of the
Circular recognizes the then Bureau of Forest Developments authority to declare areas in the island as alienable
and disposable when it provides:
Subsistence farming, in areas declared as alienable and disposable by the Bureau of Forest Development.
Therefore, Proclamation No. 1801 cannot be deemed the positive act needed to classify Boracay Island as
alienable and disposable land. If President Marcos intended to classify the island as alienable and disposable or
forest, or both, he would have identified the specific limits of each, as President Arroyo did in Proclamation No.
1064. This was not done in Proclamation No. 1801.
The Whereas clauses of Proclamation No. 1801 also explain the rationale behind the declaration of Boracay
Island, together with other islands, caves and peninsulas in the Philippines, as a tourist zone and marine reserve
to be administered by the PTA to ensure the concentrated efforts of the public and private sectors in the
development of the areas tourism potential with due regard for ecological balance in the marine environment.
Simply put, the proclamation is aimed at administering the islands for tourism and ecological purposes. It
does not address the areas alienability.
119

More importantly, Proclamation No. 1801 covers not only Boracay Island, but sixty-four (64) other islands,
coves, and peninsulas in the Philippines, such as Fortune and Verde Islands in Batangas, Port Galera in Oriental
Mindoro, Panglao and Balicasag Islands in Bohol, Coron Island, Puerto Princesa and surrounding areas in
Palawan, Camiguin Island in Cagayan de Oro, and Misamis Oriental, to name a few. If the designation of
Boracay Island as tourist zone makes it alienable and disposable by virtue of Proclamation No. 1801, all the
other areas mentioned would likewise be declared wide open for private disposition. That could not have been,
and is clearly beyond, the intent of the proclamation.
I t was Proclamation No. 1064 of 2006 which positively declared part of Boracay as alienable and opened the
same to private ownership. Sections 6 and 7 of CA No. 141
120
provide that it is only the President, upon the
recommendation of the proper department head, who has the authority to classify the lands of the public domain
into alienable or disposable, timber and mineral lands.
121

In issuing Proclamation No. 1064, President Gloria Macapagal-Arroyo merely exercised the authority granted
to her to classify lands of the public domain, presumably subject to existing vested rights. Classification of
public lands is the exclusive prerogative of the Executive Department, through the Office of the President.
Courts have no authority to do so.
122
Absent such classification, the land remains unclassified until released and
rendered open to disposition.
123

Proclamation No. 1064 classifies Boracay into 400 hectares of reserved forest land and 628.96 hectares of
agricultural land. The Proclamation likewise provides for a 15-meter buffer zone on each side of the center line
of roads and trails, which are reserved for right of way and which shall form part of the area reserved for forest
land protection purposes.
Contrary to private claimants argument, there was nothing invalid or irregular, much less unconstitutional,
about the classification of Boracay Island made by the President through Proclamation No. 1064. It was within
her authority to make such classification, subject to existing vested rights.
Proclamation No. 1064 does not violate the Comprehensive Agrarian Reform Law. Private claimants further
assert that Proclamation No. 1064 violates the provision of the Comprehensive Agrarian Reform Law (CARL)
or RA No. 6657 barring conversion of public forests into agricultural lands. They claim that since Boracay is a
public forest under PD No. 705, President Arroyo can no longer convert it into an agricultural land without
running afoul of Section 4(a) of RA No. 6657, thus:
SEC. 4.Scope. The Comprehensive Agrarian Reform Law of 1988 shall cover, regardless of tenurial
arrangement and commodity produced, all public and private agricultural lands as provided in Proclamation No.
131 and Executive Order No. 229, including other lands of the public domain suitable for agriculture.
More specifically, the following lands are covered by the Comprehensive Agrarian Reform Program:
(a) All alienable and disposable lands of the public domain devoted to or suitable for agriculture. No
reclassification of forest or mineral lands to agricultural lands shall be undertaken after the approval of this Act
until Congress, taking into account ecological, developmental and equity considerations, shall have determined
by law, the specific limits of the public domain.
That Boracay Island was classified as a public forest under PD No. 705 did not bar the Executive from later
converting it into agricultural land. Boracay Island still remained an unclassified land of the public domain
despite PD No. 705.
In Heirs of the Late Spouses Pedro S. Palanca and Soterranea Rafols v. Republic,
124
the Court stated that
unclassified lands are public forests.
While it is true that the land classification map does not categorically state that the islands are public
forests, the fact that they were unclassified lands leads to the same result. In the absence of the
classification as mineral or timber land, the land remains unclassified land until released and rendered open to
disposition.
125
(Emphasis supplied)
Moreover, the prohibition under the CARL applies only to a "reclassification" of land. If the land had never
been previously classified, as in the case of Boracay, there can be no prohibited reclassification under the
agrarian law. We agree with the opinion of the Department of Justice
126
on this point:
Indeed, the key word to the correct application of the prohibition in Section 4(a) is the word "reclassification."
Where there has been no previous classification of public forest [referring, we repeat, to the mass of the public
domain which has not been the subject of the present system of classification for purposes of determining which
are needed for forest purposes and which are not] into permanent forest or forest reserves or some other forest
uses under the Revised Forestry Code, there can be no "reclassification of forest lands" to speak of within the
meaning of Section 4(a).
Thus, obviously, the prohibition in Section 4(a) of the CARL against the reclassification of forest lands to
agricultural lands without a prior law delimiting the limits of the public domain, does not, and cannot, apply to
those lands of the public domain, denominated as "public forest" under the Revised Forestry Code, which have
not been previously determined, or classified, as needed for forest purposes in accordance with the provisions of
the Revised Forestry Code.
127

Private claimants are not entitled to apply for judicial confirmation of imperfect title under CA No. 141.
Neither do they have vested rights over the occupied lands under the said law.There are two requisites for
judicial confirmation of imperfect or incomplete title under CA No. 141, namely: (1) open, continuous,
exclusive, and notorious possession and occupation of the subject land by himself or through his predecessors-
in-interest under a bona fide claim of ownership since time immemorial or from June 12, 1945; and (2) the
classification of the land as alienable and disposable land of the public domain.
128

As discussed, the Philippine Bill of 1902, Act No. 926, and Proclamation No. 1801 did not convert portions of
Boracay Island into an agricultural land. The island remained an unclassified land of the public domain and,
applying the Regalian doctrine, is considered State property.
Private claimants bid for judicial confirmation of imperfect title, relying on the Philippine Bill of 1902, Act No.
926, and Proclamation No. 1801, must fail because of the absence of the second element of alienable and
disposable land. Their entitlement to a government grant under our present Public Land Act presupposes that
the land possessed and applied for is already alienable and disposable. This is clear from the wording of the law
itself.
129
Where the land is not alienable and disposable, possession of the land, no matter how long, cannot
confer ownership or possessory rights.
130

Neither may private claimants apply for judicial confirmation of imperfect title under Proclamation No. 1064,
with respect to those lands which were classified as agricultural lands. Private claimants failed to prove the first
element of open, continuous, exclusive, and notorious possession of their lands in Boracay since June 12, 1945.
We cannot sustain the CA and RTC conclusion in the petition for declaratory relief that private claimants
complied with the requisite period of possession.
The tax declarations in the name of private claimants are insufficient to prove the first element of possession.
We note that the earliest of the tax declarations in the name of private claimants were issued in 1993. Being of
recent dates, the tax declarations are not sufficient to convince this Court that the period of possession and
occupation commenced on June 12, 1945.
Private claimants insist that they have a vested right in Boracay, having been in possession of the island for a
long time. They have invested millions of pesos in developing the island into a tourist spot. They say their
continued possession and investments give them a vested right which cannot be unilaterally rescinded by
Proclamation No. 1064.
The continued possession and considerable investment of private claimants do not automatically give them a
vested right in Boracay. Nor do these give them a right to apply for a title to the land they are presently
occupying. This Court is constitutionally bound to decide cases based on the evidence presented and the laws
applicable. As the law and jurisprudence stand, private claimants are ineligible to apply for a judicial
confirmation of title over their occupied portions in Boracay even with their continued possession and
considerable investment in the island.
One Last Note
The Court is aware that millions of pesos have been invested for the development of Boracay Island, making it a
by-word in the local and international tourism industry. The Court also notes that for a number of years,
thousands of people have called the island their home. While the Court commiserates with private claimants
plight, We are bound to apply the law strictly and judiciously. This is the law and it should prevail. I to 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.

G.R. No. 133250 July 9, 2002
FRANCISCO I. CHAVEZ, petitioner,
vs.
PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY DEVELOPMENT CORPORATION,
respondents.
CARPIO, J .:
This is an original Petition for Mandamus with prayer for a writ of preliminary injunction and a temporary
restraining order. The petition seeks to compel the Public Estates Authority ("PEA" for brevity) to disclose all
facts on PEA's then on-going renegotiations with Amari Coastal Bay and Development Corporation ("AMARI"
for brevity) to reclaim portions of Manila Bay. The petition further seeks to enjoin PEA from signing a new
agreement with AMARI involving such reclamation.
The Facts
On November 20, 1973, the government, through the Commissioner of Public Highways, signed a contract with
the Construction and Development Corporation of the Philippines ("CDCP" for brevity) to reclaim certain
foreshore and offshore areas of Manila Bay. The contract also included the construction of Phases I and II of the
Manila-Cavite Coastal Road. CDCP obligated itself to carry out all the works in consideration of fifty percent of
the total reclaimed land.
On February 4, 1977, then President Ferdinand E. Marcos issued Presidential Decree No. 1084 creating PEA.
PD No. 1084 tasked PEA "to reclaim land, including foreshore and submerged areas," and "to develop,
improve, acquire, x x x lease and sell any and all kinds of lands."
1
On the same date, then President Marcos
issued Presidential Decree No. 1085 transferring to PEA the "lands reclaimed in the foreshore and offshore of
the Manila Bay"
2
under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP).
On December 29, 1981, then President Marcos issued a memorandum directing PEA to amend its contract with
CDCP, so that "[A]ll future works in MCCRRP x x x shall be funded and owned by PEA." Accordingly, PEA
and CDCP executed a Memorandum of Agreement dated December 29, 1981, which stated:
"(i) CDCP shall undertake all reclamation, construction, and such other works in the MCCRRP as may
be agreed upon by the parties, to be paid according to progress of works on a unit price/lump sum basis
for items of work to be agreed upon, subject to price escalation, retention and other terms and conditions
provided for in Presidential Decree No. 1594. All the financing required for such works shall be
provided by PEA.
x x x
(iii) x x x CDCP shall give up all its development rights and hereby agrees to cede and transfer in favor
of PEA, all of the rights, title, interest and participation of CDCP in and to all the areas of land
reclaimed by CDCP in the MCCRRP as of December 30, 1981 which have not yet been sold, transferred
or otherwise disposed of by CDCP as of said date, which areas consist of approximately Ninety-Nine
Thousand Four Hundred Seventy Three (99,473) square meters in the Financial Center Area covered by
land pledge No. 5 and approximately Three Million Three Hundred Eighty Two Thousand Eight
Hundred Eighty Eight (3,382,888) square meters of reclaimed areas at varying elevations above Mean
Low Water Level located outside the Financial Center Area and the First Neighborhood Unit."
3

On January 19, 1988, then President Corazon C. Aquino issued Special Patent No. 3517, granting and
transferring to PEA "the parcels of land so reclaimed under the Manila-Cavite Coastal Road and Reclamation
Project (MCCRRP) containing a total area of one million nine hundred fifteen thousand eight hundred ninety
four (1,915,894) square meters." Subsequently, on April 9, 1988, the Register of Deeds of the Municipality of
Paraaque issued Transfer Certificates of Title Nos. 7309, 7311, and 7312, in the name of PEA, covering the
three reclaimed islands known as the "Freedom Islands" located at the southern portion of the Manila-Cavite
Coastal Road, Paraaque City. The Freedom Islands have a total land area of One Million Five Hundred
Seventy Eight Thousand Four Hundred and Forty One (1,578,441) square meters or 157.841 hectares.
On April 25, 1995, PEA entered into a Joint Venture Agreement ("JVA" for brevity) with AMARI, a private
corporation, to develop the Freedom Islands. The JVA also required the reclamation of an additional 250
hectares of submerged areas surrounding these islands to complete the configuration in the Master Development
Plan of the Southern Reclamation Project-MCCRRP. PEA and AMARI entered into the JVA through
negotiation without public bidding.
4
On April 28, 1995, the Board of Directors of PEA, in its Resolution No.
1245, confirmed the JVA.
5
On June 8, 1995, then President Fidel V. Ramos, through then Executive Secretary
Ruben Torres, approved the JVA.
6

On November 29, 1996, then Senate President Ernesto Maceda delivered a privilege speech in the Senate and
denounced the JVA as the "grandmother of all scams." As a result, the Senate Committee on Government
Corporations and Public Enterprises, and the Committee on Accountability of Public Officers and
Investigations, conducted a joint investigation. The Senate Committees reported the results of their investigation
in Senate Committee Report No. 560 dated September 16, 1997.
7
Among the conclusions of their report are: (1)
the reclaimed lands PEA seeks to transfer to AMARI under the JVA are lands of the public domain which the
government has not classified as alienable lands and therefore PEA cannot alienate these lands; (2) the
certificates of title covering the Freedom Islands are thus void, and (3) the JVA itself is illegal.
On December 5, 1997, then President Fidel V. Ramos issued Presidential Administrative Order No. 365
creating a Legal Task Force to conduct a study on the legality of the JVA in view of Senate Committee Report
No. 560. The members of the Legal Task Force were the Secretary of Justice,
8
the Chief Presidential Legal
Counsel,
9
and the Government Corporate Counsel.
10
The Legal Task Force upheld the legality of the JVA,
contrary to the conclusions reached by the Senate Committees.
11

On April 4 and 5, 1998, the Philippine Daily Inquirer and Today published reports that there were on-going
renegotiations between PEA and AMARI under an order issued by then President Fidel V. Ramos. According to
these reports, PEA Director Nestor Kalaw, PEA Chairman Arsenio Yulo and retired Navy Officer Sergio Cruz
composed the negotiating panel of PEA.
On April 13, 1998, Antonio M. Zulueta filed before the Court a Petition for Prohibition with Application for the
Issuance of a Temporary Restraining Order and Preliminary Injunction docketed as G.R. No. 132994 seeking
to nullify the JVA. The Court dismissed the petition "for unwarranted disregard of judicial hierarchy, without
prejudice to the refiling of the case before the proper court."
12

On April 27, 1998, petitioner Frank I. Chavez ("Petitioner" for brevity) as a taxpayer, filed the instant Petition
for Mandamus with Prayer for the Issuance of a Writ of Preliminary Injunction and Temporary Restraining
Order. Petitioner contends the government stands to lose billions of pesos in the sale by PEA of the reclaimed
lands to AMARI. Petitioner prays that PEA publicly disclose the terms of any renegotiation of the JVA,
invoking Section 28, Article II, and Section 7, Article III, of the 1987 Constitution on the right of the people to
information on matters of public concern. Petitioner assails the sale to AMARI of lands of the public domain as
a blatant violation of Section 3, Article XII of the 1987 Constitution prohibiting the sale of alienable lands of
the public domain to private corporations. Finally, petitioner asserts that he seeks to enjoin the loss of billions of
pesos in properties of the State that are of public dominion.
After several motions for extension of time,
13
PEA and AMARI filed their Comments on October 19, 1998 and
June 25, 1998, respectively. Meanwhile, on December 28, 1998, petitioner filed an Omnibus Motion: (a) to
require PEA to submit the terms of the renegotiated PEA-AMARI contract; (b) for issuance of a temporary
restraining order; and (c) to set the case for hearing on oral argument. Petitioner filed a Reiterative Motion for
Issuance of a TRO dated May 26, 1999, which the Court denied in a Resolution dated June 22, 1999.
In a Resolution dated March 23, 1999, the Court gave due course to the petition and required the parties to file
their respective memoranda.
On March 30, 1999, PEA and AMARI signed the Amended Joint Venture Agreement ("Amended JVA," for
brevity). On May 28, 1999, the Office of the President under the administration of then President Joseph E.
Estrada approved the Amended JVA.
Due to the approval of the Amended JVA by the Office of the President, petitioner now prays that on
"constitutional and statutory grounds the renegotiated contract be declared null and void."
14

The Issues
The issues raised by petitioner, PEA
15
and AMARI
16
are as follows:
I. WHETHER THE PRINCIPAL RELIEFS PRAYED FOR IN THE PETITION ARE MOOT AND
ACADEMIC BECAUSE OF SUBSEQUENT EVENTS;
II. WHETHER THE PETITION MERITS DISMISSAL FOR FAILING TO OBSERVE THE
PRINCIPLE GOVERNING THE HIERARCHY OF COURTS;
III. WHETHER THE PETITION MERITS DISMISSAL FOR NON-EXHAUSTION OF
ADMINISTRATIVE REMEDIES;
IV. WHETHER PETITIONER HAS LOCUS STANDI TO BRING THIS SUIT;
V. WHETHER THE CONSTITUTIONAL RIGHT TO INFORMATION INCLUDES OFFICIAL
INFORMATION ON ON-GOING NEGOTIATIONS BEFORE A FINAL AGREEMENT;
VI. WHETHER THE STIPULATIONS IN THE AMENDED JOINT VENTURE AGREEMENT FOR
THE TRANSFER TO AMARI OF CERTAIN LANDS, RECLAIMED AND STILL TO BE
RECLAIMED, VIOLATE THE 1987 CONSTITUTION; AND
VII. WHETHER THE COURT IS THE PROPER FORUM FOR RAISING THE ISSUE OF
WHETHER THE AMENDED JOINT VENTURE AGREEMENT IS GROSSLY
DISADVANTAGEOUS TO THE GOVERNMENT.
The Court's Ruling
First issue: whether the principal reliefs prayed for in the petition are moot and academic because of
subsequent events.
The petition prays that PEA publicly disclose the "terms and conditions of the on-going negotiations for a new
agreement." The petition also prays that the Court enjoin PEA from "privately entering into, perfecting and/or
executing any new agreement with AMARI."
PEA and AMARI claim the petition is now moot and academic because AMARI furnished petitioner on June
21, 1999 a copy of the signed Amended JVA containing the terms and conditions agreed upon in the
renegotiations. Thus, PEA has satisfied petitioner's prayer for a public disclosure of the renegotiations.
Likewise, petitioner's prayer to enjoin the signing of the Amended JVA is now moot because PEA and AMARI
have already signed the Amended JVA on March 30, 1999. Moreover, the Office of the President has approved
the Amended JVA on May 28, 1999.
Petitioner counters that PEA and AMARI cannot avoid the constitutional issue by simply fast-tracking the
signing and approval of the Amended JVA before the Court could act on the issue. Presidential approval does
not resolve the constitutional issue or remove it from the ambit of judicial review.
We rule that the signing of the Amended JVA by PEA and AMARI and its approval by the President cannot
operate to moot the petition and divest the Court of its jurisdiction. PEA and AMARI have still to implement
the Amended JVA. The prayer to enjoin the signing of the Amended JVA on constitutional grounds necessarily
includes preventing its implementation if in the meantime PEA and AMARI have signed one in violation of the
Constitution. Petitioner's principal basis in assailing the renegotiation of the JVA is its violation of Section 3,
Article XII of the Constitution, which prohibits the government from alienating lands of the public domain to
private corporations. If the Amended JVA indeed violates the Constitution, it is the duty of the Court to enjoin
its implementation, and if already implemented, to annul the effects of such unconstitutional contract.
The Amended JVA is not an ordinary commercial contract but one which seeks to transfer title and ownership
to 367.5 hectares of reclaimed lands and submerged areas of Manila Bay to a single private corporation. It
now becomes more compelling for the Court to resolve the issue to insure the government itself does not violate
a provision of the Constitution intended to safeguard the national patrimony. Supervening events, whether
intended or accidental, cannot prevent the Court from rendering a decision if there is a grave violation of the
Constitution. In the instant case, if the Amended JVA runs counter to the Constitution, the Court can still
prevent the transfer of title and ownership of alienable lands of the public domain in the name of AMARI. Even
in cases where supervening events had made the cases moot, the Court did not hesitate to resolve the legal or
constitutional issues raised to formulate controlling principles to guide the bench, bar, and the public.
17

Also, the instant petition is a case of first impression. All previous decisions of the Court involving Section 3,
Article XII of the 1987 Constitution, or its counterpart provision in the 1973 Constitution,
18
covered
agricultural lands sold to private corporations which acquired the lands from private parties. The transferors of
the private corporations claimed or could claim the right to judicial confirmation of their imperfect titles
19

under Title I I of Commonwealth Act. 141 ("CA No. 141" for brevity). In the instant case, AMARI seeks to
acquire from PEA, a public corporation, reclaimed lands and submerged areas for non-agricultural purposes by
purchaseunder PD No. 1084 (charter of PEA) and Title I I I of CA No. 141. Certain undertakings by AMARI
under the Amended JVA constitute the consideration for the purchase. Neither AMARI nor PEA can claim
judicial confirmation of their titles because the lands covered by the Amended JVA are newly reclaimed or still
to be reclaimed. Judicial confirmation of imperfect title requires open, continuous, exclusive and notorious
occupation of agricultural lands of the public domain for at least thirty years since June 12, 1945 or earlier.
Besides, the deadline for filing applications for judicial confirmation of imperfect title expired on December 31,
1987.
20

Lastly, there is a need to resolve immediately the constitutional issue raised in this petition because of the
possible transfer at any time by PEA to AMARI of title and ownership to portions of the reclaimed lands. Under
the Amended JVA, PEA is obligated to transfer to AMARI the latter's seventy percent proportionate share in
the reclaimed areas as the reclamation progresses. The Amended JVA even allows AMARI to mortgage at any
time the entirereclaimed area to raise financing for the reclamation project.
21

Second issue: whether the petition merits dismissal for failing to observe the principle governing the
hierarchy of courts.
PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking relief directly from the Court. The
principle of hierarchy of courts applies generally to cases involving factual questions. As it is not a trier of facts,
the Court cannot entertain cases involving factual issues. The instant case, however, raises constitutional issues
of transcendental importance to the public.
22
The Court can resolve this case without determining any factual
issue related to the case. Also, the instant case is a petition for mandamus which falls under the original
jurisdiction of the Court under Section 5, Article VIII of the Constitution. We resolve to exercise primary
jurisdiction over the instant case.
Third issue: whether the petition merits dismissal for non-exhaustion of administrative remedies.
PEA faults petitioner for seeking judicial intervention in compelling PEA to disclose publicly certain
information without first asking PEA the needed information. PEA claims petitioner's direct resort to the Court
violates the principle of exhaustion of administrative remedies. It also violates the rule that mandamus may
issue only if there is no other plain, speedy and adequate remedy in the ordinary course of law.
PEA distinguishes the instant case from Taada v. Tuvera
23
where the Court granted the petition for mandamus
even if the petitioners there did not initially demand from the Office of the President the publication of the
presidential decrees. PEA points out that in Taada, the Executive Department had an affirmative statutory
duty under Article 2 of the Civil Code
24
and Section 1 of Commonwealth Act No. 638
25
to publish the
presidential decrees. There was, therefore, no need for the petitioners in Taada to make an initial demand from
the Office of the President. In the instant case, PEA claims it has no affirmative statutory duty to disclose
publicly information about its renegotiation of the JVA. Thus, PEA asserts that the Court must apply the
principle of exhaustion of administrative remedies to the instant case in view of the failure of petitioner here to
demand initially from PEA the needed information.
The original JVA sought to dispose to AMARI public lands held by PEA, a government corporation. Under
Section 79 of the Government Auditing Code,
26
the disposition of government lands to private parties requires
public bidding. PEA was under a positive legal duty to disclose to the public the terms and conditions for the
sale of its lands. The law obligated PEA to make this public disclosure even without demand from petitioner or
from anyone. PEA failed to make this public disclosure because the original JVA, like the Amended JVA, was
the result of a negotiated contract, not of a public bidding. Considering that PEA had an affirmative statutory
duty to make the public disclosure, and was even in breach of this legal duty, petitioner had the right to seek
direct judicial intervention.
Moreover, and this alone is determinative of this issue, the principle of exhaustion of administrative remedies
does not apply when the issue involved is a purely legal or constitutional question.
27
The principal issue in the
instant case is the capacity of AMARI to acquire lands held by PEA in view of the constitutional ban
prohibiting the alienation of lands of the public domain to private corporations. We rule that the principle of
exhaustion of administrative remedies does not apply in the instant case.
Fourth issue: whether petitioner has locus standi to bring this suit
PEA argues that petitioner has no standing to institute mandamus proceedings to enforce his constitutional right
to information without a showing that PEA refused to perform an affirmative duty imposed on PEA by the
Constitution. PEA also claims that petitioner has not shown that he will suffer any concrete injury because of
the signing or implementation of the Amended JVA. Thus, there is no actual controversy requiring the exercise
of the power of judicial review.
The petitioner has standing to bring this taxpayer's suit because the petition seeks to compel PEA to comply
with its constitutional duties. There are two constitutional issues involved here. First is the right of citizens to
information on matters of public concern. Second is the application of a constitutional provision intended to
insure the equitable distribution of alienable lands of the public domain among Filipino citizens. The thrust of
the first issue is to compel PEA to disclose publicly information on the sale of government lands worth billions
of pesos, information which the Constitution and statutory law mandate PEA to disclose. The thrust of the
second issue is to prevent PEA from alienating hundreds of hectares of alienable lands of the public domain in
violation of the Constitution, compelling PEA to comply with a constitutional duty to the nation.
Moreover, the petition raises matters of transcendental importance to the public. In Chavez v. PCGG,
28
the
Court upheld the right of a citizen to bring a taxpayer's suit on matters of transcendental importance to the
public, thus -
"Besides, petitioner emphasizes, the matter of recovering the ill-gotten wealth of the Marcoses is an
issue of 'transcendental importance to the public.' He asserts that ordinary taxpayers have a right to
initiate and prosecute actions questioning the validity of acts or orders of government agencies or
instrumentalities, if the issues raised are of 'paramount public interest,' and if they 'immediately affect
the social, economic and moral well being of the people.'
Moreover, the mere fact that he is a citizen satisfies the requirement of personal interest, when the
proceeding involves the assertion of a public right, such as in this case. He invokes several decisions of
this Court which have set aside the procedural matter of locus standi, when the subject of the case
involved public interest.
x x x
In Taada v. Tuvera, the Court asserted that when the issue concerns a public right and the object of
mandamus is to obtain the enforcement of a public duty, the people are regarded as the real parties in
interest; and because it is sufficient that petitioner is a citizen and as such is interested in the execution
of the laws, he need not show that he has any legal or special interest in the result of the action. In the
aforesaid case, the petitioners sought to enforce their right to be informed on matters of public concern,
a right then recognized in Section 6, Article IV of the 1973 Constitution, in connection with the rule that
laws in order to be valid and enforceable must be published in the Official Gazette or otherwise
effectively promulgated. In ruling for the petitioners' legal standing, the Court declared that the right
they sought to be enforced 'is a public right recognized by no less than the fundamental law of the land.'
Legaspi v. Civil Service Commission, while reiterating Taada, further declared that 'when a mandamus
proceeding involves the assertion of a public right, the requirement of personal interest is satisfied by the
mere fact that petitioner is a citizen and, therefore, part of the general 'public' which possesses the right.'
Further, in Albano v. Reyes, we said that while expenditure of public funds may not have been involved
under the questioned contract for the development, management and operation of the Manila
International Container Terminal, 'public interest [was] definitely involved considering the important
role [of the subject contract] . . . in the economic development of the country and the magnitude of the
financial consideration involved.' We concluded that, as a consequence, the disclosure provision in the
Constitution would constitute sufficient authority for upholding the petitioner's standing.
Similarly, the instant petition is anchored on the right of the people to information and access to official
records, documents and papers a right guaranteed under Section 7, Article III of the 1987
Constitution. Petitioner, a former solicitor general, is a Filipino citizen. Because of the satisfaction of the
two basic requisites laid down by decisional law to sustain petitioner's legal standing, i.e. (1) the
enforcement of a public right (2) espoused by a Filipino citizen, we rule that the petition at bar should be
allowed."
We rule that since the instant petition, brought by a citizen, involves the enforcement of constitutional rights - to
information and to the equitable diffusion of natural resources - matters of transcendental public importance, the
petitioner has the requisite locus standi.
Fifth issue: whether the constitutional right to information includes official information on on-going
negotiations before a final agreement.
Section 7, Article III of the Constitution explains the people's right to information on matters of public concern
in this manner:
"Sec. 7. The right of the people to information on matters of public concern shall be recognized. Access
to official records, and to documents, and papers pertaining to official acts, transactions, or decisions,
as well as to government research data used as basis for policy development, shall be afforded the
citizen, subject to such limitations as may be provided by law." (Emphasis supplied)
The State policy of full transparency in all transactions involving public interest reinforces the people's right to
information on matters of public concern. This State policy is expressed in Section 28, Article II of the
Constitution, thus:
"Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and implements a policy
of full public disclosure of all its transactions involving public interest." (Emphasis supplied)
These twin provisions of the Constitution seek to promote transparency in policy-making and in the operations
of the government, as well as provide the people sufficient information to exercise effectively other
constitutional rights. These twin provisions are essential to the exercise of freedom of expression. If the
government does not disclose its official acts, transactions and decisions to citizens, whatever citizens say, even
if expressed without any restraint, will be speculative and amount to nothing. These twin provisions are also
essential to hold public officials "at all times x x x accountable to the people,"
29
for unless citizens have the
proper information, they cannot hold public officials accountable for anything. Armed with the right
information, citizens can participate in public discussions leading to the formulation of government policies and
their effective implementation. An informed citizenry is essential to the existence and proper functioning of any
democracy. As explained by the Court in Valmonte v. Belmonte, J r.
30

"An essential element of these freedoms is to keep open a continuing dialogue or process of
communication between the government and the people. It is in the interest of the State that the channels
for free political discussion be maintained to the end that the government may perceive and be
responsive to the people's will. Yet, this open dialogue can be effective only to the extent that the
citizenry is informed and thus able to formulate its will intelligently. Only when the participants in the
discussion are aware of the issues and have access to information relating thereto can such bear fruit."
PEA asserts, citing Chavez v. PCGG,
31
that in cases of on-going negotiations the right to information is limited
to "definite propositions of the government." PEA maintains the right does not include access to "intra-agency
or inter-agency recommendations or communications during the stage when common assertions are still in the
process of being formulated or are in the 'exploratory stage'."
Also, AMARI contends that petitioner cannot invoke the right at the pre-decisional stage or before the closing
of the transaction. To support its contention, AMARI cites the following discussion in the 1986 Constitutional
Commission:
"Mr. Suarez. And when we say 'transactions' which should be distinguished from contracts,
agreements, or treaties or whatever, does the Gentleman refer to the steps leading to the consummation
of the contract, or does he refer to the contract itself?
Mr. Ople: The 'transactions' used here, I suppose is generic and therefore, it can cover both steps
leading to a contract and already a consummated contract, Mr. Presiding Officer.
Mr. Suarez: This contemplates inclusion of negotiations leading to the consummation of the
transaction.
Mr. Ople: Yes, subject only to reasonable safeguards on the national interest.
Mr. Suarez: Thank you."
32
(Emphasis supplied)
AMARI argues there must first be a consummated contract before petitioner can invoke the right. Requiring
government officials to reveal their deliberations at the pre-decisional stage will degrade the quality of decision-
making in government agencies. Government officials will hesitate to express their real sentiments during
deliberations if there is immediate public dissemination of their discussions, putting them under all kinds of
pressure before they decide.
We must first distinguish between information the law on public bidding requires PEA to disclose publicly, and
information the constitutional right to information requires PEA to release to the public. Before the
consummation of the contract, PEA must, on its own and without demand from anyone, disclose to the public
matters relating to the disposition of its property. These include the size, location, technical description and
nature of the property being disposed of, the terms and conditions of the disposition, the parties qualified to bid,
the minimum price and similar information. PEA must prepare all these data and disclose them to the public at
the start of the disposition process, long before the consummation of the contract, because the Government
Auditing Code requires public bidding. If PEA fails to make this disclosure, any citizen can demand from PEA
this information at any time during the bidding process.
Information, however, on on-going evaluation or review of bids or proposals being undertaken by the bidding
or review committee is not immediately accessible under the right to information. While the evaluation or
review is still on-going, there are no "official acts, transactions, or decisions" on the bids or proposals.
However, once the committee makes its official recommendation, there arises a "definite proposition" on the
part of the government. From this moment, the public's right to information attaches, and any citizen can access
all the non-proprietary information leading to such definite proposition. In Chavez v. PCGG,
33
the Court ruled
as follows:
"Considering the intent of the framers of the Constitution, we believe that it is incumbent upon the
PCGG and its officers, as well as other government representatives, to disclose sufficient public
information on any proposed settlement they have decided to take up with the ostensible owners and
holders of ill-gotten wealth. Such information, though, must pertain to definite propositions of the
government, not necessarily to intra-agency or inter-agency recommendations or communications
during the stage when common assertions are still in the process of being formulated or are in the
"exploratory" stage. There is need, of course, to observe the same restrictions on disclosure of
information in general, as discussed earlier such as on matters involving national security, diplomatic
or foreign relations, intelligence and other classified information." (Emphasis supplied)
Contrary to AMARI's contention, the commissioners of the 1986 Constitutional Commission understood that
the right to information "contemplates inclusion of negotiations leading to the consummation of the
transaction." Certainly, a consummated contract is not a requirement for the exercise of the right to
information. Otherwise, the people can never exercise the right if no contract is consummated, and if one is
consummated, it may be too late for the public to expose its defects.1wphi1.nt
Requiring a consummated contract will keep the public in the dark until the contract, which may be grossly
disadvantageous to the government or even illegal, becomes a fait accompli. This negates the State policy of
full transparency on matters of public concern, a situation which the framers of the Constitution could not have
intended. Such a requirement will prevent the citizenry from participating in the public discussion of any
proposed contract, effectively truncating a basic right enshrined in the Bill of Rights. We can allow neither an
emasculation of a constitutional right, nor a retreat by the State of its avowed "policy of full disclosure of all its
transactions involving public interest."
The right covers three categories of information which are "matters of public concern," namely: (1) official
records; (2) documents and papers pertaining to official acts, transactions and decisions; and (3) government
research data used in formulating policies. The first category refers to any document that is part of the public
records in the custody of government agencies or officials. The second category refers to documents and papers
recording, evidencing, establishing, confirming, supporting, justifying or explaining official acts, transactions or
decisions of government agencies or officials. The third category refers to research data, whether raw, collated
or processed, owned by the government and used in formulating government policies.
The information that petitioner may access on the renegotiation of the JVA includes evaluation reports,
recommendations, legal and expert opinions, minutes of meetings, terms of reference and other documents
attached to such reports or minutes, all relating to the JVA. However, the right to information does not compel
PEA to prepare lists, abstracts, summaries and the like relating to the renegotiation of the JVA.
34
The right only
affords access to records, documents and papers, which means the opportunity to inspect and copy them. One
who exercises the right must copy the records, documents and papers at his expense. The exercise of the right is
also subject to reasonable regulations to protect the integrity of the public records and to minimize disruption to
government operations, like rules specifying when and how to conduct the inspection and copying.
35

The right to information, however, does not extend to matters recognized as privileged information under the
separation of powers.
36
The right does not also apply to information on military and diplomatic secrets,
information affecting national security, and information on investigations of crimes by law enforcement
agencies before the prosecution of the accused, which courts have long recognized as confidential.
37
The right
may also be subject to other limitations that Congress may impose by law.
There is no claim by PEA that the information demanded by petitioner is privileged information rooted in the
separation of powers. The information does not cover Presidential conversations, correspondences, or
discussions during closed-door Cabinet meetings which, like internal deliberations of the Supreme Court and
other collegiate courts, or executive sessions of either house of Congress,
38
are recognized as confidential. This
kind of information cannot be pried open by a co-equal branch of government. A frank exchange of exploratory
ideas and assessments, free from the glare of publicity and pressure by interested parties, is essential to protect
the independence of decision-making of those tasked to exercise Presidential, Legislative and Judicial
power.
39
This is not the situation in the instant case.
We rule, therefore, that the constitutional right to information includes official information on on-going
negotiations before a final contract. The information, however, must constitute definite propositions by the
government and should not cover recognized exceptions like privileged information, military and diplomatic
secrets and similar matters affecting national security and public order.
40
Congress has also prescribed other
limitations on the right to information in several legislations.
41

Sixth issue: whether stipulations in the Amended J VA for the transfer to AMARI of lands, reclaimed or to be
reclaimed, violate the Constitution.
The Regalian Doctrine
The ownership of lands reclaimed from foreshore and submerged areas is rooted in the Regalian doctrine which
holds that the State owns all lands and waters of the public domain. Upon the Spanish conquest of the
Philippines, ownership of all "lands, territories and possessions" in the Philippines passed to the Spanish
Crown.
42
The King, as the sovereign ruler and representative of the people, acquired and owned all lands and
territories in the Philippines except those he disposed of by grant or sale to private individuals.
The 1935, 1973 and 1987 Constitutions adopted the Regalian doctrine substituting, however, the State, in lieu of
the King, as the owner of all lands and waters of the public domain. The Regalian doctrine is the foundation of
the time-honored principle of land ownership that "all lands that were not acquired from the Government, either
by purchase or by grant, belong to the public domain."
43
Article 339 of the Civil Code of 1889, which is now
Article 420 of the Civil Code of 1950, incorporated the Regalian doctrine.
Ownership and Disposition of Reclaimed Lands
The Spanish Law of Waters of 1866 was the first statutory law governing the ownership and disposition of
reclaimed lands in the Philippines. On May 18, 1907, the Philippine Commission enacted Act No. 1654 which
provided for the lease, but not the sale, of reclaimed lands of the government to corporations and individuals.
Later, on November 29, 1919, the Philippine Legislature approved Act No. 2874, the Public Land Act, which
authorized the lease, but not the sale, of reclaimed lands of the government to corporations and individuals.
On November 7, 1936, the National Assembly passed Commonwealth Act No. 141, also known as the Public
Land Act, which authorized the lease, but not the sale, of reclaimed lands of the government to corporations
and individuals. CA No. 141 continues to this day as the general law governing the classification and
disposition of lands of the public domain.
The Spanish Law of Waters of 1866 and the Civil Code of 1889
Under the Spanish Law of Waters of 1866, the shores, bays, coves, inlets and all waters within the maritime
zone of the Spanish territory belonged to the public domain for public use.
44
The Spanish Law of Waters of
1866 allowed the reclamation of the sea under Article 5, which provided as follows:
"Article 5. Lands reclaimed from the sea in consequence of works constructed by the State, or by the
provinces, pueblos or private persons, with proper permission, shall become the property of the party
constructing such works, unless otherwise provided by the terms of the grant of authority."
Under the Spanish Law of Waters, land reclaimed from the sea belonged to the party undertaking the
reclamation, provided the government issued the necessary permit and did not reserve ownership of the
reclaimed land to the State.
Article 339 of the Civil Code of 1889 defined property of public dominion as follows:
"Art. 339. Property of public dominion is
1. That devoted to public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the
State, riverbanks, shores, roadsteads, and that of a similar character;
2. That belonging exclusively to the State which, without being of general public use, is employed in
some public service, or in the development of the national wealth, such as walls, fortresses, and other
works for the defense of the territory, and mines, until granted to private individuals."
Property devoted to public use referred to property open for use by the public. In contrast, property devoted to
public service referred to property used for some specific public service and open only to those authorized to
use the property.
Property of public dominion referred not only to property devoted to public use, but also to property not so used
but employed to develop the national wealth. This class of property constituted property of public dominion
although employed for some economic or commercial activity to increase the national wealth.
Article 341 of the Civil Code of 1889 governed the re-classification of property of public dominion into private
property, to wit:
"Art. 341. Property of public dominion, when no longer devoted to public use or to the defense of the
territory, shall become a part of the private property of the State."
This provision, however, was not self-executing. The legislature, or the executive department pursuant to law,
must declare the property no longer needed for public use or territorial defense before the government could
lease or alienate the property to private parties.
45

Act No. 1654 of the Philippine Commission
On May 8, 1907, the Philippine Commission enacted Act No. 1654 which regulated the lease of reclaimed and
foreshore lands. The salient provisions of this law were as follows:
"Section 1. The control and disposition of the foreshore as defined in existing law, and the title to all
Government or public lands made or reclaimed by the Government by dredging or filling or otherwise
throughout the Philippine Islands, shall be retained by the Government without prejudice to vested
rights and without prejudice to rights conceded to the City of Manila in the Luneta Extension.
Section 2. (a) The Secretary of the Interior shall cause all Government or public lands made or reclaimed
by the Government by dredging or filling or otherwise to be divided into lots or blocks, with the
necessary streets and alleyways located thereon, and shall cause plats and plans of such surveys to be
prepared and filed with the Bureau of Lands.
(b) Upon completion of such plats and plans the Governor-General shall give notice to the public that
such parts of the lands so made or reclaimed as are not needed for public purposes will be leased for
commercial and business purposes, x x x.
x x x
(e) The leases above provided for shall be disposed of to the highest and best bidder therefore, subject
to such regulations and safeguards as the Governor-General may by executive order prescribe."
(Emphasis supplied)
Act No. 1654 mandated that the government should retain title to all lands reclaimed by the government. The
Act also vested in the government control and disposition of foreshore lands. Private parties could lease lands
reclaimed by the government only if these lands were no longer needed for public purpose. Act No. 1654
mandated public bidding in the lease of government reclaimed lands. Act No. 1654 made government
reclaimed lands sui generis in that unlike other public lands which the government could sell to private parties,
these reclaimed lands were available only for lease to private parties.
Act No. 1654, however, did not repeal Section 5 of the Spanish Law of Waters of 1866. Act No. 1654 did not
prohibit private parties from reclaiming parts of the sea under Section 5 of the Spanish Law of Waters. Lands
reclaimed from the sea by private parties with government permission remained private lands.
Act No. 2874 of the Philippine Legislature
On November 29, 1919, the Philippine Legislature enacted Act No. 2874, the Public Land Act.
46
The salient
provisions of Act No. 2874, on reclaimed lands, were as follows:
"Sec. 6.The Governor-General, upon the recommendation of the Secretary of Agriculture and
Natural Resources, shall from time to time classify the lands of the public domain into
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands, x x x.
Sec. 7. For the purposes of the government and disposition of alienable or disposable public lands, the
Governor-General, upon recommendation by the Secretary of Agriculture and Natural Resources,
shall from time to time declare what lands are open to disposition or concession under this Act."
Sec. 8.Only those lands shall be declared open to disposition or concession which have been officially
delimited or classified x x x.
x x x
Sec. 55. Any tract of land of the public domain which, being neither timber nor mineral land, shall be
classified as suitable for residential purposes or for commercial, industrial, or other productive
purposes other than agricultural purposes, and shall be open to disposition or concession, shall be
disposed of under the provisions of this chapter, and not otherwise.
Sec. 56.The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or banks of navigable
lakes or rivers;
(d) Lands not included in any of the foregoing classes.
x x x.
Sec. 58.The lands comprised in classes (a), (b), and (c) of section fifty-six shall be disposed of to
private parties by lease only and not otherwise, as soon as the Governor-General, upon
recommendation by the Secretary of Agriculture and Natural Resources, shall declare that the same
are not necessary for the public service and are open to disposition under this chapter. The lands
included in class (d) may be disposed of by sale or lease under the provisions of this Act." (Emphasis
supplied)
Section 6 of Act No. 2874 authorized the Governor-General to "classify lands of the public domain into x x x
alienable or disposable"
47
lands. Section 7 of the Act empowered the Governor-General to "declare what lands
are open to disposition or concession." Section 8 of the Act limited alienable or disposable lands only to those
lands which have been "officially delimited and classified."
Section 56 of Act No. 2874 stated that lands "disposable under this title
48
shall be classified" as government
reclaimed, foreshore and marshy lands, as well as other lands. All these lands, however, must be suitable for
residential, commercial, industrial or other productive non-agricultural purposes. These provisions vested upon
the Governor-General the power to classify inalienable lands of the public domain into disposable lands of the
public domain. These provisions also empowered the Governor-General to classify further such disposable
lands of the public domain into government reclaimed, foreshore or marshy lands of the public domain, as well
as other non-agricultural lands.
Section 58 of Act No. 2874 categorically mandated that disposable lands of the public domain classified as
government reclaimed, foreshore and marshy lands "shall be disposed of to private parties by lease only and
not otherwise." The Governor-General, before allowing the lease of these lands to private parties, must
formally declare that the lands were "not necessary for the public service." Act No. 2874 reiterated the State
policy to lease and not to sell government reclaimed, foreshore and marshy lands of the public domain, a policy
first enunciated in 1907 in Act No. 1654. Government reclaimed, foreshore and marshy lands remained sui
generis, as the only alienable or disposable lands of the public domain that the government could not sell to
private parties.
The rationale behind this State policy is obvious. Government reclaimed, foreshore and marshy public lands for
non-agricultural purposes retain their inherent potential as areas for public service. This is the reason the
government prohibited the sale, and only allowed the lease, of these lands to private parties. The State always
reserved these lands for some future public service.
Act No. 2874 did not authorize the reclassification of government reclaimed, foreshore and marshy lands into
other non-agricultural lands under Section 56 (d). Lands falling under Section 56 (d) were the only lands for
non-agricultural purposes the government could sell to private parties. Thus, under Act No. 2874, the
government could not sell government reclaimed, foreshore and marshy lands to private parties, unless the
legislature passed a law allowing their sale.
49

Act No. 2874 did not prohibit private parties from reclaiming parts of the sea pursuant to Section 5 of the
Spanish Law of Waters of 1866. Lands reclaimed from the sea by private parties with government permission
remained private lands.
Dispositions under the 1935 Constitution
On May 14, 1935, the 1935 Constitution took effect upon its ratification by the Filipino people. The 1935
Constitution, in adopting the Regalian doctrine, declared in Section 1, Article XIII, that
"Section 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals, coal,
petroleum, and other mineral oils, all forces of potential energy and other natural resources of the
Philippines belong to the State, and their disposition, exploitation, development, or utilization shall be
limited to citizens of the Philippines or to corporations or associations at least sixty per centum of the
capital of which is owned by such citizens, subject to any existing right, grant, lease, or concession at the
time of the inauguration of the Government established under this Constitution. Natural resources, with
the exception of public agricultural land, shall not be alienated, and no license, concession, or lease
for the exploitation, development, or utilization of any of the natural resources shall be granted for a
period exceeding twenty-five years, renewable for another twenty-five years, except as to water rights
for irrigation, water supply, fisheries, or industrial uses other than the development of water power, in
which cases beneficial use may be the measure and limit of the grant." (Emphasis supplied)
The 1935 Constitution barred the alienation of all natural resources except public agricultural lands, which were
the only natural resources the State could alienate. Thus, foreshore lands, considered part of the State's natural
resources, became inalienable by constitutional fiat, available only for lease for 25 years, renewable for another
25 years. The government could alienate foreshore lands only after these lands were reclaimed and classified as
alienable agricultural lands of the public domain. Government reclaimed and marshy lands of the public
domain, being neither timber nor mineral lands, fell under the classification of public agricultural lands.
50

However, government reclaimed and marshy lands, although subject to classification as disposable public
agricultural lands, could only be leased and not sold to private parties because of Act No. 2874.
The prohibition on private parties from acquiring ownership of government reclaimed and marshy lands of the
public domain was only a statutory prohibition and the legislature could therefore remove such prohibition. The
1935 Constitution did not prohibit individuals and corporations from acquiring government reclaimed and
marshy lands of the public domain that were classified as agricultural lands under existing public land laws.
Section 2, Article XIII of the 1935 Constitution provided as follows:
"Section 2.No private corporation or association may acquire, lease, or hold public agricultural lands
in excess of one thousand and twenty four hectares, nor may any individual acquire such lands by
purchase in excess of one hundred and forty hectares, or by lease in excess of one thousand and
twenty-four hectares, or by homestead in excess of twenty-four hectares. Lands adapted to grazing, not
exceeding two thousand hectares, may be leased to an individual, private corporation, or association."
(Emphasis supplied)
Still, after the effectivity of the 1935 Constitution, the legislature did not repeal Section 58 of Act No. 2874 to
open for sale to private parties government reclaimed and marshy lands of the public domain. On the contrary,
the legislature continued the long established State policy of retaining for the government title and ownership of
government reclaimed and marshy lands of the public domain.
Commonwealth Act No. 141 of the Philippine National Assembly
On November 7, 1936, the National Assembly approved Commonwealth Act No. 141, also known as the Public
Land Act, which compiled the then existing laws on lands of the public domain. CA No. 141, as amended,
remains to this day the existing general law governing the classification and disposition of lands of the public
domain other than timber and mineral lands.
51

Section 6 of CA No. 141 empowers the President to classify lands of the public domain into "alienable or
disposable"
52
lands of the public domain, which prior to such classification are inalienable and outside the
commerce of man. Section 7 of CA No. 141 authorizes the President to "declare what lands are open to
disposition or concession." Section 8 of CA No. 141 states that the government can declare open for disposition
or concession only lands that are "officially delimited and classified." Sections 6, 7 and 8 of CA No. 141 read as
follows:
"Sec. 6.The President, upon the recommendation of the Secretary of Agriculture and Commerce,
shall from time to time classify the lands of the public domain into
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands,
and may at any time and in like manner transfer such lands from one class to another,
53
for the purpose
of their administration and disposition.
Sec. 7. For the purposes of the administration and disposition of alienable or disposable public lands, the
President, upon recommendation by the Secretary of Agriculture and Commerce, shall from time to
time declare what lands are open to disposition or concession under this Act.
Sec. 8.Only those lands shall be declared open to disposition or concession which have been officially
delimited and classified and, when practicable, surveyed, and which have not been reserved for public
or quasi-public uses, nor appropriated by the Government, nor in any manner become private property,
nor those on which a private right authorized and recognized by this Act or any other valid law may be
claimed, or which, having been reserved or appropriated, have ceased to be so. x x x."
Thus, before the government could alienate or dispose of lands of the public domain, the President must first
officially classify these lands as alienable or disposable, and then declare them open to disposition or
concession. There must be no law reserving these lands for public or quasi-public uses.
The salient provisions of CA No. 141, on government reclaimed, foreshore and marshy lands of the public
domain, are as follows:
"Sec. 58.Any tract of land of the public domain which, being neither timber nor mineral land, is
intended to be used for residential purposes or for commercial, industrial, or other productive
purposes other than agricultural, and is open to disposition or concession, shall be disposed of under
the provisions of this chapter and not otherwise.
Sec. 59.The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or banks of navigable
lakes or rivers;
(d) Lands not included in any of the foregoing classes.
Sec. 60. Any tract of land comprised under this title may be leased or sold, as the case may be, to any
person, corporation, or association authorized to purchase or lease public lands for agricultural purposes.
x x x.
Sec. 61.The lands comprised in classes (a), (b), and (c) of section fifty-nine shall be disposed of to
private parties by lease only and not otherwise, as soon as the President, upon recommendation by the
Secretary of Agriculture, shall declare that the same are not necessary for the public service and are
open to disposition under this chapter. The lands included in class (d) may be disposed of by sale or
lease under the provisions of this Act." (Emphasis supplied)
Section 61 of CA No. 141 readopted, after the effectivity of the 1935 Constitution, Section 58 of Act No. 2874
prohibiting the sale of government reclaimed, foreshore and marshy disposable lands of the public domain. All
these lands are intended for residential, commercial, industrial or other non-agricultural purposes. As before,
Section 61 allowed only the lease of such lands to private parties. The government could sell to private parties
only lands falling under Section 59 (d) of CA No. 141, or those lands for non-agricultural purposes not
classified as government reclaimed, foreshore and marshy disposable lands of the public domain. Foreshore
lands, however, became inalienable under the 1935 Constitution which only allowed the lease of these lands to
qualified private parties.
Section 58 of CA No. 141 expressly states that disposable lands of the public domain intended for residential,
commercial, industrial or other productive purposes other than agricultural "shall be disposed of under the
provisions of this chapter and not otherwise." Under Section 10 of CA No. 141, the term "disposition" includes
lease of the land. Any disposition of government reclaimed, foreshore and marshy disposable lands for non-
agricultural purposes must comply with Chapter IX, Title III of CA No. 141,
54
unless a subsequent law
amended or repealed these provisions.
In his concurring opinion in the landmark case of Republic Real Estate Corporation v. Court of Appeals,
55

Justice Reynato S. Puno summarized succinctly the law on this matter, as follows:
"Foreshore lands are lands of public dominion intended for public use. So too are lands reclaimed by the
government by dredging, filling, or other means. Act 1654 mandated that the control and disposition of
the foreshore and lands under water remained in the national government. Said law allowed only the
'leasing' of reclaimed land. The Public Land Acts of 1919 and 1936 also declared that the foreshore and
lands reclaimed by the government were to be "disposed of to private parties by lease only and not
otherwise." Before leasing, however, the Governor-General, upon recommendation of the Secretary of
Agriculture and Natural Resources, had first to determine that the land reclaimed was not necessary for
the public service. This requisite must have been met before the land could be disposed of. But even
then, the foreshore and lands under water were not to be alienated and sold to private parties. The
disposition of the reclaimed land was only by lease. The land remained property of the State."
(Emphasis supplied)
As observed by Justice Puno in his concurring opinion, "Commonwealth Act No. 141 has remained in effect at
present."
The State policy prohibiting the sale to private parties of government reclaimed, foreshore and marshy alienable
lands of the public domain, first implemented in 1907 was thus reaffirmed in CA No. 141 after the 1935
Constitution took effect. The prohibition on the sale of foreshore lands, however, became a constitutional edict
under the 1935 Constitution. Foreshore lands became inalienable as natural resources of the State, unless
reclaimed by the government and classified as agricultural lands of the public domain, in which case they would
fall under the classification of government reclaimed lands.
After the effectivity of the 1935 Constitution, government reclaimed and marshy disposable lands of the public
domain continued to be only leased and not sold to private parties.
56
These lands remained sui generis, as the
only alienable or disposable lands of the public domain the government could not sell to private parties.
Since then and until now, the only way the government can sell to private parties government reclaimed and
marshy disposable lands of the public domain is for the legislature to pass a law authorizing such sale. CA No.
141 does not authorize the President to reclassify government reclaimed and marshy lands into other non-
agricultural lands under Section 59 (d). Lands classified under Section 59 (d) are the only alienable or
disposable lands for non-agricultural purposes that the government could sell to private parties.
Moreover, Section 60 of CA No. 141 expressly requires congressional authority before lands under Section 59
that the government previously transferred to government units or entities could be sold to private parties.
Section 60 of CA No. 141 declares that
"Sec. 60. x x x The area so leased or sold shall be such as shall, in the judgment of the Secretary of
Agriculture and Natural Resources, be reasonably necessary for the purposes for which such sale or
lease is requested, and shall not exceed one hundred and forty-four hectares: Provided, however, That
this limitation shall not apply to grants, donations, or transfers made to a province, municipality or
branch or subdivision of the Government for the purposes deemed by said entities conducive to the
public interest; but the land so granted, donated, or transferred to a province, municipality or branch
or subdivision of the Government shall not be alienated, encumbered, or otherwise disposed of in a
manner affecting its title, except when authorized by Congress: x x x." (Emphasis supplied)
The congressional authority required in Section 60 of CA No. 141 mirrors the legislative authority required in
Section 56 of Act No. 2874.
One reason for the congressional authority is that Section 60 of CA No. 141 exempted government units and
entities from the maximum area of public lands that could be acquired from the State. These government units
and entities should not just turn around and sell these lands to private parties in violation of constitutional or
statutory limitations. Otherwise, the transfer of lands for non-agricultural purposes to government units and
entities could be used to circumvent constitutional limitations on ownership of alienable or disposable lands of
the public domain. In the same manner, such transfers could also be used to evade the statutory prohibition in
CA No. 141 on the sale of government reclaimed and marshy lands of the public domain to private parties.
Section 60 of CA No. 141 constitutes by operation of law a lien on these lands.
57

In case of sale or leaseof disposable lands of the public domain falling under Section 59 of CA No. 141,
Sections 63 and 67 require a public bidding. Sections 63 and 67 of CA No. 141 provide as follows:
"Sec. 63. Whenever it is decided that lands covered by this chapter are not needed for public purposes,
the Director of Lands shall ask the Secretary of Agriculture and Commerce (now the Secretary of
Natural Resources) for authority to dispose of the same. Upon receipt of such authority, the Director of
Lands shall give notice by public advertisement in the same manner as in the case of leases or sales of
agricultural public land, x x x.
Sec. 67.The lease or sale shall be made by oral bidding; and adjudication shall be made to the highest
bidder. x x x." (Emphasis supplied)
Thus, CA No. 141 mandates the Government to put to public auction all leases or sales of alienable or
disposable lands of the public domain.
58

Like Act No. 1654 and Act No. 2874 before it, CA No. 141 did not repeal Section 5 of the Spanish Law of
Waters of 1866. Private parties could still reclaim portions of the sea with government permission. However,
the reclaimed land could become private land only if classified as alienable agricultural land of the public
domain open to disposition under CA No. 141. The 1935 Constitution prohibited the alienation of all natural
resources except public agricultural lands.
The Civil Code of 1950
The Civil Code of 1950 readopted substantially the definition of property of public dominion found in the Civil
Code of 1889. Articles 420 and 422 of the Civil Code of 1950 state that
"Art. 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by
the State, banks, shores, roadsteads, and others of similar character;
(2) Those which belong to the State, without being for public use, and are intended for some public
service or for the development of the national wealth.
x x x.
Art. 422. Property of public dominion, when no longer intended for public use or for public service,
shall form part of the patrimonial property of the State."
Again, the government must formally declare that the property of public dominion is no longer needed for
public use or public service, before the same could be classified as patrimonial property of the State.
59
In the
case of government reclaimed and marshy lands of the public domain, the declaration of their being disposable,
as well as the manner of their disposition, is governed by the applicable provisions of CA No. 141.
Like the Civil Code of 1889, the Civil Code of 1950 included as property of public dominion those properties of
the State which, without being for public use, are intended for public service or the "development of the
national wealth." Thus, government reclaimed and marshy lands of the State, even if not employed for public
use or public service, if developed to enhance the national wealth, are classified as property of public dominion.
Dispositions under the 1973 Constitution
The 1973 Constitution, which took effect on January 17, 1973, likewise adopted the Regalian doctrine. Section
8, Article XIV of the 1973 Constitution stated that
"Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all
forces of potential energy, fisheries, wildlife, and other natural resources of the Philippines belong to the
State. With the exception of agricultural, industrial or commercial, residential, and resettlement lands
of the public domain, natural resources shall not be alienated, and no license, concession, or lease for
the exploration, development, exploitation, or utilization of any of the natural resources shall be granted
for a period exceeding twenty-five years, renewable for not more than twenty-five years, except as to
water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water
power, in which cases, beneficial use may be the measure and the limit of the grant." (Emphasis
supplied)
The 1973 Constitution prohibited the alienation of all natural resources with the exception of "agricultural,
industrial or commercial, residential, and resettlement lands of the public domain." In contrast, the 1935
Constitution barred the alienation of all natural resources except "public agricultural lands." However, the term
"public agricultural lands" in the 1935 Constitution encompassed industrial, commercial, residential and
resettlement lands of the public domain.
60
If the land of public domain were neither timber nor mineral land, it
would fall under the classification of agricultural land of the public domain. Both the 1935 and 1973
Constitutions, therefore, prohibited the alienation of all natural resources except agricultural lands of the
public domain.
The 1973 Constitution, however, limited the alienation of lands of the public domain to individuals who were
citizens of the Philippines. Private corporations, even if wholly owned by Philippine citizens, were no longer
allowed to acquire alienable lands of the public domain unlike in the 1935 Constitution. Section 11, Article XIV
of the 1973 Constitution declared that
"Sec. 11. The Batasang Pambansa, taking into account conservation, ecological, and development
requirements of the natural resources, shall determine by law the size of land of the public domain which
may be developed, held or acquired by, or leased to, any qualified individual, corporation, or
association, and the conditions therefor. No private corporation or association may hold alienable
lands of the public domain except by leasenot to exceed one thousand hectares in area nor may any
citizen hold such lands by lease in excess of five hundred hectares or acquire by purchase, homestead or
grant, in excess of twenty-four hectares. No private corporation or association may hold by lease,
concession, license or permit, timber or forest lands and other timber or forest resources in excess of one
hundred thousand hectares. However, such area may be increased by the Batasang Pambansa upon
recommendation of the National Economic and Development Authority." (Emphasis supplied)
Thus, under the 1973 Constitution, private corporations could hold alienable lands of the public domain only
through lease. Only individuals could now acquire alienable lands of the public domain, and private
corporations became absolutely barred from acquiring any kind of alienable land of the public domain. The
constitutional ban extended to all kinds of alienable lands of the public domain, while the statutory ban under
CA No. 141 applied only to government reclaimed, foreshore and marshy alienable lands of the public domain.
PD No. 1084 Creating the Public Estates Authority
On February 4, 1977, then President Ferdinand Marcos issued Presidential Decree No. 1084 creating PEA, a
wholly government owned and controlled corporation with a special charter. Sections 4 and 8 of PD No. 1084,
vests PEA with the following purposes and powers:
"Sec. 4.Purpose. The Authority is hereby created for the following purposes:
(a) To reclaim land, including foreshore and submerged areas, by dredging, filling or other means, or
to acquire reclaimed land;
(b) To develop, improve, acquire, administer, deal in, subdivide, dispose, lease and sell any and all
kinds of lands, buildings, estates and other forms of real property, owned, managed, controlled and/or
operated by the government;
(c) To provide for, operate or administer such service as may be necessary for the efficient, economical
and beneficial utilization of the above properties.
Sec. 5.Powers and functions of the Authority. The Authority shall, in carrying out the purposes for
which it is created, have the following powers and functions:
(a)To prescribe its by-laws.
x x x
(i) To hold lands of the public domain in excess of the area permitted to private corporations by statute.
(j) To reclaim lands and to construct work across, or otherwise, any stream, watercourse, canal, ditch,
flume x x x.
x x x
(o) To perform such acts and exercise such functions as may be necessary for the attainment of the
purposes and objectives herein specified." (Emphasis supplied)
PD No. 1084 authorizes PEA to reclaim both foreshore and submerged areas of the public domain. Foreshore
areas are those covered and uncovered by the ebb and flow of the tide.
61
Submerged areas are those
permanently under water regardless of the ebb and flow of the tide.
62
Foreshore and submerged areas
indisputably belong to the public domain
63
and are inalienable unless reclaimed, classified as alienable lands
open to disposition, and further declared no longer needed for public service.
The ban in the 1973 Constitution on private corporations from acquiring alienable lands of the public domain
did not apply to PEA since it was then, and until today, a fully owned government corporation. The
constitutional ban applied then, as it still applies now, only to "private corporations and associations." PD No.
1084 expressly empowers PEA "to hold lands of the public domain" even "in excess of the area permitted to
private corporations by statute." Thus, PEA can hold title to private lands, as well as title to lands of the public
domain.
In order for PEA to sell its reclaimed foreshore and submerged alienable lands of the public domain, there must
be legislative authority empowering PEA to sell these lands. This legislative authority is necessary in view of
Section 60 of CA No.141, which states
"Sec. 60. x x x; but the land so granted, donated or transferred to a province, municipality, or branch or
subdivision of the Government shall not be alienated, encumbered or otherwise disposed of in a manner
affecting its title, except when authorized by Congress; x x x." (Emphasis supplied)
Without such legislative authority, PEA could not sell but only lease its reclaimed foreshore and submerged
alienable lands of the public domain. Nevertheless, any legislative authority granted to PEA to sell its reclaimed
alienable lands of the public domain would be subject to the constitutional ban on private corporations from
acquiring alienable lands of the public domain. Hence, such legislative authority could only benefit private
individuals.
Dispositions under the 1987 Constitution
The 1987 Constitution, like the 1935 and 1973 Constitutions before it, has adopted the Regalian doctrine. The
1987 Constitution declares that all natural resources are "owned by the State," and except for alienable
agricultural lands of the public domain, natural resources cannot be alienated. Sections 2 and 3, Article XII of
the 1987 Constitution state that
"Section 2. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all
forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural
resources are owned by the State. With the exception of agricultural lands, all other natural resources
shall not be alienated. The exploration, development, and utilization of natural resources shall be under
the full control and supervision of the State. x x x.
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 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." (Emphasis
supplied)
The 1987 Constitution continues the State policy in the 1973 Constitution banning private corporations from
acquiring any kind of alienable land of the public domain. Like the 1973 Constitution, the 1987 Constitution
allows private corporations to hold alienable lands of the public domain only through lease. As in the 1935 and
1973 Constitutions, the general law governing the lease to private corporations of reclaimed, foreshore and
marshy alienable lands of the public domain is still CA No. 141.
The Rationale behind the Constitutional Ban
The rationale behind the constitutional ban on corporations from acquiring, except through lease, alienable
lands of the public domain is not well understood. During the deliberations of the 1986 Constitutional
Commission, the commissioners probed the rationale behind this ban, thus:
"FR. BERNAS: Mr. Vice-President, my questions have reference to page 3, line 5 which says:
`No private corporation or association may hold alienable lands of the public domain except by lease,
not to exceed one thousand hectares in area.'
If we recall, this provision did not exist under the 1935 Constitution, but this was introduced in the 1973
Constitution. In effect, it prohibits private corporations from acquiring alienable public lands. But it has
not been very clear in jurisprudence what the reason for this is. In some of the cases decided in 1982
and 1983, it was indicated that the purpose of this is to prevent large landholdings. Is that the intent of
this provision?
MR. VILLEGAS: I think that is the spirit of the provision.
FR. BERNAS: In existing decisions involving the Iglesia ni Cristo, there were instances where the
Iglesia ni Cristo was not allowed to acquire a mere 313-square meter land where a chapel stood because
the Supreme Court said it would be in violation of this." (Emphasis supplied)
In Ayog v. Cusi,
64
the Court explained the rationale behind this constitutional ban in this way:
"Indeed, one purpose of the constitutional prohibition against purchases of public agricultural lands by
private corporations is to equitably diffuse land ownership or to encourage 'owner-cultivatorship and the
economic family-size farm' and to prevent a recurrence of cases like the instant case. Huge landholdings
by corporations or private persons had spawned social unrest."
However, if the constitutional intent is to prevent huge landholdings, the Constitution could have simply limited
the size of alienable lands of the public domain that corporations could acquire. The Constitution could have
followed the limitations on individuals, who could acquire not more than 24 hectares of alienable lands of the
public domain under the 1973 Constitution, and not more than 12 hectares under the 1987 Constitution.
If the constitutional intent is to encourage economic family-size farms, placing the land in the name of a
corporation would be more effective in preventing the break-up of farmlands. If the farmland is registered in the
name of a corporation, upon the death of the owner, his heirs would inherit shares in the corporation instead of
subdivided parcels of the farmland. This would prevent the continuing break-up of farmlands into smaller and
smaller plots from one generation to the next.
In actual practice, the constitutional ban strengthens the constitutional limitation on individuals from acquiring
more than the allowed area of alienable lands of the public domain. Without the constitutional ban, individuals
who already acquired the maximum area of alienable lands of the public domain could easily set up
corporations to acquire more alienable public lands. An individual could own as many corporations as his
means would allow him. An individual could even hide his ownership of a corporation by putting his nominees
as stockholders of the corporation. The corporation is a convenient vehicle to circumvent the constitutional
limitation on acquisition by individuals of alienable lands of the public domain.
The constitutional intent, under the 1973 and 1987 Constitutions, is to transfer ownership of only a limited area
of alienable land of the public domain to a qualified individual. This constitutional intent is safeguarded by the
provision prohibiting corporations from acquiring alienable lands of the public domain, since the vehicle to
circumvent the constitutional intent is removed. The available alienable public lands are gradually decreasing in
the face of an ever-growing population. The most effective way to insure faithful adherence to this
constitutional intent is to grant or sell alienable lands of the public domain only to individuals. This, it would
seem, is the practical benefit arising from the constitutional ban.
The Amended J oint Venture Agreement
The subject matter of the Amended JVA, as stated in its second Whereas clause, consists of three properties,
namely:
1. "[T]hree partially reclaimed and substantially eroded islands along Emilio Aguinaldo Boulevard in
Paranaque and Las Pinas, Metro Manila, with a combined titled area of 1,578,441 square meters;"
2. "[A]nother area of 2,421,559 square meters contiguous to the three islands;" and
3. "[A]t AMARI's option as approved by PEA, an additional 350 hectares more or less to regularize the
configuration of the reclaimed area."
65

PEA confirms that the Amended JVA involves "the development of the Freedom Islands and further
reclamation of about 250 hectares x x x," plus an option "granted to AMARI to subsequently reclaim another
350 hectares x x x."
66

In short, the Amended JVA covers a reclamation area of 750 hectares. Only 157.84 hectares of the 750-hectare
reclamation project have been reclaimed, and the rest of the 592.15 hectares are still submerged areas
forming part of Manila Bay.
Under the Amended JVA, AMARI will reimburse PEA the sum of P1,894,129,200.00 for PEA's "actual cost" in
partially reclaiming the Freedom Islands. AMARI will also complete, at its own expense, the reclamation of the
Freedom Islands. AMARI will further shoulder all the reclamation costs of all the other areas, totaling 592.15
hectares, still to be reclaimed. AMARI and PEA will share, in the proportion of 70 percent and 30 percent,
respectively, the total net usable area which is defined in the Amended JVA as the total reclaimed area less 30
percent earmarked for common areas. Title to AMARI's share in the net usable area, totaling 367.5 hectares,
will be issued in the name of AMARI. Section 5.2 (c) of the Amended JVA provides that
"x x x, PEA shall have the duty to execute without delay the necessary deed of transfer or conveyance of
the title pertaining to AMARI's Land share based on the Land Allocation Plan. PEA, when requested in
writing by AMARI , shall then cause the issuance and delivery of the proper certificates of title
covering AMARI 's Land Share in the name of AMARI , x x x; provided, that if more than seventy
percent (70%) of the titled area at any given time pertains to AMARI, PEA shall deliver to AMARI only
seventy percent (70%) of the titles pertaining to AMARI, until such time when a corresponding
proportionate area of additional land pertaining to PEA has been titled." (Emphasis supplied)
I ndisputably, under the Amended J VA AMARI will acquire and own a maximum of 367.5 hectares of
reclaimed land which will be titled in its name.
To implement the Amended JVA, PEA delegated to the unincorporated PEA-AMARI joint venture PEA's
statutory authority, rights and privileges to reclaim foreshore and submerged areas in Manila Bay. Section 3.2.a
of the Amended JVA states that
"PEA hereby contributes to the joint venture its rights and privileges to perform Rawland Reclamation
and Horizontal Development as well as own the Reclamation Area, thereby granting the Joint Venture
the full and exclusive right, authority and privilege to undertake the Project in accordance with the
Master Development Plan."
The Amended JVA is the product of a renegotiation of the original JVA dated April 25, 1995 and its
supplemental agreement dated August 9, 1995.
The Threshold I ssue
The threshold issue is whether AMARI, a private corporation, can acquire and own under the Amended JVA
367.5 hectares of reclaimed foreshore and submerged areas in Manila Bay in view of Sections 2 and 3, Article
XII of the 1987 Constitution which state that:
"Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all
forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural
resources are owned by the State. With the exception of agricultural lands, all other natural resources
shall not be alienated. x x x.
x x x
Section 3. x x x Alienable lands of the public domain shall be limited to agricultural lands. Private
corporations or associations may not hold such alienable lands of the public domain except by lease,
x x x."(Emphasis supplied)
Classification of Reclaimed Foreshore and Submerged Areas
PEA readily concedes that lands reclaimed from foreshore or submerged areas of Manila Bay are alienable or
disposable lands of the public domain. In its Memorandum,
67
PEA admits that
"Under the Public Land Act (CA 141, as amended), reclaimed lands are classified as alienable and
disposable lands of the public domain:
'Sec. 59. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the government by dredging, filling, or other means;
x x x.'" (Emphasis supplied)
Likewise, the Legal Task Force
68
constituted under Presidential Administrative Order No. 365 admitted in its
Report and Recommendation to then President Fidel V. Ramos, "[R]eclaimed lands are classified as alienable
and disposable lands of the public domain."
69
The Legal Task Force concluded that
"D. Conclusion
Reclaimed lands are lands of the public domain. However, by statutory authority, the rights of
ownership and disposition over reclaimed lands have been transferred to PEA, by virtue of which PEA,
as owner, may validly convey the same to any qualified person without violating the Constitution or any
statute.
The constitutional provision prohibiting private corporations from holding public land, except by lease
(Sec. 3, Art. XVII,
70
1987 Constitution), does not apply to reclaimed lands whose ownership has passed
on to PEA by statutory grant."
Under Section 2, Article XII of the 1987 Constitution, the foreshore and submerged areas of Manila Bay are
part of the "lands of the public domain, waters x x x and other natural resources" and consequently "owned by
the State." As such, foreshore and submerged areas "shall not be alienated," unless they are classified as
"agricultural lands" of the public domain. The mere reclamation of these areas by PEA does not convert these
inalienable natural resources of the State into alienable or disposable lands of the public domain. There must be
a law or presidential proclamation officially classifying these reclaimed lands as alienable or disposable and
open to disposition or concession. Moreover, these reclaimed lands cannot be classified as alienable or
disposable if the law has reserved them for some public or quasi-public use.
71

Section 8 of CA No. 141 provides that "only those lands shall be declared open to disposition or concession
which have been officially delimited and classified."
72
The President has the authority to classify inalienable
lands of the public domain into alienable or disposable lands of the public domain, pursuant to Section 6 of CA
No. 141. In Laurel vs. Garcia,
73
the Executive Department attempted to sell the Roppongi property in Tokyo,
Japan, which was acquired by the Philippine Government for use as the Chancery of the Philippine Embassy.
Although the Chancery had transferred to another location thirteen years earlier, the Court still ruled that, under
Article 422
74
of the Civil Code, a property of public dominion retains such character until formally declared
otherwise. The Court ruled that
"The fact that the Roppongi site has not been used for a long time for actual Embassy service does not
automatically convert it to patrimonial property. Any such conversion happens only if the property is
withdrawn from public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66 SCRA 481 [1975]. A
property continues to be part of the public domain, not available for private appropriation or
ownership 'until there is a formal declaration on the part of the government to withdraw it from being
such' (Ignacio v. Director of Lands, 108 Phil. 335 [1960]." (Emphasis supplied)
PD No. 1085, issued on February 4, 1977, authorized the issuance of special land patents for lands reclaimed by
PEA from the foreshore or submerged areas of Manila Bay. On January 19, 1988 then President Corazon C.
Aquino issued Special Patent No. 3517 in the name of PEA for the 157.84 hectares comprising the partially
reclaimed Freedom Islands. Subsequently, on April 9, 1999 the Register of Deeds of the Municipality of
Paranaque issued TCT Nos. 7309, 7311 and 7312 in the name of PEA pursuant to Section 103 of PD No. 1529
authorizing the issuance of certificates of title corresponding to land patents. To this day, these certificates of
title are still in the name of PEA.
PD No. 1085, coupled with President Aquino's actual issuanceof a special patent covering the Freedom
Islands, is equivalent to an official proclamation classifying the Freedom Islands as alienable or disposable
lands of the public domain. PD No. 1085 and President Aquino's issuance of a land patent also constitute a
declaration that the Freedom Islands are no longer needed for public service. The Freedom I slands are thus
alienable or disposable lands of the public domain, open to disposition or concession to qualified parties.
At the time then President Aquino issued Special Patent No. 3517, PEA had already reclaimed the Freedom
Islands although subsequently there were partial erosions on some areas. The government had also completed
the necessary surveys on these islands. Thus, the Freedom Islands were no longer part of Manila Bay but part of
the land mass. Section 3, Article XII of the 1987 Constitution classifies lands of the public domain into
"agricultural, forest or timber, mineral lands, and national parks." Being neither timber, mineral, nor national
park lands, the reclaimed Freedom Islands necessarily fall under the classification of agricultural lands of the
public domain. Under the 1987 Constitution, agricultural lands of the public domain are the only natural
resources that the State may alienate to qualified private parties. All other natural resources, such as the seas or
bays, are "waters x x x owned by the State" forming part of the public domain, and are inalienable pursuant to
Section 2, Article XII of the 1987 Constitution.
AMARI claims that the Freedom Islands are private lands because CDCP, then a private corporation, reclaimed
the islands under a contract dated November 20, 1973 with the Commissioner of Public Highways. AMARI,
citing Article 5 of the Spanish Law of Waters of 1866, argues that "if the ownership of reclaimed lands may be
given to the party constructing the works, then it cannot be said that reclaimed lands are lands of the public
domain which the State may not alienate."
75
Article 5 of the Spanish Law of Waters reads as follows:
"Article 5. Lands reclaimed from the sea in consequence of works constructed by the State, or by the
provinces, pueblos or private persons, with proper permission, shall become the property of the party
constructing such works, unless otherwise provided by the terms of the grant of authority." (Emphasis
supplied)
Under Article 5 of the Spanish Law of Waters of 1866, private parties could reclaim from the sea only with
"proper permission" from the State. Private parties could own the reclaimed land only if not "otherwise
provided by the terms of the grant of authority." This clearly meant that no one could reclaim from the sea
without permission from the State because the sea is property of public dominion. It also meant that the State
could grant or withhold ownership of the reclaimed land because any reclaimed land, like the sea from which it
emerged, belonged to the State. Thus, a private person reclaiming from the sea without permission from the
State could not acquire ownership of the reclaimed land which would remain property of public dominion like
the sea it replaced.
76
Article 5 of the Spanish Law of Waters of 1866 adopted the time-honored principle of land
ownership that "all lands that were not acquired from the government, either by purchase or by grant, belong to
the public domain."
77

Article 5 of the Spanish Law of Waters must be read together with laws subsequently enacted on the disposition
of public lands. In particular, CA No. 141 requires that lands of the public domain must first be classified as
alienable or disposable before the government can alienate them. These lands must not be reserved for public or
quasi-public purposes.
78
Moreover, the contract between CDCP and the government was executed after the
effectivity of the 1973 Constitution which barred private corporations from acquiring any kind of alienable land
of the public domain. This contract could not have converted the Freedom Islands into private lands of a private
corporation.
Presidential Decree No. 3-A, issued on January 11, 1973, revoked all laws authorizing the reclamation of areas
under water and revested solely in the National Government the power to reclaim lands. Section 1 of PD No. 3-
A declared that
"The provisions of any law to the contrary notwithstanding, the reclamation of areas under water,
whether foreshore or inland, shall be limited to the National Government or any person authorized by
it under a proper contract. (Emphasis supplied)
x x x."
PD No. 3-A repealed Section 5 of the Spanish Law of Waters of 1866 because reclamation of areas under water
could now be undertaken only by the National Government or by a person contracted by the National
Government. Private parties may reclaim from the sea only under a contract with the National Government, and
no longer by grant or permission as provided in Section 5 of the Spanish Law of Waters of 1866.
Executive Order No. 525, issued on February 14, 1979, designated PEA as the National Government's
implementing arm to undertake "all reclamation projects of the government," which "shall be undertaken by
the PEA or through a proper contract executed by it with any person or entity." Under such contract, a private
party receives compensation for reclamation services rendered to PEA. Payment to the contractor may be in
cash, or in kind consisting of portions of the reclaimed land, subject to the constitutional ban on private
corporations from acquiring alienable lands of the public domain. The reclaimed land can be used as payment in
kind only if the reclaimed land is first classified as alienable or disposable land open to disposition, and then
declared no longer needed for public service.
The Amended JVA covers not only the Freedom Islands, but also an additional 592.15 hectares which are still
submerged and forming part of Manila Bay. There is no legislative or Presidential act classifying these
submerged areas as alienable or disposable lands of the public domain open to disposition. These submerged
areas are not covered by any patent or certificate of title. There can be no dispute that these submerged areas
form part of the public domain, and in their present state are inalienable and outside the commerce of man.
Until reclaimed from the sea, these submerged areas are, under the Constitution, "waters x x x owned by the
State," forming part of the public domain and consequently inalienable. Only when actually reclaimed from the
sea can these submerged areas be classified as public agricultural lands, which under the Constitution are the
only natural resources that the State may alienate. Once reclaimed and transformed into public agricultural
lands, the government may then officially classify these lands as alienable or disposable lands open to
disposition. Thereafter, the government may declare these lands no longer needed for public service. Only then
can these reclaimed lands be considered alienable or disposable lands of the public domain and within the
commerce of man.
The classification of PEA's reclaimed foreshore and submerged lands into alienable or disposable lands open to
disposition is necessary because PEA is tasked under its charter to undertake public services that require the use
of lands of the public domain. Under Section 5 of PD No. 1084, the functions of PEA include the following:
"[T]o own or operate railroads, tramways and other kinds of land transportation, x x x; [T]o construct, maintain
and operate such systems of sanitary sewers as may be necessary; [T]o construct, maintain and operate such
storm drains as may be necessary." PEA is empowered to issue "rules and regulations as may be necessary for
the proper use by private parties of any or all of the highways, roads, utilities, buildings and/or any of its
properties and to impose or collect fees or tolls for their use." Thus, part of the reclaimed foreshore and
submerged lands held by the PEA would actually be needed for public use or service since many of the
functions imposed on PEA by its charter constitute essential public services.
Moreover, Section 1 of Executive Order No. 525 provides that PEA "shall be primarily responsible for
integrating, directing, and coordinating all reclamation projects for and on behalf of the National Government."
The same section also states that "[A]ll reclamation projects shall be approved by the President upon
recommendation of the PEA, and shall be undertaken by the PEA or through a proper contract executed by it
with any person or entity; x x x." Thus, under EO No. 525, in relation to PD No. 3-A and PD No.1084, PEA
became the primary implementing agency of the National Government to reclaim foreshore and submerged
lands of the public domain. EO No. 525 recognized PEA as the government entity "to undertake the reclamation
of lands and ensure their maximum utilization in promoting public welfare and interests."
79
Since large
portions of these reclaimed lands would obviously be needed for public service, there must be a formal
declaration segregating reclaimed lands no longer needed for public service from those still needed for public
service.1wphi1.nt
Section 3 of EO No. 525, by declaring that all lands reclaimed by PEA "shall belong to or be owned by the
PEA," could not automatically operate to classify inalienable lands into alienable or disposable lands of the
public domain. Otherwise, reclaimed foreshore and submerged lands of the public domain would automatically
become alienable once reclaimed by PEA, whether or not classified as alienable or disposable.
The Revised Administrative Code of 1987, a later law than either PD No. 1084 or EO No. 525, vests in the
Department of Environment and Natural Resources ("DENR" for brevity) the following powers and functions:
"Sec. 4.Powers and Functions. The Department shall:
(1) x x x
x x x
(4) Exercise supervision and control over forest lands, alienable and disposable public lands, mineral
resources and, in the process of exercising such control, impose appropriate taxes, fees, charges, rentals
and any such form of levy and collect such revenues for the exploration, development, utilization or
gathering of such resources;
x x x
(14) Promulgate rules, regulations and guidelines on the issuance of licenses, permits, concessions,
lease agreements and such other privileges concerning the development, exploration and utilization
of the country's marine, freshwater, and brackish water and over all aquatic resources of the country
and shall continue to oversee, supervise and police our natural resources; cancel or cause to cancel
such privileges upon failure, non-compliance or violations of any regulation, order, and for all other
causes which are in furtherance of the conservation of natural resources and supportive of the national
interest;
(15) Exercise exclusive jurisdiction on the management and disposition of all lands of the public
domain and serve as the sole agency responsible for classification, sub-classification, surveying and
titling of lands in consultation with appropriate agencies."
80
(Emphasis supplied)
As manager, conservator and overseer of the natural resources of the State, DENR exercises "supervision and
control over alienable and disposable public lands." DENR also exercises "exclusive jurisdiction on the
management and disposition of all lands of the public domain." Thus, DENR decides whether areas under
water, like foreshore or submerged areas of Manila Bay, should be reclaimed or not. This means that PEA needs
authorization from DENR before PEA can undertake reclamation projects in Manila Bay, or in any part of the
country.
DENR also exercises exclusive jurisdiction over the disposition of all lands of the public domain. Hence, DENR
decides whether reclaimed lands of PEA should be classified as alienable under Sections 6
81
and 7
82
of CA No.
141. Once DENR decides that the reclaimed lands should be so classified, it then recommends to the President
the issuance of a proclamation classifying the lands as alienable or disposable lands of the public domain open
to disposition. We note that then DENR Secretary Fulgencio S. Factoran, Jr. countersigned Special Patent No.
3517 in compliance with the Revised Administrative Code and Sections 6 and 7 of CA No. 141.
In short, DENR is vested with the power to authorize the reclamation of areas under water, while PEA is vested
with the power to undertake the physical reclamation of areas under water, whether directly or through private
contractors. DENR is also empowered to classify lands of the public domain into alienable or disposable lands
subject to the approval of the President. On the other hand, PEA is tasked to develop, sell or lease the reclaimed
alienable lands of the public domain.
Clearly, the mere physical act of reclamation by PEA of foreshore or submerged areas does not make the
reclaimed lands alienable or disposable lands of the public domain, much less patrimonial lands of PEA.
Likewise, the mere transfer by the National Government of lands of the public domain to PEA does not make
the lands alienable or disposable lands of the public domain, much less patrimonial lands of PEA.
Absent two official acts a classification that these lands are alienable or disposable and open to disposition
and a declaration that these lands are not needed for public service, lands reclaimed by PEA remain inalienable
lands of the public domain. Only such an official classification and formal declaration can convert reclaimed
lands into alienable or disposable lands of the public domain, open to disposition under the Constitution, Title I
and Title III
83
of CA No. 141 and other applicable laws.
84

PEA's Authority to Sell Reclaimed Lands
PEA, like the Legal Task Force, argues that as alienable or disposable lands of the public domain, the reclaimed
lands shall be disposed of in accordance with CA No. 141, the Public Land Act. PEA, citing Section 60 of CA
No. 141, admits that reclaimed lands transferred to a branch or subdivision of the government "shall not be
alienated, encumbered, or otherwise disposed of in a manner affecting its title, except when authorized by
Congress: x x x."
85
(Emphasis by PEA)
In Laurel vs. Garcia,
86
the Court cited Section 48 of the Revised Administrative Code of 1987, which states
that
"Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the Government is
authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the government
by the following: x x x."
Thus, the Court concluded that a law is needed to convey any real property belonging to the Government. The
Court declared that -
"It is not for the President to convey real property of the government on his or her own sole will. Any
such conveyance must be authorized and approved by a law enacted by the Congress. It requires
executive and legislative concurrence." (Emphasis supplied)
PEA contends that PD No. 1085 and EO No. 525 constitute the legislative authority allowing PEA to sell its
reclaimed lands. PD No. 1085, issued on February 4, 1977, provides that
"The land reclaimed in the foreshore and offshore area of Manila Bay pursuant to the contract for the
reclamation and construction of the Manila-Cavite Coastal Road Project between the Republic of the
Philippines and the Construction and Development Corporation of the Philippines dated November 20,
1973 and/or any other contract or reclamation covering the same area is hereby transferred, conveyed
and assigned to the ownership and administration of the Public Estates Authority established pursuant
to PD No. 1084; Provided, however, That the rights and interests of the Construction and Development
Corporation of the Philippines pursuant to the aforesaid contract shall be recognized and respected.
Henceforth, the Public Estates Authority shall exercise the rights and assume the obligations of the
Republic of the Philippines (Department of Public Highways) arising from, or incident to, the aforesaid
contract between the Republic of the Philippines and the Construction and Development Corporation of
the Philippines.
In consideration of the foregoing transfer and assignment, the Public Estates Authority shall issue in
favor of the Republic of the Philippines the corresponding shares of stock in said entity with an issued
value of said shares of stock (which) shall be deemed fully paid and non-assessable.
The Secretary of Public Highways and the General Manager of the Public Estates Authority shall
execute such contracts or agreements, including appropriate agreements with the Construction and
Development Corporation of the Philippines, as may be necessary to implement the above.
Special land patent/patents shall be issued by the Secretary of Natural Resources in favor of the
Public Estates Authority without prejudice to the subsequent transfer to the contractor or his
assignees of such portion or portions of the land reclaimed or to be reclaimed as provided for in the
above-mentioned contract. On the basis of such patents, the Land Registration Commission shall
issue the corresponding certificate of title." (Emphasis supplied)
On the other hand, Section 3 of EO No. 525, issued on February 14, 1979, provides that -
"Sec. 3.All lands reclaimed by PEA shall belong to or be owned by the PEA which shall be responsible
for its administration, development, utilization or disposition in accordance with the provisions of
Presidential Decree No. 1084. Any and all income that the PEA may derive from the sale, lease or use of
reclaimed lands shall be used in accordance with the provisions of Presidential Decree No. 1084."
There is no express authority under either PD No. 1085 or EO No. 525 for PEA to sell its reclaimed lands. PD
No. 1085 merely transferred "ownership and administration" of lands reclaimed from Manila Bay to PEA, while
EO No. 525 declared that lands reclaimed by PEA "shall belong to or be owned by PEA." EO No. 525
expressly states that PEA should dispose of its reclaimed lands "in accordance with the provisions of
Presidential Decree No. 1084," the charter of PEA.
PEA's charter, however, expressly tasks PEA "to develop, improve, acquire, administer, deal in, subdivide,
dispose, lease and sell any and all kinds of lands x x x owned, managed, controlled and/or operated by the
government."
87
(Emphasis supplied) There is, therefore, legislative authority granted to PEA to sell its lands,
whether patrimonial or alienable lands of the public domain. PEA may sell to private parties its patrimonial
properties in accordance with the PEA charter free from constitutional limitations. The constitutional ban on
private corporations from acquiring alienable lands of the public domain does not apply to the sale of PEA's
patrimonial lands.
PEA may also sell its alienable or disposable lands of the public domain to private individuals since, with the
legislative authority, there is no longer any statutory prohibition against such sales and the constitutional ban
does not apply to individuals. PEA, however, cannot sell any of its alienable or disposable lands of the public
domain to private corporations since Section 3, Article XII of the 1987 Constitution expressly prohibits such
sales. The legislative authority benefits only individuals. Private corporations remain barred from acquiring any
kind of alienable land of the public domain, including government reclaimed lands.
The provision in PD No. 1085 stating that portions of the reclaimed lands could be transferred by PEA to the
"contractor or his assignees" (Emphasis supplied) would not apply to private corporations but only to
individuals because of the constitutional ban. Otherwise, the provisions of PD No. 1085 would violate both the
1973 and 1987 Constitutions.
The requirement of public auction in the sale of reclaimed lands
Assuming the reclaimed lands of PEA are classified as alienable or disposable lands open to disposition, and
further declared no longer needed for public service, PEA would have to conduct a public bidding in selling or
leasing these lands. PEA must observe the provisions of Sections 63 and 67 of CA No. 141 requiring public
auction, in the absence of a law exempting PEA from holding a public auction.
88
Special Patent No. 3517
expressly states that the patent is issued by authority of the Constitution and PD No. 1084, "supplemented by
Commonwealth Act No. 141, as amended." This is an acknowledgment that the provisions of CA No. 141 apply
to the disposition of reclaimed alienable lands of the public domain unless otherwise provided by law.
Executive Order No. 654,
89
which authorizes PEA "to determine the kind and manner of payment for the
transfer" of its assets and properties, does not exempt PEA from the requirement of public auction. EO No. 654
merely authorizes PEA to decide the mode of payment, whether in kind and in installment, but does not
authorize PEA to dispense with public auction.
Moreover, under Section 79 of PD No. 1445, otherwise known as the Government Auditing Code, the
government is required to sell valuable government property through public bidding. Section 79 of PD No. 1445
mandates that
"Section 79.When government property has become unserviceable for any cause, or is no longer
needed, it shall, upon application of the officer accountable therefor, be inspected by the head of the
agency or his duly authorized representative in the presence of the auditor concerned and, if found to be
valueless or unsaleable, it may be destroyed in their presence. I f found to be valuable, it may be sold at
public auction to the highest bidder under the supervision of the proper committee on award or similar
body in the presence of the auditor concerned or other authorized representative of the Commission,
after advertising by printed notice in the Official Gazette, or for not less than three consecutive days
in any newspaper of general circulation, or where the value of the property does not warrant the
expense of publication, by notices posted for a like period in at least three public places in the locality
where the property is to be sold. I n the event that the public auction fails, the property may be sold at a
private sale at such price as may be fixed by the same committee or body concerned and approved by
the Commission."
It is only when the public auction fails that a negotiated sale is allowed, in which case the Commission on Audit
must approve the selling price.
90
The Commission on Audit implements Section 79 of the Government Auditing
Code through Circular No. 89-296
91
dated January 27, 1989. This circular emphasizes that government assets
must be disposed of only through public auction, and a negotiated sale can be resorted to only in case of "failure
of public auction."
At the public auction sale, only Philippine citizens are qualified to bid for PEA's reclaimed foreshore and
submerged alienable lands of the public domain. Private corporations are barred from bidding at the auction sale
of any kind of alienable land of the public domain.
PEA originally scheduled a public bidding for the Freedom Islands on December 10, 1991. PEA imposed a
condition that the winning bidder should reclaim another 250 hectares of submerged areas to regularize the
shape of the Freedom Islands, under a 60-40 sharing of the additional reclaimed areas in favor of the winning
bidder.
92
No one, however, submitted a bid. On December 23, 1994, the Government Corporate Counsel
advised PEA it could sell the Freedom Islands through negotiation, without need of another public bidding,
because of the failure of the public bidding on December 10, 1991.
93

However, the original JVA dated April 25, 1995 covered not only the Freedom Islands and the additional 250
hectares still to be reclaimed, it also granted an option to AMARI to reclaim another 350 hectares. The original
JVA, a negotiated contract, enlarged the reclamation area to 750 hectares.
94
The failure of public bidding on
December 10, 1991, involving only 407.84 hectares,
95
is not a valid justification for a negotiated sale of 750
hectares, almost double the area publicly auctioned. Besides, the failure of public bidding happened on
December 10, 1991, more than three years before the signing of the original JVA on April 25, 1995. The
economic situation in the country had greatly improved during the intervening period.
Reclamation under the BOT Law and the Local Government Code
The constitutional prohibition in Section 3, Article XII of the 1987 Constitution is absolute and clear: "Private
corporations or associations may not hold such alienable lands of the public domain except by lease, x x x."
Even Republic Act No. 6957 ("BOT Law," for brevity), cited by PEA and AMARI as legislative authority to
sell reclaimed lands to private parties, recognizes the constitutional ban. Section 6 of RA No. 6957 states
"Sec. 6.Repayment Scheme. - For the financing, construction, operation and maintenance of any
infrastructure projects undertaken through the build-operate-and-transfer arrangement or any of its
variations pursuant to the provisions of this Act, the project proponent x x x may likewise be repaid in
the form of a share in the revenue of the project or other non-monetary payments, such as, but not
limited to, the grant of a portion or percentage of the reclaimed land, subject to the constitutional
requirements with respect to the ownership of the land: x x x." (Emphasis supplied)
A private corporation, even one that undertakes the physical reclamation of a government BOT project, cannot
acquire reclaimed alienable lands of the public domain in view of the constitutional ban.
Section 302 of the Local Government Code, also mentioned by PEA and AMARI, authorizes local governments
in land reclamation projects to pay the contractor or developer in kind consisting of a percentage of the
reclaimed land, to wit:
"Section 302.Financing, Construction, Maintenance, Operation, and Management of Infrastructure
Projects by the Private Sector. x x x
x x x
In case of land reclamation or construction of industrial estates, the repayment plan may consist of the
grant of a portion or percentage of the reclaimed land or the industrial estate constructed."
Although Section 302 of the Local Government Code does not contain a proviso similar to that of the BOT
Law, the constitutional restrictions on land ownership automatically apply even though not expressly mentioned
in the Local Government Code.
Thus, under either the BOT Law or the Local Government Code, the contractor or developer, if a corporate
entity, can only be paid with leaseholds on portions of the reclaimed land. If the contractor or developer is an
individual, portions of the reclaimed land, not exceeding 12 hectares
96
of non-agricultural lands, may be
conveyed to him in ownership in view of the legislative authority allowing such conveyance. This is the only
way these provisions of the BOT Law and the Local Government Code can avoid a direct collision with Section
3, Article XII of the 1987 Constitution.
Registration of lands of the public domain
Finally, PEA theorizes that the "act of conveying the ownership of the reclaimed lands to public respondent
PEA transformed such lands of the public domain to private lands." This theory is echoed by AMARI which
maintains that the "issuance of the special patent leading to the eventual issuance of title takes the subject land
away from the land of public domain and converts the property into patrimonial or private property." In short,
PEA and AMARI contend that with the issuance of Special Patent No. 3517 and the corresponding certificates
of titles, the 157.84 hectares comprising the Freedom Islands have become private lands of PEA. In support of
their theory, PEA and AMARI cite the following rulings of the Court:
1. Sumail v. Judge of CFI of Cotabato,
97
where the Court held
"Once the patent was granted and the corresponding certificate of title was issued, the land ceased to be
part of the public domain and became private property over which the Director of Lands has neither
control nor jurisdiction."
2. Lee Hong Hok v. David,
98
where the Court declared -
"After the registration and issuance of the certificate and duplicate certificate of title based on a public
land patent, the land covered thereby automatically comes under the operation of Republic Act 496
subject to all the safeguards provided therein."3. Heirs of Gregorio Tengco v. Heirs of Jose Aliwalas,
99

where the Court ruled -
"While the Director of Lands has the power to review homestead patents, he may do so only so long as
the land remains part of the public domain and continues to be under his exclusive control; but once the
patent is registered and a certificate of title is issued, the land ceases to be part of the public domain and
becomes private property over which the Director of Lands has neither control nor jurisdiction."
4. Manalo v. Intermediate Appellate Court,
100
where the Court held
"When the lots in dispute were certified as disposable on May 19, 1971, and free patents were issued
covering the same in favor of the private respondents, the said lots ceased to be part of the public
domain and, therefore, the Director of Lands lost jurisdiction over the same."
5.Republic v. Court of Appeals,
101
where the Court stated
"Proclamation No. 350, dated October 9, 1956, of President Magsaysay legally effected a land grant to
the Mindanao Medical Center, Bureau of Medical Services, Department of Health, of the whole lot,
validly sufficient for initial registration under the Land Registration Act. Such land grant is constitutive
of a 'fee simple' title or absolute title in favor of petitioner Mindanao Medical Center. Thus, Section 122
of the Act, which governs the registration of grants or patents involving public lands, provides that
'Whenever public lands in the Philippine Islands belonging to the Government of the United States or to
the Government of the Philippines are alienated, granted or conveyed to persons or to public or private
corporations, the same shall be brought forthwith under the operation of this Act (Land Registration Act,
Act 496) and shall become registered lands.'"
The first four cases cited involve petitions to cancel the land patents and the corresponding certificates of titles
issued to private parties. These four cases uniformly hold that the Director of Lands has no jurisdiction over
private lands or that upon issuance of the certificate of title the land automatically comes under the Torrens
System. The fifth case cited involves the registration under the Torrens System of a 12.8-hectare public land
granted by the National Government to Mindanao Medical Center, a government unit under the Department of
Health. The National Government transferred the 12.8-hectare public land to serve as the site for the hospital
buildings and other facilities of Mindanao Medical Center, which performed a public service. The Court
affirmed the registration of the 12.8-hectare public land in the name of Mindanao Medical Center under Section
122 of Act No. 496. This fifth case is an example of a public land being registered under Act No. 496 without
the land losing its character as a property of public dominion.
In the instant case, the only patent and certificates of title issued are those in the name of PEA, a wholly
government owned corporation performing public as well as proprietary functions. No patent or certificate of
title has been issued to any private party. No one is asking the Director of Lands to cancel PEA's patent or
certificates of title. In fact, the thrust of the instant petition is that PEA's certificates of title should remain with
PEA, and the land covered by these certificates, being alienable lands of the public domain, should not be sold
to a private corporation.
Registration of land under Act No. 496 or PD No. 1529 does not vest in the registrant private or public
ownership of the land. Registration is not a mode of acquiring ownership but is merely evidence of ownership
previously conferred by any of the recognized modes of acquiring ownership. Registration does not give the
registrant a better right than what the registrant had prior to the registration.
102
The registration of lands of the
public domain under the Torrens system, by itself, cannot convert public lands into private lands.
103

Jurisprudence holding that upon the grant of the patent or issuance of the certificate of title the alienable land of
the public domain automatically becomes private land cannot apply to government units and entities like PEA.
The transfer of the Freedom Islands to PEA was made subject to the provisions of CA No. 141 as expressly
stated in Special Patent No. 3517 issued by then President Aquino, to wit:
"NOW, THEREFORE, KNOW YE, that by authority of the Constitution of the Philippines and in
conformity with the provisions of Presidential Decree No. 1084, supplemented by Commonwealth Act
No. 141, as amended, there are hereby granted and conveyed unto the Public Estates Authority the
aforesaid tracts of land containing a total area of one million nine hundred fifteen thousand eight
hundred ninety four (1,915,894) square meters; the technical description of which are hereto attached
and made an integral part hereof." (Emphasis supplied)
Thus, the provisions of CA No. 141 apply to the Freedom Islands on matters not covered by PD No. 1084.
Section 60 of CA No. 141 prohibits, "except when authorized by Congress," the sale of alienable lands of the
public domain that are transferred to government units or entities. Section 60 of CA No. 141 constitutes, under
Section 44 of PD No. 1529, a "statutory lien affecting title" of the registered land even if not annotated on the
certificate of title.
104
Alienable lands of the public domain held by government entities under Section 60 of CA
No. 141 remain public lands because they cannot be alienated or encumbered unless Congress passes a law
authorizing their disposition. Congress, however, cannot authorize the sale to private corporations of reclaimed
alienable lands of the public domain because of the constitutional ban. Only individuals can benefit from such
law.
The grant of legislative authority to sell public lands in accordance with Section 60 of CA No. 141 does not
automatically convert alienable lands of the public domain into private or patrimonial lands. The alienable lands
of the public domain must be transferred to qualified private parties, or to government entities not tasked to
dispose of public lands, before these lands can become private or patrimonial lands. Otherwise, the
constitutional ban will become illusory if Congress can declare lands of the public domain as private or
patrimonial lands in the hands of a government agency tasked to dispose of public lands. This will allow private
corporations to acquire directly from government agencies limitless areas of lands which, prior to such law, are
concededly public lands.
Under EO No. 525, PEA became the central implementing agency of the National Government to reclaim
foreshore and submerged areas of the public domain. Thus, EO No. 525 declares that
"EXECUTIVE ORDER NO. 525
Designating the Public Estates Authority as the Agency Primarily Responsible for all Reclamation
Projects
Whereas, there are several reclamation projects which are ongoing or being proposed to be undertaken
in various parts of the country which need to be evaluated for consistency with national programs;
Whereas, there is a need to give further institutional support to the Government's declared policy to
provide for a coordinated, economical and efficient reclamation of lands;
Whereas, Presidential Decree No. 3-A requires that all reclamation of areas shall be limited to the
National Government or any person authorized by it under proper contract;
Whereas, a central authority is needed to act on behalf of the National Government which shall
ensure a coordinated and integrated approach in the reclamation of lands;
Whereas, Presidential Decree No. 1084 creates the Public Estates Authority as a government
corporation to undertake reclamation of lands and ensure their maximum utilization in promoting
public welfare and interests; and
Whereas, Presidential Decree No. 1416 provides the President with continuing authority to reorganize
the national government including the transfer, abolition, or merger of functions and offices.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the
powers vested in me by the Constitution and pursuant to Presidential Decree No. 1416, do hereby order
and direct the following:
Section 1.The Public Estates Authority (PEA) shall be primarily responsible for integrating, directing,
and coordinating all reclamation projects for and on behalf of the National Government. All
reclamation projects shall be approved by the President upon recommendation of the PEA, and shall be
undertaken by the PEA or through a proper contract executed by it with any person or entity; Provided,
that, reclamation projects of any national government agency or entity authorized under its charter shall
be undertaken in consultation with the PEA upon approval of the President.
x x x ."
As the central implementing agency tasked to undertake reclamation projects nationwide, with authority to sell
reclaimed lands, PEA took the place of DENR as the government agency charged with leasing or selling
reclaimed lands of the public domain. The reclaimed lands being leased or sold by PEA are not private lands, in
the same manner that DENR, when it disposes of other alienable lands, does not dispose of private lands but
alienable lands of the public domain. Only when qualified private parties acquire these lands will the lands
become private lands. I n the hands of the government agency tasked and authorized to dispose of alienable of
disposable lands of the public domain, these lands are still public, not private lands.
Furthermore, PEA's charter expressly states that PEA "shall hold lands of the public domain" as well as "any
and all kinds of lands." PEA can hold both lands of the public domain and private lands. Thus, the mere fact
that alienable lands of the public domain like the Freedom Islands are transferred to PEA and issued land
patents or certificates of title in PEA's name does not automatically make such lands private.
To allow vast areas of reclaimed lands of the public domain to be transferred to PEA as private lands will
sanction a gross violation of the constitutional ban on private corporations from acquiring any kind of alienable
land of the public domain. PEA will simply turn around, as PEA has now done under the Amended J VA, and
transfer several hundreds of hectares of these reclaimed and still to be reclaimed lands to a single private
corporation in only one transaction. This scheme will effectively nullify the constitutional ban in Section 3,
Article XII of the 1987 Constitution which was intended to diffuse equitably the ownership of alienable lands of
the public domain among Filipinos, now numbering over 80 million strong.
This scheme, if allowed, can even be applied to alienable agricultural lands of the public domain since PEA can
"acquire x x x any and all kinds of lands." This will open the floodgates to corporations and even individuals
acquiring hundreds of hectares of alienable lands of the public domain under the guise that in the hands of PEA
these lands are private lands. This will result in corporations amassing huge landholdings never before seen in
this country - creating the very evil that the constitutional ban was designed to prevent. This will completely
reverse the clear direction of constitutional development in this country. The 1935 Constitution allowed private
corporations to acquire not more than 1,024 hectares of public lands.
105
The 1973 Constitution prohibited
private corporations from acquiring any kind of public land, and the 1987 Constitution has unequivocally
reiterated this prohibition.
The contention of PEA and AMARI that public lands, once registered under Act No. 496 or PD No. 1529,
automatically become private lands is contrary to existing laws. Several laws authorize lands of the public
domain to be registered under the Torrens System or Act No. 496, now PD No. 1529, without losing their
character as public lands. Section 122 of Act No. 496, and Section 103 of PD No. 1529, respectively, provide as
follows:
Act No. 496
"Sec. 122. Whenever public lands in the Philippine Islands belonging to the x x x Government of the
Philippine Islands are alienated, granted, or conveyed to persons or the public or private corporations,
the same shall be brought forthwith under the operation of this Act and shall become registered lands."
PD No. 1529
"Sec. 103.Certificate of Title to Patents. Whenever public land is by the Government alienated, granted
or conveyed to any person, the same shall be brought forthwith under the operation of this Decree."
(Emphasis supplied)
Based on its legislative history, the phrase "conveyed to any person" in Section 103 of PD No. 1529 includes
conveyances of public lands to public corporations.
Alienable lands of the public domain "granted, donated, or transferred to a province, municipality, or branch or
subdivision of the Government," as provided in Section 60 of CA No. 141, may be registered under the Torrens
System pursuant to Section 103 of PD No. 1529. Such registration, however, is expressly subject to the
condition in Section 60 of CA No. 141 that the land "shall not be alienated, encumbered or otherwise disposed
of in a manner affecting its title, except when authorized by Congress." This provision refers to government
reclaimed, foreshore and marshy lands of the public domain that have been titled but still cannot be alienated or
encumbered unless expressly authorized by Congress. The need for legislative authority prevents the registered
land of the public domain from becoming private land that can be disposed of to qualified private parties.
The Revised Administrative Code of 1987 also recognizes that lands of the public domain may be registered
under the Torrens System. Section 48, Chapter 12, Book I of the Code states
"Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the Government is
authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the government
by the following:
(1) x x x
(2) For property belonging to the Republic of the Philippines, but titled in the name of any political
subdivision or of any corporate agency or instrumentality, by the executive head of the agency or
instrumentality." (Emphasis supplied)
Thus, private property purchased by the National Government for expansion of a public wharf may be titled in
the name of a government corporation regulating port operations in the country. Private property purchased by
the National Government for expansion of an airport may also be titled in the name of the government agency
tasked to administer the airport. Private property donated to a municipality for use as a town plaza or public
school site may likewise be titled in the name of the municipality.
106
All these properties become properties of
the public domain, and if already registered under Act No. 496 or PD No. 1529, remain registered land. There is
no requirement or provision in any existing law for the de-registration of land from the Torrens System.
Private lands taken by the Government for public use under its power of eminent domain become
unquestionably part of the public domain. Nevertheless, Section 85 of PD No. 1529 authorizes the Register of
Deeds to issue in the name of the National Government new certificates of title covering such expropriated
lands. Section 85 of PD No. 1529 states
"Sec. 85.Land taken by eminent domain. Whenever any registered land, or interest therein, is
expropriated or taken by eminent domain, the National Government, province, city or municipality, or
any other agency or instrumentality exercising such right shall file for registration in the proper Registry
a certified copy of the judgment which shall state definitely by an adequate description, the particular
property or interest expropriated, the number of the certificate of title, and the nature of the public use. A
memorandum of the right or interest taken shall be made on each certificate of title by the Register of
Deeds, and where the fee simple is taken, a new certificate shall be issued in favor of the National
Government, province, city, municipality, or any other agency or instrumentality exercising such right
for the land so taken. The legal expenses incident to the memorandum of registration or issuance of a
new certificate of title shall be for the account of the authority taking the land or interest therein."
(Emphasis supplied)
Consequently, lands registered under Act No. 496 or PD No. 1529 are not exclusively private or patrimonial
lands. Lands of the public domain may also be registered pursuant to existing laws.
AMARI makes a parting shot that the Amended JVA is not a sale to AMARI of the Freedom Islands or of the
lands to be reclaimed from submerged areas of Manila Bay. In the words of AMARI, the Amended JVA "is not
a sale but a joint venture with a stipulation for reimbursement of the original cost incurred by PEA for the
earlier reclamation and construction works performed by the CDCP under its 1973 contract with the Republic."
Whether the Amended JVA is a sale or a joint venture, the fact remains that the Amended JVA requires PEA to
"cause the issuance and delivery of the certificates of title conveying AMARI's Land Share in the name of
AMARI."
107

This stipulation still contravenes Section 3, Article XII of the 1987 Constitution which provides that private
corporations "shall not hold such alienable lands of the public domain except by lease." The transfer of title and
ownership to AMARI clearly means that AMARI will "hold" the reclaimed lands other than by lease. The
transfer of title and ownership is a "disposition" of the reclaimed lands, a transaction considered a sale or
alienation under CA No. 141,
108
the Government Auditing Code,
109
and Section 3, Article XII of the 1987
Constitution.
The Regalian doctrine is deeply implanted in our legal system. Foreshore and submerged areas form part of the
public domain and are inalienable. Lands reclaimed from foreshore and submerged areas also form part of the
public domain and are also inalienable, unless converted pursuant to law into alienable or disposable lands of
the public domain. Historically, lands reclaimed by the government are sui generis, not available for sale to
private parties unlike other alienable public lands. Reclaimed lands retain their inherent potential as areas for
public use or public service. Alienable lands of the public domain, increasingly becoming scarce natural
resources, are to be distributed equitably among our ever-growing population. To insure such equitable
distribution, the 1973 and 1987 Constitutions have barred private corporations from acquiring any kind of
alienable land of the public domain. Those who attempt to dispose of inalienable natural resources of the State,
or seek to circumvent the constitutional ban on alienation of lands of the public domain to private corporations,
do so at their own risk.
We can now summarize our conclusions as follows:
1. The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now covered by certificates
of title in the name of PEA, are alienable lands of the public domain. PEA may lease these lands to
private corporations but may not sell or transfer ownership of these lands to private corporations. PEA
may only sell these lands to Philippine citizens, subject to the ownership limitations in the 1987
Constitution and existing laws.
2. The 592.15 hectares of submerged areas of Manila Bay remain inalienable natural resources of the
public domain until classified as alienable or disposable lands open to disposition and declared no longer
needed for public service. The government can make such classification and declaration only after PEA
has reclaimed these submerged areas. Only then can these lands qualify as agricultural lands of the
public domain, which are the only natural resources the government can alienate. In their present state,
the 592.15 hectares of submerged areas are inalienable and outside the commerce of man.
3. Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of 77.34
hectares
110
of the Freedom Islands, such transfer is void for being contrary to Section 3, Article XII of
the 1987 Constitution which prohibits private corporations from acquiring any kind of alienable land of
the public domain.
4. Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156 hectares
111
of still
submerged areas of Manila Bay, such transfer is void for being contrary to Section 2, Article XII of the
1987 Constitution which prohibits the alienation of natural resources other than agricultural lands of the
public domain. PEA may reclaim these submerged areas. Thereafter, the government can classify the
reclaimed lands as alienable or disposable, and further declare them no longer needed for public service.
Still, the transfer of such reclaimed alienable lands of the public domain to AMARI will be void in view
of Section 3, Article XII of the 1987 Constitution which prohibits private corporations from acquiring
any kind of alienable land of the public domain.
Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987 Constitution. Under
Article 1409
112
of the Civil Code, contracts whose "object or purpose is contrary to law," or whose "object is
outside the commerce of men," are "inexistent and void from the beginning." The Court must perform its duty
to defend and uphold the Constitution, and therefore declares the Amended J VA null and void ab initio.
Seventh issue: whether the Court is the proper forum to raise the issue of whether the Amended J VA is
grossly disadvantageous to the government.
Considering that the Amended JVA is null and void ab initio, there is no necessity to rule on this last issue.
Besides, the Court is not a trier of facts, and this last issue involves a determination of factual matters.
WHEREFORE, the petition is GRANTED. The Public Estates Authority and Amari Coastal Bay Development
Corporation are PERMANENTLY ENJOINED from implementing the Amended Joint Venture Agreement
which is hereby declared NULL and VOIDab initio.
SO ORDERED.

G.R. No. 135385 December 6, 2000
ISAGANI CRUZ and CESAR EUROPA, petitioners,
vs.
SECRETARY OF ENVIRONMENT AND NATURAL RESOURCES, SECRETARY OF BUDGET AND
MANAGEMENT and CHAIRMAN and COMMISSIONERS OF THE NATIONAL COMMISSION ON
INDIGENOUS PEOPLES, respondents.
HON. JUAN M .FLAVIER, HON. PONCIANO BENNAGEN, BAYANI ASCARRAGA, EDTAMI
MANSAYANGAN, BASILIO WANDAG, EVELYN DUNUAN, YAOM TUGAS, ALFREMO CARPIANO,
LIBERATO A. GABIN, MATERNIDAD M. COLAS, NARCISA M. DALUPINES, BAI KIRAM-CONNIE
SATURNO, BAE MLOMO-BEATRIZ T. ABASALA, DATU BALITUNGTUNG-ANTONIO D.
LUMANDONG, DATU MANTUMUKAW TEOFISTO SABASALES, DATU EDUAARDO BANDA, DATU
JOEL UNAD, DATU RAMON BAYAAN, TIMUAY JOSE ANOY, TIMUAY MACARIO D. SALACAO,
TIMUAY EDWIN B. ENDING, DATU SAHAMPONG MALANAW VI, DATU BEN PENDAO CABIGON,
BAI NANAPNAY-LIZA SAWAY, BAY INAY DAYA-MELINDA S. REYMUNDO, BAI TINANGHAGA
HELINITA T. PANGAN, DATU MAKAPUKAW ADOLINO L. SAWAY, DATU MAUDAYAW-CRISPEN
SAWAY, VICKY MAKAY, LOURDES D. AMOS, GILBERT P. HOGGANG, TERESA GASPAR,
MANUEL S. ONALAN, MIA GRACE L. GIRON, ROSEMARIE G. PE, BENITO CARINO, JOSEPH JUDE
CARANTES, LYNETTE CARANTES-VIVAL, LANGLEY SEGUNDO, SATUR S. BUGNAY, CARLING
DOMULOT, ANDRES MENDIOGRIN, LEOPOLDO ABUGAN, VIRGILIO CAYETANO, CONCHITA G.
DESCAGA, LEVY ESTEVES, ODETTE G. ESTEVEZ, RODOLFO C. AGUILAR, MAURO VALONES,
PEPE H. ATONG, OFELIA T. DAVI, PERFECTO B. GUINOSAO, WALTER N. TIMOL, MANUEL T.
SELEN, OSCAR DALUNHAY, RICO O. SULATAN, RAFFY MALINDA, ALFREDO ABILLANOS,
JESSIE ANDILAB, MIRLANDO H. MANGKULINTAS, SAMIE SATURNO, ROMEO A. LINDAHAY,
ROEL S. MANSANG-CAGAN, PAQUITO S. LIESES, FILIPE G. SAWAY, HERMINIA S. SAWAY,
JULIUS S. SAWAY, LEONARDA SAWAY, JIMMY UGYUB, SALVADOR TIONGSON, VENANCIO
APANG, MADION MALID, SUKIM MALID, NENENG MALID, MANGKATADONG AUGUSTO DIANO,
JOSEPHINE M. ALBESO, MORENO MALID, MARIO MANGCAL, FELAY DIAMILING, SALOME P.
SARZA, FELIPE P. BAGON, SAMMY SALNUNGAN, ANTONIO D. EMBA, NORMA
MAPANSAGONOS, ROMEO SALIGA, SR., JERSON P. GERADA, RENATO T. BAGON, JR., SARING
MASALONG, SOLEDAD M. GERARDA, ELIZABETH L. MENDI, MORANTE S. TIWAN, DANILO M.
MALUDAO, MINORS MARICEL MALID, represented by her father CORNELIO MALID, MARCELINO
M. LADRA, represented by her father MONICO D. LADRA, JENNYLYN MALID, represented by her
father TONY MALID, ARIEL M. EVANGELISTA, represented by her mother LINAY BALBUENA,
EDWARD M. EMUY, SR., SUSAN BOLANIO, OND, PULA BATO B'LAAN TRIBAL FARMER'S
ASSOCIATION, INTER-PEOPLE'S EXCHANGE, INC. and GREEN FORUM-WESTERN
VISAYAS, intervenors.
COMMISSION ON HUMAN RIGHTS, intervenor.
IKALAHAN INDIGENOUS PEOPLE and HARIBON FOUNDATION FOR THE CONSERVATION OF
NATURAL RESOURCES, INC., intervenor.
R E S O L U T I O N
PER CURIAM:
Petitioners Isagani Cruz and Cesar Europa brought this suit for prohibition and mandamus as citizens and
taxpayers, assailing the constitutionality of certain provisions of Republic Act No. 8371 (R.A. 8371),
otherwise known as the Indigenous Peoples Rights Act of 1997 (IPRA), and its Implementing Rules and
Regulations (Implementing Rules).
In its resolution of September 29, 1998, the Court required respondents to comment.
1
In compliance,
respondents Chairperson and Commissioners of the National Commission on Indigenous Peoples (NCIP),
the government agency created under the IPRA to implement its provisions, filed on October 13, 1998
their Comment to the Petition, in which they defend the constitutionality of the IPRA and pray that the
petition be dismissed for lack of merit.
On October 19, 1998, respondents Secretary of the Department of Environment and Natural Resources
(DENR) and Secretary of the Department of Budget and Management (DBM) filed through the Solicitor
General a consolidated Comment. The Solicitor General is of the view that the IPRA is partly
unconstitutional on the ground that it grants ownership over natural resources to indigenous peoples and
prays that the petition be granted in part.
On November 10, 1998, a group of intervenors, composed of Sen. Juan Flavier, one of the authors of the
IPRA, Mr. Ponciano Bennagen, a member of the 1986 Constitutional Commission, and the leaders and
members of 112 groups of indigenous peoples (Flavier, et. al), filed their Motion for Leave to Intervene.
They join the NCIP in defending the constitutionality of IPRA and praying for the dismissal of the petition.
On March 22, 1999, the Commission on Human Rights (CHR) likewise filed a Motion to Intervene and/or
to Appear as Amicus Curiae. The CHR asserts that IPRA is an expression of the principle of parens
patriae and that the State has the responsibility to protect and guarantee the rights of those who are at a
serious disadvantage like indigenous peoples. For this reason it prays that the petition be dismissed.
On March 23, 1999, another group, composed of the Ikalahan Indigenous People and the Haribon
Foundation for the Conservation of Natural Resources, Inc. (Haribon, et al.), filed a motion to Intervene
with attached Comment-in-Intervention. They agree with the NCIP and Flavier, et al. that IPRA is
consistent with the Constitution and pray that the petition for prohibition and mandamus be dismissed.
The motions for intervention of the aforesaid groups and organizations were granted.
Oral arguments were heard on April 13, 1999. Thereafter, the parties and intervenors filed their respective
memoranda in which they reiterate the arguments adduced in their earlier pleadings and during the
hearing.
Petitioners assail the constitutionality of the following provisions of the IPRA and its Implementing Rules
on the ground that they amount to an unlawful deprivation of the States ownership over lands of the
public domain as well as minerals and other natural resources therein, in violation of the regalian doctrine
embodied in Section 2, Article XII of the Constitution:
"(1) Section 3(a) which defines the extent and coverage of ancestral domains, and Section 3(b) which, in
turn, defines ancestral lands;
"(2) Section 5, in relation to section 3(a), which provides that ancestral domains including inalienable
public lands, bodies of water, mineral and other resources found within ancestral domains are private but
community property of the indigenous peoples;
"(3) Section 6 in relation to section 3(a) and 3(b) which defines the composition of ancestral domains and
ancestral lands;
"(4) Section 7 which recognizes and enumerates the rights of the indigenous peoples over the ancestral
domains;
(5) Section 8 which recognizes and enumerates the rights of the indigenous peoples over the ancestral
lands;
"(6) Section 57 which provides for priority rights of the indigenous peoples in the harvesting, extraction,
development or exploration of minerals and other natural resources within the areas claimed to be their
ancestral domains, and the right to enter into agreements with nonindigenous peoples for the
development and utilization of natural resources therein for a period not exceeding 25 years, renewable
for not more than 25 years; and
"(7) Section 58 which gives the indigenous peoples the responsibility to maintain, develop, protect and
conserve the ancestral domains and portions thereof which are found to be necessary for critical
watersheds, mangroves, wildlife sanctuaries, wilderness, protected areas, forest cover or reforestation."
2

Petitioners also content that, by providing for an all-encompassing definition of "ancestral domains" and
"ancestral lands" which might even include private lands found within said areas, Sections 3(a) and 3(b)
violate the rights of private landowners.
3

In addition, petitioners question the provisions of the IPRA defining the powers and jurisdiction of the
NCIP and making customary law applicable to the settlement of disputes involving ancestral domains and
ancestral lands on the ground that these provisions violate the due process clause of the Constitution.
4

These provisions are:
"(1) sections 51 to 53 and 59 which detail the process of delineation and recognition of ancestral
domains and which vest on the NCIP the sole authority to delineate ancestral domains and
ancestral lands;
"(2) Section 52[i] which provides that upon certification by the NCIP that a particular area is an
ancestral domain and upon notification to the following officials, namely, the Secretary of
Environment and Natural Resources, Secretary of Interior and Local Governments, Secretary of
Justice and Commissioner of the National Development Corporation, the jurisdiction of said
officials over said area terminates;
"(3) Section 63 which provides the customary law, traditions and practices of indigenous peoples
shall be applied first with respect to property rights, claims of ownership, hereditary succession and
settlement of land disputes, and that any doubt or ambiguity in the interpretation thereof shall be
resolved in favor of the indigenous peoples;
"(4) Section 65 which states that customary laws and practices shall be used to resolve disputes
involving indigenous peoples; and
"(5) Section 66 which vests on the NCIP the jurisdiction over all claims and disputes involving
rights of the indigenous peoples."
5

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

Petitioners pray for the following:
"(1) A declaration that Sections 3, 5, 6, 7, 8, 52[I], 57, 58, 59, 63, 65 and 66 and other related
provisions of R.A. 8371 are unconstitutional and invalid;
"(2) The issuance of a writ of prohibition directing the Chairperson and Commissioners of the NCIP
to cease and desist from implementing the assailed provisions of R.A. 8371 and its Implementing
Rules;
"(3) The issuance of a writ of prohibition directing the Secretary of the Department of Environment
and Natural Resources to cease and desist from implementing Department of Environment and
Natural Resources Circular No. 2, series of 1998;
"(4) The issuance of a writ of prohibition directing the Secretary of Budget and Management to
cease and desist from disbursing public funds for the implementation of the assailed provisions of
R.A. 8371; and
"(5) The issuance of a writ of mandamus commanding the Secretary of Environment and Natural
Resources to comply with his duty of carrying out the States constitutional mandate to control and
supervise the exploration, development, utilization and conservation of Philippine natural
resources."
7

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


Footnotes
1
Rollo, p. 114.
2
Petition, Rollo, pp. 16-23.
3
Id. at 23-25.
4
Section 1, Article III of the Constitution states: "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."
5
Rollo, pp. 25-27.
6
Id. at 27-28.
7
Transcript of Stenographic Notes of the hearing held on April 13, 1999, pp. 5-6.

The Lawphil Project - Arellano Law Foundation



SEPARATE OPINION
PUNO, J .:
PRECIS
A classic essay on the utility of history was written in 1874 by Friedrich Nietzsche entitled "On the Uses
and Disadvantages of History for Life." Expounding on Nietzsche's essay, Judge Richard Posner
1
wrote:
2

"Law is the most historically oriented, or if you like the most backward-looking, the most 'past-dependent,'
of the professions. It venerates tradition, precedent, pedigree, ritual, custom, ancient practices, ancient
texts, archaic terminology, maturity, wisdom, seniority, gerontocracy, and interpretation conceived of as a
method of recovering history. It is suspicious of innovation, discontinuities, 'paradigm shifts,' and the
energy and brashness of youth. These ingrained attitudes are obstacles to anyone who wants to re-orient
law in a more pragmatic direction. But, by the same token, pragmatic jurisprudence must come to
terms with history."
When Congress enacted the Indigenous Peoples Rights Act (IPRA), it introduced radical concepts into
the Philippine legal system which appear to collide with settled constitutional and jural precepts on state
ownership of land and other natural resources. The sense and subtleties of this law cannot be appreciated
without considering its distinct sociology and the labyrinths of its history. This Opinion attempts to interpret
IPRA by discovering its soul shrouded by the mist of our history. After all, the IPRA was enacted by
Congress not only to fulfill the constitutional mandate of protecting the indigenous cultural communities'
right to their ancestral land but more importantly, to correct a grave historical injustice to our
indigenous people.
This Opinion discusses the following:
I. The Development of the Regalian Doctrine in the Philippine Legal System.
A. The Laws of the Indies
B. Valenton v. Murciano
C. The Public Land Acts and the Torrens System
D. The Philippine Constitutions
II. The Indigenous Peoples Rights Act (IPRA).
A. Indigenous Peoples
1. Indigenous Peoples: Their History
2. Their Concept of Land
III. The IPRA is a Novel Piece of Legislation.
A. Legislative History
IV. The Provisions of the IPRA Do Not Contravene the Constitution.
A. Ancestral domains and ancestral lands are the private property of indigenous peoples and do
not constitute part of the land of the public domain.
1. The right to ancestral domains and ancestral lands: how acquired
2. The concept of native title
(a) Cario v. Insular Government
(b) Indian Title to land
(c) Why the Cario doctrine is unique
3. The option of securing a torrens title to the ancestral land
B. The right of ownership and possession by the ICCs/IPs to their ancestral domains is a limited
form of ownership and does not include the right to alienate the same.
1. The indigenous concept of ownership and customary law
C. Sections 7 (a), 7 (b) and 57 of the IPRA do not violate the Regalian Doctrine enshrined in
Section 2, Article XII of the 1987 Constitution.
1. The rights of ICCs/IPs over their ancestral domains and lands
2. The right of ICCs/IPs to develop lands and natural resources within the ancestral
domains does not deprive the State of ownership over the natural resources, control and
supervision in their development and exploitation.
(a) Section 1, Part II, Rule III of the Implementing Rules goes beyond the parameters
of Section 7(a) of the law on ownership of ancestral domains and is ultra vires.
(b) The small-scale utilization of natural resources in Section 7 (b) of the IPRA is
allowed under Paragraph 3, Section 2, Article XII of the 1987 Consitution.
(c) The large-scale utilization of natural resources in Section 57 of the IPRA may be
harmonized with Paragraphs 1 and 4, Section 2, Article XII of the 1987 Constitution.
V. The IPRA is a Recognition of Our Active Participation in the International Indigenous Movement.
DISCUSSION
I. THE DEVELOPMENT OF THE REGALIAN DOCTRINE IN THE PHILIPPINE LEGAL SYSTEM.
A. The Laws of the Indies
The capacity of the State to own or acquire property is the state's power of dominium.
3
This was the
foundation for the early Spanish decrees embracing the feudal theory of jura regalia. The "Regalian
Doctrine" or jura regaliais a Western legal concept that was first introduced by the Spaniards into the
country through the Laws of the Indies and the Royal Cedulas. The Laws of the Indies, i.e., more
specifically, Law 14, Title 12, Book 4 of the Novisima Recopilacion de Leyes de las Indias, set the policy
of the Spanish Crown with respect to the Philippine Islands in the following manner:
"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 as they belong to us, in order that after reserving before all what to us or to our viceroys,
audiencias, 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 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.
We therefore order and command that all viceroys and presidents of pretorial courts designate at such
time as shall to them seem most expedient, a suitable period within which all possessors of tracts, farms,
plantations, and estates shall exhibit to them and to the court officers appointed by them for this purpose,
their title deeds thereto. And those who are in possession by virtue of proper deeds and receipts, or by
virtue of just prescriptive right shall be protected, and all the rest shall be restored to us to be disposed of
at our will."
4

The Philippines passed to Spain by virtue of "discovery" and conquest. Consequently, all lands became
the exclusive patrimony and dominion of the Spanish Crown. The Spanish Government took charge of
distributing the lands by issuing royal grants and concessions to Spaniards, both military and
civilian.
5
Private land titles could only be acquired from the government either by purchase or by the
various modes of land grant from the Crown.
6

The Laws of the Indies were followed by the Ley Hipotecaria, or the Mortgage Law of 1893.
7
The
Spanish Mortgage Law provided for the systematic registration of titles and deeds as well as possessory
claims. The law sought to register and tax lands pursuant to the Royal Decree of 1880. The Royal Decree
of 1894, or the "Maura Law," was partly an amendment of the Mortgage Law as well as the Laws of the
Indies, as already amended by previous orders and decrees.
8
This was the last Spanish land law
promulgated in the Philippines. It required the "adjustment" or registration of all agricultural lands,
otherwise the lands shall revert to the state.
Four years later, by the Treaty of Paris of December 10, 1898, Spain ceded to the government of the
United States all rights, interests and claims over the national territory of the Philippine Islands. In 1903,
the United States colonial government, through the Philippine Commission, passed Act No. 926, the first
Public Land Act.
B. Valenton v. Murciano
In 1904, under the American regime, this Court decided the case of Valenton v. Murciano.
9

Valenton resolved the question of which is the better basis for ownership of land: long-time occupation or
paper title. Plaintiffs had entered into peaceful occupation of the subject land in 1860. Defendant's
predecessor-in-interest, on the other hand, purchased the land from the provincial treasurer of Tarlac in
1892. The lower court ruled against the plaintiffs on the ground that they had lost all rights to the land by
not objecting to the administrative sale. Plaintiffs appealed the judgment, asserting that their 30-year
adverse possession, as an extraordinary period of prescription in the Partidas and the Civil Code, had
given them title to the land as against everyone, including the State; and that the State, not owning the
land, could not validly transmit it.
The Court, speaking through Justice Willard, decided the case on the basis of "those special laws which
from earliest time have regulated the disposition of the public lands in the colonies."
10
The question posed
by the Court was: "Did these special laws recognize any right of prescription as against the State as to
these lands; and if so, to what extent was it recognized?"
Prior to 1880, the Court said, there were no laws specifically providing for the disposition of land in the
Philippines. However, it was understood that in the absence of any special law to govern a specific
colony, the Laws of the Indies would be followed. Indeed, in the Royal Order of July 5, 1862, it was
decreed that until regulations on the subject could be prepared, the authorities of the Philippine Islands
should follow strictly the Laws of the Indies, theOrdenanza of the Intendentes of 1786, and the Royal
Cedula of 1754.
11

Quoting the preamble of Law 14, Title 12, Book 4 of the Recopilacion de Leyes de las Indias, the court
interpreted it as follows:
"In the preamble of this law there is, as is seen, a distinct statement that all those lands belong to the
Crown which have not been granted by Philip, or in his name, or by the kings who preceded him. This
statement excludes the idea that there might be lands not so granted, that did not belong to the
king. It excludes the idea that the king was not still the owner of all ungranted lands, because some
private person had been in the adverse occupation of them. By the mandatory part of the law all the
occupants of the public lands are required to produce before the authorities named, and within a time to
be fixed by them, their title papers. And those who had good title or showed prescription were to be
protected in their holdings. It is apparent that it was not the intention of the law that mere possession for a
length of time should make the possessors the owners of the land possessed by them without any action
on the part of the authorities."
12

The preamble stated that all those lands which had not been granted by Philip, or in his name, or by the
kings who preceded him, belonged to the Crown.
13
For those lands granted by the king, the decree
provided for a system of assignment of such lands. It also ordered that all possessors of agricultural land
should exhibit their title deed, otherwise, the land would be restored to the Crown.
14

The Royal Cedula of October 15, 1754 reinforced the Recopilacion when it ordered the Crown's principal
subdelegate to issue a general order directing the publication of the Crown's instructions:
"x x x to the end that any and all persons who, since the year 1700, and up to the date of the promulgation
and publication of said order, shall have occupied royal lands, whether or not x x x cultivated or tenanted,
may x x x appear and exhibit to said subdelegates the titles and patents by virtue of which said lands are
occupied. x x x. Said subdelegates will at the same time warn the parties interested that in case of their
failure to present their title deeds within the term designated, without a just and valid reason therefor, they
will be deprived of and evicted from their lands, and they will be granted to others."
15

On June 25, 1880, the Crown adopted regulations for the adjustment of lands "wrongfully occupied" by
private individuals in the Philippine Islands. Valenton construed these regulations together with
contemporaneous legislative and executive interpretations of the law, and concluded that plaintiffs' case
fared no better under the 1880 decree and other laws which followed it, than it did under the earlier ones.
Thus as a general doctrine, the Court stated:
"While the State has always recognized the right of the occupant to a deed if he proves a possession for a
sufficient length of time, yet it has always insisted that he must make that proof before the proper
administrative officers, and obtain from them his deed, and until he did that the State remained the
absolute owner."
16

In conclusion, the Court ruled: "We hold that from 1860 to 1892 there was no law in force in these Islands
by which the plaintiffs could obtain the ownership of these lands by prescription, without any action by the
State."
17
Valenton had no rights other than those which accrued to mere possession. Murciano, on the
other hand, was deemed to be the owner of the land by virtue of the grant by the provincial secretary. In
effect, Valenton upheld the Spanish concept of state ownership of public land.
As a fitting observation, the Court added that "[t]he policy pursued by the Spanish Government from
earliest times, requiring settlers on the public lands to obtain title deeds therefor from the State,
has been continued by the American Government in Act No. 926."
18

C. The Public Land Acts and the Torrens System
Act No. 926, the first Public Land Act, was passed in pursuance of the provisions of the 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;
19
and that the government's title to public land sprung from the Treaty of Paris and other
subsequent treaties between Spain and the United States.
20
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,
21
and excluded the patrimonial property of the government and the friar
lands.
22

Act No. 926 was superseded in 1919 by Act 2874, the second Public Land Act. This new law was
passed under the Jones Law. It was more comprehensive in scope but limited the exploitation of
agricultural lands to Filipinos and Americans and citizens of other countries which gave Filipinos the same
privileges.
23
After the passage of the 1935 Constitution, Act 2874 was amended in 1936
by Commonwealth Act No. 141. Commonwealth Act No. 141 remains the present Public Land Law and
it is essentially the same as Act 2874. The main difference between the two relates to the transitory
provisions on the rights of American citizens and corporations during the Commonwealth period at par
with Filipino citizens and corporations.
24

Grants of public land were brought under the operation of the Torrens system under Act 496, or
the Land Registration Law of 1903. Enacted by the Philippine Commission, Act 496 placed all public
and private lands in the Philippines under the Torrens system. The law is said to be almost a verbatim
copy of the Massachussetts Land Registration Act of 1898,
25
which, in turn, followed the principles and
procedure of the Torrens system of registration formulated by Sir Robert Torrens who patterned it after
the Merchant Shipping Acts in South Australia. The Torrens system requires that the government issue an
official certificate of title attesting to the fact that the person named is the owner of the property described
therein, subject to such liens and encumbrances as thereon noted or the law warrants or reserves.
26
The
certificate of title is indefeasible and imprescriptible and all claims to the parcel of land are quieted upon
issuance of said certificate. This system highly facilitates land conveyance and negotiation.
27

D. The Philippine Constitutions
The Regalian doctrine was enshrined in the 1935 Constitution. One of the fixed and dominating
objectives of the 1935 Constitutional Convention was the nationalization and conservation of the natural
resources of the country.
28
There was an overwhelming sentiment in the Convention in favor of the
principle of state ownership of natural resources and the adoption of the Regalian doctrine.
29
State
ownership of natural resources was seen as a necessary starting point to secure recognition of the state's
power to control their disposition, exploitation, development, or utilization.
30
The delegates to the
Constitutional Convention very well knew that the concept of State ownership of land and natural
resources was introduced by the Spaniards, however, they were not certain whether it was continued and
applied by the Americans. To remove all doubts, the Convention approved the provision in the
Constitution affirming the Regalian doctrine.
31

Thus, the 1935 Constitution, in Section 1 of Article XIII on "Conservation and Utilization of Natural
Resources," reads as follows:
"Sec. 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals, coal,
petroleum, and other mineral oils, all forces of potential energy, and other natural resources of the
Philippines belong to the State, and their disposition, exploitation, development, or utilization shall
be limited to citizens of the Philippines, or to corporations or associations at least sixty per
centum of the capital of which is owned by such citizens, subject to any existing right, grant,
lease, or concession at the time of the inauguration of the Government established under this
Constitution. Natural resources, with the exception of public agricultural land, shall not be
alienated, and no license, concession, or lease for the exploitation, development, or utilization of any of
the natural resources shall be granted for a period exceeding twenty-five years, except as to water rights
for irrigation, water supply, fisheries, or industrial uses other than the development of water power, in
which cases beneficial use may be the measure and the limit of the grant."
The 1973 Constitution reiterated the Regalian doctrine in Section 8, Article XIV on the "National
Economy and the Patrimony of the Nation," to wit:
"Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all
forces of potential energy, fisheries, wildlife, and other natural resources of the Philippines belong
to the State. With the exception of agricultural, industrial or commercial, residential, and
resettlement lands of the public domain, natural resources shall not be alienated, and no license,
concession, or lease for the exploration, development, exploitation, or utilization of any of the
natural resources shall be granted for a period exceeding twenty-five years, renewable for not
more than twenty-five years,except as to water rights for irrigation, water supply, fisheries, or industrial
uses other than the development of water power, in which cases beneficial use may be the measure and
the limit of the grant."
The 1987 Constitution reaffirmed the Regalian doctrine in Section 2 of Article XII on "National Economy
and Patrimony," to wit:
"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 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.
x x x."
Simply stated, all lands of the public domain as well as all natural resources enumerated therein,
whether on public or private land, belong to the State. It is this concept of State ownership that
petitioners claim is being violated by the IPRA.
II. THE INDIGENOUS PEOPLES RIGHTS ACT.
Republic Act No. 8371 is entitled "An Act to Recognize, Protect and Promote the Rights of Indigenous
Cultural Communities/ Indigenous Peoples, Creating a National Commission on Indigenous Peoples,
Establishing Implementing Mechanisms, Appropriating Funds Therefor, and for Other Purposes." It is
simply known as "The Indigenous Peoples Rights Act of 1997" or the IPRA.
The IPRA recognizes the existence of the indigenous cultural communities or indigenous
peoples (ICCs/IPs) as a distinct sector in Philippine society. It grants these people the ownership and
possession of their ancestral domains and ancestral lands, and defines the extent of these lands
and domains. The ownership given is the indigenous concept of ownership under customary law
which traces its origin to native title.
Other rights are also granted the ICCs/IPs, and these are:
- the right to develop lands and natural resources;
- the right to stay in the territories;
- the right in case of displacement;
- the right to safe and clean air and water;
- the right to claim parts of reservations;
- the right to resolve conflict;
32

- the right to ancestral lands which include
a. the right to transfer land/property to/among members of the same ICCs/IPs, subject to
customary laws and traditions of the community concerned;
b. the right to redemption for a period not exceeding 15 years from date of transfer, if the
transfer is to a non-member of the ICC/IP and is tainted by vitiated consent of the ICC/IP, or
if the transfer is for an unconscionable consideration.
33

Within their ancestral domains and ancestral lands, the ICCs/IPs are given the right to self-governance
and empowerment,
34
social justice and human rights,
35
the right to preserve and protect their culture,
traditions, institutions and community intellectual rights, and the right to develop their own sciences and
technologies.
36

To carry out the policies of the Act, the law created the National Commission on Indigenous Peoples
(NCIP). The NCIP is an independent agency under the Office of the President and is composed of seven
(7) Commissioners belonging to ICCs/IPs from each of the ethnographic areas- Region I and the
Cordilleras; Region II; the rest of Luzon; Island groups including Mindoro, Palawan, Romblon, Panay and
the rest of the Visayas; Northern and Western Mindanao; Southern and Eastern Mindanao; and Central
Mindanao.
37
The NCIP took over the functions of the Office for Northern Cultural Communities and the
Office for Southern Cultural Communities created by former President Corazon Aquino which were
merged under a revitalized structure.
38

Disputes involving ICCs/IPs are to be resolved under customary laws and practices. When still
unresolved, the matter may be brought to the NCIP, which is granted quasi-judicial powers.
39
The NCIP's
decisions may be appealed to the Court of Appeals by a petition for review.
Any person who violates any of the provisions of the Act such as, but not limited to, unauthorized and/or
unlawful intrusion upon ancestral lands and domains shall be punished in accordance with customary
laws or imprisoned from 9 months to 12 years and/or fined from P100,000.00 to P500,000.00 and obliged
to pay damages.
40

A. Indigenous Peoples
The IPRA is a law dealing with a specific group of people, i.e., the Indigenous Cultural Communities
(ICCs) or the Indigenous Peoples (IPs). The term "ICCs" is used in the 1987 Constitution while that of
"IPs" is the contemporary international language in the International Labor Organization (ILO) Convention
169
41
and the United Nations (UN) Draft Declaration on the Rights of Indigenous Peoples.
42

ICCs/IPs are defined by the IPRA as:
"Sec. 3 [h]. Indigenous Cultural Communities/ Indigenous Peoples- refer to a group of people or
homogeneous societies identified by self-ascription and ascription by others, who have continuously lived
as organized community on communally bounded and defined territory, and who have, under claims of
ownership since time immemorial, occupied, possessed and utilized such territories, sharing common
bonds of language, customs, traditions and other distinctive cultural traits, or who have, through
resistance to political, social and cultural inroads of colonization, non-indigenous religions and cultures,
became historically differentiated from the majority of Filipinos. ICCs/IPs shall likewise include peoples
who are regarded as indigenous on account of their descent from the populations which inhabited the
country, at the time of conquest or colonization, or at the time of inroads of non-indigenous religions and
cultures, or the establishment of present state boundaries, who retain some or all of their own social,
economic, cultural and political institutions, but who may have been displaced from their traditional
domains or who may have resettled outside their ancestral domains."
Indigenous Cultural Communities or Indigenous Peoples refer to a group of people or
homogeneous societies who have continuously lived as an organized community on communally
bounded and defined territory. These groups of people have actually occupied, possessed and utilized
their territories under claim of ownership since time immemorial. They share common bonds of language,
customs, traditions and other distinctive cultural traits, or, they, by their resistance to political, social and
cultural inroads of colonization, non-indigenous religions and cultures, became historically differentiated
from the Filipino majority. ICCs/IPs also include descendants of ICCs/IPs who inhabited the country at the
time of conquest or colonization, who retain some or all of their own social, economic, cultural and political
institutions but who may have been displaced from their traditional territories or who may have resettled
outside their ancestral domains.
1. Indigenous Peoples: Their History
Presently, Philippine indigenous peoples inhabit the interiors and mountains of Luzon, Mindanao,
Mindoro, Negros, Samar, Leyte, and the Palawan and Sulu group of islands. They are composed of 110
tribes and are as follows:
1. In the Cordillera Autonomous Region- Kankaney, Ibaloi, Bontoc, Tinggian or Itneg, Ifugao,
Kalinga, Yapayao, Aeta or Agta or Pugot, and Bago of Ilocos Norte and Pangasinan; Ibanag of
Isabela, Cagayan; Ilongot of Quirino and Nueva Vizcaya; Gaddang of Quirino, Nueva Vizcaya,
Itawis of Cagayan; Ivatan of Batanes, Aeta of Cagayan, Quirino and Isabela.
2. In Region III- Aetas.
3. In Region IV- Dumagats of Aurora, Rizal; Remontado of Aurora, Rizal, Quezon; Alangan or
Mangyan, Batangan, Buid or Buhid, Hanunuo and Iraya of Oriental and Occidental Mindoro;
Tadyawan of Occidental Mindoro; Cuyonon, Palawanon, Tagbanua and Tao't bato of Palawan.
4. In Region V- Aeta of Camarines Norte and Camarines Sur; Aeta-Abiyan, Isarog, and Kabihug of
Camarines Norte; Agta, and Mayon of Camarines Sur; Itom of Albay, Cimaron of Sorsogon; and
the Pullon of Masbate and Camarines Sur.
5. In Region VI- Ati of Negros Occidental, Iloilo and Antique, Capiz; the Magahat of Negros
Occidental; the Corolano and Sulod.
6. In Region VII- Magahat of Negros Oriental and Eskaya of Bohol.
7. In Region IX- the Badjao numbering about 192,000 in Tawi-Tawi, Zamboanga del Sur; the
Kalibugan of Basilan, the Samal, Subanon and Yakat.
8. Region X- Numbering 1.6 million in Region X alone, the IPs are: the Banwaon, Bukidnon,
Matigsalog, Talaanding of Bukidnon; the Camiguin of Camiguin Island; the Higa-unon of Agusan
del Norte, Agusan del Sur, Bukidnon and Misamis Occidental; the Tigwahanon of Agusan del Sur,
Misamis Oriental and and Misamis Occidental, the Manobo of the Agusan provinces, and the
Umayamnon of Agusan and Bukidnon.
9. In Region XI- There are about 1,774,065 IPs in Region XI. They are tribes of the Dibabaon,
Mansaka of Davao del Norte; B'laan, Kalagan, Langilad, T'boli and Talaingod of Davao del Sur;
Mamamanua of Surigao del Sur; Mandaya of the Surigao provinces and Davao Oriental; Manobo
Blit of South Cotabato; the Mangguangon of Davao and South Cotabato; Matigsalog of Davao del
Norte and Del Sur; Tagakaolo, Tasaday and Ubo of South Cotabato; and Bagobo of Davao del sur
and South Cotabato.
10. In Region XII- Ilianen, Tiruray, Maguindanao, Maranao, Tausug, Yakan/Samal, and Iranon.
43

How these indigenous peoples came to live in the Philippines goes back to as early as 25,000 to
30,000 B.C.
Before the time of Western contact, the Philippine archipelago was peopled largely by the Negritos,
Indonesians and Malays.
44
The strains from these groups eventually gave rise to common cultural
features which became the dominant influence in ethnic reformulation in the archipelago. Influences from
the Chinese and Indian civilizations in the third or fourth millenium B.C. augmented these ethnic strains.
Chinese economic and socio-cultural influences came by way of Chinese porcelain, silk and traders.
Indian influence found their way into the religious-cultural aspect of pre-colonial society.
45

The ancient Filipinos settled beside bodies of water. Hunting and food gathering became supplementary
activities as reliance on them was reduced by fishing and the cultivation of the soil.
46
From the hinterland,
coastal, and riverine communities, our ancestors evolved an essentially homogeneous culture, a basically
common way of life where nature was a primary factor. Community life throughout the archipelago was
influenced by, and responded to, common ecology. The generally benign tropical climate and the largely
uniform flora and fauna favored similarities, not differences.
47
Life was essentially subsistence but not
harsh.
48

The early Filipinos had a culture that was basically Malayan in structure and form. They had languages
that traced their origin to the Austronesian parent-stock and used them not only as media of daily
communication but also as vehicles for the expression of their literary moods.
49
They fashioned concepts
and beliefs about the world that they could not see, but which they sensed to be part of their lives.
50
They
had their own religion and religious beliefs. They believed in the immortality of the soul and life after
death. Their rituals were based on beliefs in a ranking deity whom they called Bathalang Maykapal, and a
host of other deities, in the environmental spirits and in soul spirits. The early Filipinos adored the sun, the
moon, the animals and birds, for they seemed to consider the objects of Nature as something to be
respected. They venerated almost any object that was close to their daily life, indicating the importance of
the relationship between man and the object of nature.
51

The unit of government was the "barangay," a term that derived its meaning from the Malay word
"balangay," meaning, a boat, which transported them to these shores.
52
The barangay was basically a
family-based community and consisted of thirty to one hundred families. Each barangay was different and
ruled by a chieftain called a "dato." It was the chieftain's duty to rule and govern his subjects and promote
their welfare and interests. A chieftain had wide powers for he exercised all the functions of government.
He was the executive, legislator and judge and was the supreme commander in time of war.
53

Laws were either customary or written. Customary laws were handed down orally from generation
to generation and constituted the bulk of the laws of the barangay. They were preserved in songs
and chants and in the memory of the elder persons in the community.
54
The written laws were those that
the chieftain and his elders promulgated from time to time as the necessity arose.
55
The oldest known
written body of laws was the Maragtas Code by Datu Sumakwel at about 1250 A.D. Other old codes are
the Muslim Code of Luwaran and the Principal Code of Sulu.
56
Whether customary or written, the laws
dealt with various subjects, such as inheritance, divorce, usury, loans, partnership, crime and punishment,
property rights, family relations and adoption. Whenever disputes arose, these were decided peacefully
through a court composed by the chieftain as "judge" and the barangay elders as "jury." Conflicts arising
between subjects of different barangays were resolved by arbitration in which a board composed of elders
from neutral barangays acted as arbiters.
57

Baranganic society had a distinguishing feature: the absence of private property in land. The chiefs
merely administered the lands in the name of the barangay. The social order was an extension of the
family with chiefs embodying the higher unity of the community. Each individual, therefore, participated in
the community ownership of the soil and the instruments of production as a member of the
barangay.
58
This ancient communalism was practiced in accordance with the concept of mutual sharing of
resources so that no individual, regardless of status, was without sustenance. Ownership of land was
non-existent or unimportant and the right of usufruct was what regulated the development of
lands.
59
Marine resources and fishing grounds were likewise free to all. Coastal communities depended
for their economic welfare on the kind of fishing sharing concept similar to those in land
communities.
60
Recognized leaders, such as the chieftains and elders, by virtue of their positions of
importance, enjoyed some economic privileges and benefits. But their rights, related to either land and
sea, were subject to their responsibility to protect the communities from danger and to provide them with
the leadership and means of survival.
61

Sometime in the 13th century, Islam was introduced to the archipelago in Maguindanao. The
Sultanate of Sulu was established and claimed jurisdiction over territorial areas represented today by
Tawi-tawi, Sulu, Palawan, Basilan and Zamboanga. Four ethnic groups were within this jurisdiction:
Sama, Tausug, Yakan and Subanon.
62
The Sultanate of Maguindanao spread out from Cotabato toward
Maranao territory, now Lanao del Norte and Lanao del Sur.
63

The Muslim societies evolved an Asiatic form of feudalism where land was still held in common
but was private in use. This is clearly indicated in the Muslim Code of Luwaran. The Code contains a
provision on the lease of cultivated lands. It, however, has no provision for the acquisition, transfer,
cession or sale of land.
64

The societies encountered by Magellan and Legaspi therefore were primitive economies where most
production was geared to the use of the producers and to the fulfillment of kinship obligations. They were
not economies geared to exchange and profit.
65
Moreover, the family basis of barangay membership as
well as of leadership and governance worked to splinter the population of the islands into numerous small
and separate communities.
66

When the Spaniards settled permanently in the Philippines in 1565, they found the Filipinos living
in barangay settlements scattered along water routes and river banks. One of the first tasks imposed
on the missionaries and the encomenderos was to collect all scattered Filipinos together in
a reduccion.
67
As early as 1551, the Spanish government assumed an unvarying solicitous attitude
towards the natives.
68
The Spaniards regarded it a sacred "duty to conscience and humanity to civilize
these less fortunate people living in the obscurity of ignorance" and to accord them the "moral and
material advantages" of community life and the "protection and vigilance afforded them by the same
laws."
69

The Spanish missionaries were ordered to establish pueblos where the church and convent would be
constructed. All the new Christian converts were required to construct their houses around the church and
the unbaptized were invited to do the same.
70
With the reduccion, the Spaniards attempted to "tame" the
reluctant Filipinos through Christian indoctrination using the convento/casa real/plaza complex as focal
point. The reduccion, to the Spaniards, was a "civilizing" device to make the Filipinos law-abiding citizens
of the Spanish Crown, and in the long run, to make them ultimately adopt Hispanic culture and
civilization.
71

All lands lost by the old barangays in the process of pueblo organization as well as all lands not
assigned to them and the pueblos, were now declared to be crown lands or realengas, belonging
to the Spanish king. It was from the realengas that land grants were made to non-Filipinos.
72

The abrogation of the Filipinos' ancestral rights in land and the introduction of the concept of
public domain were the most immediate fundamental results of Spanish colonial theory and
law.
73
The concept that the Spanish king was the owner of everything of value in the Indies or
colonies was imposed on the natives, and the natives were stripped of their ancestral rights to
land.
74

Increasing their foothold in the Philippines, the Spanish colonialists, civil and religious, classified the
Filipinos according to their religious practices and beliefs, and divided them into three types . First were
the Indios, the Christianized Filipinos, who generally came from the lowland populations. Second, were
the Moros or the Muslim communities, and third, were the infieles or the indigenous communities.
75

The Indio was a product of the advent of Spanish culture. This class was favored by the Spaniards and
was allowed certain status although below the Spaniards. The Moros and infieles were regarded as the
lowest classes.
76

The Moros and infieles resisted Spanish rule and Christianity. The Moros were driven from Manila
and the Visayas to Mindanao; while the infieles, to the hinterlands. The Spaniards did not pursue them
into the deep interior. The upland societies were naturally outside the immediate concern of Spanish
interest, and the cliffs and forests of the hinterlands were difficult and inaccessible, allowing
the infieles, in effect, relative security.
77
Thus, the infieles, which were peripheral to colonial
administration, were not only able to preserve their own culture but also thwarted the Christianization
process, separating themselves from the newly evolved Christian community.
78
Their own political,
economic and social systems were kept constantly alive and vibrant.
The pro-Christian or pro-Indio attitude of colonialism brought about a generally mutual feeling of
suspicion, fear, and hostility between the Christians on the one hand and the non-Christians on the other.
Colonialism tended to divide and rule an otherwise culturally and historically related populace through a
colonial system that exploited both the virtues and vices of the Filipinos.
79

President McKinley, in his instructions to the Philippine Commission of April 7, 1900, addressed
the existence of the infieles:
"In dealing with the uncivilized tribes of the Islands, the Commission should adopt the same
course followed by Congress in permitting the tribes of our North American Indians to maintain
their tribal organization and government, and under which many of those tribes are now living in peace
and contentment, surrounded by civilization to which they are unable or unwilling to conform. Such tribal
government should, however, be subjected to wise and firm regulation; and, without undue or petty
interference, constant and active effort should be exercised to prevent barbarous practices and introduce
civilized customs."
80

Placed in an alternative of either letting the natives alone or guiding them in the path of civilization, the
American government chose "to adopt the latter measure as one more in accord with humanity and with
the national conscience."
81

The Americans classified the Filipinos into two: the Christian Filipinos and the non-Christian
Filipinos. The term "non-Christian" referred not to religious belief, but to a geographical area, and more
directly, "to natives of the Philippine Islands of a low grade of civilization, usually living in tribal relationship
apart from settled communities."
82

Like the Spaniards, the Americans pursued a policy of assimilation. In 1903, they passed Act No.
253 creating the Bureau of Non-Christian Tribes (BNCT). Under the Department of the Interior, the
BNCT's primary task was to conduct ethnographic research among unhispanized Filipinos, including
those in Muslim Mindanao, with a "special view to determining the most practicable means for bringing
about their advancement in civilization and prosperity." The BNCT was modeled after the bureau
dealing with American Indians. The agency took a keen anthropological interest in Philippine cultural
minorities and produced a wealth of valuable materials about them.
83

The 1935 Constitution did not carry any policy on the non-Christian Filipinos. The raging issue
then was the conservation of the national patrimony for the Filipinos.
In 1957, the Philippine Congress passed R.A. No. 1888, an "Act to effectuate in a more rapid and
complete manner the economic, social, moral and political advancement of the non-Christian Filipinos or
national cultural minorities and to render real, complete, and permanent the integration of all said national
cultural minorities into the body politic, creating the Commission on National Integration charged with
said functions." The law called for a policy of integration of indigenous peoples into the Philippine
mainstream and for this purpose created theCommission on National Integration (CNI).
84
The CNI was
given, more or less, the same task as the BNCT during the American regime. The post-independence
policy of integration was like the colonial policy of assimilation understood in the context of a
guardian-ward relationship.
85

The policy of assimilation and integration did not yield the desired result. Like the Spaniards and
Americans, government attempts at integration met with fierce resistance. Since World War II, a
tidal wave of Christian settlers from the lowlands of Luzon and the Visayas swamped the highlands and
wide open spaces in Mindanao.
86
Knowledge by the settlers of the Public Land Acts and the Torrens
system resulted in the titling of several ancestral lands in the settlers' names. With government
initiative and participation, this titling displaced several indigenous peoples from their
lands. Worse, these peoples were also displaced by projects undertaken by the national government in
the name of national development.
87

It was in the 1973 Constitution that the State adopted the following provision:
"The State shall consider the customs, traditions, beliefs, and interests of national cultural communities in
the formulation and implementation of State policies."
88

For the first time in Philippine history, the "non-Christian tribes" or the "cultural minorities" were
addressed by the highest law of the Republic, and they were referred to as "cultural
communities."More importantly this time, their "uncivilized" culture was given some recognition and their
"customs, traditions, beliefs and interests" were to be considered by the State in the formulation and
implementation of State policies.President Marcos abolished the CNI and transferred its functions to
the Presidential Adviser on National Minorities (PANAMIN). The PANAMIN was tasked to integrate
the ethnic groups that sought full integration into the larger community, and at the same time "protect the
rights of those who wish to preserve their original lifeways beside the larger community."
89
In short, while
still adopting the integration policy, the decree recognized the right of tribal Filipinos to preserve
their way of life.
90

In 1974, President Marcos promulgated P.D. No. 410, otherwise known as the Ancestral Lands
Decree. The decree provided for the issuance of land occupancy certificates to members of the national
cultural communities who were given up to 1984 to register their claims.
91
In 1979, the Commission on
the Settlement of Land Problems was created under E.O. No. 561 which provided a mechanism for the
expeditious resolution of land problems involving small settlers, landowners, and tribal Filipinos.
92

Despite the promulgation of these laws, from 1974 to the early 1980's, some 100,000 Kalingas and
Bontoks of the Cordillera region were displaced by the Chico River dam project of the National Power
Corporation (NPC). The Manobos of Bukidnon saw their land bulldozed by the Bukidnon Sugar Industries
Company (BUSCO). In Agusan del Sur, the National Development Company was authorized by law in
1979 to take approximately 40,550 hectares of land that later became the NDC-Guthrie plantation in
Agusan del Sur. Most of the land was possessed by the Agusan natives.
93
Timber concessions, water
projects, plantations, mining, and cattle ranching and other projects of the national government led not
only to the eviction of the indigenous peoples from their land but also to the reduction and destruction of
their natural environment.
94

The Aquino government signified a total shift from the policy of integration to one of
preservation.Invoking her powers under the Freedom Constitution, President Aquino created the Office
of Muslim Affairs, Office for Northern Cultural Communities and the Office for Southern Cultural
Communities all under the Office of the President.
95

The 1987 Constitution carries at least six (6) provisions which insure the right of tribal Filipinos to
preserve their way of life.
96
This Constitution goes further than the 1973 Constitution by expressly
guaranteeing the rights of tribal Filipinos to their ancestral domains and ancestral lands. By
recognizing their right to their ancestral lands and domains, the State has effectively upheld their
right to live in a culture distinctly their own.
2. Their Concept of Land
Indigenous peoples share distinctive traits that set them apart from the Filipino mainstream. They are
non-Christians. They live in less accessible, marginal, mostly upland areas. They have a system of self-
government not dependent upon the laws of the central administration of the Republic of the Philippines.
They follow ways of life and customs that are perceived as different from those of the rest of the
population.
97
The kind of response the indigenous peoples chose to deal with colonial threat worked well
to their advantage by making it difficult for Western concepts and religion to erode their customs and
traditions. The "infieles societies" which had become peripheral to colonial administration, represented,
from a cultural perspective, a much older base of archipelagic culture. The political systems were still
structured on the patriarchal and kinship oriented arrangement of power and authority. The economic
activities were governed by the concepts of an ancient communalism and mutual help. The social
structure which emphasized division of labor and distinction of functions, not status, was maintained. The
cultural styles and forms of life portraying the varieties of social courtesies and ecological adjustments
were kept constantly vibrant.
98

Land is the central element of the indigenous peoples' existence. There is no traditional concept of
permanent, individual, land ownership. Among the Igorots, ownership of land more accurately applies to
the tribal right to use the land or to territorial control. The people are the secondary owners or stewards of
the land and that if a member of the tribe ceases to work, he loses his claim of ownership, and the land
reverts to the beings of the spirit world who are its true and primary owners. Under the concept of
"trusteeship," the right to possess the land does not only belong to the present generation but the future
ones as well.
99

Customary law on land rests on the traditional belief that no one owns the land except the gods and
spirits, and that those who work the land are its mere stewards.
100
Customary law has a strong
preference for communal ownership, which could either be ownership by a group of individuals or
families who are related by blood or by marriage,
101
or ownership by residents of the same locality who
may not be related by blood or marriage. The system of communal ownership under customary laws
draws its meaning from the subsistence and highly collectivized mode of economic production. The
Kalingas, for instance, who are engaged in team occupation like hunting, foraging for forest products, and
swidden farming found it natural that forest areas, swidden farms, orchards, pasture and burial grounds
should be communally-owned.
102
For the Kalingas, everybody has a common right to a common economic
base. Thus, as a rule, rights and obligations to the land are shared in common.
Although highly bent on communal ownership, customary law on land also sanctions individual
ownership. The residential lots and terrace rice farms are governed by a limited system of individual
ownership. It is limited because while the individual owner has the right to use and dispose of the
property, he does not possess all the rights of an exclusive and full owner as defined under our Civil
Code.
103
Under Kalinga customary law, the alienation of individually-owned land is strongly discouraged
except in marriage and succession and except to meet sudden financial needs due to sickness, death in
the family, or loss of crops.
104
Moreover, and to be alienated should first be offered to a clan-member
before any village-member can purchase it, and in no case may land be sold to a non-member of the ili.
105

Land titles do not exist in the indigenous peoples' economic and social system. The concept of
individual land ownership under the civil law is alien to them. Inherently colonial in origin, our
national land laws and governmental policies frown upon indigenous claims to ancestral lands.
Communal ownership is looked upon as inferior, if not inexistent.
106

III. THE IPRA IS A NOVEL PIECE OF LEGISLATION.
A. The Legislative History of the IPRA
It was to address the centuries-old neglect of the Philippine indigenous peoples that the Tenth
Congress of the Philippines, by their joint efforts, passed and approved R.A. No. 8371, the Indigenous
Peoples Rights Act (IPRA) of 1997. The law was a consolidation of two Bills- Senate Bill No. 1728 and
House Bill No. 9125.
Principally sponsored by Senator Juan M. Flavier,
107
Senate Bill No. 1728 was a consolidation of four
proposed measures referred to the Committees on Cultural Communities, Environment and Natural
Resources, Ways and Means, as well as Finance. It adopted almost en toto the comprehensive version of
Senate Bill Nos. 1476 and 1486 which was a result of six regional consultations and one national
consultation with indigenous peoples nationwide.
108
At the Second Regular Session of the Tenth
Congress, Senator Flavier, in his sponsorship speech, gave a background on the situation of indigenous
peoples in the Philippines, to wit:
"The Indigenous Cultural Communities, including the Bangsa Moro, have long suffered from the
dominance and neglect of government controlled by the majority. Massive migration of their Christian
brothers to their homeland shrunk their territory and many of the tribal Filipinos were pushed to the
hinterlands. Resisting the intrusion, dispossessed of their ancestral land and with the massive exploitation
of their natural resources by the elite among the migrant population, they became marginalized. And the
government has been an indispensable party to this insidious conspiracy against the Indigenous Cultural
Communities (ICCs). It organized and supported the resettlement of people to their ancestral land, which
was massive during the Commonwealth and early years of the Philippine Republic. Pursuant to the
Regalian Doctrine first introduced to our system by Spain through the Royal Decree of 13 February 1894
or the Maura Law, the government passed laws to legitimize the wholesale landgrabbing and provide for
easy titling or grant of lands to migrant homesteaders within the traditional areas of the ICCs."
109

Senator Flavier further declared:
"The IPs are the offsprings and heirs of the peoples who have first inhabited and cared for the land long
before any central government was established. Their ancestors had territories over which they ruled
themselves and related with other tribes. These territories- the land- include people, their dwelling, the
mountains, the water, the air, plants, forest and the animals. This is their environment in its totality. Their
existence as indigenous peoples is manifested in their own lives through political, economic, socio-cultural
and spiritual practices. The IPs culture is the living and irrefutable proof to this.
Their survival depends on securing or acquiring land rights; asserting their rights to it; and depending on
it. Otherwise, IPs shall cease to exist as distinct peoples."
110

To recognize the rights of the indigenous peoples effectively, Senator Flavier proposed a bill based
on two postulates: (1) the concept of native title; and (2) the principle of parens patriae.
According to Senator Flavier, "[w]hile our legal tradition subscribes to the Regalian Doctrine reinstated in
Section 2, Article XII of the 1987 Constitution," our "decisional laws" and jurisprudence passed by the
State have "made exception to the doctrine." This exception was first laid down in the case of Cario v.
Insular Governmentwhere:
"x x x the court has recognized long occupancy of land by an indigenous member of the cultural
communities as one of private ownership, which, in legal concept, is termed "native title." This ruling has
not been overturned. In fact, it was affirmed in subsequent cases."
111

Following Cario, the State passed Act No. 926, Act No. 2874, C.A. No. 141, P.D. 705, P.D. 410, P.D.
1529, R.A. 6734 (the Organic Act for the Autonomous Region of Muslim Mindanao). These laws, explicitly
or implicitly, and liberally or restrictively, recognized "native title" or "private right" and the existence of
ancestral lands and domains. Despite the passage of these laws, however, Senator Flavier continued:
"x x x the executive department of government since the American occupation has not implemented the
policy. In fact, it was more honored in its breach than in its observance, its wanton disregard shown during
the period unto the Commonwealth and the early years of the Philippine Republic when government
organized and supported massive resettlement of the people to the land of the ICCs."
Senate Bill No. 1728 seeks to genuinely recognize the IPs right to own and possess their ancestral land.
The bill was prepared also under the principle of parens patriae inherent in the supreme power of the
State and deeply embedded in Philippine legal tradition. This principle mandates that persons suffering
from serious disadvantage or handicap, which places them in a position of actual inequality in their
relation or transaction with others, are entitled to the protection of the State.
Senate Bill No. 1728 was passed on Third Reading by twenty-one (21) Senators voting in favor and
none against, with no abstention.
112

House Bill No. 9125 was sponsored by Rep. Zapata, Chairman of the Committee on Cultural
Communities. It was originally authored and subsequently presented and defended on the floor by Rep.
Gregorio Andolana of North Cotabato.
113

Rep. Andolana's sponsorhip speech reads as follows:
"This Representation, as early as in the 8th Congress, filed a bill of similar implications that would
promote, recognize the rights of indigenous cultural communities within the framework of national unity
and development.
Apart from this, Mr. Speaker, is our obligation, the government's obligation to assure and ascertain that
these rights shall be well-preserved and the cultural traditions as well as the indigenous laws that
remained long before this Republic was established shall be preserved and promoted. There is a need,
Mr. Speaker, to look into these matters seriously and early approval of the substitute bill shall bring into
reality the aspirations, the hope and the dreams of more than 12 million Filipinos that they be considered
in the mainstream of the Philippine society as we fashion for the year 2000."
114

Rep. Andolana stressed that H.B. No. 9125 is based on the policy of preservation as mandated in the
Constitution. He also emphasized that the rights of IPs to their land was enunciated in Cario v. Insular
Government which recognized the fact that they had vested rights prior to the establishment of the
Spanish and American regimes.
115

After exhaustive interpellation, House Bill No. 9125, and its corresponding amendments, was
approved on Second Reading with no objections.
IV. THE PROVISIONS OF THE IPRA DO NOT CONTRAVENE THE CONSTITUTION.
A. Ancestral Domains and Ancestral Lands are the Private Property of Indigenous Peoples and Do
Not Constitute Part of the Land of the Public Domain.
The IPRA grants to ICCs/IPs a distinct kind of ownership over ancestral domains and ancestral
lands.Ancestral lands are not the same as ancestral domains. These are defined in Section 3 [a] and [b]
of the Indigenous Peoples Right Act, viz:
"Sec. 3 a) Ancestral Domains. - Subject to Section 56 hereof, refer 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;
b) Ancestral Lands.- Subject to Section 56 hereof, refers to land occupied, possessed and utilized by
individuals, families and clans who are members of the ICCs/IPs since time immemorial, by themselves or
through their predecessors-in-interest, under claims of individual or traditional group ownership,
continuously, to the present except when interrupted by war, force majeure or displacement by force,
deceit, stealth, or as a consequence of government projects and other voluntary dealings entered into by
government and private individuals/corporations, including, but not limited to, residential lots, rice terraces
or paddies, private forests, swidden farms and tree lots."
Ancestral domains are all areas belonging to ICCs/IPs 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 until 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 with government and/or private individuals or corporations. Ancestral domains comprise
lands, inland waters, coastal areas, and natural resources therein and includes ancestral lands,
forests, pasture, residential, agricultural, and other lands individually owned whether alienable or
not, hunting grounds, burial grounds, worship areas, bodies of water, mineral and other natural
resources. They also include 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.
116

Ancestral lands are lands held by the ICCs/IPs under the same conditions as ancestral domains except
that these are limited to lands and that these lands are not merely occupied and possessed but are also
utilized by the ICCs/IPs under claims of individual or traditional group ownership. These lands include but
are not limited to residential lots, rice terraces or paddies, private forests, swidden farms and tree lots.
117

The procedures for claiming ancestral domains and lands are similar to the procedures embodied in
Department Administrative Order (DAO) No. 2, series of 1993, signed by then Secretary of the
Department of Environment and Natural Resources (DENR) Angel Alcala.
118
DAO No. 2 allowed the
delineation of ancestral domains by special task forces and ensured the issuance of Certificates of
Ancestral Land Claims (CALC's) and Certificates of Ancestral Domain Claims (CADC's) to IPs.
The identification and delineation of these ancestral domains and lands is a power conferred by the IPRA
on the National Commission on Indigenous Peoples (NCIP).
119
The guiding principle in identification and
delineation is self-delineation.
120
This means that the ICCs/IPs have a decisive role in determining the
boundaries of their domains and in all the activities pertinent thereto.
121

The procedure for the delineation and recognition of ancestral domains is set forth in Sections 51 and 52
of the IPRA. The identification, delineation and certification of ancestral lands is in Section 53 of said law.
Upon due application and compliance with the procedure provided under the law and upon finding by the
NCIP that the application is meritorious, the NCIP shall issue a Certificate of Ancestral Domain Title
(CADT) in the name of the community concerned.
122
The allocation of lands within the ancestral
domain to any individual or indigenous corporate (family or clan) claimants is left to the ICCs/IPs
concerned to decide in accordance with customs and traditions.
123
With respect to ancestral lands
outside the ancestral domain, the NCIP issues a Certificate of Ancestral Land Title (CALT).
124

CADT's and CALT's issued under the IPRA shall be registered by the NCIP before the Register of Deeds
in the place where the property is situated.
125

(1) Right to Ancestral Domains and Ancestral Lands: How Acquired
The rights of the ICCs/IPs to their ancestral domains and ancestral lands may be acquired in two
modes: (1) bynative title over both ancestral lands and domains; or (2) by torrens title under the
Public Land Act and the Land Registration Act with respect to ancestral lands only.
(2) The Concept of Native Title
Native title is defined as:
"Sec. 3 [l]. Native Title- refers to pre-conquest rights to lands and domains which, as far back as memory
reaches, have been held under a claim of private ownership by ICCs/IPs, have never been public lands
and are thusindisputably presumed to have been held that way since before the Spanish Conquest."
126

Native title refers to ICCs/IPs' preconquest rights to lands and domains held under a claim of private
ownership as far back as memory reaches. These lands are deemed never to have been public lands and
are indisputably presumed to have been held that way since before the Spanish Conquest. The rights of
ICCs/IPs to their ancestraldomains (which also include ancestral lands) by virtue of native title shall be
recognized and respected.
127
Formal recognition, when solicited by ICCs/IPs concerned, shall be
embodied in a Certificate of Ancestral Domain Title (CADT), which shall recognize the title of the
concerned ICCs/IPs over the territories identified and delineated.
128

Like a torrens title, a CADT is evidence of private ownership of land by native title. Native title, however,
is a right of private ownership peculiarly granted to ICCs/IPs over their ancestral lands and domains. The
IPRA categorically declares ancestral lands and domains held by native title as never to have
been public land. Domains and lands held under native title are, therefore, indisputably presumed to have
never been public lands and are private.
(a) Cario v. Insular Government
129

The concept of native title in the IPRA was taken from the 1909 case of Cario v. Insular
Government.
130
Cario firmly established a concept of private land title that existed irrespective of any
royal grant from the State.
In 1903, Don Mateo Cario, an Ibaloi, sought to register with the land registration court 146 hectares of
land in Baguio Municipality, Benguet Province. He claimed that this land had been possessed and
occupied by his ancestors since time immemorial; that his grandfather built fences around the property for
the holding of cattle and that his father cultivated some parts of the land. Cario inherited the land in
accordance with Igorot custom. He tried to have the land adjusted under the Spanish land laws, but no
document issued from the Spanish Crown.
131
In 1901, Cario obtained a possessory title to the land under
the Spanish Mortgage Law.
132
The North American colonial government, however, ignored his possessory
title and built a public road on the land prompting him to seek a Torrens title to his property in the land
registration court. While his petition was pending, a U.S. military reservation
133
was proclaimed over his
land and, shortly thereafter, a military detachment was detailed on the property with orders to keep cattle
and trespassers, including Cario, off the land.
134

In 1904, the land registration court granted Cario's application for absolute ownership to the land. Both
the Government of the Philippine Islands and the U.S. Government appealed to the C.F.I. of Benguet
which reversed the land registration court and dismissed Cario's application. The Philippine Supreme
Court
135
affirmed the C.F.I. by applying the Valenton ruling. Cario took the case to the U.S. Supreme
Court.
136
On one hand, the Philippine government invoked the Regalian doctrine and contended that
Cario failed to comply with the provisions of the Royal Decree of June 25, 1880, which required
registration of land claims within a limited period of time. Cario, on the other, asserted that he was the
absolute owner of the land jure gentium, and that the land never formed part of the public domain.
In a unanimous decision written by Justice Oliver Wendell Holmes, the U.S. Supreme Court held:
"It is true that Spain, in its earlier decrees, embodied the universal feudal theory that all lands were held
from the Crown, and perhaps the general attitude of conquering nations toward people not recognized as
entitled to the treatment accorded to those in the same zone of civilization with themselves. It is true, also,
that in legal theory, sovereignty is absolute, and that, as against foreign nations, the United States may
assert, as Spain asserted, absolute power. But it does not follow that, as against the inhabitants of the
Philippines, the United States asserts that Spain had such power. When theory is left on one side,
sovereignty is a question of strength, and may vary in degree. How far a new sovereign shall insist upon
the theoretical relation of the subjects to the head in the past, and how far it shall recognize actual facts,
are matters for it to decide."
137

The U.S. Supreme Court noted that it need not accept Spanish doctrines. The choice was with the new
colonizer. Ultimately, the matter had to be decided under U.S. law.
The Cario decision largely rested on the North American constitutionalist's concept of "due process" as
well as the pronounced policy "to do justice to the natives."
138
It was based on the strong mandate
extended to the Islands via the Philippine Bill of 1902 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." The court declared:
"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 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, chapter 1369,
section 12 (32 Statutes at Large, 691), all the property and rights acquired there by the United States are
to be administered 'for the benefit of the inhabitants thereof.' It is reasonable to suppose that the attitude
thus assumed by the United States with regard to what was unquestionably its own is also its attitude in
deciding what it will claim for its own. The same statute made a bill of rights, embodying the safeguards of
the Constitution, and, like the Constitution, extends those safeguards to all. It provides that 'no law shall
be enacted in said islands which shall deprive any person of life, liberty, or property without due process
of law, or deny to any person therein the equal protection of the laws.' In the light of the declaration that
we have quoted from section 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,- of the profoundest factors in human thought,- regarded as their own."
139

The Court went further:
"Every presumption is and ought to be against the government in a case like the present. It might,
perhaps, be proper and sufficient to say that when, as far back as testimony or memory goes, the
land has been held by individuals under a claim of private ownership, it will be presumed to have
been held in the same way from before the Spanish conquest, and never to have been public
land. Certainly in a case like this, if there is doubt or ambiguity in the Spanish law, we ought to give the
applicant the benefit of the doubt."
140

The court thus laid down the presumption of a certain title held (1) as far back as testimony or memory
went, and (2) under a claim of private ownership. Land held by this title is presumed to "never have been
public land."
Against this presumption, the U.S. Supreme Court analyzed the Spanish decrees upheld in the 1904
decision ofValenton v. Murciano. The U.S. Supreme Court found no proof that the Spanish decrees
did not honor native title. On the contrary, the decrees discussed in Valenton appeared to recognize that
the natives owned some land, irrespective of any royal grant. The Regalian doctrine declared in the
preamble of the Recopilacion was all "theory and discourse" and it was observed that titles were admitted
to exist beyond the powers of the Crown, viz:
"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 the Recopilacion de Leyes de las Indias, cited
for a contrary conclusion in Valenton v. Murciano, 3 Philippine 537, while it commands viceroys and
others, when it seems proper, to call for the exhibition of grants, directs them to confirm those who hold by
good grants or justa prescripcion. It is true that it begins by the characteristic assertion of feudal
overlordship and the origin of all titles in the King or his predecessors. That was theory and
discourse. The fact was that titles were admitted to exist that owed nothing to the powers of Spain
beyond this recognition in their books." (Emphasis supplied).
141

The court further stated that the Spanish "adjustment" proceedings never held sway over unconquered
territories. The wording of the Spanish laws were not framed in a manner as to convey to the natives that
failure to register what to them has always been their own would mean loss of such land. The registration
requirement was "not to confer title, but simply to establish it;" 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."
By recognizing this kind of title, the court clearly repudiated the doctrine of Valenton. It was frank
enough, however, to admit the possibility that the applicant might have been deprived of his land under
Spanish law because of the inherent ambiguity of the decrees and concomitantly, the various
interpretations which may be given them. But precisely because of the ambiguity and of the strong
"due process mandate" of the Constitution, the court validated this kind of title.
142
This title was
sufficient, even without government administrative action, and entitled the holder to a Torrens certificate.
Justice Holmes explained:
"It will be perceived that the rights of the applicant under the Spanish law present a problem not without
difficulties for courts of a 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 the opinion that law and justice require
that the applicant should be granted what he seeks, and should not be deprived of what, by the practice
and belief of those among whom he lived, was his property, through a refined interpretation of an almost
forgotten law of Spain."
143

Thus, the court ruled in favor of Cario and ordered the registration of the 148 hectares in Baguio
Municipality in his name.
144

Examining Cario closer, the U.S. Supreme Court did not categorically refer to the title it upheld as
"native title." It simply said:
"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 through an important part of the Island of Luzon, at
least, for the want of ceremonies which the Spaniards would not have permitted and had not the power to
enforce."
145

This is the only instance when Justice Holmes used the term "native title" in the entire length of
the Cariodecision. It is observed that the widespread use of the term "native title" may be traced to
Professor Owen James Lynch, Jr., a Visiting Professor at the University of the Philippines College of Law
from the Yale University Law School. In 1982, Prof. Lynch published an article in the Philippine Law
Journal entitled Native Title, Private Right and Tribal Land Law.
146
This article was made after
Professor Lynch visited over thirty tribal communities throughout the country and studied the origin and
development of Philippine land laws.
147
He discussed Carioextensively and used the term "native title" to
refer to Cario's title as discussed and upheld by the U.S. Supreme Court in said case.
(b) Indian Title
In a footnote in the same article, Professor Lynch stated that the concept of "native title" as defined by
Justice Holmes in Cario "is conceptually similar to "aboriginal title" of the American Indians.
148
This is not
surprising, according to Prof. Lynch, considering that during the American regime, government policy
towards ICCs/IPs was consistently made in reference to native Americans.
149
This was clearly
demonstrated in the case of Rubi v. Provincial Board of Mindoro.
150

In Rubi, the Provincial Board of Mindoro adopted a Resolution authorizing the provincial governor to
remove the Mangyans from their domains and place them in a permanent reservation in Sitio Tigbao,
Lake Naujan. Any Mangyan who refused to comply was to be imprisoned. Rubi and some Mangyans,
including one who was imprisoned for trying to escape from the reservation, filed for habeas corpus
claiming deprivation of liberty under the Board Resolution. This Court denied the petition on the ground of
police power. It upheld government policy promoting the idea that a permanent settlement was the only
successful method for educating the Mangyans, introducing civilized customs, improving their health and
morals, and protecting the public forests in which they roamed.
151
Speaking through Justice Malcolm, the
court said:
"Reference was made in the President's instructions to the Commission to the policy adopted by the
United States for the Indian Tribes. The methods followed by the Government of the Philippine Islands in
its dealings with the so-called non-Christian people is said, on argument, to be practically identical with
that followed by the United States Government in its dealings with the Indian tribes. Valuable lessons, it is
insisted, can be derived by an investigation of the American-Indian policy.
From the beginning of the United States, and even before, the Indians have been treated as "in a state of
pupilage." The recognized relation between the Government of the United States and the Indians may be
described as that of guardian and ward. It is for the Congress to determine when and how the
guardianship shall be terminated. The Indians are always subject to the plenary authority of the United
States.
152

x x x.
As to the second point, the facts in the Standing Bear case and the Rubi case are not exactly identical.
But even admitting similarity of facts, yet it is known to all that Indian reservations do exist in the United
States, that Indians have been taken from different parts of the country and placed on these reservations,
without any previous consultation as to their own wishes, and that, when once so located, they have been
made to remain on the reservation for their own good and for the general good of the country. If any
lesson can be drawn from the Indian policy of the United States, it is that the determination of this policy is
for the legislative and executive branches of the government and that when once so decided upon, the
courts should not interfere to upset a carefully planned governmental system. Perhaps, just as many
forceful reasons exist for the segregation of the Manguianes in Mindoro as existed for the segregation of
the different Indian tribes in the United States."
153

Rubi applied the concept of Indian land grants or reservations in the Philippines. An Indian reservation is
a part of the public domain set apart by proper authority for the use and occupation of a tribe or tribes of
Indians.
154
It may be set apart by an act of Congress, by treaty, or by executive order, but it cannot be
established by custom and prescription.
155

Indian title to land, however, is not limited to land grants or reservations. It also covers the
"aboriginal right of possession or occupancy."
156
The aboriginal right of possession depends on the
actual occupancy of the lands in question by the tribe or nation as their ancestral home, in the sense that
such lands constitute definable territory occupied exclusively by the particular tribe or nation.
157
It is a right
which exists apart from any treaty, statute, or other governmental action, although in numerous instances
treaties have been negotiated with Indian tribes, recognizing their aboriginal possession and delimiting
their occupancy rights or settling and adjusting their boundaries.
158

American jurisprudence recognizes the Indians' or native Americans' rights to land they have held
and occupied before the "discovery" of the Americas by the Europeans. The earliest definitive
statement by the U.S. Supreme Court on the nature of aboriginal title was made in 1823 in J ohnson
& Graham's Lessee v. M'Intosh.
159

In J ohnson, the plaintiffs claimed the land in question under two (2) grants made by the chiefs of two (2)
Indian tribes. The U.S. Supreme Court refused to recognize this conveyance, the plaintiffs being private
persons. The only conveyance that was recognized was that made by the Indians to the government of
the European discoverer. Speaking for the court, Chief Justice Marshall pointed out that the potentates of
the old world believed that they had made ample compensation to the inhabitants of the new world by
bestowing civilization and Christianity upon them; but in addition, said the court, they found it necessary,
in order to avoid conflicting settlements and consequent war, to establish the principle that discovery
gives title to the government by whose subjects, or by whose authority, the discovery was made,
against all other European governments, which title might be consummated by possession.
160
The
exclusion of all other Europeans gave to the nation making the discovery the sole right of acquiring the
soil from the natives and establishing settlements upon it. As regards the natives, the court further stated
that:
"Those relations which were to exist between the discoverer and the natives were to be regulated by
themselves. The rights thus acquired being exclusive, no other power could interpose between them.
In the establishment of these relations, the rights of the original inhabitants were, in no instance, entirely
disregarded; but were necessarily, to a considerable extent, impaired. They were admitted to be the
rightful occupants of the soil, with a legal as well as just claim to retain possession of it, and to
use itaccording to their own discretion; but their rights to complete sovereignty, as independent
nations, were necessarily diminished, and their power to dispose of the soil at their own will, to
whomsoever they pleased, was denied by the fundamental principle that discovery gave exclusive title to
those who made it.
While the different nations of Europe respected the right of the natives as occupants, they
asserted the ultimate dominion to be in themselves; and claimed and exercised, as a consequence
of this ultimate dominion, a power to grant the soil, while yet in possession of the natives. These
grants have been understood by all to convey a title to the grantees, subject only to the Indian
right of occupancy."
161

Thus, the discoverer of new territory was deemed to have obtained the exclusive right to acquire Indian
land and extinguish Indian titles. Only to the discoverer- whether to England, France, Spain or Holland-
did this right belong and not to any other nation or private person. The mere acquisition of the right
nonetheless did not extinguish Indian claims to land. Rather, until the discoverer, by purchase or
conquest, exercised its right, the concerned Indians were recognized as the "rightful occupants of the soil,
with a legal as well as just claim to retain possession of it." Grants made by the discoverer to her subjects
of lands occupied by the Indians were held to convey a title to the grantees, subject only to the Indian right
of occupancy. Once the discoverer purchased the land from the Indians or conquered them, it was only
then that the discoverer gained an absolute title unrestricted by Indian rights.
The court concluded, in essence, that a grant of Indian lands by Indians could not convey a title
paramount to the title of the United States itself to other parties, saying:
"It has never been contended that the Indian title amounted to nothing. Their right of possession has
never been questioned. The claim of government extends to the complete ultimate title, charged
with this right of possession, and to the exclusive power of acquiring that right."
162

It has been said that the history of America, from its discovery to the present day, proves the universal
recognition of this principle.
163

The J ohnson doctrine was a compromise. It protected Indian rights and their native lands without having
to invalidate conveyances made by the government to many U.S. citizens.
164

J ohnson was reiterated in the case of Worcester v. Georgia.
165
In this case, the State of Georgia
enacted a law requiring all white persons residing within the Cherokee nation to obtain a license or permit
from the Governor of Georgia; and any violation of the law was deemed a high misdemeanor. The
plaintiffs, who were white missionaries, did not obtain said license and were thus charged with a violation
of the Act.
The U.S. Supreme Court declared the Act as unconstitutional for interfering with the treaties established
between the United States and the Cherokee nation as well as the Acts of Congress regulating
intercourse with them. It characterized the relationship between the United States government and the
Indians as:
"The Indian nations were, from their situation, necessarily dependent on some foreign potentate for the
supply of their essential wants, and for their protection from lawless and injurious intrusions into their
country. That power was naturally termed their protector. They had been arranged under the protection of
Great Britain; but the extinguishment of the British power in their neighborhood, and the establishment of
that of the United States in its place, led naturally to the declaration, on the part of the Cherokees, that
they were under the protection of the United States, and of no other power. They assumed the relation
with the United States which had before subsisted with Great Britain.
This relation was that of a nation claiming and receiving the protection of one more powerful, not that of
individuals abandoning their national character, and submitting as subjects to the laws of a master."
166

It was the policy of the U.S. government to treat the Indians as nations with distinct territorial boundaries
and recognize their right of occupancy over all the lands within their domains. Thus:
"From the commencement of our government Congress has passed acts to regulate trade and intercourse
with the Indians; which treat them as nations, respect their rights, and manifest a firm purpose to afford
that protection which treaties stipulate. All these acts, and especially that of 1802, which is still in force,
manifestly consider the several Indian nations as distinct political communities, having territorial
boundaries, within which their authority is exclusive, and having a right to all the lands within
those boundaries, which is not only acknowledged, but guaranteed by the United States.
x x x.
"The Indian nations had always been considered as distinct, independent political communities,
retaining their original natural rights, as the undisputed possessors of the soil from time
immemorial,with the single exception of that imposed by irresistible power, which excluded them from
intercourse with any other European potentate than the first discoverer of the coast of the particular region
claimed: and this was a restriction which those European potentates imposed on themselves, as well as
on the Indians. The very term "nation," so generally applied to them, means "a people distinct from
others." x x x.
167

The Cherokee nation, then, is a distinct community, occupying its own territory, with boundaries
accurately described, in which the laws of Georgia can have no force, and which the citizens of Georgia
have no right to enter but with the assent of the Cherokees themselves or in conformity with treaties and
with the acts of Congress. The whole intercourse between the United States and this nation is, by our
Constitution and laws, vested in the government of the United States."
168

The discovery of the American continent gave title to the government of the discoverer as against all other
European governments. Designated as the naked fee,
169
this title was to be consummated by possession
and was subject to the Indian title of occupancy. The discoverer acknowledged the Indians' legal and just
claim to retain possession of the land, the Indians being the original inhabitants of the land. The
discoverer nonetheless asserted the exclusive right to acquire the Indians' land- either by purchase,
"defensive" conquest, or cession- and in so doing, extinguish the Indian title. Only the discoverer could
extinguish Indian title because it alone asserted ultimate dominion in itself. Thus, while the different
nations of Europe respected the rights of the natives as occupants, they all asserted the ultimate dominion
and title to be in themselves.
170

As early as the 19th century, it became accepted doctrine that although fee title to the lands
occupied by the Indians when the colonists arrived became vested in the sovereign- first the
discovering European nation and later the original 13 States and the United States- a right of
occupancy in the Indian tribes was nevertheless recognized. The Federal Government continued the
policy of respecting the Indian right of occupancy, sometimes called Indian title, which it accorded the
protection of complete ownership.
171
But this aboriginal Indian interest simply constitutes "permission" from
the whites to occupy the land, and means mere possession not specifically recognized as ownership by
Congress.
172
It is clear that this right of occupancy based upon aboriginal possession is not a property
right.
173
It is vulnerable to affirmative action by the federal government who, as sovereign, possessed
exclusive power to extinguish the right of occupancy at will.
174
Thus, aboriginal title is not the same as
legal title. Aboriginal title rests on actual, exclusive and continuous use and occupancy for a long
time.
175
It entails that land owned by Indian title must be used within the tribe, subject to its laws and
customs, and cannot be sold to another sovereign government nor to any citizen.
176
Such title as Indians
have to possess and occupy land is in the tribe, and not in the individual Indian; the right of individual
Indians to share in the tribal property usually depends upon tribal membership, the property of the tribe
generally being held in communal ownership.
177

As a rule, Indian lands are not included in the term "public lands," which is ordinarily used to designate
such lands as are subject to sale or other disposal under general laws.
178
Indian land which has been
abandoned is deemed to fall into the public domain.
179
On the other hand, an Indian reservation is a part
of the public domain set apart for the use and occupation of a tribe of Indians.
180
Once set apart by proper
authority, the reservation ceases to be public land, and until the Indian title is extinguished, no one but
Congress can initiate any preferential right on, or restrict the nation's power to dispose of, them.
181

The American judiciary struggled for more than 200 years with the ancestral land claims of
indigenous Americans.
182
And two things are clear. First, aboriginal title is recognized. Second,
indigenous property systems are also recognized. From a legal point of view, certain benefits can be
drawn from a comparison of Philippine IPs to native Americans.
183
Despite the similarities between native
title and aboriginal title, however, there are at present some misgivings on whether jurisprudence on
American Indians may be cited authoritatively in the Philippines. The U.S. recognizes the possessory
rights of the Indians over their land; title to the land, however, is deemed to have passed to the U.S. as
successor of the discoverer. The aboriginal title of ownership is not specifically recognized as ownership
by action authorized by Congress.
184
The protection of aboriginal title merely guards against
encroachment by persons other than the Federal Government.
185
Although there are criticisms against the
refusal to recognize the native Americans' ownership of these lands,
186
the power of the State to
extinguish these titles has remained firmly entrenched.
187

Under the IPRA, the Philippine State is not barred form asserting sovereignty over the ancestral domains
and ancestral lands.
188
The IPRA, however, is still in its infancy and any similarities between its application
in the Philippines vis--vis American Jurisprudence on aboriginal title will depend on the peculiar facts of
each case.
(c) Why the Cario doctrine is unique
In the Philippines, the concept of native title first upheld in Cario and enshrined in the IPRA grants
ownership, albeit in limited form, of the land to the ICCs/IPs. Native title presumes that the land is private
and was never public. Cario is the only case that specifically and categorically recognizes native
title. The long line of cases citing Cario did not touch on native title and the private character of
ancestral domains and lands. Cario was cited by the succeeding cases to support the concept of
acquisitive prescription under the Public Land Act which is a different matter altogether. Under the
Public Land Act, land sought to be registered must be public agricultural land. When the conditions
specified in Section 48 [b] of the Public Land Act are complied with, the possessor of the land is deemed
to have acquired, by operation of law, a right to a grant of the land.
189
The land ceases to be part of the
public domain,
190
ipso jure,
191
and is converted to private property by the mere lapse or completion of the
prescribed statutory period.
It was only in the case of Oh Cho v. Director of Lands
192
that the court declared that the rule that all
lands that were not acquired from the government, either by purchase or grant, belong to the public
domain has an exception. This exception would be any land that should have been in the possession of
an occupant and of his predecessors-in-interest since time immemorial. It is this kind of possession that
would justify the presumption that the land had never been part of the public domain or that it had been
private property even before the Spanish conquest.
193
Oh Cho, however, was decided under the
provisions of the Public Land Act and Cario was cited to support the applicant's claim of acquisitive
prescription under the said Act.
All these years, Cario had been quoted out of context simply to justify long, continuous, open and
adverse possession in the concept of owner of public agricultural land. It is this long, continuous, open
and adverse possession in the concept of owner of thirty years both for ordinary citizens
194
and members
of the national cultural minorities
195
that converts the land from public into private and entitles the
registrant to a torrens certificate of title.
(3) The Option of Securing a Torrens Title to the Ancestral Land Indicates that the Land is Private.
The private character of ancestral lands and domains as laid down in the IPRA is further strengthened by
the option given to individual ICCs/IPs over their individually-owned ancestral lands. For purposes of
registration under the Public Land Act and the Land Registration Act, the IPRA expressly converts
ancestral land into public agricultural land which may be disposed of by the State. The necessary
implication is thatancestral land is private. It, however, has to be first converted to public
agricultural land simply for registration purposes. To wit:
"Sec. 12. Option to Secure Certificate of Title Under Commonwealth Act 141, as amended, or the Land
Registration Act 496- Individual members of cultural communities, with respect to their individually-owned
ancestral lands who, by themselves or through their predecessors-in-interest, have been in continuous
possession and occupation of the same in the concept of owner since time immemorial or for a period of
not less than thirty (30) years immediately preceding the approval of this Act and uncontested by the
members of the same ICCs/IPs shall have the option to secure title to their ancestral lands under the
provisions of Commonwealth Act 141, as amended, or the Land Registration Act 496.
For this purpose, said individually-owned ancestral lands, which are agricultural in character and actually
used for agricultural, residential, pasture, and tree farming purposes, including those with a slope of
eighteen percent (18%) or more, are hereby classified as alienable and disposable agricultural lands.
The option granted under this section shall be exercised within twenty (20) years from the approval of this
Act."
196

ICCs/IPs are given the option to secure a torrens certificate of title over their individually-owned ancestral
lands. This option is limited to ancestral lands only, not domains, and such lands must be individually, not
communally, owned.
Ancestral lands that are owned by individual members of ICCs/IPs who, by themselves or through their
predecessors-in-interest, have been in continuous possession and occupation of the same in the concept
of owner since time immemorial
197
or for a period of not less than 30 years, which claims are uncontested
by the members of the same ICCs/IPs, may be registered under C.A. 141, otherwise known as the Public
Land Act, or Act 496, the Land Registration Act. For purposes of registration, the individually-owned
ancestral lands are classified as alienable and disposable agricultural lands of the public domain,
provided, they are agricultural in character and are actually used for agricultural, residential, pasture and
tree farming purposes. These lands shall be classified as public agricultural lands regardless of whether
they have a slope of 18% or more.
The classification of ancestral land as public agricultural land is in compliance with the requirements of the
Public Land Act and the Land Registration Act. C.A. 141, the Public Land Act, deals specifically with lands
of the public domain.
198
Its provisions apply to those lands "declared open to disposition or concession" x x
x "which have not been reserved for public or quasi-public purposes, nor appropriated by the Government,
nor in any manner become private property, nor those on which a private right authorized and recognized
by this Act or any other valid law x x x or which having been reserved or appropriated, have ceased to be
so."
199
Act 496, the Land Registration Act, allows registration only of private lands and public agricultural
lands. Since ancestral domains and lands are private, if the ICC/IP wants to avail of the benefits of
C.A. 141 and Act 496, the IPRA itself converts his ancestral land, regardless of whether the land
has a slope of eighteen per cent (18%) or over,
200
from private to public agricultural land for proper
disposition.
The option to register land under the Public Land Act and the Land Registration Act has nonetheless a
limited period. This option must be exercised within twenty (20) years from October 29, 1997, the date of
approval of the IPRA.
Thus, ancestral lands and ancestral domains are not part of the lands of the public domain. They
are private and belong to the ICCs/IPs. Section 3 of Article XII on National Economy and Patrimony of
the 1987 Constitution classifies lands of the public domain into four categories: (a) agricultural, (b) forest
or timber, (c) mineral lands, and (d) national parks. Section 5 of the same Article XII mentions ancestral
lands and ancestral domains but it does not classify them under any of the said four categories. To
classify them as public lands under any one of the four classes will render the entire IPRA law a
nullity. The spirit of the IPRA lies in the distinct concept of ancestral domains and ancestral lands. The
IPRA addresses the major problem of the ICCs/IPs which is loss of land. Land and space are of vital
concern in terms of sheer survival of the ICCs/IPs.
201

The 1987 Constitution mandates the State to "protect the rights of indigenous cultural
communities to their ancestral lands" and that "Congress provide for the applicability of
customary laws x x x in determining the ownership and extent of ancestral domain."
202
It is the
recognition of the ICCs/IPs distinct rights of ownership over their ancestral domains and lands
that breathes life into this constitutional mandate.
B. The right of ownership and possession by the ICCs/IPs of their ancestral domains is a limited
form of ownership and does not include the right to alienate the same.
Registration under the Public Land Act and Land Registration Act recognizes the concept of ownership
under thecivil law. This ownership is based on adverse possession for a specified period, and harkens to
Section 44 of the Public Land Act on administrative legalization (free patent) of imperfect or incomplete
titles and Section 48 (b) and (c) of the same Act on the judicial confirmation of imperfect or incomplete
titles. Thus:
"Sec. 44. Any natural-born citizen of the Philippines who is not the owner of more than twenty-four
hectares and who since July fourth, 1926 or prior thereto, has continuously occupied and cultivated, either
by himself or through his predecessors-in-interest, a tract or tracts of agricultural public lands subject to
disposition, or who shall have paid the real estate tax thereon while the same has not been occupied by
any person shall be entitled, under the provisions of this chapter, to have a free patent issued to him for
such tract or tracts of such land not to exceed twenty-four hectares.
A member of the national cultural minorities who has continuously occupied and cultivated, either
by himself or through his predecessors-in-interest, a tract or tracts of land, whether disposable or
not since July 4, 1955, shall be entitled to the right granted in the preceding paragraph of this
section:Provided, That at the time he files his free patent application he is not the owner of any
real property secured or disposable under the provision of the Public Land Law.
203

x x x.
"Sec. 48. The following described citizens of the Philippines, occupying lands of the public domain or
claiming to own any such lands or an interest therein, but whose titles have not been perfected or
completed, may apply to the Court of First Instance of the province where the land is located for
confirmation of their claims and the issuance of a certificate of title therefor, under the Land Registration
Act, to wit:
(a) [perfection of Spanish titles] xxx.
(b) Those who by themselves or through their predecessors-in-interest have been in open,
continuous, exclusive, and notorious possession and occupation of agricultural lands of the public
domain, under a bona fide claim of acquisition or ownership, for at least thirty years immediately
preceding the filing of the application for confirmation of title except when prevented by war or
force majeure. These shall be conclusively presumed to have performed all the conditions
essential to a Government grant and shall be entitled to a certificate of title under the provisions of
this Chapter.
(c) Members of the national cultural minorities who by themselves or through their
predecessors-in-interest have been in open, continuous, exclusive and notorious
possession and occupation of lands of the public domain suitable to agriculture, whether
disposable or not, under a bona fide claim of ownership for at least 30 years shall be
entitled to the rights granted in sub-section (b) hereof."
204

Registration under the foregoing provisions presumes that the land was originally public agricultural land
but because of adverse possession since July 4, 1955 (free patent) or at least thirty years (judicial
confirmation), the land has become private. Open, adverse, public and continuous possession is
sufficient, provided, the possessor makes proper application therefor. The possession has to be confirmed
judicially or administratively after which a torrens title is issued.
A torrens title recognizes the owner whose name appears in the certificate as entitled to all the rights of
ownership under the civil law. The Civil Code of the Philippines defines ownership in Articles 427, 428
and 429. This concept is based on Roman Law which the Spaniards introduced to the Philippines through
the Civil Code of 1889. Ownership, under Roman Law, may be exercised over things or rights. It primarily
includes the right of the owner to enjoy and dispose of the thing owned. And the right to enjoy and dispose
of the thing includes the right to receive from the thing what it produces,
205
the right to consume the thing
by its use,
206
the right to alienate, encumber, transform or even destroy the thing owned,
207
and the right to
exclude from the possession of the thing owned by any other person to whom the owner has not
transmitted such thing.
208

1. The Indigenous Concept of Ownership and Customary Law.
Ownership of ancestral domains by native title does not entitle the ICC/IP to a torrens title but to a
Certificate of Ancestral Domain Title (CADT). The CADT formally recognizes the indigenous concept of
ownership of the ICCs/IPs over their ancestral domain. Thus:
"Sec. 5. Indigenous concept of ownership.- Indigenous concept of ownership sustains the view that
ancestral domains and all resources found therein shall serve as the material bases of their cultural
integrity. The indigenous concept of ownership generally holds that ancestral domains are the ICCs/IPs
private but community property which belongs to all generations and therefore cannot be sold, disposed
or destroyed. It likewise covers sustainable traditional resource rights."
The right of ownership and possession of the ICCs/IPs to their ancestral domains is held under the
indigenous concept of ownership. This concept maintains the view that ancestral domains are the
ICCs/IPs private but community property. It is private simply because it is not part of the public
domain. But its private character ends there. The ancestral domain is owned in common by the
ICCs/IPs and not by one particular person. The IPRA itself provides that areas within the ancestral
domains, whether delineated or not, are presumed to be communally held.
209
These communal rights,
however, are not exactly the same as co-ownership rights under the Civil Code.
210
Co-ownership
gives any co-owner the right to demand partition of the property held in common. The Civil Code
expressly provides that "no co-owner shall be obliged to remain in the co-ownership." Each co-owner may
demand at any time the partition of the thing in common, insofar as his share is concerned.
211
To allow
such a right over ancestral domains may be destructive not only of customary law of the community but of
the very community itself.
212

Communal rights over land are not the same as corporate rights over real property, much less
corporate condominium rights. A corporation can exist only for a maximum of fifty (50) years subject to
an extension of another fifty years in any single instance.
213
Every stockholder has the right to
disassociate himself from the corporation.
214
Moreover, the corporation itself may be dissolved voluntarily
or involuntarily.
215

Communal rights to the land are held not only by the present possessors of the land but extends
to all generations of the ICCs/IPs, past, present and future, to the domain. This is the reason why the
ancestral domain must be kept within the ICCs/IPs themselves. The domain cannot be transferred, sold or
conveyed to other persons. It belongs to the ICCs/IPs as a community.
Ancestral lands are also held under the indigenous concept of ownership. The lands are communal.
These lands, however, may be transferred subject to the following limitations: (a) only to the members of
the same ICCs/IPs; (b) in accord with customary laws and traditions; and (c) subject to the right of
redemption of the ICCs/IPs for a period of 15 years if the land was transferred to a non-member of the
ICCs/IPs.
Following the constitutional mandate that "customary law govern property rights or relations in determining
the ownership and extent of ancestral domains,"
216
the IPRA, by legislative fiat, introduces a new
concept of ownership. This is a concept that has long existed under customary law.
217

Custom, from which customary law is derived, is also recognized under the Civil Code as a source
of law.
218
Some articles of the Civil Code expressly provide that custom should be applied in cases where
no codal provision is applicable.
219
In other words, in the absence of any applicable provision in the Civil
Code, custom, when duly proven, can define rights and liabilities.
220

Customary law is a primary, not secondary, source of rights under the IPRA and uniquely applies to
ICCs/IPs. Its recognition does not depend on the absence of a specific provision in the civil
law. The indigenous concept of ownership under customary law is specifically acknowledged and
recognized, and coexists with the civil law concept and the laws on land titling and land registration.
221

To be sure, the indigenous concept of ownership exists even without a paper title. The CADT is
merely a "formal recognition" of native title. This is clear from Section 11 of the IPRA, to wit:
"Sec. 11. Recognition of Ancestral Domain Rights.- The rights of ICCs/IPs to their ancestral domains by
virtue of Native Title shall be recognized and respected. Formal recognition, when solicited by ICCs/IPs
concerned shall be embodied in a Certificate of Ancestral Domain Title, which shall recognize the title of
the concerned ICCs/IPs over the territories identified and delineated."
The moral import of ancestral domain, native land or being native is "belongingness" to the land, being
people of the land- by sheer force of having sprung from the land since time beyond recall, and the faithful
nurture of the land by the sweat of one's brow. This is fidelity of usufructuary relation to the land- the
possession of stewardship through perduring, intimate tillage, and the mutuality of blessings between man
and land; from man, care for land; from the land, sustenance for man.
222

C. Sections 7 (a), 7 (b) and 57 of the IPRA Do Not Violate the Regalian Doctrine Enshrined in
Section 2, Article XII of the 1987 Constitution.
1. The Rights of ICCs/IPs Over Their Ancestral Domains and Lands
The IPRA grants the ICCs/IPs several rights over their ancestral domains and ancestral lands. Section 7
provides for the rights over ancestral domains:
"Sec. 7. Rights to Ancestral Domains.- The rights of ownership and possession of ICCs/IPs to their
ancestral domains shall be recognized and protected. Such rights include:
a) Right of Ownership.- The right to claim ownership over lands, bodies of water traditionally
and actually occupied by ICCs/IPs, sacred places, traditional hunting and fishing grounds,
and all improvements made by them at any time within the domains;
b) Right to Develop Lands and Natural Resources.- Subject to Section 56 hereof, the right to
develop, control and use lands and territories traditionally occupied, owned, or used; to
manage and conserve natural resources within the territories and uphold the
responsibilities for future generations; to benefit and share the profits from allocation and
utilization of the natural resources found therein; the right to negotiate the terms and
conditions for the exploration of natural resources in the areas for the purpose of ensuring
ecological, environmental protection and the conservation measures, pursuant to national
and customary laws; the right to an informed and intelligent participation in the formulation and
implementation of any project, government or private, that will affect or impact upon the ancestral
domains and to receive just and fair compensation for any damages which they may sustain as a
result of the project; and the right to effective measures by the government to prevent any
interference with, alienation and encroachment upon these rights;"
c) Right to Stay in the Territories.- The right to stay in the territory and not to be removed
therefrom. No ICCs/IPs will be relocated without their free and prior informed consent, nor through
any means other than eminent domain. x x x;
d) Right in Case of Displacement.- In case displacement occurs as a result of natural catastrophes,
the State shall endeavor to resettle the displaced ICCs/IPs in suitable areas where they can have
temporary life support systems: x x x;
e) Right to Regulate the Entry of Migrants.- Right to regulate the entry of migrant settlers and
organizations into their domains;
f) Right to Safe and Clean Air and Water.-For this purpose, the ICCs/IPs shall have access to
integrated systems for the management of their inland waters and air space;
g) Right to Claim Parts of Reservations.- The right to claim parts of the ancestral domains which
have been reserved for various purposes, except those reserved and intended for common and
public welfare and service;
h) Right to Resolve Conflict.- Right to resolve land conflicts in accordance with customary laws of
the area where the land is located, and only in default thereof shall the complaints be submitted to
amicable settlement and to the Courts of Justice whenever necessary."
Section 8 provides for the rights over ancestral lands:
"Sec. 8. Rights to Ancestral Lands.- The right of ownership and possession of the ICCs/IPs to their
ancestral lands shall be recognized and protected.
a) Right to transfer land/property.- Such right shall include the right to transfer land or property
rights to/among members of the same ICCs/IPs, subject to customary laws and traditions of the
community concerned.
b) Right to Redemption.- In cases where it is shown that the transfer of land/property rights by
virtue of any agreement or devise, to a non-member of the concerned ICCs/IPs is tainted by the
vitiated consent of the ICCs/IPs, or is transferred for an unconscionable consideration or price, the
transferor ICC/IP shall have the right to redeem the same within a period not exceeding fifteen (15)
years from the date of transfer."
Section 7 (a) defines the ICCs/IPs the right of ownership over their ancestral domains which covers (a)
lands, (b) bodies of water traditionally and actually occupied by the ICCs/IPs, (c) sacred places, (d)
traditional hunting and fishing grounds, and (e) all improvements made by them at any time within the
domains. The right of ownership includes the following rights: (1) the right to develop lands and natural
resources; (b) the right to stay in the territories; (c) the right to resettlement in case of displacement; (d)
the right to regulate the entry of migrants; (e) the right to safe and clean air and water; (f) the right to claim
parts of the ancestral domains as reservations; and (g) the right to resolve conflict in accordance with
customary laws.
Section 8 governs their rights to ancestral lands. Unlike ownership over the ancestral domains, Section 8
gives the ICCs/IPs also the right to transfer the land or property rights to members of the same ICCs/IPs
or non-members thereof. This is in keeping with the option given to ICCs/IPs to secure a torrens title over
the ancestrallands, but not to domains.
2. The Right of ICCs/IPs to Develop Lands and Natural Resources Within the Ancestral Domains Does
Not Deprive the State of Ownership Over the Natural Resources and Control and Supervision in their
Development and Exploitation.
The Regalian doctrine on the ownership, management and utilization of natural resources is declared
in Section 2, Article XII of the 1987 Constitution, viz:
"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 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, water supply, fisheries, or industrial
uses other than the development of water power, beneficial use may be the measure and limit of the
grant.
The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea, and exclusive
economic zone, and reserve its use and enjoyment exclusively to Filipino citizens.
The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as
well as cooperative fish farming, with priority to subsistence fishermen and fishworkers in rivers, lakes,
bays, and lagoons.
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."
223

All lands of the public domain and all natural resources- 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. The Constitution provides that in the exploration,
development and utilization of these natural resources, the State exercises full control and supervision,
and may undertake the same in four (4) modes:
1. The State may directly undertake such activities; or
2. The State may enter into co-production, joint venture or production-sharing agreements with
Filipino citizens or qualified corporations;
3. Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens;
4. For the large-scale exploration, development and utilization of minerals, petroleum and other
mineral oils, the President may enter into agreements with foreign-owned corporations involving
technical or financial assistance.
As owner of the natural resources, the State is accorded primary power and responsibility in the
exploration, development and utilization of these natural resources. The State may directly
undertake the exploitation and development by itself, or, it may allow participation by the private sector
through co-production,
224
joint venture,
225
or production-sharing agreements.
226
These agreements may be
for a period of 25 years, renewable for another 25 years. The State, through Congress, may allow the
small-scale utilization of natural resources by Filipino citizens. For the large-scale exploration of these
resources, specifically minerals, petroleum and other mineral oils, the State, through the President, may
enter into technical and financial assistance agreements with foreign-owned corporations.
Under the Philippine Mining Act of 1995, (R.A. 7942) and the People's Small-Scale Mining Act of 1991
(R.A. 7076) the three types of agreements, i.e., co-production, joint venture or production-sharing, may
apply to both large-scale
227
and small-scale mining.
228
"Small-scale mining" refers to "mining activities
which rely heavily on manual labor using simple implements and methods and do not use explosives or
heavy mining equipment."
229

Examining the IPRA, there is nothing in the law that grants to the ICCs/IPs ownership over the
natural resources within their ancestral domains. The right of ICCs/IPs in their ancestral domains
includesownership, but this "ownership" is expressly defined and limited in Section 7 (a) as:
"Sec. 7. a) Right of ownership- The right to claim ownership over lands, bodies of water traditionally and
actually occupied by ICCs/IPs, sacred places, traditional hunting and fishing grounds, and all
improvements made by them at any time within the domains;"
The ICCs/IPs are given the right to claim ownership over "lands, bodies of water traditionally and actually
occupied by ICCs/IPs, sacred places, traditional hunting and fishing grounds, and all improvements made
by them at any time within the domains." It will be noted that this enumeration does not mention bodies of
water not occupied by the ICCs/IPs, minerals, coal, wildlife, flora and fauna in the traditional hunting
grounds, fish in the traditional fishing grounds, forests or timber in the sacred places, etc. and all other
natural resources found within the ancestral domains. Indeed, the right of ownership under Section 7
(a) does not cover "waters, minerals, coal,petroleum and other mineral oils, all forces of potential
energy, fisheries, forests or timber, wildlife,flora and fauna and all other natural resources"
enumerated in Section 2, Article XII of the 1987 Constitution as belonging to the State.
The non-inclusion of ownership by the ICCs/IPs over the natural resources in Section 7(a) complies with
the Regalian doctrine.
(a) Section 1, Part II, Rule III of the Implementing Rules Goes Beyond the Parameters of Sec. 7 (a)
of the IPRA And is Unconstitutional.
The Rules Implementing the IPRA
230
in Section 1, Part II, Rule III reads:
"Section 1. Rights of Ownership. ICCs/IPs have rights of ownership over lands, waters, and natural
resources and all improvements made by them at any time within the ancestral domains/ lands. These
rights shall include, but not limited to, the right over the fruits, the right to possess, the right to use, right to
consume, right to exclude and right to recover ownership, and the rights or interests over land and natural
resources. The right to recover shall be particularly applied to lands lost through fraud or any form or
vitiated consent or transferred for an unconscionable price."
Section 1 of the Implementing Rules gives the ICCs/IPs rights of ownership over "lands, waters and
natural resources." The term "natural resources" is not one of those expressly mentioned in Section 7 (a)
of the law. Our Constitution and jurisprudence clearly declare that the right to claim ownership over land
does not necessarily include the right to claim ownership over the natural resources found on or under the
land.
231
The IPRA itself makes a distinction between land and natural resources. Section 7 (a)
speaks of the right of ownership only over the land within the ancestral domain. It is Sections 7 (b)
and 57 of the law that speak of natural resources, and these provisions, as shall be discussed
later, do not give the ICCs/IPs the right of ownership over these resources.
The constitutionality of Section 1, Part II, Rule III of the Implementing Rules was not specifically and
categorically challenged by petitioners. Petitioners actually assail the constitutionality of the Implementing
Rules in general.
232
Nevertheless, to avoid any confusion in the implementation of the law, it is necessary
to declare that the inclusion of "natural resources" in Section 1, Part II, Rule III of the Implementing Rules
goes beyond the parameters of Section 7 (b) of the law and is contrary to Section 2, Article XII of the
1987 Constitution.
(b) The Small-Scale Utilization of Natural Resources In Sec. 7 (b) of the IPRA Is Allowed Under
Paragraph 3, Section 2 of Article XII of the Constitution.
Ownership over natural resources remain with the State and the IPRA in Section 7 (b) merely grants the
ICCs/IPs the right to manage them, viz:
"Sec. 7 (b) Right to Develop Lands and Natural Resources.- Subject to Section 56 hereof, right to
develop, control and use lands and territories traditionally occupied, owned, or used; to manage and
conserve natural resourceswithin the territories and uphold the responsibilities for future generations; to
benefit and share the profits from allocation and utilization of the natural resources found therein; the right
to negotiate the terms and conditions for the exploration of natural resources in the areas for the purpose
of ensuring ecological, environmental protection and the conservation measures, pursuant to national and
customary laws; the right to an informed and intelligent participation in the formulation and implementation
of any project, government or private, that will affect or impact upon the ancestral domains and to receive
just and fair compensation for any damages which they may sustain as a result of the project; and the
right to effective measures by the government to prevent any interference with, alienation and
encroachment upon these rights;"
The right to develop lands and natural resources under Section 7 (b) of the IPRA enumerates the
following rights:
a) the right to develop, control and use lands and territories traditionally occupied;
b) the right to manage and conserve natural resources within the territories and uphold the
responsibilities for future generations;
c) the right to benefit and share the profits from the allocation and utilization of the natural
resources found therein;
d) the right to negotiate the terms and conditions for the exploration of natural resources for the
purpose of ensuring ecological, environmental protection and the conservation measures, pursuant
to national and customary laws;
e) the right to an informed and intelligent participation in the formulation and implementation of any
project, government or private, that will affect or impact upon the ancestral domains and to receive
just and fair compensation for any damages which they may sustain as a result of the project;
f) the right to effective measures by the government to prevent any interference with, alienation
and encroachment upon these rights.
233

Ownership over the natural resources in the ancestral domains remains with the State and the
ICCs/IPs are merely granted the right to "manage and conserve" them for future generations,
"benefit and share" the profits from their allocation and utilization, and "negotiate the terms and
conditions for their exploration" for the purpose of "ensuring ecological and environmental
protection and conservation measures." It must be noted that the right to negotiate the terms and
conditions over the natural resources covers only their exploration which must be for the purpose of
ensuring ecological and environmental protection of, and conservation measures in the ancestral domain.
It does not extend to the exploitation and development of natural resources.
Simply stated, the ICCs/IPs' rights over the natural resources take the form of management or
stewardship. For the ICCs/IPs may use these resources and share in the profits of their utilization or
negotiate the terms for their exploration. At the same time, however, the ICCs/IPs must ensure that the
natural resources within their ancestral domains are conserved for future generations and that the
"utilization" of these resources must not harm the ecology and environment pursuant to national and
customary laws.
234

The limited rights of "management and use" in Section 7 (b) must be taken to contemplate small-
scale utilization of natural resources as distinguished from large-scale. Small-scale utilization of
natural resources is expressly allowed in the third paragraph of Section 2, Article XII of the
Constitution "in recognition of the plight of forest dwellers, gold panners, marginal fishermen and others
similarly situated who exploit our natural resources for their daily sustenance and survival."
235
Section 7 (b)
also expressly mandates the ICCs/IPs to manage and conserve these resources and ensure
environmental and ecological protection within the domains, which duties, by their very nature, necessarily
reject utilization in a large-scale.
(c) The Large-Scale Utilization of Natural Resources In Section 57 of the IPRA Is Allowed Under
Paragraphs 1 and 4, Section 2, Article XII of the 1987 Constitution.
Section 57 of the IPRA provides:
"Sec. 57. Natural Resources within Ancestral Domains.- The ICCs/IPs shall have priority rights in
theharvesting, extraction, development or exploitation of any natural resources within the ancestral
domains. A non-member of the ICCs/IPs concerned may be allowed to take part in the development and
utilization of the natural resources for a period of not exceeding twenty-five (25) years renewable for not
more than twenty-five (25) years: Provided, That a formal and written agreement is entered into with the
ICCs/IPs concerned or that the community, pursuant to its own decision-making process, has agreed to
allow such operation: Provided finally, That the NCIP may exercise visitorial powers and take appropriate
action to safeguard the rights of the ICCs/IPs under the same contract."
Section 57 speaks of the "harvesting, extraction, development or exploitation of natural resources
within ancestral domains" and "gives the ICCs/IPs 'priority rights' therein." The terms "harvesting,
extraction, development or exploitation" of any natural resources within the ancestral domains
obviously refer to large-scale utilization. It is utilization not merely for subsistence but for commercial
or other extensive use that require technology other than manual labor.
236
The law recognizes the
probability of requiring a non-member of the ICCs/IPs to participate in the development and utilization of
the natural resources and thereby allows such participation for a period of not more than 25 years,
renewable for another 25 years. This may be done on condition that a formal written agreement be
entered into by the non-member and members of the ICCs/IPs.
Section 57 of the IPRA does not give the ICCs/IPs the right to "manage and conserve" the natural
resources. Instead, the law only grants the ICCs/IPs "priority rights" in the development or exploitation
thereof. Priority means giving preference. Having priority rights over the natural resources does not
necessarily mean ownership rights. The grant of priority rights implies that there is a superior entity that
owns these resources and this entity has the power to grant preferential rights over the resources to
whosoever itself chooses.
Section 57 is not a repudiation of the Regalian doctrine. Rather, it is an affirmation of the said doctrine that
all natural resources found within the ancestral domains belong to the State. It incorporates by implication
the Regalian doctrine, hence, requires that the provision be read in the light of Section 2, Article XII of the
1987 Constitution. Interpreting Section 2, Article XII of the 1987 Constitution
237
in relation to Section
57 of IPRA, the State, as owner of these natural resources, may directly undertake the
development and exploitation of the natural resources by itself, or in the alternative, it may
recognize the priority rights of the ICCs/IPs as owners of the land on which the natural resources
are found by entering into a co-production, joint venture, or production-sharing agreement with
them. The State may likewise enter into any of said agreements with a non-member of the
ICCs/IPs, whether natural or juridical, or enter into agreements with foreign-owned corporations
involving either technical or financial assistance for the large-scale exploration, development and
utilization of minerals, petroleum, and other mineral oils, or allow such non-member to participate
in its agreement with the ICCs/IPs. If the State decides to enter into an agreement with a non-ICC/IP
member, the National Commission on Indigenous Peoples (NCIP) shall ensure that the rights of the
ICCs/IPs under the agreement shall be protected. The agreement shall be for a period of 25 years,
renewable for another 25 years.
To reiterate, in the large-scale utilization of natural resources within the ancestral domains, the State, as
owner of these resources, has four (4) options: (1) it may, of and by itself, directly undertake the
development and exploitation of the natural resources; or (2) it may recognize the priority rights of the
ICCs/IPs by entering into an agreement with them for such development and exploitation; or (3) it may
enter into an agreement with a non-member of the ICCs/IPs, whether natural or juridical, local or foreign;
or (4) it may allow such non-member to participate in the agreement with the ICCs/IPs.
The rights granted by the IPRA to the ICCs/IPs over the natural resources in their ancestral
domains merely gives the ICCs/IPs, as owners and occupants of the land on which the resources
are found, the right to the small-scale utilization of these resources, and at the same time, a
priority in their large-scale development and exploitation. Section 57 does not mandate the State
to automatically give priority to the ICCs/IPs. The State has several options and it is within its
discretion to choose which option to pursue. Moreover, there is nothing in the law that gives the
ICCs/IPs the right to solely undertake the large-scale development of the natural resources within their
domains. The ICCs/IPs must undertake such endeavour always under State supervision or control. This
indicates that the State does not lose control and ownership over the resources even in their exploitation.
Sections 7 (b) and 57 of the law simply give due respect to the ICCs/IPs who, as actual occupants of the
land where the natural resources lie, have traditionally utilized these resources for their subsistence and
survival.
Neither is the State stripped of ownership and control of the natural resources by the following provision:
"Section 59. Certification Precondition.- All departments and other governmental agencies shall
henceforth be strictly enjoined from issuing, renewing or granting any concession, license or lease, or
entering into any production-sharing agreement. without prior certification from the NCIP that the area
affected does not overlap with any ancestral domain. Such certification shall only be issued after a field-
based investigation is conducted by the Ancestral Domains Office of the area concerned: Provided, That
no certification shall be issued by the NCIP without the free and prior informed and written consent of the
ICCs/IPs concerned: Provided, further, That no department, government agency or government-owned or
-controlled corporation may issue new concession, license, lease, or production sharing agreement while
there is a pending application for a CADT: Provided, finally, That the ICCs/IPs shall have the right to stop
or suspend, in accordance with this Act, any project that has not satisfied the requirement of this
consultation process."
Concessions, licenses, lease or production-sharing agreements for the exploitation of natural resources
shall not be issued, renewed or granted by all departments and government agencies without prior
certification from the NCIP that the area subject of the agreement does not overlap with any ancestral
domain. The NCIP certification shall be issued only after a field-based investigation shall have been
conducted and the free and prior informed written consent of the ICCs/IPs obtained. Non-compliance with
the consultation requirement gives the ICCs/IPs the right to stop or suspend any project granted by any
department or government agency.
As its subtitle suggests, this provision 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.
V. THE IPRA IS A RECOGNITION OF OUR ACTIVE PARTICIPATION IN THE INDIGENOUS
INTERNATIONAL MOVEMENT.
The indigenous movement can be seen as the heir to a history of anti-imperialism stretching back to
prehistoric times. The movement received a massive impetus during the 1960's from two sources. First,
the decolonization of Asia and Africa brought into the limelight the possibility of peoples controlling their
own destinies. Second, the right of self-determination was enshrined in the UN Declaration on Human
Rights.
238
The rise of the civil rights movement and anti-racism brought to the attention of North American
Indians, Aborigines in Australia, and Maori in New Zealand the possibility of fighting for fundamental rights
and freedoms.
In 1974 and 1975, international indigenous organizations were founded,
239
and during the 1980's,
indigenous affairs were on the international agenda. The people of the Philippine Cordillera were the first
Asians to take part in the international indigenous movement. It was the Cordillera People's Alliance that
carried out successful campaigns against the building of the Chico River Dam in 1981-82 and they have
since become one of the best-organized indigenous bodies in the world.
240

Presently, there is a growing concern for indigenous rights in the international scene. This came as a
result of the increased publicity focused on the continuing disrespect for indigenous human rights and the
destruction of the indigenous peoples' environment, together with the national governments' inability to
deal with the situation.
241
Indigenous rights came as a result of both human rights and environmental
protection, and have become a part of today's priorities for the international agenda.
242

International institutions and bodies have realized the necessity of applying policies, programs and
specific rules concerning IPs in some nations. The World Bank, for example, first adopted a policy on IPs
as a result of the dismal experience of projects in Latin America.
243
The World Bank now seeks to apply its
current policy on IPs to some of its projects in Asia. This policy has provided an influential model for the
projects of the Asian Development Bank.
244

The 1987 Philippine Constitution formally recognizes the existence of ICCs/IPs and declares as a State
policy the promotion of their rights within the framework of national unity and development.
245
The IPRA
amalgamates the Philippine category of ICCs with the international category of IPs,
246
and is heavily
influenced by both the International Labor Organization (ILO) Convention 169 and the United Nations
(UN) Draft Declaration on the Rights of Indigenous Peoples.
247

ILO Convention No. 169 is entitled the "Convention Concerning Indigenous and Tribal Peoples in
Independent Countries"
248
and was adopted on June 27, 1989. It is based on the Universal Declaration of
Human Rights, the International Covenant on Economic, Social and Cultural Rights, the International
Covenant on Civil and Political Rights, and many other international instruments on the prevention of
discrimination.
249
ILO Convention No. 169 revised the "Convention Concerning the Protection and
Integration of Indigenous and Other Tribal and Semi-Tribal Populations in Independent Countries" (ILO
No. 107) passed on June 26, 1957. Developments in international law made it appropriate to adopt new
international standards on indigenous peoples "with a view to removing the assimilationist orientation of
the earlier standards," and recognizing the aspirations of these peoples to exercise control over their own
institutions, ways of life and economic development."
250

CONCLUSION
The struggle of the Filipinos throughout colonial history had been plagued by ethnic and religious
differences. These differences were carried over and magnified by the Philippine government through the
imposition of a national legal order that is mostly foreign in origin or derivation.
251
Largely unpopulist, the
present legal system has resulted in the alienation of a large sector of society, specifically, the indigenous
peoples. The histories and cultures of the indigenes are relevant to the evolution of Philippine culture and
are vital to the understanding of contemporary problems.
252
It is through the IPRA that an attempt was
made by our legislators to understand Filipino society not in terms of myths and biases but through
common experiences in the course of history. The Philippines became a democracy a centennial ago and
the decolonization process still continues. If the evolution of the Filipino people into a democratic society
is to truly proceed democratically, i.e., if the Filipinos as a whole are to participate fully in the task of
continuing democratization,
253
it is this Court's duty to acknowledge the presence of indigenous and
customary laws in the country and affirm their co-existence with the land laws in our national legal system.
With the foregoing disquisitions, I vote to uphold the constitutionality of the Indigenous Peoples Rights Act
of 1997.

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.
R E S O L U T I O N
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 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
Appeal
7
from the 11 October 2002 Decision and the 10 February 2003 Order.
On 19 February 2004, the Seventh Division of the Court of Appeals affirmed
8
the Decision of the RTC, to
wit:
WHEREFORE, the appealed Decision is hereby AFFIRMED with modification that the order directing then
DENR Secretary Alvarez "to pay petitioner-appellee the sum of P10 million a month beginning May, 2002
until the conversion to IFMA of TLA No. 43, as amended, is formally effected and the harvesting from the
said area is granted" is hereby deleted.
9

Challenging the deletion of the damages awarded to it, PICOP filed a Motion for Partial
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:
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.
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 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 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 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-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
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 to
29

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
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:
(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 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 twenty-five 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.1avvphi 1
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.
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:
So, they file the petition for conversion before the
end of the 50th year for IFMA.
ATTY. AGABIN:
Yes, Your Honor.
JUSTICE CARPIO:
But IFMA is the same, it is based on Section 2,
Article 12 of the Constitution, develop and utilize
natural resources because as you said when the
new constitution took effect we did away with the
old licensing regime, we have now co-production,
a production sharing, joint venture, direct
undertaking but still the same developing and
utilizing the natural resources, still comes from
section 2, Art. 12 of the Constitution. It is still a
license but different format now.
ATTY. AGABIN:
It is correct, Your Honor, except that the regimes
of joint venture, co-production and production
sharing are what is referred to in the constitution,
Your Honor, and still covered
JUSTICE CARPIO:
Yes, but it is covered by same 25 year[s], you
mean to say people now can circumvent the 50
year maximum term by calling their TLA as IFMA
and after fifty years calling it ISMA, after another
50 years call it MAMA.
ATTY. AGABIN:
Yes, Your Honor. Because
JUSTICE CARPIO:
It can be done.
ATTY. AGABIN:
That is provided for by the department itself.
34

PICOP is, in effect, arguing that the DENR issued DAO No. 99-53 in order to provide a way to circumvent
the provisions of the Constitution limiting agreements for the utilization of natural resources to a maximum
period of fifty years. Official duties are, however, disputably considered to be regularly performed,
35
and
good faith is always presumed.
DAO No. 99-53 was issued to change the means by which the government enters into an agreement with
private entities for the utilization of forest products. DAO No. 99-53 is a late response to the change in the
constitutional provisions on natural resources from the 1973 Constitution, which allowed the granting of
licenses to private entities,
36
to the present Constitution, which provides for co-production, joint venture, or
production-sharing agreements as the permissible schemes wherein private entities may participate in the
utilization of forest products. Since the granting of timber licenses ceased to be a permissible scheme for
the participation of private entities under the present Constitution, their operations should have ceased
upon the issuance of DAO No. 99-53, the rule regulating the schemes under the present Constitution.
This would be iniquitous to those with existing TLAs that would not have expired yet as of the issuance of
DAO No. 99-53, especially those with new TLAs that were originally set to expire after 10 or even 20 or
more years. The DENR thus inserted a provision in DAO No. 99-53 allowing these TLA holders to finish
the period of their TLAs, but this time as IFMAs, without the rigors of going through a new application,
which they have probably just gone through a few years ago.
Such an interpretation would not only make DAO No. 99-53 consistent with the provisions of the
Constitution, but would also prevent possible discrimination against new IFMA applicants:
ASSOCIATE JUSTICE DE CASTRO:
I ask this question because of your interpretation that the period of the IFMA, if your TLA is converted into
IFMA, would cover a new a fresh period of twenty-five years renewable by another period of twenty-five
years.
DEAN AGABIN:
Yes, Your Honor.
ASSOCIATE JUSTICE DE CASTRO:
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

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 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.1avvphi 1
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 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:
x x x x
d) Freedom from Expropriation. There shall be no expropriation by the government of the property
represented by investments or of the property of enterprises except for public use or in the interest of
national welfare and defense and upon payment of just compensation. x x x.
e) Requisition of Investment. There shall be no requisition of the property represented by the investment
or of the property of enterprises, except in the event of war or national emergency and only for the
duration thereof. Just compensation shall be determined and paid either at the time of requisition or
immediately after cessation of the state of war or national emergency. Payments received as
compensation for the requisitioned property may be remitted in the currency in which the investment was
originally made and at the exchange rate prevailing at the time of remittance, subject to the provisions of
Section seventy-four of republic Act Numbered Two hundred sixty-five.
Section 2 speaks of the policy of the State to encourage Filipino and foreign investments. It does not
speak of how this policy can be implemented. Implementation of this policy is tackled in Sections 5 to 12
of the same law,
54
which PICOP failed to mention, and for a good reason. None of the 24 incentives
enumerated therein relates to, or even remotely suggests that, 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 III
55
of the Constitution,
while the provision on requisition is a negative restatement of Section 6, Article XII.
56

Refusal to grant perpetual and exclusive possession to PICOP of its concession area would not result in
the expropriation or requisition of 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 non-
impairment clause and, even if we assume for the sake of argument that it is, it did not enjoin the
government to issue an IFMA in 2002 either. These are the essential elements in 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 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 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 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;
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
forestry-related 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 ofP2,366,901.00 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, 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 production-sharing agreement, without prior certification from the NCIP that the area affected does
not overlap with any ancestral domain. Such certification shall only be issued after a field-based
investigation is conducted by the Ancestral Domains Office of the area concerned: Provided, That no
certification shall be issued by the NCIP without the free and prior informed and written consent of the
ICCs/IPs concerned: Provided, further, That no department, government agency or government-owned or
controlled corporation may issue new concession, license, lease, or production sharing agreement while
there is a pending application for a CADT: Provided, finally, That the ICCs/IPs shall have the right to stop
or suspend, in accordance with this Act, any project that has not satisfied the requirement of this
consultation process.
PICOP had tried to put a cloud of ambiguity over Section 59 of Republic Act No. 8371 by invoking the
definition of Ancestral Domains in Section 3(a) thereof, wherein the possesssion by Indigenous Cultural
Communities/Indigenous Peoples (ICCs/IPs) must have been continuous to the present. However, we
noted the exception found in the very same sentence invoked by PICOP:
a) Ancestral domains Subject to Section 56 hereof, refers to all areas generally belonging to ICCs/IPs
comprising lands, inland waters, coastal areas, and natural resources therein, held under a claim of
ownership, occupied or possessed by ICCs/IPs, by themselves or through their ancestors, communally or
individually since time immemorial, continuously to the present except when interrupted by war, force
majeure or displacement by force, deceit, stealth or as a consequence of government projects or any
other voluntary dealings entered into by government and private individuals/corporations, and which are
necessary to ensure their economic, social and cultural welfare. It shall include ancestral lands, forests,
pasture, residential, agricultural, and other lands individually owned whether alienable and disposable or
otherwise, hunting grounds, burial grounds, worship areas, bodies of water, mineral and other natural
resources, and lands which may no longer be exclusively occupied by ICCs/IPs but from which they
traditionally had access to for their subsistence and traditional activities, particularly the home ranges of
ICCs/IPs who are still nomadic and/or shifting cultivators;
Ancestral domains, therefore, remain as such even when possession or occupation of these areas has
been interrupted by causes provided under the law, such as voluntary dealings entered into by the
government and private individuals/corporations. Consequently, the issuance of TLA No. 43 in 1952 did
not cause the ICCs/IPs to lose their possession or occupation over the area covered by TLA No. 43.
Thirdly, we held that it was manifestly absurd to claim that the subject lands must first be proven to be part
of ancestral domains before a certification that the lands are not part of ancestral domains can be
required, and invoked the separate opinion of now Chief Justice Reynato Puno in Cruz v. Secretary of
DENR
83
:
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 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.
x x x x
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 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 resolution
89
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.
x x x x
(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 non-renewable resources, loss of crop land, rangeland, or forest cover, and extinction of
animal or plant species, to consult with the local government units, nongovernmental organizations, and
other sectors concerned and explain the goals and objectives of the project or program, its impact upon
the people and the community in terms of environmental or ecological balance, and the measures that will
be undertaken to prevent or minimize the adverse effects thereof.
SEC. 27. Prior Consultations Required. No project or program shall be implemented by government
authorities unless the consultations mentioned in Sections 2(c) and 26 hereof are complied with, and prior
approval of the sanggunian concerned is obtained: Provided, That occupants in areas where such
projects are to be implemented shall not be evicted unless appropriate relocation sites have been
provided, in accordance with the provisions of the Constitution.
As stated in the assailed Decision, the common evidence of the DENR Secretary and PICOP, namely, the
31 July 2001 Memorandum of Regional Executive Director (RED) Elias D. Seraspi, Jr., enumerated the
local government units and other groups which had expressed their opposition to PICOPs application for
IFMA conversion:
7. During the conduct of the performance evaluation of TLA No. 43 issues complaints against PRI were
submitted thru Resolutions and letters. It is important that these are included in this report for assessment
of what are their worth, viz:
x x x x
7.2 Joint Resolution (unnumbered), dated March 19, 2001 of the Barangay Council and Barangay Tribal
Council of Simulao, Boston, Davao Oriental (ANNEX F) opposing the conversion of TLA No. 43 into IFMA
over the 17,112 hectares allegedly covered with CADC No. 095.
7.3 Resolution Nos. 10, s-2001 and 05, s-2001 (ANNEXES G & H) of the Bunawan Tribal Council of
Elders (BBMTCE) strongly demanding none renewal of PICOP TLA. They claim to be the rightful owner of
the area it being their alleged ancestral land.
7.4 Resolution No. 4, S-2001 of Sitio Linao, San Jose, Bislig City (ANNEX I) requesting not to renew TLA
43 over the 900 hectares occupied by them.
7.5 Resolution No. 22, S-2001 (ANNEX J) of the Sanguniang Bayan, Lingig, Surigao del Sur not to grant
the conversion of TLA 43 citing the plight of former employees of PRI who were forced to enter and farm
portion of TLA No. 43, after they were laid off.
7.6 SP Resolution No. 2001-113 and CDC Resolution Nos. 09-2001 of the Sanguniang Panglungsod of
Bislig City (ANNEXES K & L) requesting to exclude the area of TLA No. 43 for watershed purposes.
7.7 Resolution No. 2001-164, dated June 01, 2001 (ANNEX M) Sanguniang Panglungsod of Bislig City
opposing the conversion of TLA 43 to IFMA for the reason that IFMA do not give revenue benefits to the
City.
90

PICOP had claimed that it complied with the Local Government Code requirement of obtaining prior
approval of the Sanggunian concerned by submitting a purported resolution
91
of the Province of Surigao
del Sur indorsing the approval of 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

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-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.