LAW ON NATURAL RESOURCES and ENVIRONMENTAL LAWCases and Special Laws |1
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.
RESOLUTION
PER CURIAM:
Petitioners Isagani Cruz and Cesar Europa brought this suit for prohibition and mandamus as citizens and
taxpayers, assailing the constitutionality of certain provisions of Republic Act No. 8371 (R.A. 8371),
otherwise known as the Indigenous Peoples Rights Act of 1997 (IPRA), and its Implementing Rules and
Regulations (Implementing Rules).
In its resolution of September 29, 1998, the Court required respondents to comment. 1 In compliance,
respondents Chairperson and Commissioners of the National Commission on Indigenous Peoples (NCIP),
the government agency created under the IPRA to implement its provisions, filed on October 13, 1998
their Comment to the Petition, in which they defend the constitutionality of the IPRA and pray that the
petition be dismissed for lack of merit.
On October 19, 1998, respondents Secretary of the Department of Environment and Natural Resources
(DENR) and Secretary of the Department of Budget and Management (DBM) filed through the Solicitor
General a consolidated Comment. The Solicitor General is of the view that the IPRA is partly
unconstitutional on the ground that it grants ownership over natural resources to indigenous peoples and
prays that the petition be granted in part.
On November 10, 1998, a group of intervenors, composed of Sen. Juan Flavier, one of the authors of the
IPRA, Mr. Ponciano Bennagen, a member of the 1986 Constitutional Commission, and the leaders and
members of 112 groups of indigenous peoples (Flavier, et. al), filed their Motion for Leave to Intervene.
They join the NCIP in defending the constitutionality of IPRA and praying for the dismissal of the petition.
On March 22, 1999, the Commission on Human Rights (CHR) likewise filed a Motion to Intervene and/or
to Appear as Amicus Curiae. The CHR asserts that IPRA is an expression of the principle of parens patriae
and that the State has the responsibility to protect and guarantee the rights of those who are at a serious
disadvantage like indigenous peoples. For this reason it prays that the petition be dismissed.
On March 23, 1999, another group, composed of the Ikalahan Indigenous People and the Haribon
Foundation for the Conservation of Natural Resources, Inc. (Haribon, et al.), filed a motion to Intervene
with attached Comment-in-Intervention. They agree with the NCIP and Flavier, et al. that IPRA is
consistent with the Constitution and pray that the petition for prohibition and mandamus be dismissed.
The motions for intervention of the aforesaid groups and organizations were granted.
Oral arguments were heard on April 13, 1999. Thereafter, the parties and intervenors filed their
respective memoranda in which they reiterate the arguments adduced in their earlier pleadings and
during the hearing.
 LAW ON NATURAL RESOURCES and ENVIRONMENTAL LAWCases and Special Laws |2
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 State’s 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 President’s 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;
 LAW ON NATURAL RESOURCES and ENVIRONMENTAL LAWCases and Special Laws |3

"(4) The issuance of a writ of prohibition directing the Secretary of Budget and Management to Footnotes
cease and desist from disbursing public funds for the implementation of the assailed provisions
of R.A. 8371; and 1
Rollo, p. 114.

"(5) The issuance of a writ of mandamus commanding the Secretary of Environment and Natural 2
Petition, Rollo, pp. 16-23.
Resources to comply with his duty of carrying out the State’s constitutional mandate to control
and supervise the exploration, development, utilization and conservation of Philippine natural 3
Id. at 23-25.
resources."7
4
Section 1, Article III of the Constitution states: "No person shall be deprived of life, liberty or
After due deliberation on the petition, the members of the Court voted as follows: property without due process of law, nor shall any person be denied the equal protection of the
laws."
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 5
Rollo, pp. 25-27.
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 6
Id. at 27-28.
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 7
Transcript of Stenographic Notes of the hearing held on April 13, 1999, pp. 5-6.
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. SEPARATE OPINION

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.
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 Posner1 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."

SO ORDERED. 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
Davide, Jr., C.J., Bellosillo, Melo, Quisumbing, Pardo, Buena, Gonzaga-Reyes, Ynares-Santiago, and De ownership of land and other natural resources. The sense and subtleties of this law cannot be appreciated
Leon, Jr., JJ., concur. without considering its distinct sociology and the labyrinths of its history. This Opinion attempts to
Puno, Vitug, Kapunan, Mendoza and Panganiban JJ., see separate opinion interpret IPRA by discovering its soul shrouded by the mist of our history. After all, the IPRA was enacted
 LAW ON NATURAL RESOURCES and ENVIRONMENTAL LAWCases and Special Laws |4

by Congress not only to fulfill the constitutional mandate of protecting the indigenous cultural (c) Why the Cariño doctrine is unique
communities' right to their ancestral land but more importantly, to correct a grave historical injustice to
our indigenous people. 3. The option of securing a torrens title to the ancestral land

This Opinion discusses the following: 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.
I. The Development of the Regalian Doctrine in the Philippine Legal System.
1. The indigenous concept of ownership and customary law
A. The Laws of the Indies
C. Sections 7 (a), 7 (b) and 57 of the IPRA do not violate the Regalian Doctrine enshrined in
B. Valenton v. Murciano Section 2, Article XII of the 1987 Constitution.

C. The Public Land Acts and the Torrens System 1. The rights of ICCs/IPs over their ancestral domains and lands

D. The Philippine Constitutions 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
II. The Indigenous Peoples Rights Act (IPRA). and supervision in their development and exploitation.

A. Indigenous Peoples (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
1. Indigenous Peoples: Their History is ultra vires.

2. Their Concept of Land (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.
III. The IPRA is a Novel Piece of Legislation.
(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
A. Legislative History
Constitution.
IV. The Provisions of the IPRA Do Not Contravene the Constitution.
V. The IPRA is a Recognition of Our Active Participation in the International Indigenous Movement.
A. Ancestral domains and ancestral lands are the private property of indigenous peoples and do
DISCUSSION
not constitute part of the land of the public domain.

I. THE DEVELOPMENT OF THE REGALIAN DOCTRINE IN THE PHILIPPINE LEGAL SYSTEM.

1. The right to ancestral domains and ancestral lands: how acquired

A. The Laws of the Indies

2. The concept of native title

The capacity of the State to own or acquire property is the state's power of dominium.3 This was the
(a) Cariño v. Insular Government
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
(b) Indian Title to land
 LAW ON NATURAL RESOURCES and ENVIRONMENTAL LAWCases and Special Laws |5
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.kkkkkk
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 h
P; ad 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
 LAW ON NATURAL RESOURCES and ENVIRONMENTAL LAWCases and Special Laws |6
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."17Valenton 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:
 LAW ON NATURAL RESOURCES and ENVIRONMENTAL LAWCases and Special Laws |7
"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
 LAW ON NATURAL RESOURCES and ENVIRONMENTAL LAWCases and Special Laws |8
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.
 LAW ON NATURAL RESOURCES and ENVIRONMENTAL LAWCases and Special Laws |9
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,
 L A W O N N A T U R A L R E S O U R C E S a n d E N V I R O N M E N T A L L A W C a s e s a n d S p e c i a l L a w s | 10
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.78Their 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
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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.86Knowledge 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,
 L A W O N N A T U R A L R E S O U R C E S a n d E N V I R O N M E N T A L L A W C a s e s a n d S p e c i a l L a w s | 12
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.
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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 Cariño 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 Cariño, 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 Cariño 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."
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Ancestral domains are all areas belonging to ICCs/IPs held under a claim of ownership, occupied or (1) Right to Ancestral Domains and Ancestral Lands: How Acquired
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 The rights of the ICCs/IPs to their ancestral domains and ancestral lands may be acquired in two
displacement by force, deceit, stealth or as a consequence of government projects or any other voluntary modes: (1) bynative title over both ancestral lands and domains; or (2) by torrens title under the Public
dealings with government and/or private individuals or corporations. Ancestral domains comprise lands, Land Act and the Land Registration Act with respect to ancestral lands only.
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 (2) The Concept of Native Title
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
Native title is defined as:
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
"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
Ancestral lands are lands held by the ICCs/IPs under the same conditions as ancestral domains except
are thusindisputably presumed to have been held that way since before the Spanish Conquest."126
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
Native title refers to ICCs/IPs' preconquest rights to lands and domains held under a claim of private
are not limited to residential lots, rice terraces or paddies, private forests, swidden farms and tree lots.117
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
The procedures for claiming ancestral domains and lands are similar to the procedures embodied in
ICCs/IPs to their ancestraldomains (which also include ancestral lands) by virtue of native title shall be
Department Administrative Order (DAO) No. 2, series of 1993, signed by then Secretary of the
recognized and respected.127Formal recognition, when solicited by ICCs/IPs concerned, shall be embodied
Department of Environment and Natural Resources (DENR) Angel Alcala. 118 DAO No. 2 allowed the
in a Certificate of Ancestral Domain Title (CADT), which shall recognize the title of the concerned ICCs/IPs
delineation of ancestral domains by special task forces and ensured the issuance of Certificates of
over the territories identified and delineated.128
Ancestral Land Claims (CALC's) and Certificates of Ancestral Domain Claims (CADC's) to IPs.
Like a torrens title, a CADT is evidence of private ownership of land by native title. Native title, however,
The identification and delineation of these ancestral domains and lands is a power conferred by the IPRA
is a right of private ownership peculiarly granted to ICCs/IPs over their ancestral lands and domains. The
on the National Commission on Indigenous Peoples (NCIP).119 The guiding principle in identification and
IPRA categorically declares ancestral lands and domains held by native title as never to have been public
delineation is self-delineation.120 This means that the ICCs/IPs have a decisive role in determining the
land. Domains and lands held under native title are, therefore, indisputably presumed to have never been
boundaries of their domains and in all the activities pertinent thereto.121
public lands and are private.

The procedure for the delineation and recognition of ancestral domains is set forth in Sections 51 and 52
(a) Cariño v. Insular Government129
of the IPRA. The identification, delineation and certification of ancestral lands is in Section 53 of said law.
The concept of native title in the IPRA was taken from the 1909 case of Cariño v. Insular
Upon due application and compliance with the procedure provided under the law and upon finding by the
Government.130Cariño firmly established a concept of private land title that existed irrespective of any
NCIP that the application is meritorious, the NCIP shall issue a Certificate of Ancestral Domain Title (CADT)
royal grant from the State.
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
In 1903, Don Mateo Cariño, an Ibaloi, sought to register with the land registration court 146 hectares of
accordance with customs and traditions.123 With respect to ancestral lands outside the ancestral domain,
land in Baguio Municipality, Benguet Province. He claimed that this land had been possessed and
the NCIP issues a Certificate of Ancestral Land Title (CALT).124
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. Cariño inherited the land in
CADT's and CALT's issued under the IPRA shall be registered by the NCIP before the Register of Deeds in
accordance with Igorot custom. He tried to have the land adjusted under the Spanish land laws, but no
the place where the property is situated.125
document issued from the Spanish Crown.131In 1901, Cariño obtained a possessory title to the land under
the Spanish Mortgage Law.132 The North American colonial government, however, ignored his possessory
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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 Cariño, off the land.134
In 1904, the land registration court granted Cariño'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 Cariño's application. The Philippine Supreme
Court135 affirmed the C.F.I. by applying the Valenton ruling. Cariño took the case to the U.S. Supreme
Court.136 On one hand, the Philippine government invoked the Regalian doctrine and contended that
Cariño 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. Cariño, 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 Cariño 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
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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 Cariño and ordered the registration of the 148 hectares in Baguio
Municipality in his name.144
Examining Cariño 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 Cariñodecision. 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 Cariñoextensively and used the term "native title" to
refer to Cariño'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 Cariño "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
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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 Johnson & Graham's
Lessee v. M'Intosh.159
In Johnson, 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 Johnson 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
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Johnson 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.171But 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
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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-à-vis American Jurisprudence on aboriginal title will depend on the peculiar facts of
each case.
(c) Why the Cariño doctrine is unique
In the Philippines, the concept of native title first upheld in Cariño 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. Cariño is the only case that specifically and categorically recognizes native title.
The long line of cases citing Cariño did not touch on native title and the private character of ancestral
domains and lands. Cariño 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 Lands192 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 Cariño was cited to support the applicant's claim of acquisitive
prescription under the said Act.
All these years, Cariño 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 minorities195 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 immemorial197 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.
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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,
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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
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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.
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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,224joint 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-scale227 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.
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(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 IPRA230 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.232Nevertheless, 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
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"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:
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"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.241Indigenous 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
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23 Antonio H. Noblejas, Land Titles and Deeds, p. 250 [1961].

made by our legislators to understand Filipino society not in terms of myths and biases but through
24 Ponce, supra, at 32.
common experiences in the course of history. The Philippines became a democracy a centennial ago and
25 Peña, Registration of Land Titles and Deeds, p. 26 [1982]; Noblejas, supra, at 32.
the decolonization process still continues. If the evolution of the Filipino people into a democratic society
26 Noblejas, supra, at 32.
is to truly proceed democratically, i.e., if the Filipinos as a whole are to participate fully in the task of 27 Ponce, supra, at 123-124; Noblejas, supra, at 33.
continuing democratization,253 it is this Court's duty to acknowledge the presence of indigenous and 28 2 Aruego, The Framing of the Philippine Constitution, p. 592 [1937].
customary laws in the country and affirm their co-existence with the land laws in our national legal 29 Id. at 600.
system. 30 Id. at 600-601.
31 Ibid.
32 Section 7.
With the foregoing disquisitions, I vote to uphold the constitutionality of the Indigenous Peoples Rights
33 Section 8.
Act of 1997.
34 Sections 13 to 20.
35 Sections 21 to 28.
Footnotes 36 Sections 29 to 37.
1 Chief Judge, US Court of Appeals for the Seventh Circuit; Senior Lecturer, University of Chicago Law School. 37 Sections 38 and 40.
2 The University of Chicago Law Review, Vol. 67, Summer 2000, No. 3, p. 573. 38 Sections 74 to 77.
3 Dominium is distinguished from imperium which is the government authority possessed by the state
39 Section 69.
expressed in the concept of sovereignty- Lee Hong Hok v. David, 48 SCRA 372, 377 [1972]. 40 Section 73.
4 Valenton v. Murciano, 3 Phil. 537, 543 [1904]; See also Florencio D.R. Ponce, The Philippine Torrens
41 Convention Conerning Indigenous and Tribal Peoples in Independent Countries, June 27, 1989.
System, p. 13 [1964]. 42 Guide to R.A. 8371, published by the Coalition for Ips Rights and ancestral Domains in cooperation with
5 Antonio H. Noblejas, Land Titles and Deeds, p. 5 [1986]; these grants were better known as repartimientos
the ILO and Bilance-Asia Department, p. 4 [1999]—hereinafter referred to as Guide to R.A. 8371.
and encomiendas. Repartimientos were handouts to the military as fitting reward for their services to the 43 Taken from the list of IPs sbmitted by Rep. Andolana to the house of Representatives during the
Spanish crown. The encomiendas were given to Spaniards to administer and develop with the right to
deliberations on H.B. No. 9125—Interpellations of Aug. 20, 1997, pp. 00086-00095. "lost tribes" such as the
receive and enjoy for themselves the tributes of the natives assigned to them.- Ponce, supra, p. 12, citing
Lutangan and Tatang have not been included.
Benitez, History of the Philippines, pp. 125-126. 44 How these people came to the Philippines may be explained by two theories. One view, generally linked
6 Narciso Pena, Registration of Land Titles and Deeds, p. 2 [1994].
7 The Mortgage Law is a misnomer because it is primarily a law on registration of property and secondarily a
to Professor Otley H. Beyer, suggests the "wave theory"—a series of arrivals in the archipelago bringing in
different types and levels of culture. The Negritos, dark-skinned pygmies, came between 25,000 to 30,000
mortgage law- Ponce, supra, at 16.
8 Ponce, supra, at 15.
B.C. Their cultural remains are preserved by the Negrito-type Filipinos found in Luzon, Visayas and
9 3 Phil. 537 [1904].
Mindanao. Their relatively inferior culture did not enable them to overcome the pressures from the second
10 Id. at 540.
wave of people, the Indonesians A and B who came in 5,000 and 3,500 B.C. They are represented today by
11 Id. at 548.
the Kalinga, Gaddang, Isneg, Mangyan, Tagbanua, Manobo, Mandaya, Subanon, and Sama. The first group
12 Id. at 543-544.
was pushed inland as the second occupied the coastal and downriver settlements. The last wave involved
13 Id. at 543.
Malay migrations between 500 B.C. and 1,500 A.D. they had a more advanced culture based on metal age
14 Id. at 542-543. These comments by the court are clear expressions of the concept that Crown holdings
technology. They are represented by the Christianized and Islamized Filipinos who pushed the Indonesian
groups inland and occupied much of the coastal, lowland and downstream areas.
embraced both imperium and dominium—Ma. Lourdes Aranal-Sereno and Roan Libarios, The Interface
A second view is postulated by Robert Fox, F. Landa Jocana, Alfredo Evangelista, and Jesus Peralta.
Between National Land Law and Kalinga Land Law, 58 P.L.J. 420, 423 [1983].
15 Id. at 545-546.
Jocano maintains that the Negritos, Indonesians and Malays stand co-equal as ethnic groups
16 Id. at 543.
without any one being dominant, racially or culturally. The geographic distribution of the ethno-
17 Id. at 557.
linguistic groups, which shows overlapping of otherwise similar racial strains in both upland and
18 Id. at 553-554; Valenton was applied in Cansino v. Valdez, 6 Phil. 320 [1906]; Tiglao v. Insular
lowland cultures or coastal and inland communities, suggests a random and unstructured advent
of different kinds of groups in the archipelago—Samuel K. Tan, A History of the
Government, 7 Phil. 80 [1906]; and Cariño v. Insular Government, 7 Phil. 132 [1906]; all decided by the
Philippines, published by the Manila Studies Association, Inc. and the Philippine National Historical
Philippine Supreme Court.
19 Please see Section 70, Act 926.
society, Inc., pp. 33-34 [1997]; Teodoro A. Agoncillo, History of the Filipino People, p. 21 [1990].
45 Tan, supra, at 35-36.
20 Ponce, supra, at 33.
46 Onofre D. Corpuz, The Roots of the Filipino Nation, Philippine Centennial (1898-1998) Edition, vol. 1, p. 13,
21 Montano v. Insular Government, 12 Phil. 572 [1909]; also cited in Ponce, supra, at 32.
22 Archbishop of Manila v. Director of Lands, 27 Phil. 245 [1914]; also cited in Ponce, supra, at 32.
Aklahi foundation, Inc. [1989]. It was in 800-1,000 A.D. that the Ifugaos of Northern Luzon built the rice
terraces—Id. at 37.
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47 Id. at 5-6. 80 People v. Cayat, 68 Phil. 12, 17 [1939].

48 Id. at 13. 81 Memorandum of the Secretary of the Interior, quoted in Rubi v. Provincial Board of Mindoro, 39 Phil. 660,
49 Teodoro A. Agoncillo, History of the Filipino People, p. 54 [1990]. 714 [1919]; also cited in People v. Cayat, supra, at 17-18.
50 Corpuz, supra, at 5. 82 Rubi v. Provincial Board of Mindoro, supra, at 693.
51 Id. at 44-45. 83 Charles Macdonald, Indigenous Peoples of the Philippines: Between Segregation and Integration,
52 Agoncillo, supra, at 40. Indigenous Peoples of Asia, p. 348, ed. by R.H. Barnes, A. Gray and B. Kingsburry, pub. by Association for
53 Id. at 40-41. Asian Studies [1995]. The BNCT made a Bontok and subanon ethnography, a history of Sulu genealogy, and
54 Rafael Iriarte, History of the Judicial System, the Philippine Indigenous Era Prior to 1565, unpublished work a compilation on unhispanized peoples in northern Luzon.—Owen J. Lynch, Jr., The Philippine Colonial
submitted as entry to the Centennial Essay-Writing Contest sponsored by the National Centennial Dichotomy: Attraction and Disenfranchisement, 63 P. L. J. 139-140 [1988].
Commission and the Supreme Court in 1997, p. 103, citing Perfecto V. Fernandez, Customs Laws in Pre- 84 R.A. No. 1888 of 1957.

Conquest Philippines, UP Law Center, p. 10 [1976]. 85 See People v. Cayat, supra, at 21; See also Rubi v. Provincial Board of Mindoro, 39 Phil. 660, 694 [1919]
55 Agoncillo, supra, at 41. 86 MacDonald, Indigenous Peoples of the Philippines, supra, at 351.
56 Amelia Alonzo, The History of the Judicial System in the Philippines, Indigenous Era Prior to 87 The construction of the Ambuklao and Binga dams in the 1950’s resulted in the eviction of hundreds of

1565,unpublished work submitted as entry to the Centennial Essay-Writing Contest sponsored by the
National Centennial Commission and the Supreme Court in 1997.
57 Agoncillo, supra, at 42.
58 Renato Constantino, A Past Revisited , p. 38 [1975].
59 Samuel K. Tan, A History of the Philippines, published by the Manila Studies Ass’n., Inc. and the Phil.
Ibaloi families – Cerilo Rico S. Abelardo, Ancestral Domain Rights: Issues, Responses, and
Recommendations, Ateneo Law Journal, vol. 38, No. 1, p. 92 [1993].
88 Section 11, Art. XV, 1973 Constitution.
89 Presidential Decrees Nos. 1017 and 1414.
90 The PANAMIN, however, concentrated funds and resources on image-building, publicity, and impact

National Historical Society, Inc., p. 43 [1997]. projects. In Mindanao, the agency resorted to a policy of forced resettlement on reservations, militarization
60 Id. and intimidation- MacDonald, Indigenous Peoples of the Philippines, supra, at 349-350.
61 Id. at 43-44. 91 No occupancy certificates were issued, however, because the government failed to release the decree’s
62 Tan, supra, at 47-48. implementing rules and regulations- Abelardo, supra, at 120-121.
63 Id. at 48-49. 92 Id., Note 177.
64 Cacho v. Government of the P.I., 28 Phil. 616, 625-627 [1914]; see also Ponce, The Philippine Torrens 93 Id., at 93-94.

System, pp. 11-12 [1964]. In Philippine pre-colonial history, there was only one recorded transaction on the 94 MacDonald, Indigenous People of the Philippines, supra, at 351.

purchase of land. The Maragtas Code tells us of the purchase of Panay Island by ten Bornean datus led by 95 E.O. Nos. 122-A, 122-B and 122-C. The preamble of E.O. No. 122-B states:

Datu Puti from the Atis under Marikudo in the 13th century. The purchase price for the island was a gold "Believing that the new government is committed to formulate more vigorous policies, plans,
salakot and a long gold necklace – Agoncillo, supra, at 25. programs, and projects for tribal Filipinos, otherwise known as Indigenous Cultural Communities,
65 Constantino, supra, at 38. taking into consideration their communal aspirations, customs, traditions, beliefs, and interests, in
66 Corpuz, supra, at 39. order to promote and preserve their rich cultural heritage and insure their participation in the
67 Resettlement- "bajo el son de la campana" (under the sound of the bell) or "bajo el toque de la country’s development for national unity; xxx"
campana"(Under the peal of the bell). 96 Article II, sec. 22; Article VI, sec. 5, par. 2; Article XII, sec. 5; Article XIII, sec. 6; Article XIV, sec. 17; and
68 People v. Cayat, 68 Phil. 12, 17 [1939]. Article XVI, sec. 12.
69 Id. at 17, citing the Decree of the Governor-General of the Philippines, Jan. 14, 1887. 97 MacDonald, Indigenous Peoples of the Philippines, supra, at 345.
70 Agoncillo, supra, at 80. 98 Samuel K. Tan, A History of the Philippines, p. 54 [1997].
71 Id. at 80. 99 Cordillera Studies Program, Land Use and Ownership and Public Policy in the Cordillera, 29-30 [n.d.]; also
72 Corpuz, supra, at 277-278. cited in Dante B. Gatmaytan, Ancestral Domain Recognition in the Philippines: Trends in Jurisprudence and
73 Id. at 277. Legislation, 5 Phil. Nat. Res. L.J. No. 1, pp. 47-48 [1992].
74 Id., N.B. But see discussion in Cariño v. Insular Government, infra, where the United States Supreme Court 100 Abelardo, Ancestral Domain Rights, supra, at 98-99, citing Ponciano L. Bennagen, Indigenous Attitudes

found that the Spanish decrees in the Philippines appeared to recognize that the natives owned some Toward Land and Natural Resources of Tribal Filipinos, 31 National Council of Churches in the Philippines
land. Whether in the implementation of these decrees the natives’ ancestral rights to land Newsletter, Oct.-Dec. 1991, at 4-9.
wereactually respected was not discussed by the U.S. Supreme Court; see also Note 131, infra. 101 Id. at 99, citing June Prill-Brett, Bontok Land Tenure (UP Law library, mimeographed).
75 Tan, supra, at 49-50. 102 Ma. Lourdes Aranal-Sereno and Roan Libarios, The Interface of National Land Law and Kalinga Law, 58
76 Id. at 67. P.L.J. 420, 440-441 [1983].
77 Id. at 52-53. 103 Ibid.
78 Id. at 53. 104 Ibid.
79 Id. at 55. 105 Ibid.
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106 Ma. Lourdes Aranal-Sereno and Roan Libarios, The Interface, supra, at 420. its representatives in the Philippines, real and definitive title." See Lynch, Invisible Peoples, supra, at 290,
107 Senate Bill No. 1728 was co-sponsored by Senator Macapagal-Arroyo and co-authored by Senators citing Government’s Exhibit G, Records, at 137-138, Cariño.
Alvarez, Magsaysay, Revilla, Mercado, Enrile, Honasan, Tatad, Maceda, Shahani, Osmena and Romulo. 137 Cariño v. Insular Government, supra, at 939.

The Eighth Congress, through Senators Rasul, Estrada and Romulo filed a bill to operationalize the 138Ibid.

mandate of the 1987 Constitution on indigenous peoples. The bill was reported out, sponsored an 139Id. at 940.

interpellated but never enacted into law. In the Ninth Congress, the bill filed by Senators Rasul 140Id. at 941.

and Macapagal-Arroyo was never sponsored and deliberated upon in the floor. 141Id. at 941-942.
108 Sponsorship Speech of Senator Flavier, Legislative History of SBN 1728, Tenth Congress, Second Regular 142Aranal-Sereno and Libarios, The Interface Between Kalinga Land Law, supra at 428-This artcile was one of

Session, Senate, Oct. 16, 1996, pp. 15-16. those circulated among the Constitutional Commissioners in the formulation of Sec. 5, Article XII of the
109 Id. at 12. 1987 Constitution (4 Record of the Constitutional Commission 33).
110 Id. at 17-18. 143Id. at 944.
111 Id. at 13. 144Certificate of Title No. 2 covering the 148 hectares of Baguio Municipality was issued not in the name of
112 Journal of the Tenth Congress of the Philippines, Senate, Session No. 5, Aug. 5-6, 1997, pp. 86-87. Cariño who died on June 6, 1908, but to his lawyers John Hausserman and Charles Cohn and his attorney-in-
113 Co-authors of the bill were Reps. Ermita, Teves, Plaza, Calalay, Recto, Fua, Luciano, Abad, Cosalan, fact Metcalf Clarke. Hausserman, Cohn and Clarke sold the land to the U.S. Government in a Deed of
Aumentado, de la Cruz, Bautista, Singson, Damasing, Romualdo, Montilla, Germino, Verceles—Proceedings Quitclaim-Richel B. Langit, Igorot Descendants Claim Rights to Camp John Hay, Manila Times, p. 1, Jan. 12,
of Sept. 4, 1997, pp. 00107-00108. 1998.
114 Sponsorship speech of Rep. Andolana of House Bill No. 9125, March 20, 1997. 145Id. at 939.
115 Interpellation of Aug. 20, 1997, 6:16 p.m., p. 00061. 14657 P.L.J. 268, 293-296 [1982].
116 Section 3 [a], IPRA. 147From 1987 to 1988, Prof. Lynch allowed the P.L.J. to publish parts of his doctoral dissertation at the Yale
117 Section 3 [b], IPRA. Law School entitled "Invisible Peoples: A History of Philippine Land Law." Please see the Legal Bases of
118 Guide to R.A. 8371, p. 14. Philippine Colonial Sovereignty: An Inquiry, 62 P.L.J. 279 [1987]; Land Rights, Land Laws and Land
119 Section 44 [e], IPRA. Usurpation: The Spanish Era (1568-1898), 63 P.L.J. 82 [1988]; The Colonial Dichotomy: Attraction and
120 Section 51, IPRA. Disenfranchisement, 63 P.L.J. 112; Invisible Peoples and a Hidden Agenda: The Origins of Contemporary
121 Guide to R.A. 8371, p. 15. Philippine Land Laws (1900-1913), 63 P.L.J. 249.
122 A CADT refers to a title formally recognizing the right of possession and ownership of ICCs/IPs over their 148"Native title" is a common law recognition of pre-existing aboriginal land interests in Autsralia- Maureen

ancestral domains identified and delineated in acordance with the IPRA—Rule II [c], Rules & Regulations Tehan, Customary Title, Heritage Protection, and Property Rights in Australia: Emerging Patterns of Land
Implementing the IPRA, NCIP Admin. Order No. 1. Use in the Post-Mabo Era, 7 Pacific Rim Law & Policy Journal, No. 3, p. 765 [June 1998].
123 Section 53 [a], IPRA. 149Lynch, Native Titles, supra, Note 164, p. 293.
124 A CALT refers to a title formally recognizing the rights of the ICCs/IPs over their ancestral lands- Rule II 15039 Phil. 660 [1919].

[d], Implementing Rules, NCIP A.O. No. 1. 151Id. at 712-713.

125 Section 52 [k], IPRA. 152Id. at 694.
126 Section 3 [1], IPRA. 153Id. at 700.
127 Section 11, IPRA. 15442 C.J.S., Indians, Sec. 29 [1944 ed.].
128 Ibid. 155There are 3 kinds of Indian reservations: (a) those created by treaties prior to 1871; (b) those created by
129 41 Phil. 935 (1909), 212 U.S. 449, 53 L.Ed. 594. acts of Congress since 1871; and (c) those made by Executive Orders where the President has set apart
130 Sponsorship Speech of Senator Juan Flavier, Leg. History of SBN 1728, Tenth Congress, Second Regular public lands for the use of the Indians in order to keep them within a certain territory- 42 C.J.S., Indians, Sec.
Session, Oct. 16, 1996, p. 13. 29 citing Sioux Tribe of Indians v. U.S. 94 Ct. Cl. 150, 170, certiorari granted 62 S. Ct. 631, 315 U.S. 790, 86 L.
131 It was the practice of the Spanish colonial government not to issue titles to Igorots—Owen J. Lynch, Jr., Ed. 1194, affirmed 62 S. Ct. 1095, 316 U.S. 317, 86 L. Ed. 1501. It is observed that the first two kinds may
Invisible Peoples and a Hidden Agenda: The Origins of Contemporary Philippine Land Laws (1900-1913), 63 include lands possessed by aboriginal title. The last kind covers Indian reservations proper.
P.L.J. 249, 288 [1988], citing the testimony of Benguet Provincial Governnor William F. Pack, Records at 47, Until 1871, Indian tribes were recognized by the United States as possessing the attributes of
Cariño. nations to the extent that treaties were made with them. In that year, however, Congress, by
132 Maura Law or the Royal Decree of Feb. 13, 1894. statute, declared its intention thereafter to make the Indian tribes amenable directly to the power
133 Later named Camp John Hay. and authority of the United States by the immediate exercise of its legislative power over them,
134 Lynch, Invisible Peoples, supra, at 288-289. instead of by treaty. Since then, Indian affairs have been regulated by acts if Congress and by
135 7 Phil. 132 [1906]. contracts with the Indian tribes practically amounting to treaties- 41 Am Jur 2d, Indians, Sec. 55
136 In 1901, Cariño had entered into a promissory agreement with a U.S. merchant in Manila. The note [1995 ed].
obliged Cariño to sell the land at issue "as soon as he obtains from the Government of the United States, or 15642 C.J.S. Indians, Sec. 28 [1944 ed.].
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157Ibid.; see also U.S. v. Santa Fe Pac. R. Co., Ariz., 62 S. Ct. 248, 314 U.S. 339, 86 L. Ed. 260 [1941].
158Ibid.
1598 Wheat 543, 5 L. Ed. 681 [1823].
160Id. at 680.
161Id. at 689.
162Id. at 696; see also 41 ALR Fed 425, Annotation: Proof and Extinguishment of Aboriginal Title to Indian
Lands, Sec. 2[a] [1979].
163Buttz v. Northern Pac.R. Co., Dak., 7 S. Ct. 100, 119 U.S. 55, 30 L. Ed. 330, 335 [1886].
164Lynch, Native Title, supra, at 293-294; Cohen, Original Indian Title, 32 Minn. L.R. 48-49 [1947].
1656 Pet 515, 8 L.Ed. 483 [1832].
166Id. at 499.
167Id. at 500.
168Id. at 501.
169The title of the government to Indian lands, the naked fee, is a sovereign title, the government having no
landlord from whom it holds the fee- Shoshone Tribe of Indians of Wind River Reservation in Wyoming v.
U.S., 85 Ct. Cl. 331, certiorari granted U.S. v. Shoshone Tribe of Indians, 58 S. Ct. 609, 303 U.S. 629, 82 L. Ed.
1090, affirmed 58 S. Ct. 794, 304 U.S. 111, 82 L. Ed. 1213, 1218-1219 [1938].
170Buttz v. Northern Pac. R. Co., Dak., at 30 L. Ed. 330, 335; Beecher v. Wetherby, Wis., 95 U.S. 517, 24 L. Ed.
440, 441 [1877]; see also 42 C.J.S., Indians, Sec. 28 [1944 ed.].
171Annotation, Proof and Extinguishment of Aboriginal title to Indian Lands, 41 ALR Fed 425, Sec. 2 [b]
[1979]- hereinafter cited as Aboriginal Title to Indian Lands.
172Ibid.; see also Tee Hit Ton Indians v. U.S., 348 U.S. 272, 99 L. Ed. 314, 320, 75 S. Ct. 313 [1955], reh den
348 U.S. 965, 99 L. Ed. 753, 75 S. Ct. 521.
173Ibid.; Tee Hit Ton Indians v. U.S., at 99 L. Ed. 320.
174Oneida Indian Nation v. County of Oneida, 414 U.S. 661, 39 L. Ed. 2d 73, 94 S Ct. 772 [1974]; U.S. v. Alcea
Bank of Tillamooks, 329 U.S. 40, 91 L. Ed. 29. 67 S. Ct. 167 [1946].
175For compensation under the Indian Claims Commission Act, the proof of aboriginal title rests on actual,
exclusive and continuous use and occupancy for a long time prior to the loss of the property. (The Indian
Claims Commission Act awards compensation to Indians whose aboriginal titles were extinguished by the
government through military conquest, creation of a reservation, forced confinement of Indians and
removal of Indians from certain portions of the land an the designation of Indian land into forest preserve,
grazing district, etc.) - Aboriginal Title to Indian Lands, supra, at Secs. 2[a], 3[a], pp. 431, 433, 437.
176Aboriginal Title to Indian Lands, supra, at Sec. 2[b], p. 435.
17741 Am Jr 2d, Indians, Sec. 59 [1995 ed.].
178An allotment of Indian land contains restrictions on alienation of the land. These restrictions extend to a
devise of the land by will- Missouri, K. & T.R. Co. v. U.S., 235 U.S. 37, 59 L. Ed. 116,. 35 S. Ct. 6 [1914]; A
railroad land grant that falls within Indian land is null and void- Northern P. R. Co. v. U.S., 227 U.S. 355, 57
L.Ed. 544,33 S. Ct. 368 [1913]; Portions of Indian land necessary for a railroad right of way were, by the
terms of the treaty, declared "public land," implying that land beyond the right of way was private-
Kindred v. Union P.R. Co., 225 U.S. 582, 56 L. Ed. 1216, 32 S. Ct. 780 [1912]; see also 41 Am Jur 2d, Indians,
Sec. 58 [1995 ed].
179Aboriginal Title to Indian Lands, supra, at Sec. 2[a], p. 433.
18042 C.J.S. Indians, Sec. 29 [1944 ed.]
181Ibid.
182North American Indians have made much progress in establishing a relationship with the national
government and developing their own laws. Some have their own government-recognized constitutions.
Usually the recognition of Indian tribes depends on whether the tribe has a reservation. North American
tribes have reached such an advanced stage that the main issues today evolve around complex jurisdictional
and litigation matters. Tribes have acquired the status of sovereign nations within another nation,
possessing the right to change and grow- Jose Paulo Kastrup, The Internationalization of Indigenous Rights
from the Environmental and Human Rights Perspective, Texas International Law Journal, vol. 32: 97, 104
[1997].
183Lynch, Native Title, supra, at 293.
184Dante Gatmaytan, Ancestral Domain Recognition in the Philippines: Trends in Jurisprudence and
Legislation, 5 Phil. Nat. Res. L.J. No. 1, pp. 43, 40 [Aug. 1992]; see also Tee Hit Ton Indians v. U.S., supra, at
320.
185Ibid.
186D. Gatmaytan, supra, citing Churchill, The Earth is Our Mother: Struggles for American Indian Land and
Liberation in the Contemporary United States, The State of Native America: Genocide, Colonization and
Resistance 139 (M. Jaimes 1992); and Indian Law Resource Center, United States Denial of Indian Property
Rights: A Study in Lawless Power and Racial Discrimination, Rethinking Indian Law 15 (National Lawyers
Guild, Committee on Native American Struggles 1982).
187Id., Note 28, stating that some earlier decisions of the U.S. Supreme Court have held that Congress is
subject to the strictures of the Constitution in dealing with Indians. When an Indian property is taken for
non-Indian use, the U.S. government is liable for payment of compensation, and an uncompensated taking
may be enjoined. F. Cohen, Handbook of Federal Indian Law 217 [1982], citing Shoshone Tribe v. U.S. 299
U.S. 476 [1937]; Choate v. Trapp, 224 U.S. 665 [1912]; and Lane v. Pueblo of Santa Rosa, 249 U.S. 110
[1919].
188See Discussion, infra, Part IV (c) (2).
189Susi v. Razon, 48 Phil. 424 [1925]; Herico v. Dar, 95 SCRA 437 [1980].
190Ibid.
191Director of Lands v. Intermediate Appellate Court, 146 SCRA 509 [1986]; Director of Lands v. Buyco, 216
SCRA 78 [1992]; Republic v. Court of Appeals and Lapina, 235 SCRA 567 [1994].
19275 Phil. 890 [1946].
193Id. at 892.
194Sec. 48 [b], C.A. 141.
195Sec. 48 [c], C.A. 141, as amended. This provision was added in 1964 by R.A. 3872.
196Section 12, IPRA.
197"Time immemorial" refers "to a period of time when as far back as memory can go, certain ICCs/Ips are
known to have occupied, possessed in the concept of owner, and utilized a defined territory devolved to
them, by operation of customary law or inherited from their ancestors, in accordance with their customs
and traditions." (Sec. 3 [p], IPRA).
198Section 2, C.A. 141.
199Section 8, C.A. 141.
200 The classification of ancestral lands 18% in slope or over as alienable in the IPRA is an exception to
Section 15, P.D. 705, the Revised Forestry Code.
201 Charles MacDonald, Indigenous Peoples of the Philippines: Between Segregation and Integration,
Indigenous Peoples of Asia, supra, at pp. 345, 350.
202 Section 5, Article XII, 1987 Constitution.
203 Words in bold were amendments introduced by R.A. 3872 in 1964.
204 Words in bold were amendments introduced by R.A. 3872 on June 18, 1964. On January 25, 1977,
however, Sec. 48 [b] and 48 [c] were further amended by P.D. 1073 stating that these provisions on cultural
minorities apply only to alienable and disposable lands of the public domain- Please see Republic v. CA and
Paran, 201 SCRA 1, 10-11 [1991].
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205 Jus utendi, jus fruendi.
206 Jus abutendi.
207 Jus disponendi.
208 Jus vindicandi. Please see Tolentino, Civil Code, vol. II, pp. 45-46 [1992]; see also Tolentino, vol. I, pp. 12-
14.
209 Sec. 55, IPRA provides:
"Sec. 55. Communal rights.- Subject to Section 56 hereof, areas within the ancestral domains,
whether delineated or not, shall be presumed to be communally held: provided, That communal
rights under this Act shall not be construed as co-ownership as provided in Republic Act No. 386,
otherwise known as the New Civil Code."
210 Ibid.
211 Article 494, Civil Code.
212 Antonio M. La Vina, Arguments for Communal Title, Part II, 2 Phil. Nat. Res. L. J. 23 [Dec. 1989].
213 Section 11, Corporation Code.
214 Sections 60-72, Corporation Code.
215 Section 117, Corporation Code. Please see also La Vina, Arguments for Communal Title, Part II, supra, at
23.
216 Section 5, par. 2, Article XII, 1987 Constitution.
217 Customary law is recognized by the Local Government Code of 1991 in solving disputes among members
of the indigenous communities, viz:
"Sec. 412 (c) Conciliation among members of indigenous cultural communities.- The customs and
traditions of indigenous cultural communities shall be applied in settling disputes between
members of the cultural communities."
218 Law writes custom into contract-Hongkong & Shanghai Bank v. Peters, 16 Phil. 284 [1910].
The Civil Code provides:
"Art. 11. Customs which are contrary to law, public order or public policy shall not be
countenanced."
"Art. 12. A custom must be proved as a fact, according to the rules of evidence."
219 Article 78 on marriages between Mohammedans or pagans who live in the non-Christian provinces- this
is now Art. 33 of the Family Code; Art. 118, now Art. 74 of the Family Code on property relations between
spouses; Art. 577 on the usufructuary of woodland; Art. 657 on easement of right of way for passage of
livestock; Arts. 678, 1315, 1376, 1522, 1564 and 1577. Please see Aquino, Civil Code, vol. 1, p. 25.
220 Castle Bros. v. Gutierrez Hermanos, 11 Phil. 629 [1908]; In Re: Firm Name of Ozaeta Romulo, 92 SCRA 1
[1979]; Yao Kee v. Sy-Gonzales, 167 SCRA 736 [1988]; Please see Aquino, Civil Code, vol. 1, p. 26 for a list of
other cases.
221 This situation is analogous to the Muslim code or the Code of Muslim Personal Laws (P.D. 1083) which
took effect on February 4, 1977 despite the effectivity of the Civil Code and the Family Code. P.D. 1083
governs persons, family relations and succession among Muslims, the adjudication and settlement of
disputes, the organization of the Shari’a courts, etc.
222 Mariflor P. Pagusara, The Kalinga Ili: Cultural-Ecological Reflections on Indigenous Theora and Praxis of
Man-Nature Relationship, Dakami Ya Nan Dagami, p. 36, Papers and Proceedings of the 1st Cordillera Muti-
Sectoral Land Congress, 11-14 March 1983, Cordillera Consultative Committee [1984].
223 Section 2, Article XII.
224 A "co-production agreement" is defined as one wherein the government provides input to the mining
operation other than the mineral resource- Section 26 (b), R.A. 7942, the Philippine Mining Act of 1995.
225 A "joint venture agreement" is one where a joint-venture company is organized by the government and
the contractor with both parties having equity shares, and the government entitled to a share in the gross
output- Section 26 (c), R.A. 7942.
226 A mineral "production-sharing agreement" is one where the government grants to the contractor the
exclusive right to conduct mining operations within a contract area and shares in the gross output. The
contractor provides the financing, technology, management and personnel necessary for the
implementation of the agreement- Section 26 (a), R.A. 7942.
227 Section 26, R.A. 7942.
228 Section 3 [d], People's Small-Scale Mining Act of 1991 (R.A. 7076) provides:
"Sec. 3 [d] 'Small-scale mining contract' refers to co-production, joint venture or mineral
production sharing agreement between the State and a small-scale mining contractor for the
small-scale utilization of a plot of mineral land."
229 Section 3 [b], R.A. 7076.
230 NCIP Administrative Order No. 1, Series of 1998.
231 In Republic v. Court of Appeals, 160 SCRA 228, 239 [1988], Cruz, J., ponente, it was declared that if a
person is the owner of a piece of agricultural land on which minerals are discovered, his ownership of such
land does not give him the right to extract or utilize the said minerals without the permission of the State to
which such minerals belong- also cited in H. de Leon, Phil. Constitutional Law, Principles and Cases, vol. 2,
pp. 800-801 [1999].
232 See Ground I, Grounds to Issue Writ of Prohibition, Petition, p. 14.
233 Section 7 (b) is subject to Section 56 of the same law which provides:
"Sec. 56. Existing Property Rights Regimes.- Property rights within the ancestral domains already
existing and/or vested upon effectivity of this Act, shall be recognized and respected."
The law took effect 15 days upon publication in the O.G. or in any 2 newspapers of general
circulation (Sec. 84, IPRA). The IPRA was published in the Chronicle and Malaya on Nov. 7, 1997.
234 Section 9 of the IPRA also gives the ICCs/IPs the ff. responsibilities over their ancestral domains:
(a) Maintain Ecological Balance- To preserve, restore, and maintain a balanced ecology in the
ancestral domain by protecting the flora and fauna, watershed areas, and other reserves;
(b) Restore Denuded Areas.- To actively initiate, undertake and participate in the reforestation of
denuded areas and other development programs and projects subject to just and reasonable
renumeration;
(c) Observe Laws.- To observe and comply with the provisions of this Act and the rules and
regulations for its effective implementation."
Section 58 of the same law also mandates that ancestral domains or portions thereof, which are
found to be necessary for critical watersheds, mangroves, wildlife sanctuaries, wilderness,
protected areas, forest cover, or reforestation as determined by appropriate agencies with the full
participation of the ICCs/IPs concerned shall be maintained, managed and developed for such
purposes. The ICCs/IPs concerned shall be given the responsibility to maintain, develop, protect
and conserve such areas with the full and effective assistance of government agencies.
235 Hector S. de Leon, Textbook on the New Philippine Constitution pp. 473-474 [1987] citing the 1986 UP
Law Constitution Project, The National Economy and Patrimony, p. 11.
236 Under the Small-Scale Mining Act of 1991, "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"- Section 3 [b], R.A. 7076.
237 See infra., pp. 77-79?.
238 Andrew Gray, The Indigenous Movement in Asia, Indigenous Peoples of Asia, ed. By Barnes, Gray and
Kingsbury, pub. By Ass'n. for Asian Studies, at 35, 42 [1995].
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239 E.g. International Indian Treaty Council, World Council of IPs.

240 Gray, The Indigenous Movement in Asia, supra, at 44, citing the International Work Group for Indigenous
Affairs, 1988.
241 Jose Paulo Kastrup, The Internationalization of Indigenous Rights from the Environmental and Human

Rights Perspective, 32 Texas International Law Journal 97, 102 [1997].

242 Benedict Kingsbury, "Indigenous Peoples" in International Law: A Constructivist Approach to the Asian

Controversy, The American Journal of International Law, vol. 92: 414, 429 [1998].
243 The World Bank supported the Chico Dam project. Due to the Kalingas' opposition, the WB pulled out of

the project but the conflict between the Philippine government and the natives endured long after- Marcus
Colchester, Indigenous Peoples' Rights and Sustainable Resource Use in South and Southeast Asia,
Indigenous Peoples of Asia, supra, pp. 59, 71-72.
244 Kingsbury, supra, at 417.
245 Section 22, Article II, 1987 Constitution.
246 Interpellation of Senator Flavier on S.B. No. 1728, Deliberation on Second Reading, November 20, 1996,

p. 20.
247 Guide to R.A. 8371, Coalition for IPs Rights and Ancestral Domains, the International Labor Organization,

and the ILO-Bilance- Asia Dep't, p. 3 [1999].

248 Also referred to as the "Indigenous and Tribal Peoples Convention, 1989."
249 See Introduction to ILO Convention No. 169, par. 4.
250 Id., pars. 5 and 6.
251 Perfecto V. Fernandez, Towards a Definition of National Policy on Recognition of Ethnic Law within the

Philippine Legal Order, 55 P.L.J. 383, 385 [1980].

252 Samuel K. Tan, A History of the Philippines, Manila Studies Association, Inc. and the Phil. National

Historical Society, Inc., p. 6 [1997].

253 Fernandez, supra, at 385, 391.
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G.R. No. L-30389 December 27, 1972
PEDRO LEE HONG HOK, SIMEON LEE HONG HOK, ROSITA LEE HONG HOK and LEONCIO LEE HONG
HOK,petitioners,
vs.
ANIANO DAVID, THE HON. SECRETARY OF AGRICULTURE AND NATURAL RESOURCES, THE DIRECTOR OF
LANDS and COURT OF APPEALS, respondents.
Augusto A. Pardalis for petitioners.
Luis General, Jr. for respondent Aniano David.
Office of the Solicitor General for other respondents.
FERNANDO, J.:p
Petitioners 1 in this appeal by certiorari would have us reverse a decision of respondent Court of Appeals
affirming a lower court judgment dismissing their complaint to have the Torrens Title 2 of respondent
Aniano David declared null and void. What makes the task for petitioners quite difficult is that their
factual support for their pretension to ownership of such disputed lot through accretion was rejected by
respondent Court of Appeals. Without such underpinning, they must perforce rely on a legal theory,
which, to put it mildly, is distinguished by unorthodoxy and is therefore far from persuasive. A grant by
the government through the appropriate public officials 3 exercising the competence duly vested in them
by law is not to be set at naught on the premise, unexpressed but implied, that land not otherwise passing
into private ownership may not be disposed of by the state. Such an assumption is at war with settled
principles of constitutional law. It cannot receive our assent. We affirm.
The decision of respondent Court of Appeals following that of the lower court makes clear that there is no
legal justification for nullifying the right of respondent Aniano David to the disputed lot arising from the
grant made in his favor by respondent officials. As noted in the decision under review, he "acquired lawful
title thereby pursuant to his miscellaneous sales application in accordance with which an order of award
and for issuance of a sales patent was made by the Director of Lands on June 18, 1958, covering Lot 2892
containing an area of 226 square meters, which is a portion of Lot 2863 of the Naga Cadastre. On the basis
of the order of award of the Director of Lands the Undersecretary of Agriculture and Natural Resources
issued on August 26, 1959, Miscellaneous Sales Patent No. V-1209 pursuant to which OCT No. 510 was
issued by the Register of Deeds of Naga City to defendant-appellee Aniano David on October 21, 1959.
According to the Stipulation of Facts, since the filing of the sales application of Aniano David and during all
the proceedings in connection with said application, up to the actual issuance of the sales patent in his
favor, the plaintiffs-appellants did not put up any opposition or adverse claim thereto. This is fatal to them
because after the registration and issuance of the certificate and duplicate certificate of title based on a
public land patent, the land covered thereby automatically comes under the operation of Republic Act
496 subject to all the safeguards provided therein.... Under Section 38 of Act 496 any question concerning
the validity of the certificate of title based on fraud should be raised within one year from the date of the
issuance of the patent. Thereafter the certificate of title based thereon becomes indefeasible.... In this
case the land in question is not a private property as the Director of Lands and the Secretary of
Agriculture and Natural Resources have always sustained the public character thereof for having been
formed by reclamation.... The only remedy therefore, available to the appellants is an action for
reconveyance on the ground of fraud. In this case we do not see any fraud committed by defendant-
appellant Aniano David in applying for the purchase of the land involved through his Miscellaneous Sales
Application No. MSA-V-26747, entered in the records of the Bureau of Lands [Miscellaneous Sales] Entry
No. V-9033, because everything was done in the open. The notices regarding the auction sale of the land
were published, the actual sale and award thereof to Aniano David were not clandestine but open and
public official acts of an officer of the Government. The application was merely a renewal of his deceased
wife's application, and the said deceased occupied the land since 1938." 4
On such finding of facts, the attempt of petitioners to elicit a different conclusion is likely to be attended
with frustration. The first error assigned predicated an accretion having taken place, notwithstanding its
rejection by respondent Court of Appeals, would seek to disregard what was accepted by respondent
Court as to how the disputed lot came into being, namely by reclamation. It does not therefore call for
any further consideration. Neither of the other two errors imputed to respondent Court, as to its holding
that authoritative doctrines preclude a party other than the government to dispute the validity of a grant
and the recognition of the indefeasible character of a public land patent after one year, is possessed of
merit. Consequently, as set forth at the outset, there is no justification for reversal.
1. More specifically, the shaft of criticism was let loose by petitioner aimed at this legal proposition set
forth in the exhaustive opinion of then Justice Salvador Esguerra of the Court of Appeals, now a member
of this Court: "There is, furthermore, a fatal defect of parties to this action. Only the Government,
represented by the Director of Lands, or the Secretary of Agriculture and Natural Resources, can bring an
action to cancel a void certificate of title issued pursuant to a void patent (Lucas vs. Durian, 102 Phil. 1157;
Director of Lands vs. Heirs of Ciriaco Carlo, G.R. No. L-12485, July 31, 1959). This was not done by said
officers but by private parties like the plaintiffs, who cannot claim that the patent and title issued for the
land involved are void since they are not the registered owners thereof nor had they been declared as
owners in the cadastral proceedings of Naga Cadastre after claiming it as their private property. The cases
cited by appellants are not in point as they refer to private registered lands or public lands over which
vested rights have been acquired but notwithstanding such fact the Land Department subsequently
granted patents to public land applicants." 5 Petitioner ought to have known better. The above excerpt is
invulnerable to attack. It is a restatement of a principle that dates back to Maninang v. Consolacion, 6 a
1908 decision. As was there categorically stated: "The fact that the grant was made by the government is
undisputed. Whether the grant was in conformity with the law or not is a question which the government
may raise, but until it is raised by the government and set aside, the defendant can not question it. The
legality of the grant is a question between the grantee and the government." 7 The above citation was
repeated ipsissimis verbis inSalazar v. Court of Appeals. 8 Bereft as petitioners were of the right of
 L A W O N N A T U R A L R E S O U R C E S a n d E N V I R O N M E N T A L L A W C a s e s a n d S p e c i a l L a w s | 34
ownership in accordance with the findings of the Court of Appeals, they cannot, in the language of Reyes
v. Rodriguez, 9 "question the [title] legally issued."10 The second assignment of error is thus disposed of.
2. As there are overtones indicative of skepticism, if not of outright rejection, of the well-known
distinction in public law between the government authority possessed by the state which is appropriately
embraced in the concept of sovereignty, and its capacity to own or acquire property, it is not
inappropriate to pursue the matter further. The former comes under the heading of imperium and the
latter of dominium. The use of this term is appropriate with reference to lands held by the state in its
proprietary character. In such capacity, it may provide for the exploitation and use of lands and other
natural resources, including their disposition, except as limited by the Constitution. Dean Pound did speak
of the confusion that existed during the medieval era between such two concepts, but did note the
existence of res publicae as a corollary to dominium." 11 As far as the Philippines was concerned, there
was a recognition by Justice Holmes in Cariño v. Insular Government, 12 a case of Philippine origin, that
"Spain in its earlier decrees embodied the universal feudal theory that all lands were held from the
Crown...." 13 That was a manifestation of the concept of jura regalia, 14 which was adopted by the present
Constitution, ownership however being vested in the state as such rather than the head thereof. What
was stated by Holmes served to confirm a much more extensive discussion of the matter in the leading
case of Valenton v. Murciano, 15 decided in 1904. One of the royal decrees cited was incorporated in the
Recopilacion de Leyes de las Indias 16 in these words: "We having acquired full sovereignty over the Indies
and all lands, territories, and possessions not heretofore ceded away by our royal predecessors, or by us,
or in our name, still pertaining to the royal crown and patrimony, it is our will that all lands which are held
without proper and true deeds of grant be restored to us according as they belong to us, in order that
after reserving before all what to us or to our viceroys audiences, and governors may seem necessary for
public squares, ways, pastures, and commons in those places which are peopled, taking into consideration
not only their present condition, but also their future and their probable increase, and after distributing to
the natives what may be necessary for tillage and pasturage, confirming them in what they now have and
giving them more if necessary, all the rest of said lands may remain free and unencumbered for us to
dispose of as we may wish." 17
It could therefore be affirmed in Montano v. Insular Government" 18 that "as to the unappropriated public
lands constituting the public domain the sole power of legislation is vested in Congress, ..." 19 They
continue to possess that character until severed therefrom by state grant. 20 Where, as in this case, it was
found by the Court of Appeals that the disputed lot was the result of reclamation, its being correctly
categorized as public land is undeniable. 21 What was held in Heirs of Datu Pendatun v. Director of
Lands 22 finds application. Thus: "There being no evidence whatever that the property in question was
ever acquired by the applicants or their ancestors either by composition title from the Spanish
Government or by possessory information title or by any other means for the acquisition of public lands,
the property must be held to be public domain." 23 For it is well-settled "that no public land can be
acquired by private persons without any grant, express or implied, from the government." 24 It is
indispensable then that there be a showing of a title from the state or any other mode of acquisition
recognized by law. 25 The most recent restatement of the doctrine, found in an opinion of Justice J.B.L.
Reyes, follows: 26 "The applicant, having failed to establish his right or title over the northern portion of
Lot No. 463 involved in the present controversy, and there being no showing that the same has been
acquired by any private person from the Government, either by purchase or by grant, the property is and
remains part of the public domain." 27 To repeat, the second assignment of error is devoid of merit.
3. The last error assigned would take issue with this portion of the opinion of Justice Esguerra: "According
to the Stipulation of Facts, since the filing of the sales application of Aniano David and during all the
proceedings in connection with said application, up to the actual issuance of the sales patent in his favor,
the
plaintiffs-appellants did not put up any opposition or adverse claim thereto. This is fatal to them because
after the registration and issuance of the certificate and duplicate certificate of title based on a public land
patent, the land covered thereby automatically comes under the operation of Republic Act 496 subject to
all the safeguards provided therein ... Under Section 38 of Act 496 any question concerning the validity of
the certificate of title based on fraud should be raised within one year from the date of the issuance of
the patent. Thereafter the certificate of title based thereon becomes indefeasible ..." 28 Petitioners cannot
reconcile themselves to the view that respondent David's title is impressed with the quality of
indefeasibility. In thus manifesting such an attitude, they railed to accord deference to controlling
precedents. As far back as 1919, in Aquino v. Director of
Lands, 29 Justice Malcolm, speaking for the Court, stated: "The proceedings under the Land Registration
Law and under the provisions of Chapter VI of the Public Land Law are the same in that both are against
the whole world, both take the nature of judicial proceedings, and for both the decree of registration
issued is conclusive and final."30 Such a view has been followed since then. 31 The latest case in point
is Cabacug v. Lao. 32 There is this revealing excerpt appearing in that decision: "It is said, and with reason,
that a holder of a land acquired under a free patent is more favorably situated than that of an owner of
registered property. Not only does a free patent have a force and effect of a Torrens Title, but in addition
the person to whom it is granted has likewise in his favor the right to repurchase within a period of five
years." 33 It is quite apparent, therefore, that petitioners' stand is legally indefensible.
WHEREFORE, the decision of respondent Court of Appeals of January 31, 1969 and its resolution of March
14, 1969 are affirmed. With costs against petitioners-appellants.
Concepcion, C.J., Makalintal, Zaldivar, Castro, Teehankee Barredo, Makasiar, Antonio and Esguerra, JJ.,
concur.
Footnotes
1 Petitioners are Pedro Lee Hong Hok, Simeon Lee Hong Hok, Rosita Lee Hong Hok and Leoncio
Lee Hong Hok.
2 Original Certificate of Title No. 510 of the Registry of Naga City.
3 The Secretary of Agriculture and Natural Resources and the Director of Lands were likewise
named respondents.
4 Decision Appendix A, Brief for the Petitioners, 54-56.
5 Ibid, 56-57.
6 12 Phil. 342.
7 Ibid, 349.
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8 87 Phil. 456 (1950).

9 62 Phil. 771 (1936).
10 Ibid, 776.
11 Cf. 3 Pound, Jurisprudence, 108-109 (1959).
12 212 US 449 (1909).
13 Ibid, 458.
14 Cf. Radin, Law Dictionary, 288 (1955).
15 3 Phil. 537.
16 Law I, Title 12, Book 4.
17 3 Phil. 537, 542-543.
18 12 Phil. 572 (1909).
19 Ibid, 579. Cf. Insular Government v. Aldecoa & Co., 19 Phil. 505, (1911); Ankron v. Government
of the Philippine Islands, 40 Phil. 10 (1919).
20 Cf. Archbishop of Manila v. Director of Lands, 27 Phil. 245 (1914).
21 Cf. Aragon v. Insular Government, 19 Phil. 223 (1911); Francisco v. Government, 28 Phil. 505
(1914); Government v. Cabangis 53 Phil. 112 (1929).
22 59 Phil. 600 (1934).
23 Ibid, 603.
24 Padilla v. Reyes, 60 Phil. 967, 969 (1934).
25 Cf. Reyes v. Rodriguez, 62 Phil. 771 (1936).
26 Director of Lands v. Court of Appeals, L-29575, April 30, 1971, 38 Phil. 634.
27 Ibid, 639.
28 Decision, Appendix A to Brief for Petitioners, 54-55.
29 39 Phil. 850 (1919).
30 Ibid, 858.
31 Cf. Manalo v. Lukban, 48 Phil. 973, (1924); El Hogar Filipino v. Olviga, 60 Phil. 17 (1934);
Republic of the Philippines v. Abacite, L-15415, April 26, 1961, 1 SCRA 1076; Panimdim v. Director
of Lands, L-19731, July 31, 1964, 11 SCRA 628; Director of Lands v. The Court of Appeals, L-17696,
May 19, 1966, 17 SCRA 71; Antonio v. Barroga, L-23769, April 29, 1968, 23 SCRA 357; Dela Cruz v.
Reano, L-29792, August 31, 1970, 34 SCRA 585.
32 L-27036, November 26, 1970, 36 SCRA 92.
33 Ibid, 96.
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G.R. No. 127882 January 27, 2004
LA BUGAL-B'LAAN TRIBAL ASSOCIATION, INC., represented by its Chairman F'LONG MIGUEL M.
LUMAYONG, WIGBERTO E. TAÑADA, PONCIANO BENNAGEN, JAIME TADEO, RENATO R. CONSTANTINO,
JR., F'LONG AGUSTIN M. DABIE, ROBERTO P. AMLOY, RAQIM L. DABIE, SIMEON H. DOLOJO, IMELDA M.
GANDON, LENY B. GUSANAN, MARCELO L. GUSANAN, QUINTOL A. LABUAYAN, LOMINGGES D. LAWAY,
BENITA P. TACUAYAN, minors JOLY L. BUGOY, represented by his father UNDERO D. BUGOY, ROGER M.
DADING, represented by his father ANTONIO L. DADING, ROMY M. LAGARO, represented by his father
TOTING A. LAGARO, MIKENY JONG B. LUMAYONG, represented by his father MIGUEL M. LUMAYONG,
RENE T. MIGUEL, represented by his mother EDITHA T. MIGUEL, ALDEMAR L. SAL, represented by his
father DANNY M. SAL, DAISY RECARSE, represented by her mother LYDIA S. SANTOS, EDWARD M.
EMUY, ALAN P. MAMPARAIR, MARIO L. MANGCAL, ALDEN S. TUSAN, AMPARO S. YAP, VIRGILIO CULAR,
MARVIC M.V.F. LEONEN, JULIA REGINA CULAR, GIAN CARLO CULAR, VIRGILIO CULAR, JR., represented
by their father VIRGILIO CULAR, PAUL ANTONIO P. VILLAMOR, represented by his parents JOSE
VILLAMOR and ELIZABETH PUA-VILLAMOR, ANA GININA R. TALJA, represented by her father MARIO
JOSE B. TALJA, SHARMAINE R. CUNANAN, represented by her father ALFREDO M. CUNANAN, ANTONIO
JOSE A. VITUG III, represented by his mother ANNALIZA A. VITUG, LEAN D. NARVADEZ, represented by
his father MANUEL E. NARVADEZ, JR., ROSERIO MARALAG LINGATING, represented by her father RIO
OLIMPIO A. LINGATING, MARIO JOSE B. TALJA, DAVID E. DE VERA, MARIA MILAGROS L. SAN JOSE, SR.,
SUSAN O. BOLANIO, OND, LOLITA G. DEMONTEVERDE, BENJIE L. NEQUINTO,1 ROSE LILIA S. ROMANO,
ROBERTO S. VERZOLA, EDUARDO AURELIO C. REYES, LEAN LOUEL A. PERIA, represented by his father
ELPIDIO V. PERIA,2 GREEN FORUM PHILIPPINES, GREEN FORUM WESTERN VISAYAS, (GF-WV),
ENVIRONMETAL LEGAL ASSISTANCE CENTER (ELAC), PHILIPPINE KAISAHAN TUNGO SA KAUNLARAN NG
KANAYUNAN AT REPORMANG PANSAKAHAN (KAISAHAN),3 KAISAHAN TUNGO SA KAUNLARAN NG
KANAYUNAN AT REPORMANG PANSAKAHAN (KAISAHAN), PARTNERSHIP FOR AGRARIAN REFORM and
RURAL DEVELOPMENT SERVICES, INC. (PARRDS), PHILIPPINE PART`NERSHIP FOR THE DEVELOPMENT OF
HUMAN RESOURCES IN THE RURAL AREAS, INC. (PHILDHRRA), WOMEN'S LEGAL BUREAU (WLB),
CENTER FOR ALTERNATIVE DEVELOPMENT INITIATIVES, INC. (CADI), UPLAND DEVELOPMENT INSTITUTE
(UDI), KINAIYAHAN FOUNDATION, INC., SENTRO NG ALTERNATIBONG LINGAP PANLIGAL (SALIGAN),
LEGAL RIGHTS AND NATURAL RESOURCES CENTER, INC. (LRC), petitioners,
vs.
VICTOR O. RAMOS, SECRETARY, DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES (DENR),
HORACIO RAMOS, DIRECTOR, MINES AND GEOSCIENCES BUREAU (MGB-DENR), RUBEN TORRES,
EXECUTIVE SECRETARY, and WMC (PHILIPPINES), INC.4 respondents.
DECISION
CARPIO-MORALES, J.:
The present petition for mandamus and prohibition assails the constitutionality of Republic Act No.
7942,5otherwise known as the PHILIPPINE MINING ACT OF 1995, along with the Implementing Rules and
Regulations issued pursuant thereto, Department of Environment and Natural Resources (DENR)
Administrative Order 96-40, and of the Financial and Technical Assistance Agreement (FTAA) entered into
on March 30, 1995 by the Republic of the Philippines and WMC (Philippines), Inc. (WMCP), a corporation
organized under Philippine laws.
On July 25, 1987, then President Corazon C. Aquino issued Executive Order (E.O.) No. 279 6 authorizing the
DENR Secretary to accept, consider and evaluate proposals from foreign-owned corporations or foreign
investors for contracts or agreements involving either technical or financial assistance for large-scale
exploration, development, and utilization of minerals, which, upon appropriate recommendation of the
Secretary, the President may execute with the foreign proponent. In entering into such proposals, the
President shall consider the real contributions to the economic growth and general welfare of the country
that will be realized, as well as the development and use of local scientific and technical resources that
will be promoted by the proposed contract or agreement. Until Congress shall determine otherwise,
large-scale mining, for purpose of this Section, shall mean those proposals for contracts or agreements for
mineral resources exploration, development, and utilization involving a committed capital investment in a
single mining unit project of at least Fifty Million Dollars in United States Currency (US $50,000,000.00). 7
On March 3, 1995, then President Fidel V. Ramos approved R.A. No. 7942 to "govern the exploration,
development, utilization and processing of all mineral resources." 8 R.A. No. 7942 defines the modes of
mineral agreements for mining operations,9 outlines the procedure for their filing and
approval,10 assignment/transfer11and withdrawal,12 and fixes their terms.13 Similar provisions govern
financial or technical assistance agreements. 14
The law prescribes the qualifications of contractors15 and grants them certain rights, including
timber,16 water17and easement18 rights, and the right to possess explosives. 19 Surface owners, occupants,
or concessionaires are forbidden from preventing holders of mining rights from entering private lands and
concession areas.20 A procedure for the settlement of conflicts is likewise provided for. 21
The Act restricts the conditions for exploration,22 quarry23 and other24 permits. It regulates the transport,
sale and processing of minerals,25 and promotes the development of mining communities, science and
mining technology,26 and safety and environmental protection.27
The government's share in the agreements is spelled out and allocated, 28 taxes and fees are
imposed,29incentives granted.30 Aside from penalizing certain acts,31 the law likewise specifies grounds for
the cancellation, revocation and termination of agreements and permits. 32
On April 9, 1995, 30 days following its publication on March 10, 1995 in Malaya and Manila Times, two
newspapers of general circulation, R.A. No. 7942 took effect.33 Shortly before the effectivity of R.A. No.
7942, however, or on March 30, 1995, the President entered into an FTAA with WMCP covering 99,387
hectares of land in South Cotabato, Sultan Kudarat, Davao del Sur and North Cotabato. 34
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On August 15, 1995, then DENR Secretary Victor O. Ramos issued DENR Administrative Order (DAO) No.
95-23, s. 1995, otherwise known as the Implementing Rules and Regulations of R.A. No. 7942. This was
later repealed by DAO No. 96-40, s. 1996 which was adopted on December 20, 1996.
On January 10, 1997, counsels for petitioners sent a letter to the DENR Secretary demanding that the
DENR stop the implementation of R.A. No. 7942 and DAO No. 96-40,35 giving the DENR fifteen days from
receipt36 to act thereon. The DENR, however, has yet to respond or act on petitioners' letter.37
Petitioners thus filed the present petition for prohibition and mandamus, with a prayer for a temporary
restraining order. They allege that at the time of the filing of the petition, 100 FTAA applications had
already been filed, covering an area of 8.4 million hectares, 38 64 of which applications are by fully foreign-
owned corporations covering a total of 5.8 million hectares, and at least one by a fully foreign-owned
mining company over offshore areas.39
Petitioners claim that the DENR Secretary acted without or in excess of jurisdiction:
I between the President of the Republic of the Philippines and Western Mining Corporation Philippines Inc.
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No.
7942, the latter being unconstitutional in that it allows fully foreign owned corporations to explore,
develop, utilize and exploit mineral resources in a manner contrary to Section 2, paragraph 4, Article XII of
the Constitution;
II
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No.
7942, the latter being unconstitutional in that it allows the taking of private property without the
determination of public use and for just compensation;
III
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No.
7942, the latter being unconstitutional in that it violates Sec. 1, Art. III of the Constitution;
IV
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No.
7942, the latter being unconstitutional in that it allows enjoyment by foreign citizens as well as fully
foreign owned corporations of the nation's marine wealth contrary to Section 2, paragraph 2 of Article XII
of the Constitution;
V
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No.
7942, the latter being unconstitutional in that it allows priority to foreign and fully foreign owned
corporations in the exploration, development and utilization of mineral resources contrary to Article XII of
the Constitution;
VI
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No.
7942, the latter being unconstitutional in that it allows the inequitable sharing of wealth contrary to
Sections [sic] 1, paragraph 1, and Section 2, paragraph 4[,] [Article XII] of the Constitution;
VII
x x x in recommending approval of and implementing the Financial and Technical Assistance Agreement
because the same is illegal and unconstitutional.40
They pray that the Court issue an order:
(a) Permanently enjoining respondents from acting on any application for Financial or Technical
Assistance Agreements;
(b) Declaring the Philippine Mining Act of 1995 or Republic Act No. 7942 as unconstitutional and
null and void;
(c) Declaring the Implementing Rules and Regulations of the Philippine Mining Act contained in
DENR Administrative Order No. 96-40 and all other similar administrative issuances as
unconstitutional and null and void; and
(d) Cancelling the Financial and Technical Assistance Agreement issued to Western Mining
Philippines, Inc. as unconstitutional, illegal and null and void.41
Impleaded as public respondents are Ruben Torres, the then Executive Secretary, Victor O. Ramos, the
then DENR Secretary, and Horacio Ramos, Director of the Mines and Geosciences Bureau of the DENR.
Also impleaded is private respondent WMCP, which entered into the assailed FTAA with the Philippine
Government. WMCP is owned by WMC Resources International Pty., Ltd. (WMC), "a wholly owned
subsidiary of Western Mining Corporation Holdings Limited, a publicly listed major Australian mining and
exploration company."42 By WMCP's information, "it is a 100% owned subsidiary of WMC LIMITED."43
 L A W O N N A T U R A L R E S O U R C E S a n d E N V I R O N M E N T A L L A W C a s e s a n d S p e c i a l L a w s | 38
Respondents, aside from meeting petitioners' contentions, argue that the requisites for judicial inquiry
have not been met and that the petition does not comply with the criteria for prohibition and mandamus.
Additionally, respondent WMCP argues that there has been a violation of the rule on hierarchy of courts.
After petitioners filed their reply, this Court granted due course to the petition. The parties have since
filed their respective memoranda.
WMCP subsequently filed a Manifestation dated September 25, 2002 alleging that on January 23, 2001,
WMC sold all its shares in WMCP to Sagittarius Mines, Inc. (Sagittarius), a corporation organized under
Philippine laws.44 WMCP was subsequently renamed "Tampakan Mineral Resources
45
Corporation." WMCP claims that at least 60% of the equity of Sagittarius is owned by Filipinos and/or
Filipino-owned corporations while about 40% is owned by Indophil Resources NL, an Australian
company.46 It further claims that by such sale and transfer of shares, "WMCP has ceased to be connected
in any way with WMC."47
By virtue of such sale and transfer, the DENR Secretary, by Order of December 18, 2001, 48 approved the
transfer and registration of the subject FTAA from WMCP to Sagittarius. Said Order, however, was
appealed by Lepanto Consolidated Mining Co. (Lepanto) to the Office of the President which upheld it by
Decision of July 23, 2002.49 Its motion for reconsideration having been denied by the Office of the
President by Resolution of November 12, 2002,50 Lepanto filed a petition for review51 before the Court of
Appeals. Incidentally, two other petitions for review related to the approval of the transfer and
registration of the FTAA to Sagittarius were recently resolved by this Court. 52
It bears stressing that this case has not been rendered moot either by the transfer and registration of the
FTAA to a Filipino-owned corporation or by the non-issuance of a temporary restraining order or a
preliminary injunction to stay the above-said July 23, 2002 decision of the Office of the President.53 The
validity of the transfer remains in dispute and awaits final judicial determination. This assumes, of course,
that such transfer cures the FTAA's alleged unconstitutionality, on which question judgment is reserved.
WMCP also points out that the original claimowners of the major mineralized areas included in the WMCP
FTAA, namely, Sagittarius, Tampakan Mining Corporation, and Southcot Mining Corporation, are all
Filipino-owned corporations,54 each of which was a holder of an approved Mineral Production Sharing
Agreement awarded in 1994, albeit their respective mineral claims were subsumed in the WMCP
FTAA;55 and that these three companies are the same companies that consolidated their interests in
Sagittarius to whom WMC sold its 100% equity in WMCP.56 WMCP concludes that in the event that the
FTAA is invalidated, the MPSAs of the three corporations would be revived and the mineral claims would
revert to their original claimants.57
These circumstances, while informative, are hardly significant in the resolution of this case, it involving the
validity of the FTAA, not the possible consequences of its invalidation.
Of the above-enumerated seven grounds cited by petitioners, as will be shown later, only the first and the
last need be delved into; in the latter, the discussion shall dwell only insofar as it questions the effectivity
of E. O. No. 279 by virtue of which order the questioned FTAA was forged.
I
Before going into the substantive issues, the procedural questions posed by respondents shall first be
tackled.
REQUISITES FOR JUDICIAL REVIEW
When an issue of constitutionality is raised, this Court can exercise its power of judicial review only if the
following requisites are present:
(1) The existence of an actual and appropriate case;
(2) A personal and substantial interest of the party raising the constitutional question;
(3) The exercise of judicial review is pleaded at the earliest opportunity; and
(4) The constitutional question is the lis mota of the case. 58
Respondents claim that the first three requisites are not present.
Section 1, Article VIII of the Constitution states that "(j)udicial power includes the duty of the courts of
justice to settle actual controversies involving rights which are legally demandable and enforceable." The
power of judicial review, therefore, is limited to the determination of actual cases and controversies. 59
An actual case or controversy means an existing case or controversy that is appropriate or ripe for
determination, not conjectural or anticipatory,60 lest the decision of the court would amount to an
advisory opinion.61 The power does not extend to hypothetical questions 62 since any attempt at
abstraction could only lead to dialectics and barren legal questions and to sterile conclusions unrelated to
actualities.63
"Legal standing" or locus standi has been defined as a personal and substantial interest in the case such
that the party has sustained or will sustain direct injury as a result of the governmental act that is being
challenged,64alleging more than a generalized grievance.65 The gist of the question of standing is whether
a party alleges "such personal stake in the outcome of the controversy as to assure that concrete
adverseness which sharpens the presentation of issues upon which the court depends for illumination of
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difficult constitutional questions."66Unless a person is injuriously affected in any of his constitutional As earlier stated, petitioners meet this requirement.
rights by the operation of statute or ordinance, he has no standing. 67
The challenge against the constitutionality of R.A. No. 7942 and DAO No. 96-40 likewise fulfills the
Petitioners traverse a wide range of sectors. Among them are La Bugal B'laan Tribal Association, Inc., a requisites of justiciability. Although these laws were not in force when the subject FTAA was entered into,
farmers and indigenous people's cooperative organized under Philippine laws representing a community the question as to their validity is ripe for adjudication.
actually affected by the mining activities of WMCP, members of said cooperative,68 as well as other
residents of areas also affected by the mining activities of WMCP. 69 These petitioners have standing to The WMCP FTAA provides:
raise the constitutionality of the questioned FTAA as they allege a personal and substantial injury. They
claim that they would suffer "irremediable displacement"70 as a result of the implementation of the FTAA 14.3 Future Legislation
allowing WMCP to conduct mining activities in their area of residence. They thus meet the appropriate
case requirement as they assert an interest adverse to that of respondents who, on the other hand, insist
Any term and condition more favourable to Financial &Technical Assistance Agreement contractors
on the FTAA's validity.
resulting from repeal or amendment of any existing law or regulation or from the enactment of a law,
regulation or administrative order shall be considered a part of this Agreement.
In view of the alleged impending injury, petitioners also have standing to assail the validity of E.O. No.
279, by authority of which the FTAA was executed.
It is undisputed that R.A. No. 7942 and DAO No. 96-40 contain provisions that are more favorable to
WMCP, hence, these laws, to the extent that they are favorable to WMCP, govern the FTAA.
Public respondents maintain that petitioners, being strangers to the FTAA, cannot sue either or both
contracting parties to annul it.71 In other words, they contend that petitioners are not real parties in
In addition, R.A. No. 7942 explicitly makes certain provisions apply to pre-existing agreements.
interest in an action for the annulment of contract.
SEC. 112. Non-impairment of Existing Mining/Quarrying Rights. – x x x That the provisions of Chapter XIV
Public respondents' contention fails. The present action is not merely one for annulment of contract but
on government share in mineral production-sharing agreement and of Chapter XVI on incentives of this
for prohibition and mandamus. Petitioners allege that public respondents acted without or in excess of
Act shall immediately govern and apply to a mining lessee or contractor unless the mining lessee or
jurisdiction in implementing the FTAA, which they submit is unconstitutional. As the case involves
contractor indicates his intention to the secretary, in writing, not to avail of said provisions x x x Provided,
constitutional questions, this Court is not concerned with whether petitioners are real parties in interest,
finally, That such leases, production-sharing agreements, financial or technical assistance agreements
but with whether they have legal standing. As held in Kilosbayan v. Morato:72
shall comply with the applicable provisions of this Act and its implementing rules and regulations.

x x x. "It is important to note . . . that standing because of its constitutional and public policy
As there is no suggestion that WMCP has indicated its intention not to avail of the provisions of Chapter
underpinnings, is very different from questions relating to whether a particular plaintiff is the real party in
XVI of R.A. No. 7942, it can safely be presumed that they apply to the WMCP FTAA.
interest or has capacity to sue. Although all three requirements are directed towards ensuring that only
certain parties can maintain an action, standing restrictions require a partial consideration of the merits,
as well as broader policy concerns relating to the proper role of the judiciary in certain areas.["] Misconstruing the application of the third requisite for judicial review – that the exercise of the review is
pleaded at the earliest opportunity – WMCP points out that the petition was filed only almost two years
(FRIEDENTHAL, KANE AND MILLER, CIVIL PROCEDURE 328 [1985])
after the execution of the FTAA, hence, not raised at the earliest opportunity.
Standing is a special concern in constitutional law because in some cases suits are brought not by parties
The third requisite should not be taken to mean that the question of constitutionality must be raised
who have been personally injured by the operation of a law or by official action taken, but by concerned
immediately after the execution of the state action complained of. That the question of constitutionality
citizens, taxpayers or voters who actually sue in the public interest. Hence, the question in standing is
has not been raised before is not a valid reason for refusing to allow it to be raised later. 73 A contrary rule
whether such parties have "alleged such a personal stake in the outcome of the controversy as to assure
that concrete adverseness which sharpens the presentation of issues upon which the court so largely would mean that a law, otherwise unconstitutional, would lapse into constitutionality by the mere failure
of the proper party to promptly file a case to challenge the same.
depends for illumination of difficult constitutional questions." (Baker v. Carr, 369 U.S. 186, 7 L.Ed.2d 633
[1962].)
PROPRIETY OF PROHIBITION AND MANDAMUS
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Before the effectivity in July 1997 of the Revised Rules of Civil Procedure, Section 2 of Rule 65 read:
SEC. 2. Petition for prohibition. – When the proceedings of any tribunal, corporation, board, or person,
whether exercising functions judicial or ministerial, are without or in excess of its or his jurisdiction, or
with grave abuse of discretion, and there is no appeal or any other plain, speedy, and adequate remedy in
the ordinary course of law, a 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 defendant to
desist from further proceeding in the action or matter specified therein.
Prohibition is a preventive remedy.74 It seeks a judgment ordering the defendant to desist from continuing
with the commission of an act perceived to be illegal.75
The petition for prohibition at bar is thus an appropriate remedy. While the execution of the contract
itself may be fait accompli, its implementation is not. Public respondents, in behalf of the Government,
have obligations to fulfill under said contract. Petitioners seek to prevent them from fulfilling such
obligations on the theory that the contract is unconstitutional and, therefore, void.
The propriety of a petition for prohibition being upheld, discussion of the propriety of the mandamus
aspect of the petition is rendered unnecessary.
HIERARCHY OF COURTS
The contention that the filing of this petition violated the rule on hierarchy of courts does not likewise lie.
The rule has been explained thus:
Between two courts of concurrent original jurisdiction, it is the lower court that should initially pass upon
the issues of a case. That way, as a particular case goes through the hierarchy of courts, it is shorn of all
but the important legal issues or those of first impression, which are the proper subject of attention of the
appellate court. This is a procedural rule borne of experience and adopted to improve the administration
of justice.
This Court has consistently enjoined litigants to respect the hierarchy of courts. Although this Court has
concurrent jurisdiction with the Regional Trial Courts and the Court of Appeals to issue writs of certiorari,
prohibition, mandamus, quo warranto, habeas corpus and injunction, such concurrence does not give a
party unrestricted freedom of choice of court forum. The resort to this Court's primary jurisdiction to
issue said writs shall be allowed only where the redress desired cannot be obtained in the appropriate
courts or where exceptional and compelling circumstances justify such invocation. We held in People v.
Cuaresma that:
A becoming regard for judicial hierarchy most certainly indicates that petitions for the issuance of
extraordinary writs against first level ("inferior") courts should be filed with the Regional Trial Court, and
those against the latter, with the Court of Appeals. A direct invocation of the Supreme Court's original
jurisdiction to issue these writs should be allowed only where there are special and important reasons
therefor, clearly and specifically set out in the petition. This is established policy. It is a policy necessary to
prevent inordinate demands upon the Court's time and attention which are better devoted to those
matters within its exclusive jurisdiction, and to prevent further over-crowding of the Court's docket x x
x.76 [Emphasis supplied.]
The repercussions of the issues in this case on the Philippine mining industry, if not the national economy,
as well as the novelty thereof, constitute exceptional and compelling circumstances to justify resort to
this Court in the first instance.
In all events, this Court has the discretion to take cognizance of a suit which does not satisfy the
requirements of an actual case or legal standing when paramount public interest is involved. 77 When the
issues raised are of paramount importance to the public, this Court may brush aside technicalities of
procedure.78
II
Petitioners contend that E.O. No. 279 did not take effect because its supposed date of effectivity came
after President Aquino had already lost her legislative powers under the Provisional Constitution.
And they likewise claim that the WMC FTAA, which was entered into pursuant to E.O. No. 279, violates
Section 2, Article XII of the Constitution because, among other reasons:
(1) It allows foreign-owned companies to extend more than mere financial or technical assistance
to the State in the exploitation, development, and utilization of minerals, petroleum, and other
mineral oils, and even permits foreign owned companies to "operate and manage mining
activities."
(2) It allows foreign-owned companies to extend both technical and financial assistance, instead
of "either technical or financial assistance."
To appreciate the import of these issues, a visit to the history of the pertinent constitutional provision,
the concepts contained therein, and the laws enacted pursuant thereto, is in order.
Section 2, Article XII reads in full:
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
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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.
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 fish-workers in rivers, lakes, bays, and
lagoons.
The President may enter into agreements with foreign-owned corporations involving either technical or
financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and
other mineral oils according to the general terms and conditions provided by law, based on real
contributions to the economic growth and general welfare of the country. In such agreements, the State
shall promote the development and use of local scientific and technical resources.
The President shall notify the Congress of every contract entered into in accordance with this provision,
within thirty days from its execution.
THE SPANISH REGIME AND THE REGALIAN DOCTRINE
The first sentence of Section 2 embodies the Regalian doctrine or jura regalia. Introduced by Spain into
these Islands, this feudal concept is based on the State's power of dominium, which is the capacity of the
State to own or acquire property.79
In its broad sense, the term "jura regalia" refers to royal rights, or those rights which the King has by
virtue of his prerogatives. In Spanish law, it refers to a right which the sovereign has over anything in
which a subject has a right of property or propriedad. These were rights enjoyed during feudal times by
the king as the sovereign.
The theory of the feudal system was that title to all lands was originally held by the King, and while the
use of lands was granted out to others who were permitted to hold them under certain conditions, the
King theoretically retained the title. By fiction of law, the King was regarded as the original proprietor of
all lands, and the true and only source of title, and from him all lands were held. The theory of jura regalia
was therefore nothing more than a natural fruit of conquest.80
The Philippines having passed to Spain by virtue of discovery and conquest, 81 earlier Spanish decrees
declared that "all lands were held from the Crown."82
The Regalian doctrine extends not only to land but also to "all natural wealth that may be found in the
bowels of the earth."83 Spain, in particular, recognized the unique value of natural resources, viewing
them, especially minerals, as an abundant source of revenue to finance its wars against other
nations.84 Mining laws during the Spanish regime reflected this perspective.85
THE AMERICAN OCCUPATION AND THE CONCESSION REGIME
By the Treaty of Paris of December 10, 1898, Spain ceded "the archipelago known as the Philippine
Islands" to the United States. The Philippines was hence governed by means of organic acts that were in
the nature of charters serving as a Constitution of the occupied territory from 1900 to 1935. 86 Among the
principal organic acts of the Philippines was the Act of Congress of July 1, 1902, more commonly known as
the Philippine Bill of 1902, through which the United States Congress assumed the administration of the
Philippine Islands.87 Section 20 of said Bill reserved the disposition of mineral lands of the public domain
from sale. Section 21 thereof allowed the free and open exploration, occupation and purchase of mineral
deposits not only to citizens of the Philippine Islands but to those of the United States as well:
Sec. 21. That all valuable mineral deposits in public lands in the Philippine Islands, both surveyed and
unsurveyed, are hereby declared to be free and open to exploration, occupation and purchase, and the
land in which they are found, to occupation and purchase, by citizens of the United States or of said
Islands: Provided, That when on any lands in said Islands entered and occupied as agricultural lands under
the provisions of this Act, but not patented, mineral deposits have been found, the working of such
mineral deposits is forbidden until the person, association, or corporation who or which has entered and
is occupying such lands shall have paid to the Government of said Islands such additional sum or sums as
will make the total amount paid for the mineral claim or claims in which said deposits are located equal to
the amount charged by the Government for the same as mineral claims.
Unlike Spain, the United States considered natural resources as a source of wealth for its nationals and
saw fit to allow both Filipino and American citizens to explore and exploit minerals in public lands, and to
grant patents to private mineral lands.88 A person who acquired ownership over a parcel of private
mineral land pursuant to the laws then prevailing could exclude other persons, even the State, from
exploiting minerals within his property.89Thus, earlier jurisprudence90 held that:
A valid and subsisting location of mineral land, made and kept up in accordance with the provisions of the
statutes of the United States, has the effect of a grant by the United States of the present and exclusive
possession of the lands located, and this exclusive right of possession and enjoyment continues during the
entire life of the location. x x x.
x x x.
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The discovery of minerals in the ground by one who has a valid mineral location perfects his claim and his
location not only against third persons, but also against the Government. x x x. [Italics in the original.]
The Regalian doctrine and the American system, therefore, differ in one essential respect. Under the
Regalian theory, mineral rights are not included in a grant of land by the state; under the American
doctrine, mineral rights are included in a grant of land by the government. 91
Section 21 also made possible the concession (frequently styled "permit", license" or
"lease")92 system.93 This was the traditional regime imposed by the colonial administrators for the
exploitation of natural resources in the extractive sector (petroleum, hard minerals, timber, etc.). 94
Under the concession system, the concessionaire makes a direct equity investment for the purpose of
exploiting a particular natural resource within a given area. 95 Thus, the concession amounts to complete
control by the concessionaire over the country's natural resource, for it is given exclusive and plenary
rights to exploit a particular resource at the point of extraction.96 In consideration for the right to exploit a
natural resource, the concessionaire either pays rent or royalty, which is a fixed percentage of the gross
proceeds.97
Later statutory enactments by the legislative bodies set up in the Philippines adopted the contractual
framework of the concession.98 For instance, Act No. 2932,99 approved on August 31, 1920, which
provided for the exploration, location, and lease of lands containing petroleum and other mineral oils and
gas in the Philippines, and Act No. 2719,100 approved on May 14, 1917, which provided for the leasing and
development of coal lands in the Philippines, both utilized the concession system. 101
THE 1935 CONSTITUTION AND THE NATIONALIZATION OF NATURAL RESOURCES
By the Act of United States Congress of March 24, 1934, popularly known as the Tydings-McDuffie Law,
the People of the Philippine Islands were authorized to adopt a constitution. 102 On July 30, 1934, the
Constitutional Convention met for the purpose of drafting a constitution, and the Constitution
subsequently drafted was approved by the Convention on February 8, 1935. 103 The Constitution was
submitted to the President of the United States on March 18, 1935. 104 On March 23, 1935, the President
of the United States certified that the Constitution conformed substantially with the provisions of the Act
of Congress approved on March 24, 1934.105 On May 14, 1935, the Constitution was ratified by the Filipino
people.106
The 1935 Constitution adopted the Regalian doctrine, declaring all natural resources of the Philippines,
including mineral lands and minerals, to be property belonging to the State. 107 As adopted in a republican
system, the medieval concept of jura regalia is stripped of royal overtones and ownership of the land is
vested in the State.108
Section 1, Article XIII, on Conservation and Utilization of Natural Resources, of the 1935 Constitution
provided:
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, 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 nationalization and conservation of the natural resources of the country was one of the fixed and
dominating objectives of the 1935 Constitutional Convention.109 One delegate relates:
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. 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. The delegates of 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.
The adoption of the principle of state ownership of the natural resources and of the Regalian doctrine was
considered to be a necessary starting point for the plan of nationalizing and conserving the natural
resources of the country. For with the establishment of the principle of state ownership of the natural
resources, it would not be hard to secure the recognition of the power of the State to control their
disposition, exploitation, development or utilization.110
The nationalization of the natural resources was intended (1) to insure their conservation for Filipino
posterity; (2) to serve as an instrument of national defense, helping prevent the extension to the country
of foreign control through peaceful economic penetration; and (3) to avoid making the Philippines a
source of international conflicts with the consequent danger to its internal security and independence. 111
The same Section 1, Article XIII also adopted the concession system, expressly permitting the State to
grant licenses, concessions, or leases for the exploitation, development, or utilization of any of the natural
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resources. Grants, however, were limited to Filipinos or entities at least 60% of the capital of which is
owned by Filipinos.lawph!l.ne+
The swell of nationalism that suffused the 1935 Constitution was radically diluted when on November
1946, the Parity Amendment, which came in the form of an "Ordinance Appended to the Constitution,"
was ratified in a plebiscite.112 The Amendment extended, from July 4, 1946 to July 3, 1974, the right to
utilize and exploit our natural resources to citizens of the United States and business enterprises owned
or controlled, directly or indirectly, by citizens of the United States:113
Notwithstanding the provision of section one, Article Thirteen, and section eight, Article Fourteen, of the
foregoing Constitution, during the effectivity of the Executive Agreement entered into by the President of
the Philippines with the President of the United States on the fourth of July, nineteen hundred and forty-
six, pursuant to the provisions of Commonwealth Act Numbered Seven hundred and thirty-three, but in
no case to extend beyond the third of July, nineteen hundred and seventy-four, the disposition,
exploitation, development, and utilization of all agricultural, timber, and mineral lands of the public
domain, waters, minerals, coals, petroleum, and other mineral oils, all forces and sources of potential
energy, and other natural resources of the Philippines, and the operation of public utilities, shall, if open
to any person, be open to citizens of the United States and to all forms of business enterprise owned or
controlled, directly or indirectly, by citizens of the United States in the same manner as to, and under the
same conditions imposed upon, citizens of the Philippines or corporations or associations owned or
controlled by citizens of the Philippines.
The Parity Amendment was subsequently modified by the 1954 Revised Trade Agreement, also known as
the Laurel-Langley Agreement, embodied in Republic Act No. 1355.114
THE PETROLEUM ACT OF 1949 AND THE CONCESSION SYSTEM
In the meantime, Republic Act No. 387,115 also known as the Petroleum Act of 1949, was approved on
June 18, 1949.
The Petroleum Act of 1949 employed the concession system for the exploitation of the nation's
petroleum resources. Among the kinds of concessions it sanctioned were exploration and exploitation
concessions, which respectively granted to the concessionaire the exclusive right to explore for116 or
develop117 petroleum within specified areas.
Concessions may be granted only to duly qualified persons 118 who have sufficient finances, organization,
resources, technical competence, and skills necessary to conduct the operations to be undertaken. 119
Nevertheless, the Government reserved the right to undertake such work itself. 120 This proceeded from
the theory that all natural deposits or occurrences of petroleum or natural gas in public and/or private
lands in the Philippines belong to the State.121 Exploration and exploitation concessions did not confer
upon the concessionaire ownership over the petroleum lands and petroleum deposits. 122 However, they
did grant concessionaires the right to explore, develop, exploit, and utilize them for the period and under
the conditions determined by the law.123
Concessions were granted at the complete risk of the concessionaire; the Government did not guarantee
the existence of petroleum or undertake, in any case, title warranty.124
Concessionaires were required to submit information as maybe required by the Secretary of Agriculture
and Natural Resources, including reports of geological and geophysical examinations, as well as
production reports.125 Exploration126 and exploitation127 concessionaires were also required to submit
work programs.lavvphi1.net
Exploitation concessionaires, in particular, were obliged to pay an annual exploitation tax, 128 the object of
which is to induce the concessionaire to actually produce petroleum, and not simply to sit on the
concession without developing or exploiting it. 129 These concessionaires were also bound to pay the
Government royalty, which was not less than 12½% of the petroleum produced and saved, less that
consumed in the operations of the concessionaire. 130 Under Article 66, R.A. No. 387, the exploitation tax
may be credited against the royalties so that if the concessionaire shall be actually producing enough oil,
it would not actually be paying the exploitation tax.131
Failure to pay the annual exploitation tax for two consecutive years, 132 or the royalty due to the
Government within one year from the date it becomes due, 133 constituted grounds for the cancellation of
the concession. In case of delay in the payment of the taxes or royalty imposed by the law or by the
concession, a surcharge of 1% per month is exacted until the same are paid.134
As a rule, title rights to all equipment and structures that the concessionaire placed on the land belong to
the exploration or exploitation concessionaire.135 Upon termination of such concession, the
concessionaire had a right to remove the same.136
The Secretary of Agriculture and Natural Resources was tasked with carrying out the provisions of the law,
through the Director of Mines, who acted under the Secretary's immediate supervision and control. 137 The
Act granted the Secretary the authority to inspect any operation of the concessionaire and to examine all
the books and accounts pertaining to operations or conditions related to payment of taxes and
royalties.138
The same law authorized the Secretary to create an Administration Unit and a Technical Board. 139 The
Administration Unit was charged, inter alia, with the enforcement of the provisions of the law. 140 The
Technical Board had, among other functions, the duty to check on the performance of concessionaires
and to determine whether the obligations imposed by the Act and its implementing regulations were
being complied with.141
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Victorio Mario A. Dimagiba, Chief Legal Officer of the Bureau of Energy Development, analyzed the
benefits and drawbacks of the concession system insofar as it applied to the petroleum industry:
Advantages of Concession. Whether it emphasizes income tax or royalty, the most positive aspect of the
concession system is that the State's financial involvement is virtually risk free and administration is
simple and comparatively low in cost. Furthermore, if there is a competitive allocation of the resource
leading to substantial bonuses and/or greater royalty coupled with a relatively high level of taxation,
revenue accruing to the State under the concession system may compare favorably with other financial
arrangements.
Disadvantages of Concession. There are, however, major negative aspects to this system. Because the
Government's role in the traditional concession is passive, it is at a distinct disadvantage in managing and
developing policy for the nation's petroleum resource. This is true for several reasons. First, even though
most concession agreements contain covenants requiring diligence in operations and production, this
establishes only an indirect and passive control of the host country in resource development. Second, and
more importantly, the fact that the host country does not directly participate in resource management
decisions inhibits its ability to train and employ its nationals in petroleum development. This factor could
delay or prevent the country from effectively engaging in the development of its resources. Lastly, a direct
role in management is usually necessary in order to obtain a knowledge of the international petroleum
industry which is important to an appreciation of the host country's resources in relation to those of other
countries.142
Other liabilities of the system have also been noted:
x x x there are functional implications which give the concessionaire great economic power arising from
its exclusive equity holding. This includes, first, appropriation of the returns of the undertaking, subject to
a modest royalty; second, exclusive management of the project; third, control of production of the natural
resource, such as volume of production, expansion, research and development; and fourth, exclusive
responsibility for downstream operations, like processing, marketing, and distribution. In short, even if
nominally, the state is the sovereign and owner of the natural resource being exploited, it has been shorn
of all elements of control over such natural resource because of the exclusive nature of the contractual
regime of the concession. The concession system, investing as it does ownership of natural resources,
constitutes a consistent inconsistency with the principle embodied in our Constitution that natural
resources belong to the state and shall not be alienated, not to mention the fact that the concession was
the bedrock of the colonial system in the exploitation of natural resources. 143
Eventually, the concession system failed for reasons explained by Dimagiba:
Notwithstanding the good intentions of the Petroleum Act of 1949, the concession system could not have
properly spurred sustained oil exploration activities in the country, since it assumed that such a capital-
intensive, high risk venture could be successfully undertaken by a single individual or a small company. In
effect, concessionaires' funds were easily exhausted. Moreover, since the concession system practically
closed its doors to interested foreign investors, local capital was stretched to the limits. The old system
also failed to consider the highly sophisticated technology and expertise required, which would be
available only to multinational companies.144
A shift to a new regime for the development of natural resources thus seemed imminent.
PRESIDENTIAL DECREE NO. 87, THE 1973 CONSTITUTION AND THE SERVICE CONTRACT SYSTEM
The promulgation on December 31, 1972 of Presidential Decree No. 87, 145 otherwise known as The Oil
Exploration and Development Act of 1972 signaled such a transformation. P.D. No. 87 permitted the
government to explore for and produce indigenous petroleum through "service contracts."146
"Service contracts" is a term that assumes varying meanings to different people, and it has carried many
names in different countries, like "work contracts" in Indonesia, "concession agreements" in Africa,
"production-sharing agreements" in the Middle East, and "participation agreements" in Latin
America.147 A functional definition of "service contracts" in the Philippines is provided as follows:
A service contract is a contractual arrangement for engaging in the exploitation and development of
petroleum, mineral, energy, land and other natural resources by which a government or its agency, or a
private person granted a right or privilege by the government authorizes the other party (service
contractor) to engage or participate in the exercise of such right or the enjoyment of the privilege, in that
the latter provides financial or technical resources, undertakes the exploitation or production of a given
resource, or directly manages the productive enterprise, operations of the exploration and exploitation of
the resources or the disposition of marketing or resources. 148
In a service contract under P.D. No. 87, service and technology are furnished by the service contractor for
which it shall be entitled to the stipulated service fee.149 The contractor must be technically competent
and financially capable to undertake the operations required in the contract. 150
Financing is supposed to be provided by the Government to which all petroleum produced belongs. 151 In
case the Government is unable to finance petroleum exploration operations, the contractor may furnish
services, technology and financing, and the proceeds of sale of the petroleum produced under the
contract shall be the source of funds for payment of the service fee and the operating expenses due the
contractor.152 The contractor shall undertake, manage and execute petroleum operations, subject to the
government overseeing the management of the operations.153 The contractor provides all necessary
services and technology and the requisite financing, performs the exploration work obligations, and
assumes all exploration risks such that if no petroleum is produced, it will not be entitled to
reimbursement.154 Once petroleum in commercial quantity is discovered, the contractor shall operate the
field on behalf of the government.155
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P.D. No. 87 prescribed minimum terms and conditions for every service contract. 156 It also granted the
contractor certain privileges, including exemption from taxes and payment of tariff duties,157 and
permitted the repatriation of capital and retention of profits abroad. 158
Ostensibly, the service contract system had certain advantages over the concession regime. 159 It has been
opined, though, that, in the Philippines, our concept of a service contract, at least in the petroleum
industry, was basically a concession regime with a production-sharing element.160
On January 17, 1973, then President Ferdinand E. Marcos proclaimed the ratification of a new
Constitution.161Article XIV on the National Economy and Patrimony contained provisions similar to the
1935 Constitution with regard to Filipino participation in the nation's natural resources. Section 8, Article
XIV thereof provides:
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.
While Section 9 of the same Article maintained the Filipino-only policy in the enjoyment of natural
resources, it also allowed Filipinos, upon authority of the Batasang Pambansa, to enter into service
contracts with any person or entity for the exploration or utilization of natural resources.
Sec. 9. The disposition, exploration, development, exploitation, or utilization of any of the natural
resources of the Philippines shall be limited to citizens, or to corporations or associations at least sixty per
centum of which is owned by such citizens. The Batasang Pambansa, in the national interest, may allow
such citizens, corporations or associations to enter into service contracts for financial, technical,
management, or other forms of assistance with any person or entity for the exploration, or utilization of
any of the natural resources. Existing valid and binding service contracts for financial, technical,
management, or other forms of assistance are hereby recognized as such. [Emphasis supplied.]
The concept of service contracts, according to one delegate, was borrowed from the methods followed by
India, Pakistan and especially Indonesia in the exploration of petroleum and mineral oils. 162 The provision
allowing such contracts, according to another, was intended to "enhance the proper development of our
natural resources since Filipino citizens lack the needed capital and technical know-how which are
essential in the proper exploration, development and exploitation of the natural resources of the
country."163
The original idea was to authorize the government, not private entities, to enter into service contracts
with foreign entities.164 As finally approved, however, a citizen or private entity could be allowed by the
National Assembly to enter into such service contract.165 The prior approval of the National Assembly was
deemed sufficient to protect the national interest.166 Notably, none of the laws allowing service contracts
were passed by the Batasang Pambansa. Indeed, all of them were enacted by presidential decree.
On March 13, 1973, shortly after the ratification of the new Constitution, the President promulgated
Presidential Decree No. 151.167 The law allowed Filipino citizens or entities which have acquired lands of
the public domain or which own, hold or control such lands to enter into service contracts for financial,
technical, management or other forms of assistance with any foreign persons or entity for the
exploration, development, exploitation or utilization of said lands. 168
Presidential Decree No. 463,169 also known as The Mineral Resources Development Decree of 1974, was
enacted on May 17, 1974. Section 44 of the decree, as amended, provided that a lessee of a mining claim
may enter into a service contract with a qualified domestic or foreign contractor for the exploration,
development and exploitation of his claims and the processing and marketing of the product thereof.
Presidential Decree No. 704170 (The Fisheries Decree of 1975), approved on May 16, 1975, allowed
Filipinos engaged in commercial fishing to enter into contracts for financial, technical or other forms of
assistance with any foreign person, corporation or entity for the production, storage, marketing and
processing of fish and fishery/aquatic products.171
Presidential Decree No. 705172 (The Revised Forestry Code of the Philippines), approved on May 19, 1975,
allowed "forest products licensees, lessees, or permitees to enter into service contracts for financial,
technical, management, or other forms of assistance . . . with any foreign person or entity for the
exploration, development, exploitation or utilization of the forest resources." 173
Yet another law allowing service contracts, this time for geothermal resources, was Presidential Decree
No. 1442,174 which was signed into law on June 11, 1978. Section 1 thereof authorized the Government to
enter into service contracts for the exploration, exploitation and development of geothermal resources
with a foreign contractor who must be technically and financially capable of undertaking the operations
required in the service contract.
Thus, virtually the entire range of the country's natural resources –from petroleum and minerals to
geothermal energy, from public lands and forest resources to fishery products – was well covered by
apparent legal authority to engage in the direct participation or involvement of foreign persons or
corporations (otherwise disqualified) in the exploration and utilization of natural resources through
service contracts.175
THE 1987 CONSTITUTION AND TECHNICAL OR FINANCIAL ASSISTANCE AGREEMENTS
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After the February 1986 Edsa Revolution, Corazon C. Aquino took the reins of power under a
revolutionary government. On March 25, 1986, President Aquino issued Proclamation No.
3,176 promulgating the Provisional Constitution, more popularly referred to as the Freedom Constitution.
By authority of the same Proclamation, the President created a Constitutional Commission (CONCOM) to
draft a new constitution, which took effect on the date of its ratification on February 2, 1987. 177
The 1987 Constitution retained the Regalian doctrine. The first sentence of Section 2, Article XII states:
"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."
Like the 1935 and 1973 Constitutions before it, the 1987 Constitution, in the second sentence of the same
provision, prohibits the alienation of natural resources, except agricultural lands.
The third sentence of the same paragraph is new: "The exploration, development and utilization of
natural resources shall be under the full control and supervision of the State." The constitutional policy of
the State's "full control and supervision" over natural resources proceeds from the concept of jura regalia,
as well as the recognition of the importance of the country's natural resources, not only for national
economic development, but also for its security and national defense.178 Under this provision, the State
assumes "a more dynamic role" in the exploration, development and utilization of natural resources. 179
Conspicuously absent in Section 2 is the provision in the 1935 and 1973 Constitutions authorizing the
State to grant licenses, concessions, or leases for the exploration, exploitation, development, or utilization
of natural resources. By such omission, the utilization of inalienable lands of public domain through
"license, concession or lease" is no longer allowed under the 1987 Constitution.180
Having omitted the provision on the concession system, Section 2 proceeded to introduce "unfamiliar
language":181
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.
Consonant with the State's "full supervision and control" over natural resources, Section 2 offers the State
two "options."182 One, the State may directly undertake these activities itself; or two, it may enter into co-
production, joint venture, or production-sharing agreements with Filipino citizens, or entities at least 60%
of whose capital is owned by such citizens.
A third option is found in the third paragraph of the same section:
The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as
cooperative fish farming, with priority to subsistence fishermen and fish-workers in rivers, lakes, bays, and
lagoons.
While the second and third options are limited only to Filipino citizens or, in the case of the former, to
corporations or associations at least 60% of the capital of which is owned by Filipinos, a fourth allows the
participation of foreign-owned corporations. The fourth and fifth paragraphs of Section 2 provide:
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.
Although Section 2 sanctions the participation of foreign-owned corporations in the exploration,
development, and utilization of natural resources, it imposes certain limitations or conditions to
agreements with such corporations.
First, the parties to FTAAs. Only the President, in behalf of the State, may enter into these
agreements, and only with corporations. By contrast, under the 1973 Constitution, a Filipino
citizen, corporation or association may enter into a service contract with a "foreign person or
entity."
Second, the size of the activities: only large-scale exploration, development, and utilization is
allowed. The term "large-scale usually refers to very capital-intensive activities."183
Third, the natural resources subject of the activities is restricted to minerals, petroleum and
other mineral oils, the intent being to limit service contracts to those areas where Filipino capital
may not be sufficient.184
Fourth, consistency with the provisions of statute. The agreements must be in accordance with
the terms and conditions provided by law.
Fifth, Section 2 prescribes certain standards for entering into such agreements. The agreements
must be based on real contributions to economic growth and general welfare of the country.
Sixth, the agreements must contain rudimentary stipulations for the promotion of the
development and use of local scientific and technical resources.
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Seventh, the notification requirement. The President shall notify Congress of every financial or
technical assistance agreement entered into within thirty days from its execution.
Finally, the scope of the agreements. While the 1973 Constitution referred to "service contracts
for financial, technical, management, or other forms of assistance" the 1987 Constitution
provides for "agreements. . . involving either financial or technical assistance." It bears noting
that the phrases "service contracts" and "management or other forms of assistance" in the
earlier constitution have been omitted.
By virtue of her legislative powers under the Provisional Constitution,185 President Aquino, on July 10,
1987, signed into law E.O. No. 211 prescribing the interim procedures in the processing and approval of
applications for the exploration, development and utilization of minerals. The omission in the 1987
Constitution of the term "service contracts" notwithstanding, the said E.O. still referred to them in Section
2 thereof:
Sec. 2. Applications for the exploration, development and utilization of mineral resources, including
renewal applications and applications for approval of operating agreements and mining service contracts,
shall be accepted and processed and may be approved x x x. [Emphasis supplied.]
The same law provided in its Section 3 that the "processing, evaluation and approval of all mining
applications . . . operating agreements and service contracts . . . shall be governed by Presidential Decree
No. 463, as amended, other existing mining laws, and their implementing rules and regulations. . . ."
As earlier stated, on the 25th also of July 1987, the President issued E.O. No. 279 by authority of which
the subject WMCP FTAA was executed on March 30, 1995.
On March 3, 1995, President Ramos signed into law R.A. No. 7942. Section 15 thereof declares that the
Act "shall govern the exploration, development, utilization, and processing of all mineral resources." Such
declaration notwithstanding, R.A. No. 7942 does not actually cover all the modes through which the State
may undertake the exploration, development, and utilization of natural resources.
The State, being the owner of the natural resources, is accorded the primary power and responsibility in
the exploration, development and utilization thereof. As such, it may undertake these activities through
four modes:
The State may directly undertake such activities.
(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.186
Except to charge the Mines and Geosciences Bureau of the DENR with performing researches and
surveys,187and a passing mention of government-owned or controlled corporations,188 R.A. No. 7942 does
not specify how the State should go about the first mode. The third mode, on the other hand, is governed
by Republic Act No. 7076189 (the People's Small-Scale Mining Act of 1991) and other pertinent laws. 190 R.A.
No. 7942 primarily concerns itself with the second and fourth modes.
Mineral production sharing, co-production and joint venture agreements are collectively classified by R.A.
No. 7942 as "mineral agreements."191 The Government participates the least in a mineral production
sharing agreement (MPSA). In an MPSA, the Government grants the contractor 192 the exclusive right to
conduct mining operations within a contract area193 and shares in the gross output.194 The MPSA
contractor provides the financing, technology, management and personnel necessary for the agreement's
implementation.195 The total government share in an MPSA is the excise tax on mineral products under
Republic Act No. 7729,196 amending Section 151(a) of the National Internal Revenue Code, as amended. 197
In a co-production agreement (CA),198 the Government provides inputs to the mining operations other
than the mineral resource,199 while in a joint venture agreement (JVA), where the Government enjoys the
greatest participation, the Government and the JVA contractor organize a company with both parties
having equity shares.200 Aside from earnings in equity, the Government in a JVA is also entitled to a share
in the gross output.201 The Government may enter into a CA202 or JVA203 with one or more contractors.
The Government's share in a CA or JVA is set out in Section 81 of the law:
The share of the Government in co-production and joint venture agreements shall be negotiated by the
Government and the contractor taking into consideration the: (a) capital investment of the project, (b) the
risks involved, (c) contribution of the project to the economy, and (d) other factors that will provide for a
fair and equitable sharing between the Government and the contractor. The Government shall also be
entitled to compensations for its other contributions which shall be agreed upon by the parties, and shall
consist, among other things, the contractor's income tax, excise tax, special allowance, withholding tax
due from the contractor's foreign stockholders arising from dividend or interest payments to the said
foreign stockholders, in case of a foreign national and all such other taxes, duties and fees as provided for
under existing laws.
All mineral agreements grant the respective contractors the exclusive right to conduct mining operations
and to extract all mineral resources found in the contract area. 204 A "qualified person" may enter into any
of the mineral agreements with the Government.205 A "qualified person" is
any citizen of the Philippines with capacity to contract, or a corporation, partnership, association, or
cooperative organized or authorized for the purpose of engaging in mining, with technical and financial
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capability to undertake mineral resources development and duly registered in accordance with law at
least sixty per centum (60%) of the capital of which is owned by citizens of the Philippines x x x. 206
The fourth mode involves "financial or technical assistance agreements." An FTAA is defined as "a
contract involving financial or technical assistance for large-scale exploration, development, and
utilization of natural resources."207 Any qualified person with technical and financial capability to
undertake large-scale exploration, development, and utilization of natural resources in the Philippines
may enter into such agreement directly with the Government through the DENR. 208 For the purpose of
granting an FTAA, a legally organized foreign-owned corporation (any corporation, partnership,
association, or cooperative duly registered in accordance with law in which less than 50% of the capital is
owned by Filipino citizens)209 is deemed a "qualified person."210
Other than the difference in contractors' qualifications, the principal distinction between mineral
agreements and FTAAs is the maximum contract area to which a qualified person may hold or be
granted.211 "Large-scale" under R.A. No. 7942 is determined by the size of the contract area, as opposed
to the amount invested (US $50,000,000.00), which was the standard under E.O. 279.
Like a CA or a JVA, an FTAA is subject to negotiation.212 The Government's contributions, in the form of
taxes, in an FTAA is identical to its contributions in the two mineral agreements, save that in an FTAA:
The collection of Government share in financial or technical assistance agreement shall commence after
the financial or technical assistance agreement contractor has fully recovered its pre-operating expenses,
exploration, and development expenditures, inclusive.213
III
Having examined the history of the constitutional provision and statutes enacted pursuant thereto, a
consideration of the substantive issues presented by the petition is now in order.
THE EFFECTIVITY OF EXECUTIVE ORDER NO. 279
Petitioners argue that E.O. No. 279, the law in force when the WMC FTAA was executed, did not come
into effect.
E.O. No. 279 was signed into law by then President Aquino on July 25, 1987, two days before the opening
of Congress on July 27, 1987.214 Section 8 of the E.O. states that the same "shall take effect immediately."
This provision, according to petitioners, runs counter to Section 1 of E.O. No. 200, 215 which provides:
SECTION 1. Laws shall take effect after fifteen days following the completion of their publication either in
the Official Gazette or in a newspaper of general circulation in the Philippines, unless it is otherwise
provided.216[Emphasis supplied.]
On that premise, petitioners contend that E.O. No. 279 could have only taken effect fifteen days after its
publication at which time Congress had already convened and the President's power to legislate had
ceased.
Respondents, on the other hand, counter that the validity of E.O. No. 279 was settled in Miners
Association of the Philippines v. Factoran, supra. This is of course incorrect for the issue in Miners
Association was not the validity of E.O. No. 279 but that of DAO Nos. 57 and 82 which were issued
pursuant thereto.
Nevertheless, petitioners' contentions have no merit.
It bears noting that there is nothing in E.O. No. 200 that prevents a law from taking effect on a date other
than – even before – the 15-day period after its publication. Where a law provides for its own date of
effectivity, such date prevails over that prescribed by E.O. No. 200. Indeed, this is the very essence of the
phrase "unless it is otherwise provided" in Section 1 thereof. Section 1, E.O. No. 200, therefore, applies
only when a statute does not provide for its own date of effectivity.
What is mandatory under E.O. No. 200, and what due process requires, as this Court held in Tañada v.
Tuvera,217 is the publication of the law for without such notice and publication, there would be no basis
for the application of the maxim "ignorantia legis n[eminem] excusat." It would be the height of injustice
to punish or otherwise burden a citizen for the transgression of a law of which he had no notice
whatsoever, not even a constructive one.
While the effectivity clause of E.O. No. 279 does not require its publication, it is not a ground for its
invalidation since the Constitution, being "the fundamental, paramount and supreme law of the nation,"
is deemed written in the law.218 Hence, the due process clause,219 which, so Tañada held, mandates the
publication of statutes, is read into Section 8 of E.O. No. 279. Additionally, Section 1 of E.O. No. 200 which
provides for publication "either in the Official Gazette or in a newspaper of general circulation in the
Philippines," finds suppletory application. It is significant to note that E.O. No. 279 was actually published
in the Official Gazette220 on August 3, 1987.
From a reading then of Section 8 of E.O. No. 279, Section 1 of E.O. No. 200, and Tañada v. Tuvera, this
Court holds that E.O. No. 279 became effective immediately upon its publication in the Official Gazette on
August 3, 1987.
That such effectivity took place after the convening of the first Congress is irrelevant. At the time
President Aquino issued E.O. No. 279 on July 25, 1987, she was still validly exercising legislative powers
under the Provisional Constitution.221 Article XVIII (Transitory Provisions) of the 1987 Constitution
explicitly states:
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Sec. 6. The incumbent President shall continue to exercise legislative powers until the first Congress is
convened.
The convening of the first Congress merely precluded the exercise of legislative powers by President
Aquino; it did not prevent the effectivity of laws she had previously enacted.
There can be no question, therefore, that E.O. No. 279 is an effective, and a validly enacted, statute.
THE CONSTITUTIONALITY OF THE WMCP FTAA
Petitioners submit that, in accordance with the text of Section 2, Article XII of the Constitution, FTAAs
should be limited to "technical or financial assistance" only. They observe, however, that, contrary to the
language of the Constitution, the WMCP FTAA allows WMCP, a fully foreign-owned mining corporation, to
extend more than mere financial or technical assistance to the State, for it permits WMCP to manage and
operate every aspect of the mining activity. 222
Petitioners' submission is well-taken. It is a cardinal rule in the interpretation of constitutions that the
instrument must be so construed as to give effect to the intention of the people who adopted it. 223 This
intention is to be sought in the constitution itself, and the apparent meaning of the words is to be taken
as expressing it, except in cases where that assumption would lead to absurdity, ambiguity, or
contradiction.224 What the Constitution says according to the text of the provision, therefore, compels
acceptance and negates the power of the courts to alter it, based on the postulate that the framers and
the people mean what they say.225 Accordingly, following the literal text of the Constitution, assistance
accorded by foreign-owned corporations in the large-scale exploration, development, and utilization of
petroleum, minerals and mineral oils should be limited to "technical" or "financial" assistance only.
terminology 'service contract' was avoided [by the Constitution], the concept it represented was not."
They add that "[t]he concept is embodied in the phrase 'agreements involving financial or technical
assistance.'"229 And point out how members of the CONCOM referred to these agreements as "service
contracts." For instance:
SR. TAN. Am I correct in thinking that the only difference between these future service contracts
and the past service contracts under Mr. Marcos is the general law to be enacted by the
legislature and the notification of Congress by the President? That is the only difference, is it not?
MR. VILLEGAS. That is right.
SR. TAN. So those are the safeguards[?]
MR. VILLEGAS. Yes. There was no law at all governing service contracts before.
SR. TAN. Thank you, Madam President. 230 [Emphasis supplied.]
WMCP also cites the following statements of Commissioners Gascon, Garcia, Nolledo and Tadeo
who alluded to service contracts as they explained their respective votes in the approval of the
draft Article:
MR. GASCON. Mr. Presiding Officer, I vote no primarily because of two reasons: One, the
provision on service contracts. I felt that if we would constitutionalize any provision on service
contracts, this should always be with the concurrence of Congress and not guided only by a
general law to be promulgated by Congress. x x x.231 [Emphasis supplied.]

WMCP nevertheless submits that the word "technical" in the fourth paragraph of Section 2 of E.O. No. x x x.
279 encompasses a "broad number of possible services," perhaps, "scientific and/or technological in
basis."226 It thus posits that it may also well include "the area of management or operations . . . so long as
MR. GARCIA. Thank you.
such assistance requires specialized knowledge or skills, and are related to the exploration, development
and utilization of mineral resources."227
I vote no. x x x.
This Court is not persuaded. As priorly pointed out, the phrase "management or other forms of
Service contracts are given constitutional legitimization in Section 3, even when they have been
assistance" in the 1973 Constitution was deleted in the 1987 Constitution, which allows only "technical or
proven to be inimical to the interests of the nation, providing as they do the legal loophole for
financial assistance." Casus omisus pro omisso habendus est. A person, object or thing omitted from an
the exploitation of our natural resources for the benefit of foreign interests. They constitute a
enumeration must be held to have been omitted intentionally.228 As will be shown later, the management
serious negation of Filipino control on the use and disposition of the nation's natural resources,
or operation of mining activities by foreign contractors, which is the primary feature of service contracts,
especially with regard to those which are nonrenewable.232 [Emphasis supplied.]
was precisely the evil that the drafters of the 1987 Constitution sought to eradicate.

xxx
Respondents insist that "agreements involving technical or financial assistance" is just another term for
service contracts. They contend that the proceedings of the CONCOM indicate "that although the
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MR. NOLLEDO. While there are objectionable provisions in the Article on National Economy and
Patrimony, going over said provisions meticulously, setting aside prejudice and personalities will
reveal that the article contains a balanced set of provisions. I hope the forthcoming Congress will
implement such provisions taking into account that Filipinos should have real control over our
economy and patrimony, and if foreign equity is permitted, the same must be subordinated to
the imperative demands of the national interest.
x x x.
It is also my understanding that service contracts involving foreign corporations or entities are
resorted to only when no Filipino enterprise or Filipino-controlled enterprise could possibly
undertake the exploration or exploitation of our natural resources and that compensation under
such contracts cannot and should not equal what should pertain to ownership of capital. In other
words, the service contract should not be an instrument to circumvent the basic provision, that
the exploration and exploitation of natural resources should be truly for the benefit of Filipinos.
Thank you, and I vote yes.233 [Emphasis supplied.]
x x x.
MR. TADEO. Nais ko lamang ipaliwanag ang aking boto.
Matapos suriin ang kalagayan ng Pilipinas, ang saligang suliranin, pangunahin ang salitang
"imperyalismo." Ang ibig sabihin nito ay ang sistema ng lipunang pinaghaharian ng iilang
monopolyong kapitalista at ang salitang "imperyalismo" ay buhay na buhay sa National Economy
and Patrimony na nating ginawa. Sa pamamagitan ng salitang "based on," naroroon na ang free
trade sapagkat tayo ay mananatiling tagapagluwas ng hilaw na sangkap at tagaangkat ng yaring
produkto. Pangalawa, naroroon pa rin ang parity rights, ang service contract, ang 60-40 equity sa
natural resources. Habang naghihirap ang sambayanang Pilipino, ginagalugad naman ng mga
dayuhan ang ating likas na yaman. Kailan man ang Article on National Economy and Patrimony ay
hindi nagpaalis sa pagkaalipin ng ating ekonomiya sa kamay ng mga dayuhan. Ang solusyon sa
suliranin ng bansa ay dalawa lamang: ang pagpapatupad ng tunay na reporma sa lupa at ang
national industrialization. Ito ang tinatawag naming pagsikat ng araw sa Silangan. Ngunit ang mga
landlords and big businessmen at ang mga komprador ay nagsasabi na ang free trade na ito, ang
kahulugan para sa amin, ay ipinipilit sa ating sambayanan na ang araw ay sisikat sa Kanluran.
Kailan man hindi puwedeng sumikat ang araw sa Kanluran. I vote no. 234 [Emphasis supplied.]
This Court is likewise not persuaded.
As earlier noted, the phrase "service contracts" has been deleted in the 1987 Constitution's Article on
National Economy and Patrimony. If the CONCOM intended to retain the concept of service contracts
under the 1973 Constitution, it could have simply adopted the old terminology ("service contracts")
instead of employing new and unfamiliar terms ("agreements . . . involving either technical or financial
assistance"). Such a difference between the language of a provision in a revised constitution and that of a
similar provision in the preceding constitution is viewed as indicative of a difference in purpose. 235 If, as
respondents suggest, the concept of "technical or financial assistance" agreements is identical to that of
"service contracts," the CONCOM would not have bothered to fit the same dog with a new collar. To
uphold respondents' theory would reduce the first to a mere euphemism for the second and render the
change in phraseology meaningless.
An examination of the reason behind the change confirms that technical or financial assistance
agreements are not synonymous to service contracts.
[T]he Court in construing a Constitution should bear in mind the object sought to be accomplished by its
adoption, and the evils, if any, sought to be prevented or remedied. A doubtful provision will be examined
in light of the history of the times, and the condition and circumstances under which the Constitution was
framed. The object is to ascertain the reason which induced the framers of the Constitution to enact the
particular provision and the purpose sought to be accomplished thereby, in order to construe the whole
as to make the words consonant to that reason and calculated to effect that purpose. 236
As the following question of Commissioner Quesada and Commissioner Villegas' answer shows the
drafters intended to do away with service contracts which were used to circumvent the capitalization
(60%-40%) requirement:
MS. QUESADA. The 1973 Constitution used the words "service contracts." In this particular
Section 3, is there a safeguard against the possible control of foreign interests if the Filipinos go
into coproduction with them?
MR. VILLEGAS. Yes. In fact, the deletion of the phrase "service contracts" was our first attempt to
avoid some of the abuses in the past regime in the use of service contracts to go around the 60-
40 arrangement. The safeguard that has been introduced – and this, of course can be refined – is
found in Section 3, lines 25 to 30, where Congress will have to concur with the President on any
agreement entered into between a foreign-owned corporation and the government involving
technical or financial assistance for large-scale exploration, development and utilization of
natural resources.237 [Emphasis supplied.]
In a subsequent discussion, Commissioner Villegas allayed the fears of Commissioner Quesada
regarding the participation of foreign interests in Philippine natural resources, which was
supposed to be restricted to Filipinos.
MS. QUESADA. Another point of clarification is the phrase "and utilization of natural resources
shall be under the full control and supervision of the State." In the 1973 Constitution, this was
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limited to citizens of the Philippines; but it was removed and substituted by "shall be under the
full control and supervision of the State." Was the concept changed so that these particular
resources would be limited to citizens of the Philippines? Or would these resources only be
under the full control and supervision of the State; meaning, noncitizens would have access to
these natural resources? Is that the understanding?
MR. VILLEGAS. No, Mr. Vice-President, if the Commissioner reads the next sentence, it states:
Such activities may be directly undertaken by the State, or it may enter into co-production, joint venture,
production-sharing agreements with Filipino citizens.
So we are still limiting it only to Filipino citizens.
x x x.
MS. QUESADA. Going back to Section 3, the section suggests that:
The exploration, development, and utilization of natural resources… may be directly undertaken by the
State, or it may enter into co-production, joint venture or production-sharing agreement with . . .
corporations or associations at least sixty per cent of whose voting stock or controlling interest is owned
by such citizens.
Lines 25 to 30, on the other hand, suggest that in the large-scale exploration, development and utilization
of natural resources, the President with the concurrence of Congress may enter into agreements with
foreign-owned corporations even for technical or financial assistance.
I wonder if this part of Section 3 contradicts the second part. I am raising this point for fear that foreign
investors will use their enormous capital resources to facilitate the actual exploitation or exploration,
development and effective disposition of our natural resources to the detriment of Filipino investors. I am
not saying that we should not consider borrowing money from foreign sources. What I refer to is that
foreign interest should be allowed to participate only to the extent that they lend us money and give us
technical assistance with the appropriate government permit. In this way, we can insure the enjoyment of
our natural resources by our own people.
MR. VILLEGAS. Actually, the second provision about the President does not permit foreign investors to
participate. It is only technical or financial assistance – they do not own anything – but on conditions that
have to be determined by law with the concurrence of Congress. So, it is very restrictive.
If the Commissioner will remember, this removes the possibility for service contracts which we said
yesterday were avenues used in the previous regime to go around the 60-40 requirement.238 [Emphasis
supplied.]
The present Chief Justice, then a member of the CONCOM, also referred to this limitation in scope in
proposing an amendment to the 60-40 requirement:
MR. DAVIDE. May I be allowed to explain the proposal?
MR. MAAMBONG. Subject to the three-minute rule, Madam President.
MR. DAVIDE. It will not take three minutes.
The Commission had just approved the Preamble. In the Preamble we clearly stated that the Filipino
people are sovereign and that one of the objectives for the creation or establishment of a government is
to conserve and develop the national patrimony. The implication is that the national patrimony or our
natural resources are exclusively reserved for the Filipino people. No alien must be allowed to enjoy,
exploit and develop our natural resources. As a matter of fact, that principle proceeds from the fact that
our natural resources are gifts from God to the Filipino people and it would be a breach of that special
blessing from God if we will allow aliens to exploit our natural resources.
I voted in favor of the Jamir proposal because it is not really exploitation that we granted to the alien
corporations but only for them to render financial or technical assistance. It is not for them to enjoy our
natural resources. Madam President, our natural resources are depleting; our population is increasing by
leaps and bounds. Fifty years from now, if we will allow these aliens to exploit our natural resources,
there will be no more natural resources for the next generations of Filipinos. It may last long if we will
begin now. Since 1935 the aliens have been allowed to enjoy to a certain extent the exploitation of our
natural resources, and we became victims of foreign dominance and control. The aliens are interested in
coming to the Philippines because they would like to enjoy the bounty of nature exclusively intended for
Filipinos by God.
And so I appeal to all, for the sake of the future generations, that if we have to pray in the Preamble "to
preserve and develop the national patrimony for the sovereign Filipino people and for the generations to
come," we must at this time decide once and for all that our natural resources must be reserved only to
Filipino citizens.
Thank you.239 [Emphasis supplied.]
The opinion of another member of the CONCOM is persuasive 240 and leaves no doubt as to the intention
of the framers to eliminate service contracts altogether. He writes:
Paragraph 4 of Section 2 specifies large-scale, capital-intensive, highly technological undertakings for
which the President may enter into contracts with foreign-owned corporations, and enunciates strict
conditions that should govern such contracts. x x x.
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This provision balances the need for foreign capital and technology with the need to maintain the national
sovereignty. It recognizes the fact that as long as Filipinos can formulate their own terms in their own production, joint venture,
territory, there is no danger of relinquishing sovereignty to foreign interests. production sharing agreements
with Filipino citizens or
Are service contracts allowed under the new Constitution? No. Under the new Constitution, foreign corporations or associations sixty
per cent of whose voting stock or
investors (fully alien-owned) can NOT participate in Filipino enterprises except to provide: (1) Technical
controlling interest is owned by
Assistance for highly technical enterprises; and (2) Financial Assistance for large-scale enterprises. such citizens for a period of not
more than twenty-five years,
The intent of this provision, as well as other provisions on foreign investments, is to prevent the practice renewable for not more than
(prevalent in the Marcos government) of skirting the 60/40 equation using the cover of service twenty-five years and under such
contracts.241 [Emphasis supplied.] terms and conditions as may be
provided by law. In case as to
water rights for irrigation, water
Furthermore, it appears that Proposed Resolution No. 496,242 which was the draft Article on National supply, fisheries, or industrial
Economy and Patrimony, adopted the concept of "agreements . . . involving either technical or financial uses other than the development
assistance" contained in the "Draft of the 1986 U.P. Law Constitution Project" (U.P. Law draft) which was of water power, beneficial use
taken into consideration during the deliberation of the CONCOM.243 The former, as well as Article XII, as may be the measure and limit of
adopted, employed the same terminology, as the comparative table below shows: the grant.
production-sharing agreements
with Filipino citizens or
corporations or associations at
least sixty per cent of whose
voting stock or controlling
interest is owned by such
citizens. Such agreements shall
be for a period of twenty-five
years, renewable for not more
than twenty-five years, and
under such term 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 for water power,
beneficial use may be the
measure and limit of the grant.
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 case 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.

DRAFT OF THE UP LAW
CONSTITUTION PROJECT
Sec. 1. All lands of the public
domain, waters, minerals, coal,
petroleum and other mineral oils,
all forces of potential energy,
fisheries, flora and fauna and
other natural resources of the
Philippines 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. Such activities may be
directly undertaken by the state,
or it may enter into co-
PROPOSED RESOLUTION NO. 496
OF THE CONSTITUTIONAL
COMMISSION
Sec. 3. All lands of the public
domain, waters, minerals, coal,
petroleum and other mineral oils,
all forces of potential energy,
fisheries, forests, 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. Such activities may be
directly undertaken by the State,
or it may enter into co-
production, joint venture,
ARTICLE XII OF THE 1987
CONSTITUTION
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,
The National Assembly may by
law allow small scale utilization of
natural resources by Filipino
citizens.
The National Assembly, may, by
two-thirds vote of all its members
by special law provide the terms
and conditions under which a
foreign-owned corporation may
enter into agreements with the
government involving either
technical or financial
assistance for large-scale
exploration, development, or
utilization of natural resources.
[Emphasis supplied.]
The Congress may by law allow
small-scale utilization of natural
resources by Filipino citizens, as
well as cooperative fish farming
in rivers, lakes, bays, and lagoons.
The President with the
concurrence of Congress, by
special law, shall provide the
terms and conditions under
which a foreign-owned
corporation may enter into
agreements with the government
involving either technical or
financial assistance for large-
scale exploration, development,
and utilization of natural
resources. [Emphasis supplied.]
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 fish-workers in
rivers, lakes, bays, and lagoons.
The President may enter into
agreements with foreign-owned
corporations involving either
technical or financial
assistance for large-scale
exploration, development, and
utilization of minerals,
petroleum, and other mineral oils
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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. [Emphasis
supplied.]
The President shall notify the
Congress of every contract
entered into in accordance with
this provision, within thirty days
from its execution.
The insights of the proponents of the U.P. Law draft are, therefore, instructive in interpreting the phrase
"technical or financial assistance."
In his position paper entitled Service Contracts: Old Wine in New Bottles?, Professor Pacifico A. Agabin,
who was a member of the working group that prepared the U.P. Law draft, criticized service contracts for
they "lodge exclusive management and control of the enterprise to the service contractor, which is
reminiscent of the old concession regime. Thus, notwithstanding the provision of the Constitution that
natural resources belong to the State, and that these shall not be alienated, the service contract system
renders nugatory the constitutional provisions cited." 244He elaborates:
Looking at the Philippine model, we can discern the following vestiges of the concession regime, thus:
1. Bidding of a selected area, or leasing the choice of the area to the interested party and then
negotiating the terms and conditions of the contract; (Sec. 5, P.D. 87)
5. Ownership of equipment, machinery, fixed assets, and other properties remain with
contractor (Sec. 12, P.D. 87);
6. Repatriation of capital and retention of profits abroad guaranteed to the contractor (Sec. 13,
P.D. 87); and
7. While title to the petroleum discovered may nominally be in the name of the government, the
contractor has almost unfettered control over its disposition and sale, and even the domestic
requirements of the country is relegated to a pro rata basis (Sec. 8).
In short, our version of the service contract is just a rehash of the old concession regime x x x. Some
people have pulled an old rabbit out of a magician's hat, and foisted it upon us as a new and different
animal.
The service contract as we know it here is antithetical to the principle of sovereignty over our natural
resources restated in the same article of the [1973] Constitution containing the provision for service
contracts. If the service contractor happens to be a foreign corporation, the contract would also run
counter to the constitutional provision on nationalization or Filipinization, of the exploitation of our
natural resources.245 [Emphasis supplied. Underscoring in the original.]
Professor Merlin M. Magallona, also a member of the working group, was harsher in his reproach of the
system:
x x x the nationalistic phraseology of the 1935 [Constitution] was retained by the [1973] Charter, but the
essence of nationalism was reduced to hollow rhetoric. The 1973 Charter still provided that the
exploitation or development of the country's natural resources be limited to Filipino citizens or
corporations owned or controlled by them. However, the martial-law Constitution allowed them, once
these resources are in their name, to enter into service contracts with foreign investors for financial,
technical, management, or other forms of assistance. Since foreign investors have the capital resources,
the actual exploitation and development, as well as the effective disposition, of the country's natural
resources, would be under their direction, and control, relegating the Filipino investors to the role of
second-rate partners in joint ventures.

2. Management of the enterprise vested on the contractor, including operation of the field if
petroleum is discovered; (Sec. 8, P.D. 87)
3. Control of production and other matters such as expansion and development; (Sec. 8)
4. Responsibility for downstream operations – marketing, distribution, and processing may be
with the contractor (Sec. 8);
Through the instrumentality of the service contract, the 1973 Constitution had legitimized at the highest
level of state policy that which was prohibited under the 1973 Constitution, namely: the exploitation of
the country's natural resources by foreign nationals. The drastic impact of [this] constitutional change
becomes more pronounced when it is considered that the active party to any service contract may be a
corporation wholly owned by foreign interests. In such a case, the citizenship requirement is completely
set aside, permitting foreign corporations to obtain actual possession, control, and [enjoyment] of the
country's natural resources.246 [Emphasis supplied.]
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Accordingly, Professor Agabin recommends that:
Recognizing the service contract for what it is, we have to expunge it from the Constitution and reaffirm
ownership over our natural resources. That is the only way we can exercise effective control over our
natural resources.
This should not mean complete isolation of the country's natural resources from foreign investment.
Other contract forms which are less derogatory to our sovereignty and control over natural resources –
like technical assistance agreements, financial assistance [agreements], co-production agreements, joint
ventures, production-sharing – could still be utilized and adopted without violating constitutional
provisions. In other words, we can adopt contract forms which recognize and assert our sovereignty and
ownership over natural resources, and where the foreign entity is just a pure contractor instead of the
beneficial owner of our economic resources.247 [Emphasis supplied.]
Still another member of the working group, Professor Eduardo Labitag, proposed that:
2. Service contracts as practiced under the 1973 Constitution should be discouraged, instead the
government may be allowed, subject to authorization by special law passed by an extraordinary majority
to enter into either technical or financial assistance. This is justified by the fact that as presently worded in
the 1973 Constitution, a service contract gives full control over the contract area to the service contractor,
for him to work, manage and dispose of the proceeds or production. It was a subterfuge to get around the
nationality requirement of the constitution.248 [Emphasis supplied.]
In the annotations on the proposed Article on National Economy and Patrimony, the U.P. Law draft
summarized the rationale therefor, thus:
5. The last paragraph is a modification of the service contract provision found in Section 9, Article XIV of
the 1973 Constitution as amended. This 1973 provision shattered the framework of nationalism in our
fundamental law (see Magallona, "Nationalism and its Subversion in the Constitution"). Through the
service contract, the 1973 Constitution had legitimized that which was prohibited under the 1935
constitution—the exploitation of the country's natural resources by foreign nationals. Through the service
contract, acts prohibited by the Anti-Dummy Law were recognized as legitimate arrangements. Service
contracts lodge exclusive management and control of the enterprise to the service contractor, not unlike
the old concession regime where the concessionaire had complete control over the country's natural
resources, having been given exclusive and plenary rights to exploit a particular resource and, in effect,
having been assured of ownership of that resource at the point of extraction (see Agabin, "Service
Contracts: Old Wine in New Bottles"). Service contracts, hence, are antithetical to the principle of
sovereignty over our natural resources, as well as the constitutional provision on nationalization or
Filipinization of the exploitation of our natural resources.
Under the proposed provision, only technical assistance or financial assistance agreements may be
entered into, and only for large-scale activities. These are contract forms which recognize and assert our
sovereignty and ownership over natural resources since the foreign entity is just a pure contractor and
not a beneficial owner of our economic resources. The proposal recognizes the need for capital and
technology to develop our natural resources without sacrificing our sovereignty and control over such
resources by the safeguard of a special law which requires two-thirds vote of all the members of the
Legislature. This will ensure that such agreements will be debated upon exhaustively and thoroughly in
the National Assembly to avert prejudice to the nation.249 [Emphasis supplied.]
The U.P. Law draft proponents viewed service contracts under the 1973 Constitution as grants of
beneficial ownership of the country's natural resources to foreign owned corporations. While, in theory,
the State owns these natural resources – and Filipino citizens, their beneficiaries – service contracts
actually vested foreigners with the right to dispose, explore for, develop, exploit, and utilize the same.
Foreigners, not Filipinos, became the beneficiaries of Philippine natural resources. This arrangement is
clearly incompatible with the constitutional ideal of nationalization of natural resources, with the Regalian
doctrine, and on a broader perspective, with Philippine sovereignty.
The proponents nevertheless acknowledged the need for capital and technical know-how in the large-
scale exploitation, development and utilization of natural resources – the second paragraph of the
proposed draft itself being an admission of such scarcity. Hence, they recommended a compromise to
reconcile the nationalistic provisions dating back to the 1935 Constitution, which reserved all natural
resources exclusively to Filipinos, and the more liberal 1973 Constitution, which allowed foreigners to
participate in these resources through service contracts. Such a compromise called for the adoption of a
new system in the exploration, development, and utilization of natural resources in the form of technical
agreements or financial agreements which, necessarily, are distinct concepts from service contracts.
The replacement of "service contracts" with "agreements… involving either technical or financial
assistance," as well as the deletion of the phrase "management or other forms of assistance," assumes
greater significance when note is taken that the U.P. Law draft proposed other equally crucial changes
that were obviously heeded by the CONCOM. These include the abrogation of the concession system and
the adoption of new "options" for the State in the exploration, development, and utilization of natural
resources. The proponents deemed these changes to be more consistent with the State's ownership of,
and its "full control and supervision" (a phrase also employed by the framers) over, such resources. The
Project explained:
3. In line with the State ownership of natural resources, the State should take a more active role in the
exploration, development, and utilization of natural resources, than the present practice of granting
licenses, concessions, or leases – hence the provision that said activities shall be under the full control and
supervision of the State. There are three major schemes by which the State could undertake these
activities: first, directly by itself; second, by virtue of co-production, joint venture, production sharing
agreements with Filipino citizens or corporations or associations sixty per cent (60%) of the voting stock or
controlling interests of which are owned by such citizens; or third, with a foreign-owned corporation, in
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cases of large-scale exploration, development, or utilization of natural resources through agreements
involving either technical or financial assistance only. x x x.
At present, under the licensing concession or lease schemes, the government benefits from such benefits
only through fees, charges, ad valorem taxes and income taxes of the exploiters of our natural resources.
Such benefits are very minimal compared with the enormous profits reaped by theses licensees, grantees,
concessionaires. Moreover, some of them disregard the conservation of natural resources and do not
protect the environment from degradation. The proposed role of the State will enable it to a greater share
in the profits – it can also actively husband its natural resources and engage in developmental programs
that will be beneficial to them.
4. Aside from the three major schemes for the exploration, development, and utilization of our natural
resources, the State may, by law, allow Filipino citizens to explore, develop, utilize natural resources in
small-scale. This is in recognition of the plight of marginal fishermen, forest dwellers, gold panners, and
others similarly situated who exploit our natural resources for their daily sustenance and survival. 250
Professor Agabin, in particular, after taking pains to illustrate the similarities between the two systems,
concluded that the service contract regime was but a "rehash" of the concession system. "Old wine in
new bottles," as he put it. The rejection of the service contract regime, therefore, is in consonance with
the abolition of the concession system.
In light of the deliberations of the CONCOM, the text of the Constitution, and the adoption of other
proposed changes, there is no doubt that the framers considered and shared the intent of the U.P. Law
proponents in employing the phrase "agreements . . . involving either technical or financial assistance."
While certain commissioners may have mentioned the term "service contracts" during the CONCOM
deliberations, they may not have been necessarily referring to the concept of service contracts under the
1973 Constitution. As noted earlier, "service contracts" is a term that assumes different meanings to
different people.251 The commissioners may have been using the term loosely, and not in its technical and
legal sense, to refer, in general, to agreements concerning natural resources entered into by the
Government with foreign corporations. These loose statements do not necessarily translate to the
adoption of the 1973 Constitution provision allowing service contracts.
It is true that, as shown in the earlier quoted portions of the proceedings in CONCOM, in response to Sr.
Tan's question, Commissioner Villegas commented that, other than congressional notification, the only
difference between "future" and "past" "service contracts" is the requirement of a general law as there
were no laws previously authorizing the same. 252 However, such remark is far outweighed by his more
categorical statement in his exchange with Commissioner Quesada that the draft article "does not permit
foreign investors to participate" in the nation's natural resources – which was exactly what service
contracts did – except to provide "technical or financial assistance." 253
In the case of the other commissioners, Commissioner Nolledo himself clarified in his work that the
present charter prohibits service contracts. 254 Commissioner Gascon was not totally averse to foreign
participation, but favored stricter restrictions in the form of majority congressional concurrence. 255 On the
other hand, Commissioners Garcia and Tadeo may have veered to the extreme side of the spectrum and
their objections may be interpreted as votes against any foreign participation in our natural resources
whatsoever.
WMCP cites Opinion No. 75, s. 1987,256 and Opinion No. 175, s. 1990257 of the Secretary of Justice,
expressing the view that a financial or technical assistance agreement "is no different in concept" from
the service contract allowed under the 1973 Constitution. This Court is not, however, bound by this
interpretation. When an administrative or executive agency renders an opinion or issues a statement of
policy, it merely interprets a pre-existing law; and the administrative interpretation of the law is at best
advisory, for it is the courts that finally determine what the law means.258
In any case, the constitutional provision allowing the President to enter into FTAAs with foreign-owned
corporations is an exception to the rule that participation in the nation's natural resources is reserved
exclusively to Filipinos. Accordingly, such provision must be construed strictly against their enjoyment by
non-Filipinos. As Commissioner Villegas emphasized, the provision is "very restrictive." 259 Commissioner
Nolledo also remarked that "entering into service contracts is an exception to the rule on protection of
natural resources for the interest of the nation and, therefore, being an exception, it should be subject,
whenever possible, to stringent rules."260Indeed, exceptions should be strictly but reasonably construed;
they extend only so far as their language fairly warrants and all doubts should be resolved in favor of the
general provision rather than the exception.261
With the foregoing discussion in mind, this Court finds that R.A. No. 7942 is invalid insofar as said Act
authorizes service contracts. Although the statute employs the phrase "financial and technical
agreements" in accordance with the 1987 Constitution, it actually treats these agreements as service
contracts that grant beneficial ownership to foreign contractors contrary to the fundamental law.
Section 33, which is found under Chapter VI (Financial or Technical Assistance Agreement) of R.A. No.
7942 states:
SEC. 33. Eligibility.—Any qualified person with technical and financial capability to undertake large-scale
exploration, development, and utilization of mineral resources in the Philippines may enter into a financial
or technical assistance agreement directly with the Government through the Department. [Emphasis
supplied.]
"Exploration," as defined by R.A. No. 7942,
means the searching or prospecting for mineral resources by geological, geochemical or geophysical
surveys, remote sensing, test pitting, trending, drilling, shaft sinking, tunneling or any other means for the
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purpose of determining the existence, extent, quantity and quality thereof and the feasibility of mining
them for profit.262
A legally organized foreign-owned corporation may be granted an exploration permit, 263 which vests it
with the right to conduct exploration for all minerals in specified areas,264 i.e., to enter, occupy and
explore the same.265Eventually, the foreign-owned corporation, as such permittee, may apply for a
financial and technical assistance agreement.266
"Development" is the work undertaken to explore and prepare an ore body or a mineral deposit for
mining, including the construction of necessary infrastructure and related facilities. 267
"Utilization" "means the extraction or disposition of minerals." 268 A stipulation that the proponent shall
dispose of the minerals and byproducts produced at the highest price and more advantageous terms and
conditions as provided for under the implementing rules and regulations is required to be incorporated in
every FTAA.269
A foreign-owned/-controlled corporation may likewise be granted a mineral processing
permit.270 "Mineral processing" is the milling, beneficiation or upgrading of ores or minerals and rocks or
by similar means to convert the same into marketable products.271
An FTAA contractor makes a warranty that the mining operations shall be conducted in accordance with
the provisions of R.A. No. 7942 and its implementing rules272 and for work programs and minimum
expenditures and commitments.273 And it obliges itself to furnish the Government records of geologic,
accounting, and other relevant data for its mining operation. 274
"Mining operation," as the law defines it, means mining activities involving exploration, feasibility,
development, utilization, and processing.275
The underlying assumption in all these provisions is that the foreign contractor manages the mineral
resources, just like the foreign contractor in a service contract.
Furthermore, Chapter XII of the Act grants foreign contractors in FTAAs the same auxiliary mining rights
that it grants contractors in mineral agreements (MPSA, CA and JV).276 Parenthetically, Sections 72 to 75
use the term "contractor," without distinguishing between FTAA and mineral agreement contractors. And
so does "holders of mining rights" in Section 76. A foreign contractor may even convert its FTAA into a
mineral agreement if the economic viability of the contract area is found to be inadequate to justify large-
scale mining operations,277provided that it reduces its equity in the corporation, partnership, association
or cooperative to forty percent (40%).278
Finally, under the Act, an FTAA contractor warrants that it "has or has access to all the financing,
managerial, and technical expertise. . . ."279 This suggests that an FTAA contractor is bound to provide
some management assistance – a form of assistance that has been eliminated and, therefore, proscribed
by the present Charter.
By allowing foreign contractors to manage or operate all the aspects of the mining operation, the above-
cited provisions of R.A. No. 7942 have in effect conveyed beneficial ownership over the nation's mineral
resources to these contractors, leaving the State with nothing but bare title thereto.
Moreover, the same provisions, whether by design or inadvertence, permit a circumvention of the
constitutionally ordained 60%-40% capitalization requirement for corporations or associations engaged in
the exploitation, development and utilization of Philippine natural resources.
In sum, the Court finds the following provisions of R.A. No. 7942 to be violative of Section 2, Article XII of
the Constitution:
(1) The proviso in Section 3 (aq), which defines "qualified person," to wit:
Provided, That a legally organized foreign-owned corporation shall be deemed a qualified person
for purposes of granting an exploration permit, financial or technical assistance agreement or
mineral processing permit.
(2) Section 23,280 which specifies the rights and obligations of an exploration permittee, insofar as
said section applies to a financial or technical assistance agreement,
(3) Section 33, which prescribes the eligibility of a contractor in a financial or technical assistance
agreement;
(4) Section 35,281 which enumerates the terms and conditions for every financial or technical
assistance agreement;
(5) Section 39,282 which allows the contractor in a financial and technical assistance agreement to
convert the same into a mineral production-sharing agreement;
(6) Section 56,283 which authorizes the issuance of a mineral processing permit to a contractor in
a financial and technical assistance agreement;
The following provisions of the same Act are likewise void as they are dependent on the foregoing
provisions and cannot stand on their own:
(1) Section 3 (g),284 which defines the term "contractor," insofar as it applies to a financial or
technical assistance agreement.
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Section 34,285 which prescribes the maximum contract area in a financial or technical assistance
agreements;
Section 36,286 which allows negotiations for financial or technical assistance agreements;
Section 37,287 which prescribes the procedure for filing and evaluation of financial or technical
assistance agreement proposals;
Section 38, 288
which limits the term of financial or technical assistance agreements;
Section 40,289 which allows the assignment or transfer of financial or technical assistance
agreements;
Section 41,290 which allows the withdrawal of the contractor in an FTAA;
291
The second and third paragraphs of Section 81, which provide for the Government's share in a
financial and technical assistance agreement; and
Section 90,292 which provides for incentives to contractors in FTAAs insofar as it applies to said
contractors;
When the parts of the statute are so mutually dependent and connected as conditions, considerations,
inducements, or compensations for each other, as to warrant a belief that the legislature intended them
as a whole, and that if all could not be carried into effect, the legislature would not pass the residue
independently, then, if some parts are unconstitutional, all the provisions which are thus dependent,
conditional, or connected, must fall with them.293
There can be little doubt that the WMCP FTAA itself is a service contract.
Section 1.3 of the WMCP FTAA grants WMCP "the exclusive right to explore, exploit, utilise[,] process and
dispose of all Minerals products and by-products thereof that may be produced from the Contract
Area."294 The FTAA also imbues WMCP with the following rights:
(b) to extract and carry away any Mineral samples from the Contract area for the purpose of
conducting tests and studies in respect thereof;
(c) to determine the mining and treatment processes to be utilised during the
Development/Operating Period and the project facilities to be constructed during the
Development and Construction Period;
(d) have the right of possession of the Contract Area, with full right of ingress and egress and the
right to occupy the same, subject to the provisions of Presidential Decree No. 512 (if applicable)
and not be prevented from entry into private ands by surface owners and/or occupants thereof
when prospecting, exploring and exploiting for minerals therein;
xxx
(f) to construct roadways, mining, drainage, power generation and transmission facilities and all
other types of works on the Contract Area;
(g) to erect, install or place any type of improvements, supplies, machinery and other equipment
relating to the Mining Operations and to use, sell or otherwise dispose of, modify, remove or
diminish any and all parts thereof;
(h) enjoy, subject to pertinent laws, rules and regulations and the rights of third Parties,
easement rights and the use of timber, sand, clay, stone, water and other natural resources in
the Contract Area without cost for the purposes of the Mining Operations;
xxx
(i) have the right to mortgage, charge or encumber all or part of its interest and obligations under
this Agreement, the plant, equipment and infrastructure and the Minerals produced from the
Mining Operations;
x x x. 295
All materials, equipment, plant and other installations erected or placed on the Contract Area remain the
property of WMCP, which has the right to deal with and remove such items within twelve months from
the termination of the FTAA.296
Pursuant to Section 1.2 of the FTAA, WMCP shall provide "[all] financing, technology, management and
personnel necessary for the Mining Operations." The mining company binds itself to "perform all Mining
Operations . . . providing all necessary services, technology and financing in connection therewith," 297 and
to "furnish all materials, labour, equipment and other installations that may be required for carrying on all
Mining Operations."298> WMCP may make expansions, improvements and replacements of the mining
facilities and may add such new facilities as it considers necessary for the mining operations.299
These contractual stipulations, taken together, grant WMCP beneficial ownership over natural resources
that properly belong to the State and are intended for the benefit of its citizens. These stipulations are
abhorrent to the 1987 Constitution. They are precisely the vices that the fundamental law seeks to avoid,
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the evils that it aims to suppress. Consequently, the contract from which they spring must be struck
down.
In arguing against the annulment of the FTAA, WMCP invokes the Agreement on the Promotion and
Protection of Investments between the Philippine and Australian Governments, which was signed in
Manila on January 25, 1995 and which entered into force on December 8, 1995.
x x x. Article 2 (1) of said treaty states that it applies to investments whenever made and thus the fact that
[WMCP's] FTAA was entered into prior to the entry into force of the treaty does not preclude the
Philippine Government from protecting [WMCP's] investment in [that] FTAA. Likewise, Article 3 (1) of the
treaty provides that "Each Party shall encourage and promote investments in its area by investors of the
other Party and shall [admit] such investments in accordance with its Constitution, Laws, regulations and
investment policies" and in Article 3 (2), it states that "Each Party shall ensure that investments are
accorded fair and equitable treatment." The latter stipulation indicates that it was intended to impose an
obligation upon a Party to afford fair and equitable treatment to the investments of the other Party and
that a failure to provide such treatment by or under the laws of the Party may constitute a breach of the
treaty. Simply stated, the Philippines could not, under said treaty, rely upon the inadequacies of its own
laws to deprive an Australian investor (like [WMCP]) of fair and equitable treatment by invalidating
[WMCP's] FTAA without likewise nullifying the service contracts entered into before the enactment of RA
7942 such as those mentioned in PD 87 or EO 279.
This becomes more significant in the light of the fact that [WMCP's] FTAA was executed not by a mere
Filipino citizen, but by the Philippine Government itself, through its President no less, which, in entering
into said treaty is assumed to be aware of the existing Philippine laws on service contracts over the
exploration, development and utilization of natural resources. The execution of the FTAA by the Philippine
Government assures the Australian Government that the FTAA is in accordance with existing Philippine
laws.300 [Emphasis and italics by private respondents.]
The invalidation of the subject FTAA, it is argued, would constitute a breach of said treaty which, in turn,
would amount to a violation of Section 3, Article II of the Constitution adopting the generally accepted
principles of international law as part of the law of the land. One of these generally accepted principles is
pacta sunt servanda, which requires the performance in good faith of treaty obligations.
Even assuming arguendo that WMCP is correct in its interpretation of the treaty and its assertion that
"the Philippines could not . . . deprive an Australian investor (like [WMCP]) of fair and equitable treatment
by invalidating [WMCP's] FTAA without likewise nullifying the service contracts entered into before the
enactment of RA 7942 . . .," the annulment of the FTAA would not constitute a breach of the treaty
invoked. For this decision herein invalidating the subject FTAA forms part of the legal system of the
Philippines.301 The equal protection clause302 guarantees that such decision shall apply to all contracts
belonging to the same class, hence, upholding rather than violating, the "fair and equitable treatment"
stipulation in said treaty.
One other matter requires clarification. Petitioners contend that, consistent with the provisions of Section
2, Article XII of the Constitution, the President may enter into agreements involving "either technical or
financial assistance" only. The agreement in question, however, is a technical and financial assistance
agreement.
Petitioners' contention does not lie. To adhere to the literal language of the Constitution would lead to
absurd consequences.303 As WMCP correctly put it:
x x x such a theory of petitioners would compel the government (through the President) to enter into
contract with two (2) foreign-owned corporations, one for financial assistance agreement and with the
other, for technical assistance over one and the same mining area or land; or to execute two (2) contracts
with only one foreign-owned corporation which has the capability to provide both financial and technical
assistance, one for financial assistance and another for technical assistance, over the same mining area.
Such an absurd result is definitely not sanctioned under the canons of constitutional
construction.304 [Underscoring in the original.]
Surely, the framers of the 1987 Charter did not contemplate such an absurd result from their use of
"either/or." A constitution is not to be interpreted as demanding the impossible or the impracticable; and
unreasonable or absurd consequences, if possible, should be avoided. 305 Courts are not to give words a
meaning that would lead to absurd or unreasonable consequences and a literal interpretation is to be
rejected if it would be unjust or lead to absurd results.306 That is a strong argument against its
adoption.307 Accordingly, petitioners' interpretation must be rejected.
The foregoing discussion has rendered unnecessary the resolution of the other issues raised by the
petition.
WHEREFORE, the petition is GRANTED. The Court hereby declares unconstitutional and void:
(1) The following provisions of Republic Act No. 7942:
(a) The proviso in Section 3 (aq),
(b) Section 23,
(c) Section 33 to 41,
(d) Section 56,
(e) The second and third paragraphs of Section 81, and
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18 Id., sec. 75.

(f) Section 90.
19 Id., sec. 74.
20 Id., sec. 76.
(2) All provisions of Department of Environment and Natural Resources Administrative Order 96- 21 Id., ch. XIII.
40, s. 1996 which are not in conformity with this Decision, and 22 Id., secs. 20-22.
23 Id., secs. 43, 45.

(3) The Financial and Technical Assistance Agreement between the Government of the Republic 24 Id., secs. 46-49, 51-52.
25 Id., ch. IX.
of the Philippines and WMC Philippines, Inc.
26 Id., ch. X.
27 Id., ch. XI.
SO ORDERED. 28 Id., ch. XIV.
29 Id., ch. XV.
Davide, Jr., C.J., Puno, Quisumbing, Carpio, Corona, Callejo, Sr., and Tinga. JJ., concur. 30 Id., ch. XVI.

Vitug, J., see Separate Opinion. 31 Id., ch. XIX.

32 Id., ch. XVII.
Panganiban, J., see Separate Opinion.
33 Section 116, R.A. No. 7942 provides that the Act "shall take effect thirty (30) days following its complete
Ynares-Santiago, Sandoval-Gutierrez and Austria-Martinez, JJ., joins J., Panganiban's separate opinion.
Azcuna, no part, one of the parties was a client. publication in two (2) newspapers of general circulation in the Philippines."
34 WMCP FTAA, sec. 4.1.
35 Rollo, p. 22.
Footnotes 36 Ibid.
1 Appears as "Nequito" in the caption of the Petition but "Nequinto" in the body. (Rollo, p. 12.) 37 Ibid.
2 As appears in the body of the Petition. (Id., at 13.) The caption of the petition does not include Louel A. 38 Ibid. The number has since risen to 129 applications when the petitioners filed their Reply. (Rollo, p. 363.)
Peria as one of the petitioners but the name of his father Elpidio V. Peria appears therein. 39 Id., at 22.
3 Appears as "Kaisahan Tungo sa Kaunlaran ng Kanayunan at Repormang Pansakahan (KAISAHAN)" in the
40 Id., at 23-24.
caption of the Petition by "Philippine Kaisahan Tungo sa Kaunlaran ng Kanayunan at Repormang 41 Id., at 52-53. Emphasis and underscoring supplied.
Pansakahan (KAISAHAN)" in the body. (Id., at 14.) 42 WMCP FTAA, p. 2.
4 Erroneously designated in the Petition as "Western Mining Philippines Corporation." (Id., at 212.)
43 Rollo, p. 220.
Subsequently, WMC (Philippines), Inc. was renamed "Tampakan Mineral Resources Corporation." (Id., at 44 Id., at 754.
778.) 45 Vide Note 4.
5 An Act Instituting A New System of Mineral Resources Exploration, Development, Utilization and
46 Rollo, p. 754.
Conservation. 47 Id., at 755.
6 Authorizing the Secretary of Environment and Natural Resources to Negotiate and Conclude Joint Venture,
48 Id., at 761-763.
Co-Production, or Production-Sharing Agreements for the Exploration, Development and Utilization of 49 Id., at 764-776.
Mineral Resources, and Prescribing the Guidelines for such Agreements and those Agreements involving 50 Id., at 782-786.
Technical or Financial Assistance by Foreign-Owned Corporations for Large-Scale Exploration, Development 51 Docketed as C.A.-G. R. No. 74161.
and Utilization of Minerals. 52 G.R. No. 153885, entitled Lepanto Consolidated Mining Company v. WMC Resources International Pty.
7 Exec. Order No. 279 (1987), sec. 4.
8 Rep. Act No. 7942 (1995), sec. 15.
Ltd., et al., decided September 24, 2003 and G.R. No. 156214, entitled Lepanto Mining Company v. WMC
9 Id., sec. 26 (a)-(c).
Resources International Pty. Ltd., WMC (Philippines), Inc., Southcot Mining Corporation, Tampakan Mining
10 Id., sec. 29.
Corporation and Sagittarius Mines, Inc., decided September 23, 2003.
53 Section 12, Rule 43 of the Rules of Court, invoked by private respondent, states, " The appeal shall not
11 Id., sec. 30.
12 Id., sec. 31.
stay the award, judgment, final order or resolution sought to be reviewed unless the Court of Appeals shall
13 Id., sec. 32.
direct otherwise upon such terms as it may deem just."
54 WMCP's Reply (dated May 6, 2003) to Petitioners' Comment (to the Manifestation and Supplemental
14 Id., ch. VI.
15 Id., secs. 27 and 33 in relation to sec. 3 (aq).
Manifestation), p. 3.
55 Ibid.
16 Id., sec. 72.
56 Ibid.
17 Id., sec. 73.
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57 WMCP's Reply (dated May 6, 2003) to Petitioners' Comment (to the Manifestation and Supplemental
Manifestation), p. 4.
58 Philippine Constitution Association v. Enriquez, 235 SCRA 506 (1994); National Economic Protectionism
Association v. Ongpin, 171 SCRA 657 (1989); Dumlao v. COMELEC, 95 SCRA 392 (1980).
59 Dumlao v. COMELEC, supra.
60 Board of Optometry v. Colet, 260 SCRA 88 (1996).
61 Dumlao v. COMELEC, supra.
62 Subic Bay Metropolitan Authority v. Commission on Elections, 262 SCRA 492 (1996).
63 Angara v. Electoral Commission, 63 Phil. 139 (1936).
64 Integrated Bar of the Philippines v. Zamora, 338 SCRA 81, 100 (2000); Dumlao v. COMELEC, supra; People
v. Vera, 65 Phil. 56 (1937).
65 Dumlao v. COMELEC, supra.
66 Integrated Bar of the Philippines v. Zamora, supra.
67 Ermita-Malate Hotel and Motel Operators Association, Inc. v. City Mayor of Manila¸ 21 SCRA 449 (1967).
68 Petitioners Roberto P. Amloy, Raqim L. Dabie, Simeon H. Dolojo, Imelda Gandon, Leny B. Gusanan,
Marcelo L. Gusanan, Quintol A. Labuayan, Lomingges Laway, and Benita P. Tacuayan.
69 Petitioners F'long Agutin M. Dabie, Mario L. Mangcal, Alden S. Tusan, Sr. Susuan O. Bolanio, OND, Lolita G.
Demonteverde, Benjie L. Nequinto, Rose Lilia S. Romano and Amparo S. Yap.
70 Rollo, p. 6.
71 Id. at 337, citing Malabanan v. Gaw Ching, 181 SCRA 84 (1990).
72 246 SCRA 540 (1995).
73 People v. Vera, supra.
74 Militante v. Court of Appeals, 330 SCRA 318 (2000).
75 Ibid.
76 Cruz v. Secretary of Environment and Natural Resources, 347 SCRA 128 (2000), Kapunan, J., Separate
Opinion. [Emphasis supplied.]
77 Joya v. Presidential Commission on Good Government, 225 SCRA 568 (1993).
78 Integrated Bar of the Philippines v. Zamora, supra.
79 J. Bernas, S.J., The 1987 Constitution of the Philippines: A Commentary 1009 (1996).
80 Cruz v. Secretary of Environment and Natural Resources, supra, Kapunan, J., Separate Opinion.
81 Id., Puno, J., Separate Opinion, and Panganiban, J., Separate Opinion.
82 Cariño v. Insular Government, 212 US 449, 53 L.Ed. 595 (1909). For instance, Law 14, Title 12, Book 4 of
the Recopilacion de Leyes de las Indias proclaimed:
We having acquired full sovereignty over the Indies, and all lands, territories, and possessions not
heretofore ceded away by our royal predecessors, or by us, or in our name, still pertaining to the
royal crown and patrimony, it is our will that all lands which are held without proper and true
deeds of grant be restored to us according as they belong to us, in order that after reserving
before all what to us or to our viceroys, 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.
83 Republic v. Court of Appeals, 160 SCRA 228 (1988). It has been noted, however, that "the prohibition in
the [1935] Constitution against alienation by the state of mineral lands and minerals is not properly a part
of the Regalian doctrine but a separate national policy designed to conserve our mineral resources and
prevent the state from being deprived of such minerals as are essential to national defense." (A. Noblejas,
Philippine Law on Natural Resources 126-127 [1959 ed.], citing V. Francisco, The New Mining Law.)
84 Cruz v. Secretary of Environment and Natural Resources, supra, Kapunan, J., Separate Opinion, citing A.
Noblejas, Philippine Law on Natural Resources 6 (1961). Noblejas continues:
Thus, they asserted their right of ownership over mines and minerals or precious metals, golds,
and silver as distinct from the right of ownership of the land in which the minerals were found.
Thus, when on a piece of land mining was more valuable than agriculture, the sovereign retained
ownership of mines although the land has been alienated to private ownership. Gradually, the
right to the ownership of minerals was extended to base metals. If the sovereign did not exploit
the minerals, they grant or sell it as a right separate from the land. (Id., at 6.)
85 In the unpublished case of Lawrence v. Garduño (L-10942, quoted in V. Francisco, Philippine Law on
Natural Resources 14-15 [1956]), this Court observed:
The principle underlying Spanish legislation on mines is that these are subject to the eminent
domain of the state. The Spanish law of July 7, 1867, amended by the law of March 4, 1868, in
article 2 says: "The ownership of the substances enumerated in the preceding article (among
them those of inflammable nature), belong[s] to the state, and they cannot be disposed of
without the government authority."
The first Spanish mining law promulgated for these Islands (Decree of Superior Civil Government
of January 28, 1864), in its Article I, says: "The supreme ownership of mines throughout the
kingdom belong[s] to the crown and to the king. They shall not be exploited except by persons
who obtained special grant from this superior government and by those who may secure it
thereafter, subject to this regulation."
Article 2 of the royal decree on ownership of mines in the Philippine Islands, dated May 14, 1867,
which was the law in force at the time of the cession of these Islands to the Government of the
United States, says: "The ownership of the substances enumerated in the preceding article
(among them those of inflammable nature) belongs to the state, and they cannot be disposed of
without an authorization issued by the Superior Civil Governor."
Furthermore, all those laws contained provisions regulating the manner of prospecting, locating
and exploring mines in private property by persons other than the owner of the land as well as the
granting of concessions, which goes to show that private ownership of the land did not include,
without express grant, the mines that might be found therein.
Analogous provisions are found in the Civil Code of Spain determining the ownership of mines. In
its Article 339 (Article 420, New Civil Code) enumerating properties of public ownership, the mines
are included, until specially granted to private individuals. In its article 350 (Art. 437, New Civil
Code) declaring that the proprietor of any parcel of land is the owner of its surface and of
everything under it, an exception is made as far as mining laws are concerned. Then in speaking of
minerals, the Code in its articles 426 and 427 (Art. 519, New Civil Code) provides rules governing
the digging of pits by third persons on private-owned lands for the purpose of prospecting for
minerals.
86 Atok Big-Wedge Mining Co. v. Intermediate Appellate Court, 261 SCRA 528 (1996).
87 Ibid.
88 Cruz v. Secretary of Environment and Natural Resources, supra, Kapunan, J., Separate Opinion.
89 Ibid.
90 McDaniel v. Apacible and Cuisia, 42 Phil. 749 (1922).
91 Noblejas, supra, at 5.
92 V. M. A. Dimagiba, Service Contract Concepts in Energy, 57 Phil. L. J. 307, 313 (1982).
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93 P. A. Agabin, Service Contracts: Old Wine in New Bottles?, in II Draft Proposal of the 1986 U.P. Law
Constitution Project 3.
94 Id., at 2-3.
95 Id., at 3.
96 Ibid.
97 Ibid.
98 Ibid.
99 An Act to Provide for the Exploration, Location and Lease of Lands Containing Petroleum and other
Mineral Oils and Gas in the Philippine Islands.
100 An Act to Provide for the Leasing and Development of Coal Lands in the Philippine Islands.
101 Agabin, supra, at 3.
102 People v. Linsangan, 62 Phil. 646 (1935).
103 Ibid.
104 Ibid.
105 Ibid.
106 Ibid.
107 Atok Big-Wedge Mining Co. v. Intermediate Appellate Court, supra.
108 Bernas, S.J., supra, at 1009-1010, citing Lee Hong Hok v. David, 48 SCRA 372 (1972).
109 II J. Aruego, The Framing of the Philippine Constitution 592 (1949).
110 Id., at 600-601.
111 Id., at 604. Delegate Aruego expounds:
At the time of the framing of the Philippine Constitution, Filipino capital had been known to be
rather shy. Filipinos hesitated as a general rule to invest a considerable sum of their capital for the
development, exploitation, and utilization of the natural resources of the country. They had not as
yet been so used to corporate enterprises as the peoples of the West. This general apathy, the
delegates knew, would mean the retardation of the development of the natural resources, unless
foreign capital would be encouraged to come in and help in that development. They knew that
the nationalization of the natural resources would certainly not encourage the investment of
foreign capital into them. But there was a general feeling in the Convention that it was better to
have such development retarded or even postponed altogether until such time when the Filipinos
would be ready and willing to undertake it rather than permit the natural resources to be placed
under the ownership or control of foreigners in order that they might be immediately developed,
with the Filipinos of the future serving not as owners but at most as tenants or workers under
foreign masters. By all means, the delegates believed, the natural resources should be conserved
for Filipino posterity.
The nationalization of natural resources was also intended as an instrument of national defense.
The Convention felt that to permit foreigner to own or control the natural resources would be to
weaken the national defense. It would be making possible the gradual extension of foreign
influence into our politics, thereby increasing the possibility of foreign control. x x x.
Not only these. The nationalization of the natural resources, it was believed, would prevent
making the Philippines a source of international conflicts with the consequent danger to its
internal security and independence. For unless the natural resources were nationalized, with the
nationals of foreign countries having the opportunity to own or control them, conflicts of interest
among them might arise inviting danger to the safety and independence of the nation. (Id., at
605-606.)
112 Palting v. San Jose Petroleum Inc., 18 SCRA 924 (1966); Republic v. Quasha, 46 SCRA 160 (1972).
113 Atok Big-Wedge Mining Co. v. Intermediate Appellate Court, supra.
114 Article VI thereof provided:
1. The disposition, exploitation, development and utilization of all agricultural, timber, and
mineral lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all
forces and sources of potential energy, and other natural resources of either Party, and the
operation of public utilities, shall, if open to any person, be open to citizens of the other Party and
to all forms of business enterprise owned or controlled directly or indirectly, by citizens of such
other Party in the same manner as to and under the same conditions imposed upon citizens or
corporations or associations owned or controlled by citizens of the Party granting the right.
2. The rights provided for in Paragraph 1 may be exercised x x x in the case of citizens of the
United States, with respect to natural resources in the public domain in the Philippines, only
through the medium of a corporation organized under the laws of the Philippines and at least 60%
of the capital stock of which is owned or controlled by citizens of the United States x x x.
3. The United States of America reserves the rights of the several States of the United States to
limit the extent to which citizens or corporations or associations owned or controlled by citizens
of the Philippines may engage in the activities specified in this Article. The Republic of the
Philippines reserves the power to deny any of the rights specified in this Article to citizens of the
United States who are citizens of States, or to corporations or associations at least 60% of whose
capital stock or capital is owned or controlled by citizens of States, which deny like rights to
citizens of the Philippines, or to corporations or associations which ore owned or controlled by
citizens of the Philippines x x x.
115 An Act to Promote the Exploration, Development, Exploitation, and Utilization of the Petroleum
Resources of the Philippines; to Encourage the Conservation of such Petroleum Resources; to Authorize the
Secretary of Agriculture and Natural Resources to Create an Administration Unit and a Technical Board in
the Bureau of Mines; to Appropriate Funds therefor; and for other purposes.
116 Rep. Act No. 387 (1949), as amended, art. 10 (b).
117 Id., art. 10 (c).
118 Id., art. 5.
119 Id., art. 31. The same provision recognized the rights of American citizens under the Parity Amendment:
During the effectivity and subject to the provisions of the ordinance appended to the Constitution
of the Philippines, citizens of the United States and all forms of business enterprises owned and
controlled, directly or indirectly, by citizens of the United States shall enjoy the same rights and
obligations under the provisions of this Act in the same manner as to, and under the same
conditions imposed upon, citizens of the Philippines or corporations or associations owned or
controlled by citizens of the Philippines.
120 Id., art. 10.
121 Id., art. 3.
122 Id., art. 9.
123 Ibid.
124 Rep. Act No. 387 (1949), as amended, art. 8.
125 Id., art. 25.
126 Id., art. 47.
127 Id., art. 60.
128 Id., art. 64. Article 49, R.A. No. 387 originally imposed an annual exploration tax on exploration
concessionaires but this provision was repealed by Section 1, R.A. No. 4304.
129 Francisco, supra, at 103.
130 Rep. Act No. 387 (1949), as amended, art. 65.
131 Francisco, supra, at 103.
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132 Rep. Act No. 387 (1949), as amended, art. 90 (b) 3. regardless of whether the concession holder makes profits or not. This is not so in the service
133 Id., art. 90 (b) 4. contract system. A certain percentage of the gross production is set aside for recoverable
134 Id., art. 93-A. expenditures by the contractor. Of the net proceeds the parties are entitled percentages of share
135 Id., art. 93. that will accrue to each of them.
136 Ibid. In the royalty system, the concessionaire may be discouraged to produce more for the reason that
137 Rep. Act No. 387 (1949), as amended, art. 94. since the royalty paid to the host country is closely linked to the volume of production, the greater
138 Id., art. 106. the produce, the more amount or royalty would be allocated to the Government. This is not so in
139 Id., art. 95. the production sharing system. The share of the Government depends largely on the net proceeds
140 Ibid. of production after reimbursing the service contractor of its recoverable expenses.
141 Rep. Act No. 387 (1949), as amended, art. 95 (e). As a general rule, the Government plays a passive role in the concession system, more
142 Dimagiba, supra, at 315, citing Fabrikant, Oil Discovery and Technical Change in Southeast Asia, Legal particularly, interested in receiving royalties from the concessionaire. In the production-sharing
Aspects of Production Sharing Contracts in the Indonesian Petroleum Industry, 101-102, sections 13C.24 arrangement, the Government plays a more active role in the management and monitoring of oil
and 13C.25 (1972). operations and requires the service contractor entertain obligations designed to bring more
143 Agabin, supra, at 4. economic and technological benefits to the host country. (Dimagiba, supra, at 330-331.)
144 Dimagiba, supra, at 318. 160 Agabin, supra, at 6.
145 Amending Presidential Decree No. 8 issued on October 2, 1972, and Promulgating an Amended Act to 161 The antecedents leading to the Proclamation are narrated in Javellana v. Executive Secretary, 50 SCRA 55

Promote the Discovery and Production of Indigenous Petroleum and Appropriate Funds Therefor. (1973):
146 Pres. Decree No. 87 (1972), sec. 4. On March 16, 1967, Congress of the Philippines passed Resolution No. 2, which was amended by
147 Agabin, supra, at 6. Resolution No. 4, of said body, adopted on June 17, 1969, calling a convention to propose
148 M. Magallona, Service Contracts in Philippine Natural Resources, 9 World Bull. 1, 4 (1993). amendments to the Constitution of the Philippines. Said Resolution No. 2, as amended, was
149 Pres. Decree No. 87 (1972), sec. 6. implemented by Republic Act No. 6132 approved on August 24, 1970, pursuant to the provisions
150 Id., sec. 4. of which the election of delegates to said convention was held on November 10, 1970, and the
151 Id., sec. 6. 1971 Convention began to perform its functions on June 1, 1971. While the Convention was in
152 Id., sec. 7. session on September 21, 1972, the President issued Proclamation No. 1081 placing the entire
153 Id., sec. 8. Philippines under Martial Law. On November 29, 1972, the President of the Philippines issued
154 Ibid. Presidential Decree No. 73, submitting to the Filipino people for ratification or rejection the
155 Ibid. Constitution of the Republic of the Philippines proposed by the 1971 Constitutional Convention,
156 Pres. Decree No. 87 (1972), sec. 9. and appropriating funds therefor, as well as setting the plebiscite for such ratification on January
157 Id., sec. 12. 15, 1973.
158 Id., sec. 13. On January 17, 1973, the President issued Proclamation No. 1102 certifying and proclaiming that
159 Dimagiba draws the following comparison between the service contract scheme and the concession the Constitution proposed by the 1971 Constitutional Convention "has been ratified by an
system: overwhelming majority of all the votes cast by the members of all the Barangays (Citizens
In both the concession system and the service contract scheme, work and financial obligations are Assemblies) throughout the Philippines, and has thereby come into effect."
required of the developer. Under Republic Act No. 387 and Presidential Decree No. 87, the 162 Bernas, S.J., supra, at 1016, Note 28, citing Session of November 25, 1972.

concessionaire and the service contractors are extracted certain taxes in favor of the government. 163 Agabin, supra, at 1, quoting Sanvictores, The Economic Provisions in the 1973 Constitution, in Espiritu,

In both arrangements, the explorationist/developer is given incentives in the form of tax 1979 Philconsa Reader on Constitutional and Policy Issues 449.
exemptions in the importation or disposition of machinery, equipment, materials and spare parts 164 Bernas, S.J., supra, at 1016, Note 28, citing Session of November 25, 1972.

needed in petroleum operations. 165 Ibid.

The concessionaire and the service contractor are required to keep in their files valuable data and 166 Ibid.

information and may be required to submit need technological or accounting reports to the 167 Allowing Citizens of the Philippines or Corporations or Associations at least Sixty Per Centum of the

Government. Duly authorized representatives of the Government could, under the law, inspect or Capital of which is Owned by such Citizens to Enter into Service Contracts with Foreign Persons,
audit the books of accounts of the contract holder. Corporations for the Exploration, Development, Exploitation or Utilization of Lands of the Public Domain,
In both systems, signature, discovery or production bonuses may be given by the developer to the Amending for the purpose certain provisions of Commonwealth Act No. 141.
host Government. 168 Pres. Decree No. 151 (1973), sec. 1.

The concession system, however, differs considerably from the service contract system in 169 Providing for A Modernized System of Administration and Disposition of Mineral Lands and to Promote

important areas of the operations. In the concession system, the Government merely receives and Encourage the Development and Exploitation thereof.
fixed royalty which is a certain percentage of the crude oil produced or other units of measure, 170 Revising and Consolidating All Laws and Decrees Affecting Fishing and Fisheries.
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171 Pres. Decree No. 704 (1975), sec. 21. 207 Id., sec. 3 (r).
172 Revising Presidential Decree No. 389, otherwise known as The Forestry Reform Code of the Philippines. 208 Id., sec. 33.
173 Pres. Decree No. 705 (1975), sec. 62. 209 Id., sec. 3 (t).
174 An Act to Promote the Exploration and Development of Geothermal Resources. 210 Id., sec. 3 (aq).
175 Magallona, supra, at 6. 211 The maximum areas in cases of mineral agreements are prescribed in Section 28 as follows:
176 Declaring a National Policy to Implement the Reforms Mandated by the People, Protecting their Basic SEC. 28. Maximum Areas for Mineral Agreement. – The maximum area that a qualified person
Rights, Adopting a Provisional Constitution, and Providing for an Orderly Transition to a Government under may hold at any time under a mineral agreement shall be:
a New Constitution. (a) Onshore, in any one province –
177 Const., art. XVIII, sec. 27; De Leon v. Esguerra, 153 SCRA 602 (1987). (1) For individuals, ten (10) blocks; and
178 Miners Association of the Philippines, Inc. v. Factoran, Jr., 240 SCRA 100 (1995). (2) For partnerships, cooperatives, associations, or corporations, one hundred
179 Ibid. (100) blocks.
180 Ibid. (b) Onshore, in the entire Philippines –
181 J. Bernas, S.J., The Intent of the 1986 Constitution Writers 812 (1995). (1) For individuals, twenty (20) blocks; and
182 Miners Association of the Philippines, Inc. v. Factoran, Jr., supra. (2) For partnerships, cooperatives, associations, or corporations, two hundred
183 III Records of the Constitutional Commission 255. (200) blocks.
184 Id., at 355-356. (c) Offshore, in the entire Philippines –
185 Const. (1986), art. II, sec. 1. (1) For individuals, fifty (50) blocks;
186 Cruz v. Secretary of Environment and Natural Resources, supra, Puno, J., Separate Opinion. (2) For partnerships, cooperatives, associations, or corporations, five hundred
187 Rep. Act No. 7942 (1995), sec. 9. (500) blocks; and
188 SEC. 82. Allocation of Government Share.—The Government share as referred to in the preceding (3) For the exclusive economic area, a larger area to be determined by the
sections shall be shared and allocated in accordance with Sections 290 and 292 of Republic Act No. 7160 Secretary.
otherwise known as the Local Government Code of 1991. In case the development and utilization of mineral The maximum areas mentioned above that a contractor may hold under a mineral
resources is undertaken by a government-owned or -controlled corporation, the sharing and allocation shall agreement shall not include mining/quarry areas under operating agreements between
be in accordance with Sections 291 and 292 of the said Code. the contractor and a claimowner/lessee/permittee/licensee entered into under
189 An Act Creating A People's Small-Scale Mining Program and for other purposes. Presidential Decree No. 463.
190 Rep. Act No. 7942 (1995), sec. 42. On the other hand, Section 34, which governs the maximum area for FTAAs provides:
191 Id., secs. 3 (ab) and 26. SEC. 34. Maximum Contract Area. – The maximum contract area that may be granted per qualified
192 "Contractor" means a qualified person acting alone or in consortium who is a party to a mineral person, subject to relinquishment shall be:
agreement or to a financial or technical assistance agreement. (Id., sec. 3[g].) (a) 1,000 meridional blocks onshore;
193 "Contract area" means land or body water delineated for purposes of exploration, development, or (b) 4,000 meridional blocks offshore; or
utilization of the minerals found therein. (Id., sec. 3[f].) (c) Combinations of (a) and (b) provided that it shall not exceed the maximum limits for
194 "Gross output" means the actual market value of minerals or mineral products from its mining area as onshore and offshore areas.
defined in the National Internal Revenue Code (Id., sec. 3[v]). 212 Id., sec. 33.
195 Id., sec. 26 (a). 213 Id., sec. 81.
196 An Act Reducing Excise Tax Rates on Metallic and Non-Metallic Minerals and Quarry Resources, 214 Kapatiran v. Tan, 163 SCRA 371 (1988).

amending for the purpose Section 151 (a) of the National Internal Revenue Code, as amended. 215 Providing for the Publication of Laws either in the Official Gazette or in a Newspaper of General
197 Rep. Act No. 7942 (1995), sec. (80). Circulation in the Philippines as a Requirement for their Effectivity.
198 Id., Sec. 26 (b). 216 Section 1, E.O. No. 200 was subsequently incorporated in the Administrative Code of 1987 (Executive
199 "Mineral resource" means any concentration of minerals/rocks with potential economic value. (Id., sec. Order No. 292 as Section 18, Chapter 5 (Operation and Effect of Laws), Book 1 (Sovereignty and General
3[ad].) Administration).
200 Id., sec. 26 (c). 217 136 SCRA 27 (1985).
201 Ibid. 218 Manila Prince Hotel v. Government Service Insurance System, 267 SCRA 408 (1997).
202 Id., sec. 3 (h). 219 Const., art. 3, sec. 1.
203 Id., sec. 3 (x). 220 83 O.G. (Suppl.) 3528-115 to 3528-117 (August 1987).
204 Id., sec. 26, last par. 221 Miners Association of the Philippines, Inc. v. Factoran, Jr., supra.
205 Id., sec. 27. 222 Petitioners note in their Memorandum that the FTAA:
206 Id., sec. 3 (aq).
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x x x guarantees that wholly foreign owned [WMCP] entered into the FTAA in order to facilitate
"the large scale exploration, development and commercial exploitation of mineral deposits that
may be found to exist within the Contract area." [Section 1.1] As a contractor it also has the
"exclusive right to explore, exploit, utilize, process and dispose of all mineral products and by-
products thereof that may be derived or produced from the Contract Area." [Section 1.3] Thus, it
is divided into an "exploration and feasibility phase" [Section 3.2 (a)] and a "construction,
development and production phase." [Section 3. 2 (b).]
Thus, it is this wholly foreign owned corporation that, among other things:
MR. VILLEGAS. We just had a long discussion with the members of the team from the UP Law
Center who provided us a draft. The phrase that is contained here which we adopted from the UP
draft is "60 percent of voting stock." (III Record of the Constitutional Commission 255.)
Likewise, in explaining the reasons for the deletion of the term "exploitation":
MR. VILLEGAS. Madam President, following the recommendation in the UP draft, we omitted
"exploitation" first of all because it is believed to be subsumed under "development" and
secondly because it has a derogatory connotation. (Id., at 358.)
244 Id., at 12.

(a) operates within a prescribed contract area [Section 4], 245 Id., at 15-16.

(b) opts to apply for a Mining Production Sharing Agreement [Section 4.2], 246 M. Magallona, Nationalism and Its Subversion in the Constitution 5, in II Draft Proposal of the 1986 U.P.

(c) relinquishes control over portions thereof at their own choice [Section 4.6], Law Constitution Project.
(d) submits work programs, incurs expenditures, and makes reports during the 247 Agabin, supra, at 16.

exploration period [Section 5], 248 E. Labitag, Philippine Natural Resources: Some Problems and Perspectives 17 in II Draft Proposal of the

(e) submits a Declaration of Mining Feasibility [Sections 5.4 and 5.5], 1986 U.P. Law Constitution Project.
(f) during the development period, determines the timetable, submits work programs, 249 I Draft Proposal of the 1986 U.P. Law Constitution Project 11-13.

provides the reports and determines and executes expansions, modifications, 250 Id., at 9-11. Professor Labitag also suggests that:

improvements and replacements of new mining facilities within the area [Section 6],
(g) complies with the conditions for environmental protection and industrial safety,
posts the necessary bonds and makes representations and warranties to the
government [Section 10.5].
The contract subsists for an initial term of twenty-five (25) years from the date of its effectivity
x x x. The concession regime of natural resources disposition should be discontinued. Instead the
State shall enter into such arrangements and agreements like co-production, joint ventures, etc.
as shall bring about effective control and a larger share in the proceeds, harvest or production.
(Labitag, supra, at 17.)
251 Vide Note 147.

[Section 3.1] and renewable for a further period of twenty-five years under the same terms and 252 Vide Note 230. The question was posed before the Jamir amendment and subsequent proposals

conditions upon application by private respondent [Section 3.3]. (Rollo, pp. 458-459.) introducing other limitations.
223 H. C. Black, Handbook on the Construction and Interpretation of the Laws § 8. Comm. Villegas' response that there was no requirement in the 1973 Constitution for a law to
224 Ibid. govern service contracts and that, in fact, there were then no such laws is inaccurate. The 1973
225 J. M. Tuason & Co., Inc. v. Land Tenure Association, 31 SCRA 413 (1970). Charter required similar legislative approval, although it did not specify the form it should take:
226 Rollo, p. 580. "The Batasang Pambansa, in the national interest, may allow such citizens… to enter into service
227 Ibid. Emphasis supplied. contracts…." As previously noted, however, laws authorizing service contracts were actually
228 People v. Manantan, 115 Phil. 657 (1962); Commission on Audit of the Province of Cebu v. Province of enacted by presidential decree.
Cebu, 371 SCRA 196 (2001). 253 Vide Note 238.
229 Rollo, p. 569. 254 Vide Note 241.
230 III Record of the Constitutional Commission 351-352. 255 Vide Note 231.
231 V Record of the Constitutional Commission 844. 256 Dated July 28, 1987.
232 Id., at 841. 257 Dated October 3, 1990.
233 Id., at 842. 258 Peralta v. Civil Service Commission, 212 SCRA 425 (1992).
234 Id. at 844. 259 Vide Note 238.
235 Vide Cherey v. Long Beach, 282 NY 382, 26 NE 2d 945, 127 ALR 1210 (1940), cited in 16 Am Jur 2d 260 III Record of the Constitutional Commission 354.

Constitutional Law §79. 261 Salaysay v. Castro, 98 Phil. 364 (1956).

236 Civil Liberties Union v. Executive Secretary, 194 SCRA 317, 325 (1991). 262 Rep. Act No. 7942 (1995), sec. 3 (q).
237 III Record of the Constitutional Commission 278. 263 Id., sec. 3 (aq).
238 Id., at 316-317. 264 Id., sec. 20.
239 III Record of the Constitutional Commission 358-359. 265 Id., sec. 23, first par.
240 Vera v. Avelino, 77 Phil. 192 (1946). 266 Id., sec. 23, last par.
241 J. Nolledo, The New Constitution of the Philippines Annotated 924-926 (1990). 267 Id., sec. 3 (j).
242 Resolution to Incorporate in the New Constitution an Article on National Economy and Patrimony. 268 Id., sec. 3 (az).
243 The Chair of the Committee on National Economy and Patrimony, alluded to it in the discussion on the 269 Id., sec. 35 (m).

capitalization requirement: 270 Id., secs. 3 (aq) and 56.

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271 Id., sec. 3 (y).
272 Id., sec. 35 (g).
273 Id., sec. 35 (h).
274 Id., sec. 35 (l).
275 Id., sec. 3 (af).
276 SEC. 72. Timber Rights.—Any provision of the law to the contrary notwithstanding, a contractor may be
granted a right to cut trees or timber within his mining area as may be necessary for his mining operations
subject to forestry laws, rules and regulations: Provided, That if the land covered by the mining area is
already covered by exiting timber concessions, the volume of timber needed and the manner of cutting and
removal thereof shall be determined by the mines regional director, upon consultation with the contractor,
the timber concessionaire/permittee and the Forest Management Bureau of the Department: Provided,
further, That in case of disagreement between the contractor and the timber concessionaire, the matter
shall be submitted to the Secretary whose decision shall be final. The contractor shall perform reforestation
work within his mining area in accordance with forestry laws, rules and regulations. [Emphasis supplied.]
SEC. 73. Water Rights.—A contractor shall have water rights for mining operations upon approval
of application with the appropriate government agency in accordance with existing water laws,
rules and regulations promulgated thereunder: Provided, That water rights already granted or
vested through long use, recognized and acknowledged by local customs, laws and decisions of
courts shall not thereby be impaired: Provided, further, That the Government reserves the right to
regulate water rights and the reasonable and equitable distribution of water supply so as to
prevent the monopoly of the use thereof. [Emphasis supplied.]
SEC. 74. Right to Possess Explosives.—A contractor/exploration permittee shall have the right to
possess and use explosives within his contract/permit area as may be necessary for his mining
operations upon approval of an application with the appropriate government agency in
accordance with existing laws, rules and regulations promulgated thereunder: Provided, That the
Government reserves the right to regulate and control the explosive accessories to ensure safe
mining operations. [Emphasis supplied.]
SEC. 75. Easement Rights.—When mining areas are so situated that for purposes of more
convenient mining operations it is necessary to build, construct or install on the mining areas or
lands owned, occupied or leased by other persons, such infrastructure as roads, railroads, mills,
waste dump sites, tailings ponds, warehouses, staging or storage areas and port facilities,
tramways, runways, airports, electric transmission, telephone or telegraph lines, dams and their
normal flood and catchment areas, sites for water wells, ditches, canals, new river beds, pipelines,
flumes, cuts, shafts, tunnels, or mills, the contractor, upon payment of just compensation, shall be
entitled to enter and occupy said mining areas or lands. [Emphasis supplied.]
SEC. 76. Entry into Private Lands and Concession Areas.—Subject to prior notification, holders of
mining rights shall not be prevented from entry into private lands and concession areas by surface
owners, occupants, or concessionaires when conducting mining operations therein: Provided,
That any damage done to the property of the surface owner, occupant, or concessionaire as a
consequence of such operations shall be properly compensated as may be bee provided for in the
implementing rules and regulations: Provided, further, That to guarantee such compensation, the
person authorized to conduct mining operation shall, prior thereto, post a bond with the regional
director based on the type of properties, the prevailing prices in and around the area where the
mining operations are to be conducted, with surety or sureties satisfactory to the regional
director. [Emphasis supplied.]
277 Id., sec. 39, first par.
278 Id., sec. 39, second par.
279 Id., sec. 35 (e).
280 SEC. 23. Rights and Obligations of the Permittee.—x x x.
The permittee may apply for a mineral production sharing agreement, joint venture agreement,
co-production agreement or financial or technical assistance agreement over the permit area,
which application shall be granted if the permittee meets the necessary qualifications and the
terms and conditions of any such agreement: Provided, That the exploration period covered by
the exploration period of the mineral agreement or financial or technical assistance agreement.
281 SEC. 35. Terms and Conditions. — The following terms, conditions, and warranties shall be incorporated
in the financial or technical assistance agreement, to wit:
(a) A firm commitment in the form of a sworn statement, of an amount corresponding to the
expenditure obligation that will be invested in the contract area: Provided, That such amount shall
be subject to changes as may be provided for in the rules and regulations of this Act;
(b) A financial guarantee bond shall be posted in favor of the Government in an amount
equivalent to the expenditure obligation of the applicant for any year;
(c) Submission of proof of technical competence, such as, but not limited to, its track record in
mineral resource exploration, development, and utilization; details of technology to be employed
in the proposed operation; and details of technical personnel to undertake the operation;
(d) Representations and warranties that the applicant has all the qualifications and none of the
disqualifications for entering into the agreement;
(e) Representations and warranties that the contractor has or has access to all the financing,
managerial and technical expertise and, if circumstances demand, the technology required to
promptly and effectively carry out the objectives of the agreement with the understanding to
timely deploy these resources under its supervision pursuant to the periodic work programs and
related budgets, when proper, providing an exploration period up to two (2) years, extendible for
another two (2) years but subject to annual review by the Secretary in accordance with the
implementing rules and regulations of this Act, and further, subject to the relinquishment
obligations;
(f) Representations and warranties that, except for paymets for dispositions for its equity, foreign
investments in local enterprises which are qualified for repatriation, and local supplier's credits
and such other generally accepted and permissible financial schemes for raising funds for valid
business purposes, the conractor shall not raise any form of financing from domestic sources of
funds, whether in Philippine or foreign currency, for conducting its mining operations for and in
the contract area;
(g) The mining operations shall be conducted in accordance with the provisions of this Act and its
implementing rules and regulations;
(h) Work programs and minimum expenditures commitments;
(i) Preferential use of local goods and services to the maximum extent practicable;
(j) A stipulation that the contractors are obligated to give preference to Filipinos in all types of
mining employment for which they are qualified and that technology shall be transferred to the
same;
(k) Requiring the proponent to effectively use appropriate anti-pollution technology and facilities
to protect the environment and to restore or rehabilitate mined out areas and other areas
affected by mine tailings and other forms of pollution or destruction;
(l) The contractors shall furnish the Government records of geologic, accounting, and other
relevant data for its mining operations, and that book of accounts and records shall be open for
inspection by the government;
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(m) Requiring the proponent to dispose of the minerals and byproducts produced under a
financial or technical assistance agreement at the highest price and more advantageous terms and
conditions as provided for under the rules and regulations of this Act;
(n) Provide for consultation and arbitration with respect to the interpretation and implementation
of the terms and conditions of the agreements; and
(o) Such other terms and conditions consistent with the Constitution and with this Act as the
Secretary may deem to be for the best interest of the State and the welfare of the Filipino people.
282 SEC. 39. Option to Convert into a Mineral Agreement. — The contractor has the option to convert the
financial or technical assistance agreement to a mineral agreement at any time during the term of the
agreement, if the economic viability of the contract area is found to be inadequate to justify large-scale
mining operations, after proper notice to the Secretary as provided for under the implementing rules and
regulations; Provided, That the mineral agreement shall only be for the remaining period of the original
agreement.
In the case of a foreign contractor, it shall reduce its equity to forty percent (40%) in the
corporation, partnership, association, or cooperative. Upon compliance with this requirement by
the contractor, the Secretary shall approve the conversion and execute the mineral production-
sharing agreement.
283 SEC. 56. Eligibility of Foreign-owned/-controlled Corporation.—A foreign owned/ -controlled corporation
may be granted a mineral processing permit.
284 SEC. 3. Definition of Terms. – As used in and for purposes of this Act, the following terms, whether in
singular or plural, shall mean:
xxx
(g) "Contractor" means a qualified person acting alone or in consortium who is a party to a
mineral agreement or to a financial or technical assistance agreement.
285 SEC. 34. Maximum Contract Area. — The maximum contract area that may be granted per qualified
person, subject to relinquishment shall be:
(a) 1,000 meridional blocks onshore;
(b) 4,000 meridional blocks offshore; or
(c) Combinations of (a) and (b) provided that it shall not exceed the maximum limits for onshore
and offshore areas.
286 SEC. 36. Negotiations. — A financial or technical assistance agreement shall be negotiated by the
Department and executed and approved by the President. The President shall notify Congress of all financial
or technical assistance agreements within thirty (30) days from execution and approval thereof.
287 SEC. 37. Filing and Evaluation of Financial or Technical Assistance Agreement Proposals. — All financial or
technical assistance agreement proposals shall be filed with the Bureau after payment of the required
processing fees. If the proposal is found to be sufficient and meritorious in form and substance after
evaluation, it shall be recorded with the appropriate government agency to give the proponent the prior
right to the area covered by such proposal: Provided, That existing mineral agreements, financial or
technical assistance agreements and other mining rights are not impaired or prejudiced thereby. The
Secretary shall recommend its approval to the President.
288 SEC. 38. Term of Financial or Technical Assistance Agreement. — A financial or technical assistance
agreement shall have a term not exceeding twenty-five (25) years to start from the execution thereof,
renewable for not more than twenty-five (25) years under such terms and conditions as may be provided by
law.
289 SEC. 40. Assignment/Transfer. — A financial or technical assistance agreement may be assigned or
transferred, in whole or in part, to a qualified person subject to the prior approval of the President:
Provided, That the President shall notify Congress of every financial or technical assistance agreement
assigned or converted in accordance with this provision within thirty (30) days from the date of the approval
thereof.
290 SEC. 41. Withdrawal from Financial or Technical Assistance Agreement. — The contractor shall manifest
in writing to the Secretary his intention to withdraw from the agreement, if in his judgment the mining
project is no longer economically feasible, even after he has exerted reasonable diligence to remedy the
cause or the situation. The Secretary may accept the withdrawal: Provided, That the contractor has
complied or satisfied all his financial, fiscal or legal obligations.
291 SEC. 81. Government Share in Other Mineral Agreements.—x x x.
The Government share in financial or technical assistance agreement shall consist of, among other
things, the contractor's corporate income tax, excise tax, special allowance, withholding tax due
from the contractor's foreign stockholders arising from dividend or interest payments to the said
foreign stockholder in case of a foreign national and all such other taxes, duties and fees as
provided for under existing laws.
The collection of Government share in financial or technical assistance agreement shall
commence after the financial or technical assistance agreement contractor has fully recovered its
pre-operating expenses, exploration, and development expenditures, inclusive.
292 SEC. 90. Incentives.—The contractors in mineral agreements, and financial or technical assistance
agreements shall be entitled to the applicable fiscal and non-fiscal incentives as provided for under
Executive Order No. 226, otherwise known as the Omnibus Investments Code of 1987: Provided, That
holders of exploration permits may register with the Board of Investments and be entitled to the fiscal
incentives granted under the said Code for the duration of the permits or extensions thereof: Provided,
further, That mining activities shall always be included in the investment priorities plan.
293 Lidasan v. Commission on Elections, 21 SCRA 496 (1967).
294 Vide also WMCP FTAA, sec. 10.2 (a).
295 WMCP, sec. 10.2.
296 Id., sec. 11.
297 Id., sec. 10.1(a).
298 Id., sec. 10.1(c).
299 Id., sec. 6.4.
300 Rollo, pp. 563-564.
301 Civil Code, art. 8.
302 Const., art III, sec. 1.
303 Vide Note 223.
304 Rollo, p. 243.
305 Civil Liberties Union v. Executive Secretary, supra.
306 Automotive Parts & Equipment Company, Inc. v. Lingad, 30 SCRA 248 (1969).
307 Ibid.
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G.R. No. L-50464 January 29, 1990
SUNBEAM CONVENIENCE FOODS INC., CORAL BEACH DEVELOPMENT CORP., and the REGISTER OF
DEEDS OF BATAAN, petitioners,
vs.
HON. COURT OF APPEALS and THE REPUBLIC OF THE PHILIPPINES, respondents.
Filoteo T. Banzon for petitioners.
SARMIENTO, J.:
In this petition for review on certiorari, Convenience Foods Corporation (hereafter simply SUNBEAM) and
Coral Beach Development Corporation (hereafter simply CORAL BEACH) bring to our attention the
decision rendered by the Court of Appeals in "Republic of the Philippines v. Hon. Pedro T. Santiago, et al.,"
disposing as follows:
WHEREFORE, the writ prayed for is granted. The order of the respondent judge dated October 7, 1977,
dismissing Civil Case No. 4062 is set aside, and respondent judge is ordered to require private
respondents to file their answer to the complaint in said Civil Case No. 4062 and thereafter to proceed
with the trial of the case on the merits and to render judgment thereon.'
The following facts stated by the respondent Court in its decision and restated by the petitioners in their
petition are accurate:
(a) On April 29, 1963, the Director of Lands caused the issuance of a Sales Patent in favor of defendant
Sunbeam Convenience Foods, Inc., over the parcels of land both situated in Mariveles, Bataan and more
particularly described and bounded as follows:
Lot 1-Sgs-2409 (area 3,113,695 sq. m )
Lot 2-Sgs-2409 area 1,401,855 sq. m
(b) On May 3, 1963, the aforesaid Sales Patent was registered with the defendant Register of Deeds of
Bataan who in turn issued Original Certificate of Title No. Sp-24 in favor of defendant Sunbeam
Convenience Foods, Inc., for the two parcels of land above-described;
(c) Subsequently, Original Certificate of Title No. Sp-24 was cancelled and in lieu thereof, Transfer
Certificate of Title No. T-12421 was issued over Lot 1, Sgs-2409, while Transfer Certificate of Title No.
12422 was issued over Lot 2, Sgs-2409, both in favor of defendant Coral Beach Development Corporation I
(d) On May 11, 1976, the Solicitor General in the name of the Republic of the Philippines instituted before
the Court of First Instance of Bataan, an action for reversion docketed as Civil Case No. 4062. 2
SUNBEAM and CORAL BEACH filed a Motion to Dismiss on the following grounds:
1. The Republic of the Philippines should have exhausted all administrative remedies before filing the case
in court;
2. The title issued to SUNBEAM and CORAL BEACH had become indefeasible and imprescriptible;
3. The action for reversion was defective, having been initiated by the Solicitor General and not by the
Director of Lands. 3 The then Court of First Instance of Bataan dismissed the complaint in the Order of
October 7, 1977,4adopting mainly the theory that since the titles sought to be cancelled emanated from
the administrative act of the Bureau of Lands Director, the latter, not the courts, had jurisdiction over the
disposition of the land.
The Solicitor General received the copy of the Order on October 11, 1977 and filed a Notice of Appeal
dated October 25, 1977 . 5 The Solicitor General then moved for an extension of thirty days within which
to file the Record on Appeal and to pay the docket fee in order to perfect the appeal. This was to be
followed by another motion for extension filed by the Solicitor General, resulting in the Court of Appeals
granting the petitioner another extension of fifteen days from December 10, 1977. Finally before this
period of extension lapsed, instead of an appeal, a petition for certiorari with the respondent Court of
Appeals was filed.
According to the Solicitor General, the Court of First Instance committed grave abuse of discretion in
dismissing the complaint and in
a. Not finding that since the lower court acted in a Motion to Dismiss, the correctness of its decision must
be decided in the assumed truth and accuracy of the allegations of the complaint. The complaint alleges
that the lands in question are forest lands; hence, inalienable.
b. Finding that Lots I and 2 are alienable and disposable lands of the public domain under the jurisdiction
of the Director of Lands despite clear and positive evidence to the contrary.
c. Concluding that the complaint for reversion is defective as it was not initiated by the Director of Lands.
d. Finding that the complaint for reversion states no cause of action for alleged failure of petitioner to
exhaust administrative remedies. 6
The Court of Appeals gave due course to the petition for certiorari, set aside the Order of Dismissal
rendered by the Court of First Instance in Civil Case No. 4062, and ordered the presiding judge Hon. Pedro
 L A W O N N A T U R A L R E S O U R C E S a n d E N V I R O N M E N T A L L A W C a s e s a n d S p e c i a l L a w s | 68
T. Santiago to receive the answers of the private respondents SUNBEAM and CORAL BEACH in the action
for reversion.
Hence Sunbeam and Coral Beach filed this petition for review.
A review is not a matter of right but of sound judicial discretion, and is granted only when there are
special and important reasons therefore. The following, while neither controlling nor fully measuring the
Court's discretion, enumerates the premises for granting a review:
(a) When the Court of Appeals has decided a question of substance, not theretofore determined by the
Supreme Court or has decided it in a way probably not in accord with law or the applicable decisions of
the Supreme Court; and
(b) When the Court of Appeals has so far departed from the accepted and usual course of judicial
proceedings or so far sanctioned such departure by a lower court as to call for supervision . 7
We agree with the Court of Appeals' granting of the petition filed by the Republic of the Philippines
charging the then Court of First Instance with grave abuse of discretion. The filing of the Motion to
Dismiss the complaint for reversion by SUNBEAM and CORAL BEACH on the ground of lack of cause of
action, necessarily carried with it the admission, for purposes of the motion, of the truth of all material
facts pleaded in the complaint instituted by the Republic.
An important factual issue raised in the complaint was the classification of the lands as forest lands. This
material allegation stated in the Republic's complaint' was never denied specifically 9 by the defendants
(petitioners herein) SUNBEAM and CORAL BEACH.
If it is true that the lands are forest lands, then all these proceedings become moot and academic. Land
remains unclassified land until it is released therefrom and rendered open to disposition. 10
Our adherence to the Regalian doctrine subjects all agricultural, timber, and mineral lands to the
dominion of the State. 11 Thus, before any land may be declassified from the forest group and converted
into alienable or disposable land for agricultural or other purposes, there must be a positive act from the
government. Even rules on the confirmation of imperfect titles do not apply unless and until the land
classified as forest land is released in an official proclamation to that effect so that it may form part of the
disposable agricultural lands of the public domain. 12
The mere fact that a title was issued by the Director of Lands does not confer any validity on such title if
the property covered by the title or patent is part of the public forest. 13
The only way to resolve this question of fact as to the classification of the land is by remanding the case to
the lower court for a full- dress trial on the issues involved.
Generally, the rules of procedure must be observed so that the efficient administration of justice is
ensured. However, the rules of procedure should be viewed as mere tools designed to facilitate the
attainment of justice. 14They must lead to the proper and just determination of litigation, without tying
the hands of the law or making it indifferent to realities.
Certiorari is one such remedy. Considered extraordinary, it is made available only when there is no
appeal, nor any plain, speedy or adequate remedy in the ordinary course of the law. 15 The long line of
decisions denying the petition for certiorari, either before appeal was availed of or specially in instances
where the appeal period has lapsed, far outnumbers the instances when certiorari was given due course.
The few significant exceptions were: when public welfare and the advancement of public policy dictate; or
when the broader interests of justice so require, or when the writs issued are null, 16 or when the
questioned order amounts to an oppressive exercise of judicial authority. 17
We find nothing disagreeable with the action of the Court of Appeals to give due course to the petition
considering that the issue affected a matter of public concern which is the disposition of the lands of our
matrimony No less than the Constitution protects its policy.
We therefore find no compelling reason to disturb the findings of the appellate court, in the absence of a
clear showing that the Court of Appeals has decided a question of substance in a manner inconsistent
with jurisprudence, or that the respondent Court has departed from the accepted and usual course of
judicial proceedings. In sum, no reversible error has been committed by the respondent court. 18
WHEREFORE, the petition is DENIED and the decision of the Court of Appeals is affirmed. Costs against the
petitioners.
SO ORDERED.
Melencio-Herrera (Chairperson), Paras, Padilla and Regalado, JJ., concur.
 L A W O N N A T U R A L R E S O U R C E S a n d E N V I R O N M E N T A L L A W C a s e s a n d S p e c i a l L a w s | 69
G.R. No. 124293 January 31, 2005
J.G. SUMMIT HOLDINGS, INC., petitioner,
vs.
COURT OF APPEALS; COMMITTEE ON PRIVATIZATION, its Chairman and Members; ASSET
PRIVATIZATION TRUST; and PHILYARDS HOLDINGS, INC., respondents.
RESOLUTION
PUNO, J.:
For resolution before this Court are two motions filed by the petitioner, J.G. Summit Holdings, Inc. for
reconsideration of our Resolution dated September 24, 2003 and to elevate this case to the Court En
Banc. The petitioner questions the Resolution which reversed our Decision of November 20, 2000, which
in turn reversed and set aside a Decision of the Court of Appeals promulgated on July 18, 1995.
I. Facts
The undisputed facts of the case, as set forth in our Resolution of September 24, 2003, are as follows:
On January 27, 1997, the National Investment and Development Corporation (NIDC), a government
corporation, entered into a Joint Venture Agreement (JVA) with Kawasaki Heavy Industries, Ltd. of Kobe,
Japan (KAWASAKI) for the construction, operation and management of the Subic National Shipyard, Inc.
(SNS) which subsequently became the Philippine Shipyard and Engineering Corporation (PHILSECO).
Under the JVA, the NIDC and KAWASAKI will contribute P330 million for the capitalization of PHILSECO in
the proportion of 60%-40% respectively. One of its salient features is the grant to the parties of the right
of first refusal should either of them decide to sell, assign or transfer its interest in the joint venture, viz:
1.4 Neither party shall sell, transfer or assign all or any part of its interest in SNS [PHILSECO] to any third
party without giving the other under the same terms the right of first refusal. This provision shall not
apply if the transferee is a corporation owned or controlled by the GOVERNMENT or by a KAWASAKI
affiliate.
On November 25, 1986, NIDC transferred all its rights, title and interest in PHILSECO to the Philippine
National Bank (PNB). Such interests were subsequently transferred to the National Government pursuant
to Administrative Order No. 14. On December 8, 1986, President Corazon C. Aquino issued Proclamation
No. 50 establishing the Committee on Privatization (COP) and the Asset Privatization Trust (APT) to take
title to, and possession of, conserve, manage and dispose of non-performing assets of the National
Government. Thereafter, on February 27, 1987, a trust agreement was entered into between the National
Government and the APT wherein the latter was named the trustee of the National Government's share
in PHILSECO. In 1989, as a result of a quasi-reorganization of PHILSECO to settle its huge obligations to
PNB, the National Government's shareholdings in PHILSECO increased to 97.41% thereby reducing
KAWASAKI's shareholdings to 2.59%.
In the interest of the national economy and the government, the COP and the APT deemed it best to sell
the National Government's share in PHILSECO to private entities. After a series of negotiations between
the APT and KAWASAKI, they agreed that the latter's right of first refusal under the JVA be "exchanged"
for the right to top by five percent (5%) the highest bid for the said shares. They further agreed that
KAWASAKI would be entitled to name a company in which it was a stockholder, which could exercise the
right to top. On September 7, 1990, KAWASAKI informed APT that Philyards Holdings, Inc. (PHI)1 would
exercise its right to top.
At the pre-bidding conference held on September 18, 1993, interested bidders were given copies of the
JVA between NIDC and KAWASAKI, and of the Asset Specific Bidding Rules (ASBR) drafted for the National
Government's 87.6% equity share in PHILSECO. The provisions of the ASBR were explained to the
interested bidders who were notified that the bidding would be held on December 2, 1993. A portion of
the ASBR reads:
1.0 The subject of this Asset Privatization Trust (APT) sale through public bidding is the National
Government's equity in PHILSECO consisting of 896,869,942 shares of stock (representing 87.67% of
PHILSECO's outstanding capital stock), which will be sold as a whole block in accordance with the rules
herein enumerated.
xxx xxx xxx
2.0 The highest bid, as well as the buyer, shall be subject to the final approval of both the APT Board of
Trustees and the Committee on Privatization (COP).
2.1 APT reserves the right in its sole discretion, to reject any or all bids.
3.0 This public bidding shall be on an Indicative Price Bidding basis. The Indicative price set for the
National Government's 87.67% equity in PHILSECO is PESOS: ONE BILLION THREE HUNDRED MILLION
(P1,300,000,000.00).
xxx xxx xxx
6.0 The highest qualified bid will be submitted to the APT Board of Trustees at its regular meeting
following the bidding, for the purpose of determining whether or not it should be endorsed by the APT
Board of Trustees to the COP, and the latter approves the same. The APT shall advise Kawasaki Heavy
Industries, Inc. and/or its nominee, [PHILYARDS] Holdings, Inc., that the highest bid is acceptable to the
National Government. Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings, Inc. shall then have a
period of thirty (30) calendar days from the date of receipt of such advice from APT within which to
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exercise their "Option to Top the Highest Bid" by offering a bid equivalent to the highest bid plus five (5%)
percent thereof.
6.1 Should Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings, Inc. exercise their "Option to Top
the Highest Bid," they shall so notify the APT about such exercise of their option and deposit with APT the
amount equivalent to ten percent (10%) of the highest bid plus five percent (5%) thereof within the thirty
(30)-day period mentioned in paragraph 6.0 above. APT will then serve notice upon Kawasaki Heavy
Industries, Inc. and/or [PHILYARDS] Holdings, Inc. declaring them as the preferred bidder and they shall
have a period of ninety (90) days from the receipt of the APT's notice within which to pay the balance of
their bid price.
6.2 Should Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings, Inc. fail to exercise their "Option
to Top the Highest Bid" within the thirty (30)-day period, APT will declare the highest bidder as the
winning bidder.
xxx xxx xxx
12.0 The bidder shall be solely responsible for examining with appropriate care these rules, the official bid
forms, including any addenda or amendments thereto issued during the bidding period. The bidder shall
likewise be responsible for informing itself with respect to any and all conditions concerning the PHILSECO
Shares which may, in any manner, affect the bidder's proposal. Failure on the part of the bidder to so
examine and inform itself shall be its sole risk and no relief for error or omission will be given by APT or
COP. . . .
At the public bidding on the said date, petitioner J.G. Summit Holdings, Inc.2 submitted a bid of Two Billion
and Thirty Million Pesos (P2,030,000,000.00) with an acknowledgment of KAWASAKI/[PHILYARDS'] right
to top, viz:
4. I/We understand that the Committee on Privatization (COP) has up to thirty (30) days to act on APT's
recommendation based on the result of this bidding. Should the COP approve the highest bid, APT shall
advise Kawasaki Heavy Industries, Inc. and/or its nominee, [PHILYARDS] Holdings, Inc. that the highest bid
is acceptable to the National Government. Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings,
Inc. shall then have a period of thirty (30) calendar days from the date of receipt of such advice from APT
within which to exercise their "Option to Top the Highest Bid" by offering a bid equivalent to the highest
bid plus five (5%) percent thereof.
As petitioner was declared the highest bidder, the COP approved the sale on December 3, 1993 "subject
to the right of Kawasaki Heavy Industries, Inc./[PHILYARDS] Holdings, Inc. to top JGSMI's bid by 5% as
specified in the bidding rules."
On December 29, 1993, petitioner informed APT that it was protesting the offer of PHI to top its bid on
the grounds that: (a) the KAWASAKI/PHI consortium composed of KAWASAKI, [PHILYARDS], Mitsui,
Keppel, SM Group, ICTSI and Insular Life violated the ASBR because the last four (4) companies were the
losing bidders thereby circumventing the law and prejudicing the weak winning bidder; (b) only
KAWASAKI could exercise the right to top; (c) giving the same option to top to PHI constituted
unwarranted benefit to a third party; (d) no right of first refusal can be exercised in a public bidding or
auction sale; and (e) the JG Summit consortium was not estopped from questioning the proceedings.
On February 2, 1994, petitioner was notified that PHI had fully paid the balance of the purchase price of
the subject bidding. On February 7, 1994, the APT notified petitioner that PHI had exercised its option to
top the highest bid and that the COP had approved the same on January 6, 1994. On February 24, 1994,
the APT and PHI executed a Stock Purchase Agreement. Consequently, petitioner filed with this Court a
Petition for Mandamus under G.R. No. 114057. On May 11, 1994, said petition was referred to the Court
of Appeals. On July 18, 1995, the Court of Appeals denied the same for lack of merit. It ruled that the
petition for mandamus was not the proper remedy to question the constitutionality or legality of the right
of first refusal and the right to top that was exercised by KAWASAKI/PHI, and that the matter must be
brought "by the proper party in the proper forum at the proper time and threshed out in a full blown
trial." The Court of Appeals further ruled that the right of first refusal and the right to top are prima facie
legal and that the petitioner, "by participating in the public bidding, with full knowledge of the right to top
granted to KAWASAKI/[PHILYARDS] is…estopped from questioning the validity of the award given to
[PHILYARDS] after the latter exercised the right to top and had paid in full the purchase price of the
subject shares, pursuant to the ASBR." Petitioner filed a Motion for Reconsideration of said Decision
which was denied on March 15, 1996. Petitioner thus filed a Petition for Certiorari with this Court alleging
grave abuse of discretion on the part of the appellate court.
On November 20, 2000, this Court rendered x x x [a] Decision ruling among others that the Court of
Appeals erred when it dismissed the petition on the sole ground of the impropriety of the special civil
action of mandamus because the petition was also one of certiorari. It further ruled that a shipyard like
PHILSECO is a public utility whose capitalization must be sixty percent (60%) Filipino-owned.
Consequently, the right to top granted to KAWASAKI under the Asset Specific Bidding Rules (ASBR) drafted
for the sale of the 87.67% equity of the National Government in PHILSECO is illegal — not only because it
violates the rules on competitive bidding — but more so, because it allows foreign corporations to own
more than 40% equity in the shipyard. It also held that "although the petitioner had the opportunity to
examine the ASBR before it participated in the bidding, it cannot be estopped from questioning the
unconstitutional, illegal and inequitable provisions thereof." Thus, this Court voided the transfer of the
national government's 87.67% share in PHILSECO to Philyard[s] Holdings, Inc., and upheld the right of JG
Summit, as the highest bidder, to take title to the said shares, viz:
WHEREFORE, the instant petition for review on certiorari is GRANTED. The assailed Decision and
Resolution of the Court of Appeals are REVERSED and SET ASIDE. Petitioner is ordered to pay to APT its
bid price of Two Billion Thirty Million Pesos (P2,030,000,000.00), less its bid deposit plus interests upon
the finality of this Decision. In turn, APT is ordered to:
 L A W O N N A T U R A L R E S O U R C E S a n d E N V I R O N M E N T A L L A W C a s e s a n d S p e c i a l L a w s | 71
(a) accept the said amount of P2,030,000,000.00 less bid deposit and interests from petitioner;
(b) execute a Stock Purchase Agreement with petitioner;
(c) cause the issuance in favor of petitioner of the certificates of stocks representing 87.6% of
PHILSECO's total capitalization;
(d) return to private respondent PHGI the amount of Two Billion One Hundred Thirty-One Million
Five Hundred Thousand Pesos (P2,131,500,000.00); and
(e) cause the cancellation of the stock certificates issued to PHI.
SO ORDERED.
In separate Motions for Reconsideration, respondents submit[ted] three basic issues for x x x resolution:
(1) Whether PHILSECO is a public utility; (2) Whether under the 1977 JVA, KAWASAKI can exercise its right
of first refusal only up to 40% of the total capitalization of PHILSECO; and (3) Whether the right to top
granted to KAWASAKI violates the principles of competitive bidding.3 (citations omitted)
In a Resolution dated September 24, 2003, this Court ruled in favor of the respondents. On the first issue,
we held that Philippine Shipyard and Engineering Corporation (PHILSECO) is not a public utility, as by
nature, a shipyard is not a public utility4 and that no law declares a shipyard to be a public utility. 5 On the
second issue, we found nothing in the 1977 Joint Venture Agreement (JVA) which prevents Kawasaki
Heavy Industries, Ltd. of Kobe, Japan (KAWASAKI) from acquiring more than 40% of PHILSECO’s total
capitalization.6 On the final issue, we held that the right to top granted to KAWASAKI in exchange for its
right of first refusal did not violate the principles of competitive bidding. 7
On October 20, 2003, the petitioner filed a Motion for Reconsideration 8 and a Motion to Elevate This Case
to the Court En Banc.9 Public respondents Committee on Privatization (COP) and Asset Privatization Trust
(APT), and private respondent Philyards Holdings, Inc. (PHILYARDS) filed their Comments on J.G. Summit
Holdings, Inc.’s (JG Summit’s) Motion for Reconsideration and Motion to Elevate This Case to the Court En
Banc on January 29, 2004 and February 3, 2004, respectively.
II. Issues
Based on the foregoing, the relevant issues to resolve to end this litigation are the following:
1. Whether there are sufficient bases to elevate the case at bar to the Court en banc.
2. Whether the motion for reconsideration raises any new matter or cogent reason to warrant a
reconsideration of this Court’s Resolution of September 24, 2003.
Motion to Elevate this Case to the
Court En Banc
The petitioner prays for the elevation of the case to the Court en banc on the following grounds:
1. The main issue of the propriety of the bidding process involved in the present case has been
confused with the policy issue of the supposed fate of the shipping industry which has never
been an issue that is determinative of this case.10
2. The present case may be considered under the Supreme Court Resolution dated February 23,
1984 which included among en banc cases those involving a novel question of law and those
where a doctrine or principle laid down by the Court en banc or in division may be modified or
reversed.11
3. There was clear executive interference in the judicial functions of the Court when the
Honorable Jose Isidro Camacho, Secretary of Finance, forwarded to Chief Justice Davide, a
memorandum dated November 5, 2001, attaching a copy of the Foreign Chambers Report dated
October 17, 2001, which matter was placed in the agenda of the Court and noted by it in a formal
resolution dated November 28, 2001.12
Opposing J.G. Summit’s motion to elevate the case en banc, PHILYARDS points out the petitioner’s
inconsistency in previously opposing PHILYARDS’ Motion to Refer the Case to the Court En
Banc. PHILYARDS contends that J.G. Summit should now be estopped from asking that the case be
referred to the Court en banc. PHILYARDS further contends that the Supreme Court en banc is not an
appellate court to which decisions or resolutions of its divisions may be appealed citing Supreme Court
Circular No. 2-89 dated February 7, 1989.13 PHILYARDS also alleges that there is no novel question of law
involved in the present case as the assailed Resolution was based on well-settled jurisprudence. Likewise,
PHILYARDS stresses that the Resolution was merely an outcome of the motions for reconsideration filed
by it and the COP and APT and is "consistent with the inherent power of courts to ‘amend and control its
process and orders so as to make them conformable to law and justice.’ (Rule 135, sec. 5)" 14 Private
respondent belittles the petitioner’s allegations regarding the change in ponente and the alleged
executive interference as shown by former Secretary of Finance Jose Isidro Camacho’s memorandum
dated November 5, 2001 arguing that these do not justify a referral of the present case to the Court en
banc.
In insisting that its Motion to Elevate This Case to the Court En Banc should be granted, J.G. Summit
further argued that: its Opposition to the Office of the Solicitor General’s Motion to Refer is different from
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its own Motion to Elevate; different grounds are invoked by the two motions; there was unwarranted
"executive interference"; and the change in ponente is merely noted in asserting that this case should be
decided by the Court en banc.15
We find no merit in petitioner’s contention that the propriety of the bidding process involved in the
present case has been confused with the policy issue of the fate of the shipping industry which, petitioner
maintains, has never been an issue that is determinative of this case. The Court’s Resolution of September
24, 2003 reveals a clear and definitive ruling on the propriety of the bidding process. In discussing
whether the right to top granted to KAWASAKI in exchange for its right of first refusal violates the
principles of competitive bidding, we made an exhaustive discourse on the rules and principles of public
bidding and whether they were complied with in the case at bar. 16 This Court categorically ruled on the
petitioner’s argument that PHILSECO, as a shipyard, is a public utility which should maintain a 60%-40%
Filipino-foreign equity ratio, as it was a pivotal issue. In doing so, we recognized the impact of our ruling
on the shipbuilding industry which was beyond avoidance.17
We reject petitioner’s argument that the present case may be considered under the Supreme Court
Resolution dated February 23, 1984 which included among en banc cases those involving a novel question
of law and those where a doctrine or principle laid down by the court en banc or in division may be
modified or reversed. The case was resolved based on basic principles of the right of first refusal in
commercial law and estoppel in civil law. Contractual obligations arising from rights of first refusal are not
new in this jurisdiction and have been recognized in numerous cases. 18 Estoppel is too known a civil law
concept to require an elongated discussion. Fundamental principles on public bidding were likewise used
to resolve the issues raised by the petitioner. To be sure, petitioner leans on the right to top in a public
bidding in arguing that the case at bar involves a novel issue. We are not swayed. The right to top was
merely a condition or a reservation made in the bidding rules which was fully disclosed to all bidding
parties. In Bureau Veritas, represented by Theodor H. Hunermann v. Office of the President, et al., 19 we
dealt with this conditionality, viz:
x x x It must be stressed, as held in the case of A.C. Esguerra & Sons v. Aytona, et al., (L-18751, 28 April
1962, 4 SCRA 1245), that in an "invitation to bid, there is a condition imposed upon the bidders to the
effect that the bidding shall be subject to the right of the government to reject any and all bids subject
to its discretion. In the case at bar, the government has made its choice and unless an unfairness or
injustice is shown, the losing bidders have no cause to complain nor right to dispute that choice. This is
a well-settled doctrine in this jurisdiction and elsewhere."
The discretion to accept or reject a bid and award contracts is vested in the Government agencies
entrusted with that function. The discretion given to the authorities on this matter is of such wide latitude
that the Courts will not interfere therewith, unless it is apparent that it is used as a shield to a fraudulent
award (Jalandoni v. NARRA, 108 Phil. 486 [1960]). x x x The exercise of this discretion is a policy decision
that necessitates prior inquiry, investigation, comparison, evaluation, and deliberation. This task can best
be discharged by the Government agencies concerned, not by the Courts. The role of the Courts is to
ascertain whether a branch or instrumentality of the Government has transgressed its constitutional
boundaries. But the Courts will not interfere with executive or legislative discretion exercised within those
boundaries. Otherwise, it strays into the realm of policy decision-making.
It is only upon a clear showing of grave abuse of discretion that the Courts will set aside the award of a
contract made by a government entity. Grave abuse of discretion implies a capricious, arbitrary and
whimsical exercise of power (Filinvest Credit Corp. v. Intermediate Appellate Court, No. 65935, 30
September 1988, 166 SCRA 155). The abuse of discretion must be so patent and gross as to amount to an
evasion of positive duty or to a virtual refusal to perform a duty enjoined by law, as to act at all in
contemplation of law, where the power is exercised in an arbitrary and despotic manner by reason of
passion or hostility (Litton Mills, Inc. v. Galleon Trader, Inc., et al[.], L-40867, 26 July 1988, 163 SCRA 489).
The facts in this case do not indicate any such grave abuse of discretion on the part of public respondents
when they awarded the CISS contract to Respondent SGS. In the "Invitation to Prequalify and Bid" (Annex
"C," supra), the CISS Committee made an express reservation of the right of the Government to "reject
any or all bids or any part thereof or waive any defects contained thereon and accept an offer most
advantageous to the Government." It is a well-settled rule that where such reservation is made in an
Invitation to Bid, the highest or lowest bidder, as the case may be, is not entitled to an award as a
matter of right (C & C Commercial Corp. v. Menor, L-28360, 27 January 1983, 120 SCRA 112). Even the
lowest Bid or any Bid may be rejected or, in the exercise of sound discretion, the award may be made to
another than the lowest bidder (A.C. Esguerra & Sons v. Aytona, supra, citing 43 Am. Jur., 788). (emphases
supplied)1awphi1.nét
Like the condition in the Bureau Veritas case, the right to top was a condition imposed by the government
in the bidding rules which was made known to all parties. It was a condition imposed on all bidders
equally, based on the APT’s exercise of its discretion in deciding on how best to privatize the
government’s shares in PHILSECO. It was not a whimsical or arbitrary condition plucked from the ether
and inserted in the bidding rules but a condition which the APT approved as the best way the government
could comply with its contractual obligations to KAWASAKI under the JVA and its mandate of getting the
most advantageous deal for the government. The right to top had its history in the mutual right of first
refusal in the JVA and was reached by agreement of the government and KAWASAKI.
Further, there is no "executive interference" in the functions of this Court by the mere filing of a
memorandum by Secretary of Finance Jose Isidro Camacho. The memorandum was merely "noted" to
acknowledge its filing. It had no further legal significance. Notably too, the assailed Resolution dated
September 24, 2003 was decided unanimously by the Special First Division in favor of the respondents.
Again, we emphasize that a decision or resolution of a Division is that of the Supreme Court 20 and the
Court en banc is not an appellate court to which decisions or resolutions of a Division may be appealed. 21
For all the foregoing reasons, we find no basis to elevate this case to the Court en banc.
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Motion for Reconsideration
Three principal arguments were raised in the petitioner’s Motion for Reconsideration. First, that a fair
resolution of the case should be based on contract law, not on policy considerations; the contracts do not
authorize the right to top to be derived from the right of first refusal. 22 Second, that neither the right of
first refusal nor the right to top can be legally exercised by the consortium which is not the proper party
granted such right under either the JVA or the Asset Specific Bidding Rules (ASBR). 23 Third, that the
maintenance of the 60%-40% relationship between the National Investment and Development
Corporation (NIDC) and KAWASAKI arises from contract and from the Constitution because PHILSECO is a
landholding corporation and need not be a public utility to be bound by the 60%-40% constitutional
limitation.24
On the other hand, private respondent PHILYARDS asserts that J.G. Summit has not been able to show
compelling reasons to warrant a reconsideration of the Decision of the Court. 25 PHILYARDS denies that the
Decision is based mainly on policy considerations and points out that it is premised on principles
governing obligations and contracts and corporate law such as the rule requiring respect for contractual
stipulations, upholding rights of first refusal, and recognizing the assignable nature of contracts
rights.26 Also, the ruling that shipyards are not public utilities relies on established case law and
fundamental rules of statutory construction. PHILYARDS stresses that KAWASAKI’s right of first refusal or
even the right to top is not limited to the 40% equity of the latter. 27 On the landholding issue raised by
J.G. Summit, PHILYARDS emphasizes that this is a non-issue and even involves a question of fact. Even
assuming that this Court can take cognizance of such question of fact even without the benefit of a trial,
PHILYARDS opines that landholding by PHILSECO at the time of the bidding is irrelevant because what is
essential is that ultimately a qualified entity would eventually hold PHILSECO’s real estate
properties.28 Further, given the assignable nature of the right of first refusal, any applicable nationality
restrictions, including landholding limitations, would not affect the right of first refusal itself, but only the
manner of its exercise.29 Also, PHILYARDS argues that if this Court takes cognizance of J.G. Summit’s
allegations of fact regarding PHILSECO’s landholding, it must also recognize PHILYARDS’ assertions that
PHILSECO’s landholdings were sold to another corporation. 30 As regards the right of first refusal, private
respondent explains that KAWASAKI’s reduced shareholdings (from 40% to 2.59%) did not translate to a
deprivation or loss of its contractually granted right of first refusal. 31 Also, the bidding was valid because
PHILYARDS exercised the right to top and it was of no moment that losing bidders later joined PHILYARDS
in raising the purchase price.32
In cadence with the private respondent PHILYARDS, public respondents COP and APT contend:
1. The conversion of the right of first refusal into a right to top by 5% does not violate any
provision in the JVA between NIDC and KAWASAKI.
2. PHILSECO is not a public utility and therefore not governed by the constitutional restriction on
foreign ownership.
3. The petitioner is legally estopped from assailing the validity of the proceedings of the public
bidding as it voluntarily submitted itself to the terms of the ASBR which included the provision on
the right to top.
4. The right to top was exercised by PHILYARDS as the nominee of KAWASAKI and the fact that
PHILYARDS formed a consortium to raise the required amount to exercise the right to top the
highest bid by 5% does not violate the JVA or the ASBR.
5. The 60%-40% Filipino-foreign constitutional requirement for the acquisition of lands does not
apply to PHILSECO because as admitted by petitioner itself, PHILSECO no longer owns real
property.
6. Petitioner’s motion to elevate the case to the Court en banc is baseless and would only delay
the termination of this case.33
In a Consolidated Comment dated March 8, 2004, J.G. Summit countered the arguments of the public and
private respondents in this wise:
1. The award by the APT of 87.67% shares of PHILSECO to PHILYARDS with losing bidders through
the exercise of a right to top, which is contrary to law and the constitution is null and void for
being violative of substantive due process and the abuse of right provision in the Civil Code.
a. The bidders[’] right to top was actually exercised by losing bidders.
b. The right to top or the right of first refusal cannot co-exist with a genuine competitive
bidding.
c. The benefits derived from the right to top were unwarranted.
2. The landholding issue has been a legitimate issue since the start of this case but is shamelessly
ignored by the respondents.
a. The landholding issue is not a non-issue.
b. The landholding issue does not pose questions of fact.
c. That PHILSECO owned land at the time that the right of first refusal was agreed upon
and at the time of the bidding are most relevant.
d. Whether a shipyard is a public utility is not the core issue in this case.
 L A W O N N A T U R A L R E S O U R C E S a n d E N V I R O N M E N T A L L A W C a s e s a n d S p e c i a l L a w s | 74
3. Fraud and bad faith attend the alleged conversion of an inexistent right of first refusal to the
right to top.
a. The history behind the birth of the right to top shows fraud and bad faith.
b. The right of first refusal was, indeed, "effectively useless."
4. Petitioner is not legally estopped to challenge the right to top in this case.
a. Estoppel is unavailing as it would stamp validity to an act that is prohibited by law or
against public policy.
b. Deception was patent; the right to top was an attractive nuisance.
c. The 10% bid deposit was placed in escrow.
J.G. Summit’s insistence that the right to top cannot be sourced from the right of first refusal is not new
and we have already ruled on the issue in our Resolution of September 24, 2003. We upheld the mutual
right of first refusal in the JVA.34 We also ruled that nothing in the JVA prevents KAWASAKI from acquiring
more than 40% of PHILSECO’s total capitalization.35 Likewise, nothing in the JVA or ASBR bars the
conversion of the right of first refusal to the right to top. In sum, nothing new and of significance in the
petitioner’s pleading warrants a reconsideration of our ruling.
Likewise, we already disposed of the argument that neither the right of first refusal nor the right to top
can legally be exercised by the consortium which is not the proper party granted such right under either
the JVA or the ASBR. Thus, we held:
The fact that the losing bidder, Keppel Consortium (composed of Keppel, SM Group, Insular Life
Assurance, Mitsui and ICTSI), has joined PHILYARDS in the latter's effort to raise P2.131 billion necessary
in exercising the right to top is not contrary to law, public policy or public morals. There is nothing in the
ASBR that bars the losing bidders from joining either the winning bidder (should the right to top is not
exercised) or KAWASAKI/PHI (should it exercise its right to top as it did), to raise the purchase price. The
petitioner did not allege, nor was it shown by competent evidence, that the participation of the losing
bidders in the public bidding was done with fraudulent intent. Absent any proof of fraud, the formation by
[PHILYARDS] of a consortium is legitimate in a free enterprise system. The appellate court is thus correct
in holding the petitioner estopped from questioning the validity of the transfer of the National
Government's shares in PHILSECO to respondent.36
Further, we see no inherent illegality on PHILYARDS’ act in seeking funding from parties who were losing
bidders. This is a purely commercial decision over which the State should not interfere absent any legal
infirmity. It is emphasized that the case at bar involves the disposition of shares in a corporation which
the government sought to privatize. As such, the persons with whom PHILYARDS desired to enter into
business with in order to raise funds to purchase the shares are basically its business. This is in contrast to
a case involving a contract for the operation of or construction of a government infrastructure where the
identity of the buyer/bidder or financier constitutes an important consideration. In such cases, the
government would have to take utmost precaution to protect public interest by ensuring that the parties
with which it is contracting have the ability to satisfactorily construct or operate the infrastructure.
On the landholding issue, J.G. Summit submits that since PHILSECO is a landholding company, KAWASAKI
could exercise its right of first refusal only up to 40% of the shares of PHILSECO due to the constitutional
prohibition on landholding by corporations with more than 40% foreign-owned equity. It further argues
that since KAWASAKI already held at least 40% equity in PHILSECO, the right of first refusal was inutile and
as such, could not subsequently be converted into the right to top. 37 Petitioner also asserts that, at
present, PHILSECO continues to violate the constitutional provision on landholdings as its shares are more
than 40% foreign-owned.38 PHILYARDS admits that it may have previously held land but had already
divested such landholdings.39 It contends, however, that even if PHILSECO owned land, this would not
affect the right of first refusal but only the exercise thereof. If the land is retained, the right of first refusal,
being a property right, could be assigned to a qualified party. In the alternative, the land could be divested
before the exercise of the right of first refusal. In the case at bar, respondents assert that since the right of
first refusal was validly converted into a right to top, which was exercised not by KAWASAKI, but by
PHILYARDS which is a Filipino corporation (i.e., 60% of its shares are owned by Filipinos), then there is no
violation of the Constitution.40 At first, it would seem that questions of fact beyond cognizance by this
Court were involved in the issue. However, the records show that PHILYARDS admits it had owned land
up until the time of the bidding.41 Hence, the only issue is whether KAWASAKI had a valid right of first
refusal over PHILSECO shares under the JVA considering that PHILSECO owned land until the time of the
bidding and KAWASAKI already held 40% of PHILSECO’s equity.
We uphold the validity of the mutual rights of first refusal under the JVA between KAWASAKI and NIDC.
First of all, the right of first refusal is a property right of PHILSECO shareholders, KAWASAKI and NIDC,
under the terms of their JVA. This right allows them to purchase the shares of their co-shareholder before
they are offered to a third party. The agreement of co-shareholders to mutually grant this right to each
other, by itself, does not constitute a violation of the provisions of the Constitution limiting land
ownership to Filipinos and Filipino corporations. As PHILYARDS correctly puts it, if PHILSECO still owns
land, the right of first refusal can be validly assigned to a qualified Filipino entity in order to maintain the
60%-40% ratio. This transfer, by itself, does not amount to a violation of the Anti-Dummy Laws, absent
proof of any fraudulent intent. The transfer could be made either to a nominee or such other party which
the holder of the right of first refusal feels it can comfortably do business with. Alternatively, PHILSECO
may divest of its landholdings, in which case KAWASAKI, in exercising its right of first refusal, can exceed
40% of PHILSECO’s equity. In fact, it can even be said that if the foreign shareholdings of a landholding
corporation exceeds 40%, it is not the foreign stockholders’ ownership of the shares which is adversely
affected but the capacity of the corporation to own land – that is, the corporation becomes disqualified
to own land. This finds support under the basic corporate law principle that the corporation and its
stockholders are separate juridical entities. In this vein, the right of first refusal over shares pertains to the
 L A W O N N A T U R A L R E S O U R C E S a n d E N V I R O N M E N T A L L A W C a s e s a n d S p e c i a l L a w s | 75
shareholders whereas the capacity to own land pertains to the corporation. Hence, the fact that PHILSECO
owns land cannot deprive stockholders of their right of first refusal. No law disqualifies a person from
purchasing shares in a landholding corporation even if the latter will exceed the allowed foreign equity,
what the law disqualifies is the corporation from owning land. This is the clear import of the following
provisions in the Constitution:
Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all
forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural
resources are owned by the State. With the exception of agricultural lands, all other natural resources
shall not be alienated. The exploration, development, and utilization of natural resources shall be under
the full control and supervision of the State. The State may directly undertake such activities, or it may
enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or
corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such
agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-
five years, and under such terms and conditions as may be provided by law. In cases of water rights for
irrigation, water supply, fisheries, or industrial uses other than the development of water power,
beneficial use may be the measure and limit of the grant.
xxx xxx xxx
Section 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed
except to individuals, corporations, or associations qualified to acquire or hold lands of the public
domain.42 (emphases supplied)
The petitioner further argues that "an option to buy land is void in itself (Philippine Banking Corporation v.
Lui She, 21 SCRA 52 [1967]). The right of first refusal granted to KAWASAKI, a Japanese corporation, is
similarly void. Hence, the right to top, sourced from the right of first refusal, is also void."43 Contrary to
the contention of petitioner, the case of Lui She did not that say "an option to buy land is void in itself,"
for we ruled as follows:
x x x To be sure, a lease to an alien for a reasonable period is valid. So is an option giving an alien the
right to buy real property on condition that he is granted Philippine citizenship. As this Court said in
Krivenko vs. Register of Deeds:
[A]liens are not completely excluded by the Constitution from the use of lands for residential purposes.
Since their residence in the Philippines is temporary, they may be granted temporary rights such as a
lease contract which is not forbidden by the Constitution. Should they desire to remain here forever and
share our fortunes and misfortunes, Filipino citizenship is not impossible to acquire.
But if an alien is given not only a lease of, but also an option to buy, a piece of land, by virtue of which
the Filipino owner cannot sell or otherwise dispose of his property, this to last for 50 years, then it
becomes clear that the arrangement is a virtual transfer of ownership whereby the owner divests
himself in stages not only of the right to enjoy the land (jus possidendi, jus utendi, jus fruendi and jus
abutendi) but also of the right to dispose of it (jus disponendi) — rights the sum total of which make up
ownership. It is just as if today the possession is transferred, tomorrow, the use, the next day, the
disposition, and so on, until ultimately all the rights of which ownership is made up are consolidated in
an alien. And yet this is just exactly what the parties in this case did within this pace of one year, with the
result that Justina Santos'[s] ownership of her property was reduced to a hollow concept. If this can be
done, then the Constitutional ban against alien landholding in the Philippines, as announced in Krivenko
vs. Register of Deeds, is indeed in grave peril.44 (emphases supplied; Citations omitted)
In Lui She, the option to buy was invalidated because it amounted to a virtual transfer of ownership as the
owner could not sell or dispose of his properties. The contract in Lui She prohibited the owner of the land
from selling, donating, mortgaging, or encumbering the property during the 50-year period of the option
to buy. This is not so in the case at bar where the mutual right of first refusal in favor of NIDC and
KAWASAKI does not amount to a virtual transfer of land to a non-Filipino. In fact, the case at bar involves
a right of first refusal over shares of stockwhile the Lui She case involves an option to buy the land itself.
As discussed earlier, there is a distinction between the shareholder’s ownership of shares and the
corporation’s ownership of land arising from the separate juridical personalities of the corporation and its
shareholders.
We note that in its Motion for Reconsideration, J.G. Summit alleges that PHILSECO continues to violate
the Constitution as its foreign equity is above 40% and yet owns long-term leasehold rights which are
real rights.45 It cites Article 415 of the Civil Code which includes in the definition of immovable property,
"contracts for public works, and servitudes and other real rights over immovable property." 46 Any existing
landholding, however, is denied by PHILYARDS citing its recent financial statements. 47 First, these are
questions of fact, the veracity of which would require introduction of evidence. The Court needs to
validate these factual allegations based on competent and reliable evidence. As such, the Court cannot
resolve the questions they pose. Second, J.G. Summit misreads the provisions of the Constitution cited in
its own pleadings, to wit:
29.2 Petitioner has consistently pointed out in the past that private respondent is not a 60%-40%
corporation, and this violates the Constitution x x x The violation continues to this day because under the
law, it continues to own real property…
xxx xxx xxx
32. To review the constitutional provisions involved, Section 14, Article XIV of the 1973 Constitution (the
JVA was signed in 1977), provided:
"Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to
individuals, corporations, or associations qualified to acquire or hold lands of the public domain."
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32.1 This provision is the same as Section 7, Article XII of the 1987 Constitution.
32.2 Under the Public Land Act, corporations qualified to acquire or hold lands of the public domain are
corporations at least 60% of which is owned by Filipino citizens (Sec. 22, Commonwealth Act 141, as
amended). (emphases supplied)
As correctly observed by the public respondents, the prohibition in the Constitution applies only to
ownership of land.48 It does not extend to immovable or real property as defined under Article 415 of
the Civil Code.Otherwise, we would have a strange situation where the ownership of immovable property
such as trees, plants and growing fruit attached to the land 49 would be limited to Filipinos and Filipino
corporations only.
III.
WHEREFORE, in view of the foregoing, the petitioner’s Motion for Reconsideration is DENIED WITH
FINALITY and the decision appealed from is AFFIRMED. The Motion to Elevate This Case to the Court En
Banc is likewise DENIED for lack of merit.
5. A resolution of the Division denying a party’s motion for referral to the Court en banc of any
Division case, shall be final and not appealable to the Court en banc.
6. When a decision or resolution is referred by a Division to the Court en banc, the latter may, in
the absence of sufficiently important reasons, decline to take cognizance of the same, in which
case, the decision or resolution shall be returned to the referring Division.
7. No motion for reconsideration of the action of the Court en banc declining to take cognizance
of a referral by a Division, shall be entertained.
14 PHILYARDS’ Comment dated February 3, 2004, pp. 26-27; Rollo, pp. 1996-1997.
15 J.G. Summit’s Consolidated Comment dated March 8, 2004.
16 Resolution dated September 24, 2003, pp. 26-32.
17 Id., pp. 10-22.
18 See Bastida and Ysmael & Co., Inc. v. Dy Buncio & Co., Inc., 93 Phil. 195 (1953); Garcia v. Burgos , 291
SCRA 546 (1998); Sadhwani v. CA , 281 SCRA 75 (1997); Parañaque Kings Enterprises, Incorporated v. CA ,
268 SCRA 727 (1997); Polytechnic University of the Philippines v. CA , 368 SCRA 691 (2001); and Guzman,
Bocaling & Co. v. Bonnevie, 206 SCRA 668 (1992).
19 G.R. No. 101678, February 3, 1992, 205 SCRA 705.
20 Sec. 4(3), Art. VIII, Constitution.
21 Supreme Court Circular No. 2-89, February 7, 1989.
22 J.G. Summit’s Motion for Reconsideration dated October 17, 2003, pp. 8-9; Rollo, pp. 1861-1862.
23 Id. at 10-13; Rollo, pp. 1863-1866.
24 Id. at 13-19; Rollo, pp. 1866-1872.

SO ORDERED. 25 PHILYARDS’ Comment dated February 3, 2004, p. 1; Rollo, p. 1971.

26 Id. at 2; Rollo, p. 1972.
27 Id. at 5; Rollo, p. 1975.
Davide, Jr., C.J., (Chairman), Ynares-Santiago, Corona, and Tinga, JJ., concur.
28 Id. at 9; Rollo, p. 1979.
29 Id. at 12; Rollo, p. 1982.
Footnotes 30 Id.
1 Also referred to in this Resolution as "PHILYARDS." 31 Id. at 14; Rollo, p. 1984.
2 Also referred to as J G Summit. 32 Id. at 19; Rollo, p. 1989.
3 Resolution promulgated on September 24, 2003, pp. 2 – 10.
33 COP and APT’s Comment dated January 14, 2004, pp. 14-15; Rollo, pp. 1927-1928.
4 Id. at 10 – 13.
34 Resolution dated September 24, 2003, pp. 23-24.
5 Id. at 14 – 22.
35 Id. at 22.
6 Id. at 22 – 25.
36 Resolution dated September 24, 2003, pp. 31-32.
7 Id. at 26 – 32.
37 J.G. Summit’s Consolidated Reply dated March 11, 2004, p. 14; Rollo, p. 2109.
8 Rollo, p. 1854.
38 Id.
9 Rollo, p. 1876.
39 PHILYARDS’ Manifestation and Comment dated June 26, 2002, p. 10; Rollo, p. 1334.
10 J.G. Summit’s Motion to Elevate this Case to the Court En Banc dated October 17, 2003, p. 3; Rollo, p.
40 PHILYARDS’ Comment dated February 3, 2004, pp. 8-16; Rollo, pp. 1978-1986.
1878. 41 PHILYARDS’ Manifestation and Comment dated June 26, 2002, p. 10; Rollo, p. 1334.
11 Id.
42 Constitution, Article XII, National Economy and Patrimony.
12 Id.
43 J.G. Summit’s Consolidated Comment dated March 8, 2004, p. 17; Rollo, p. 2112.
13 2. A decision or resolution of a Division of the Court, when concurred in by a majority of its Members who
44 Philippine Banking Corporation v. Lui She, No. L-17587, September 12, 1967, 21 SCRA 52.
actually took part in the deliberations on the issues in a case and voted thereon, and in no case without the 45 J.G. Summit’s Motion for Reconsideration dated October 17, 2003, p. 14; Rollo, p. 1867.
concurrence of at least three of such Members, is a decision or resolution of the Supreme Court (Section 46 Id. at 15; Rollo, p. 1868.
4[3], Article VIII, 1987 Constitution). 47 PHILYARDS’ Manifestation and Comment dated June 26, 2002, p. 10; Rollo, p. 1334.
3. The Court en banc is not an Appellate Court to which decisions or resolutions of a Division may 48 COP and APT’s Comment dated January 14, 2004, p. 36; Rollo, p. 1949.
be appealed. 49 Art. 415(2), Civil Code.
xxx xxx xxx
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G.R. No. L-46729 November 19, 1982 1. Vicente Abaqueta 21. Eniego Garlic
LAUSAN AYOG, BENITO AYOG, DAMASO AYOG, JULIO AYOG, SEGUNDA AYOG, VICENTE ABAQUETA,
BERNARDINO ADORMEO, VIDAL ALBANO, FELICIANO ARIAS, ANTONIO BALDOS, MAXIMO BALDOS, 2. Candido Abella 22. Nicolas Garlic
ROMERO BINGZON, EMILIO CADAYDAY, FRUCTUOSO CHUA, SR., HERACLEO CHUA, GUILLERMO DAGOY,
ABDON DEIMOS, NICASIO DE LEON, JULIANA VDA. DE DIANNA, DEMOCRITO DEVERO, ALFREDO 3. Julio Ayog 23. Rufo Garlic
DIVINAGRACIA, ESTEBAN DIVINAGRACIA, LEODEGARDIO DIVINAGRACIA, NELLO DIVINAGRACIA,
MERQUIADES EMBERADOR, JESUS EMPERADO, PORFERIO ENOC, SOFRONIO ENOC, RAFAEL GAETOS,
4. Arcadio Ayong 24. Alfonso Ibales
NICOLAS GARLET, TRINIDAD GARLET, FORTUNATA GEONZON, NICOLADA NAQUILA, TORIBIO NAQUILA,
EFREN OKAY, ELPIDIO OKAY, SR., DIEGO ONGRIA, ERNESTO PANARES, VICENTE PATULOT, IGNACIA
5. Generoso Bangonan 25. Julian Locacia
RIBAO, JUANO RICO, JESUS ROSALITA, ARMANDO TANTE and ANSELMO VALMORES, petitioners,
vs.
JUDGE VICENTE N. CUSI, JR., Court of First Instance of Davao, Branch I, PROVINCIAL SHERIFF OF DAVAO, 6. Lomayong Cabao 26. Filomeno Labantaban
and BINAN DEVELOPMENT CO., INC., respondents. MINISTER OF NATURAL RESOURCES and DIRECTOR
OF LANDS, intervenors. 7. Jose Catibring 27. Arcadio Lumantas

AQUINO, J.: 8. Teodolfo Chua 28. Santos Militante

This case is about the application of section 11, Article XIV of the 1973 Constitution (disqualifying a private 9. Guillermo Dagoy 29. Toribio Naquila
corporation from purchasing public lands) to a 1953 sales award made by the Bureau of Lands, for which a
sales patent and Torrens title were issued in 1975, and to the 1964 decision of the trial court, ejecting 10. Anastacia Vda. de Didal 30. Elpidio Okay
some of the petitioners from the land purchased, which decision was affirmed in 1975 by the Court of
Appeals. That legal question arises under the following facts: 11. Alfredo Divinagracia 31. Guillermo Omac

On January 21, 1953, the Director of Lands, after a bidding, awarded to Biñan Development Co., Inc. on 12. Silverio Divinagracia 32. Emilio Padayday
the basis of its 1951 Sales Application No. V-6834 Cadastral Lot No. 281 located at Barrio Tamugan,
Guianga (Baguio District), Davao City with an area of about two hundred fifty hectares. Some occupants of 13. Galina Edsa 33. Marcosa Vda. de Rejoy
the lot protested against the sale. The Director of Lands in his decision of August 30, 1957 dismissed the
protests and ordered the occupants to vacate the lot and remove their improvements. No appeal was
14. Jesus Emperado 34. Lorenzo Rutsa
made from that decision.
15. Porfirio Enoc 35. Ramon Samsa
The Director found that the protestants (defendants in the 1961 ejectment suit, some of whom are now
petitioners herein) entered the land only after it was awarded to the corporation and, therefore, they
could not be regarded as bona fide occupants thereof. The Director characterized them as squatters. He 16. Benito Ente 36. Rebecca Samsa
found that some claimants were fictitious persons (p. 30, Rollo of L-43505, Okay vs. CA). He issued a writ
of execution but the protestants defied the writ and refused to vacate the land (p. 28, Rollo of L-43505, 17. German Flores 37. Alfeao Sante
Okay vs. CA). **
18. Ciriaco Fuentes 38. Meliton Sante
Because the alleged occupants refused to vacate the land, the corporation filed against them on February
27, 1961 in the Court of First Instance of Davao, Civil Case No. 3711, an ejectment suit (accion publiciana). 19. Pulong Gabao 39. Amil Sidaani
The forty defendants were Identified as follows:
20. Constancio Garlic 40. Cosme Villegas
 L A W O N N A T U R A L R E S O U R C E S a n d E N V I R O N M E N T A L L A W C a s e s a n d S p e c i a l L a w s | 78
That ejectment suit delayed the issuance of the patent. The trial court found that the protests of twenty
of the abovenamed defendants were among those that were dismissed by the Director of Lands in his
1957 decision already mentioned.
On July 18, 1961 the purchase price of ten thousand pesos was fully paid by Binan Development Co., Inc.
OnNovember 10, 1961, an official of the Bureau of Lands submitted a final investigation report wherein it
was stated that the corporation had complied with the cultivation and other requirements under the
Public Land Law and had paid the purchase price of the land (p. 248, Rollo).
It was only more than thirteen years later or on August 14, 1975 when Sales Patent No. 5681 was issued
to the corporation for that lot with a reduced area of 175.3 hectares. The patent was registered. Original
Certificate of Title No. P-5176 was issued to the patentee.
The Director of Lands in his memorandum dated June 29, 1974 for the Secretary of Natural Resources,
recommending approval of the sales patent, pointed out that the purchaser corporation had complied
with the said requirements long before the effectivity of the Constitution, that the land in question was
free from claims and conflicts and that the issuance of the patent was in conformity with the guidelines
prescribed in Opinion No. 64, series of 1973, of Secretary of Justice Vicente Abad Santos and was an
exception to the prohibition in section 11, Article XIV of the Constitution (p. 258, Rollo).
Secretary of Natural Resources Jose J. Leido, Jr., in approving the patent on August 14, 1975, noted that
the applicant had acquired a nested right to its issuance (p. 259, Rollo).
Before that patent was issued, there was a trial in the ejectment suit. Fifteen defendants (out of forty),
namely, Julio Ayog, Guillermo Bagoy, Generoso Bangonan, Jose Catibring, Porfirio Enoc, Jose Emperado,
Arcadio Lomanto, Toribio Naquila, Elpidio Okay, Alfeo Sante, Meliton Sante, Ramon Samsa, Rebecca
Samsa, Arcadio Sarumines and Felix Tahantahan, testified that they entered the disputed land long before
1951 and that they planted it to coconuts, coffee, jackfruit and other fruit trees. (p. 28, Record on
Appeal).
The trial court did not give credence to their testimonies. It believed the report of an official of the Bureau
of Lands that in 1953 the land was free from private claims and conflicts and it gave much weight to the
decision of the Director of Lands dismissing the protests of the defendants against the sales award (p. 30,
Record on Appeal).
Furthermore, the trial court during its ocular inspection of the land on November 8, 1964 found that the
plantings on the land could not be more than ten years old, meaning that they were not existing in 1953
when the sales award was made. Hence, the trial court ordered the defendants to vacate the land and to
restore the possession thereof to tile company. The Court of Appeals affirmed that judgment on
December 5, 1975 in its decision in Binan Development Co., Inc. vs, Sante, CA-G.R. No. 37142- R. The
review of the decision was denied by this Court on May 17, 1976 in Elpidio Okay vs. Court of Appeals, L-
43505.
After the record was remanded to the trial court, the corporation filed a motion for execution. The
defendants, some of whom are now petitioners herein, opposed the motion. They contended that the
adoption of the Constitution, which took effect on January 17, 1973, was a supervening fact which
rendered it legally impossible to execute the lower court's judgment. They invoked the constitutional
prohibition, already mentioned, that "no private corporation or association may hold alienable lands of
the public domain except by lease not to exceed one thousand hectares in area."
The lower court suspended action on the motion for execution because of the manifestation of the
defendants that they would file a petition for prohibition in this Court. On August 24, 1977, the instant
prohibition action was filed. Some of the petitioners were not defendants in the ejectment case.
We hold that the said constitutional prohibition has no retroactive application to the sales application of
Biñan Development Co., Inc. because it had already acquired a vested right to the land applied for at the
time the 1973 Constitution took effect.
That vested right has to be respected. lt could not be abrogated by the new Constitution. Section 2,
Article XIII of the 1935 Constitution allows private corporations to purchase public agricultural lands not
exceeding one thousand and twenty-four hectares. Petitioners' prohibition action is barred by the
doctrine of vested rights in constitutional law.
"A right is vested when the right to enjoyment has become the property of some particular person or
persons as a present interest" (16 C.J.S. 1173). It is "the privilege to enjoy property legally vested, to
enforce contracts, and enjoy the rights of property conferred by the existing law" (12 C.J. 955, Note 46,
No. 6) or "some right or interest in property which has become fixed and established and is no longer
open to doubt or controversy" (Downs vs. Blount 170 Fed. 15, 20, cited in Balboa vs. Farrales, 51 Phil. 498,
502).
The due process clause prohibits the annihilation of vested rights. "A state may not impair vested rights by
legislative enactment, by the enactment or by the subsequent repeal of a municipal ordinance, or by a
change in the constitution of the State, except in a legitimate exercise of the police power" (16 C.J.S.
1177-78).
It has been observed that, generally, the term "vested right" expresses the concept of present fixed
interest, which in right reason and natural justice should be protected against arbitrary State action, or an
innately just and imperative right which an enlightened free society, sensitive to inherent and irrefragable
individual rights, cannot deny (16 C.J.S. 1174, Note 71, No. 5, citing Pennsylvania Greyhound Lines, Inc. vs.
Rosenthal, 192 Atl. 2nd 587).
 L A W O N N A T U R A L R E S O U R C E S a n d E N V I R O N M E N T A L L A W C a s e s a n d S p e c i a l L a w s | 79
Secretary of Justice Abad Santos in his 1973 opinion ruled that where the applicant, before the
Constitution took effect, had fully complied with all his obligations under the Public Land Act in order to
entitle him to a sales patent, there would seem to be no legal or equitable justification for refusing to
issue or release the sales patent (p. 254, Rollo).
In Opinion No. 140, series of 1974, he held that as soon as the applicant had fulfilled the construction or
cultivation requirements and has fully paid the purchase price, he should be deemed to have acquired by
purchase the particular tract of land and to him the area limitation in the new Constitution would not
apply.
In Opinion No. 185, series of 1976, Secretary Abad Santos held that where the cultivation requirements
were fulfilled before the new Constitution took effect but the full payment of the price was completed
after January 17, 1973, the applicant was, nevertheless, entitled to a sales patent (p. 256, Rollo).
Such a contemporaneous construction of the constitutional prohibition by a high executive official carries
great weight and should be accorded much respect. It is a correct interpretation of section 11 of Article
XIV.
In the instant case, it is incontestable that prior to the effectivity of the 1973 Constitution the right of the
corporation to purchase the land in question had become fixed and established and was no longer open
to doubt or controversy.
Its compliance with the requirements of the Public Land Law for the issuance of a patent had the effect of
segregating the said land from the public domain. The corporation's right to obtain a patent for that land
is protected by law. It cannot be deprived of that right without due process (Director of Lands vs. CA, 123
Phil. 919).
As we cannot review the factual findings of the trial court and the Court of Appeals, we cannot entertain
petitioners' contention that many of them by themselves and through their predecessors-in-interest have
possessed portions of land even before the war. They should have filed homestead or free patent
applications.
Our jurisdiction is limited to the resolution of the legal issue as to whether the 1973 Constitution is an
obstacle to the implementation of the trial court's 1964 final and executory judgment ejecting the
petitioners. On that issue, we have no choice but to sustain its enforceability.
Nevertheless, in the interest of social justice, to avoid agrarian unrest and to dispel the notion that the
law grinds the faces of the poor, the administrative authorities should find ways and means of
accommodating some of the petitioners if they are landless and are really tillers of the soil who in the
words of President Magsaysay deserve a little more food in their stomachs, a little more shelter over their
heads and a little more clothing on their backs. The State should endeavor to help the poor who find it
difficult to make both ends meet and who suffer privations in the universal struggle for existence.
A tiller of the soil is entitled to enjoy basic human rights, particularly freedom from want. The common
man should be assisted in possessing and cultivating a piece of land for his sustenance, to give him social
security and to enable him to achieve a dignified existence and become an independent, self-reliant and
responsible citizen in our democratic society.
To guarantee him that right is to discourage him from becoming a subversive or from rebelling against a
social order where, as the architect of the French Revolution observed, the rich are choking with the
superfluities of life but the famished multitude lack the barest necessities.
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 owned social unrest.
Petitioners' counsel claims that Biñan Development Co., Inc. seeks to execute the judgment in Civil Case
No. 3711, the ejectment suit from which this prohibition case arose, against some of the petitioners who
were not defendants in that suit (p. 126, Rollo).
Those petitioners are not successors-in-interest of the defendants in the ejectment suit. Nor do they derive
their right of possession from the said defendants. Those petitioners occupy portions of the disputed land
distinct and separate from the portions occupied by the said defendants.
We hold that judgment cannot be enforced against the said petitioners who were not defendants in that
litigation or who were not summoned and heard in that case. Generally, "it is an axiom of the law that no
man shall be affected by proceedings to which he is a stranger" (Ed. A. Keller & Co. vs Ellerman & Bucknall
Steamship Co., 38 Phil. 514, 520).
To enforce the judgment against those who were not parties to the case and who occupy portions of the
disputed land distinct and separate from the portions occupied by the defendants in the ejectment
suit, would be violative of due process of law, the law which, according to Daniel Webster in his argument
in the Dartmouth College case, is the law of the land, a law which hears before it condemns, which
proceeds upon inquiry and renders judgment only after trial. "The meaning is, that every citizen shall hold
his life, liberty, property, and immunities, under the protection of the general rules which govern society."
(Cited in Lopez vs. Director of Lands, 47 Phil. 23, 32. See Gatchalian vs. Arlegui, L-35615 and Tang Tee vs.
Arlegui, L-41360, February 17, 1977, 75 SCRA 234 and Berses vs. Villanueva, 25 Phil. 473.)
Contempt incident.-During the pendency of this case, or at about four o'clock in the morning of December
12, 1978, Ciriaco Tebayan, Domingo Nevasca, Rogelio Duterte and Sofronio Etac, employees of the Crown
 L A W O N N A T U R A L R E S O U R C E S a n d E N V I R O N M E N T A L L A W C a s e s a n d S p e c i a l L a w s | 80

Fruits and Cannery Corporation, plowed or bulldozed with their tractors a portion of the disputed land Case No. 3711, and over whom the lower court did not acquire jurisdiction. The contempt proceeding is
which was occupied by Melquiades Emberador, one of the petitioners herein. The disputed land was also dismissed. No costs.
leased by Biñan Development Co., Inc. to the canning corporation.
SO ORDERED.
The four tractor drivers destroyed the improvements thereon worth about five thousand pesos consisting
of coffee, coconut and banana plants. Emberador was in the hospital at the time the alleged destruction Concepcion, Jr., Guerrero, Abad Santos, Relova and Gutierrez, Jr., JJ., concur.
of the improvements occurred. However, it should be noted that Emberador was not expressly named as
a defendant in the ejectment suit. Apparently, he is not included in the trial court's decision although he Escolin, J., took no part.
was joined as a co-petitioner in this prohibition case.
Separate Opinions
The petitioners in their motion of January 11, 1979 asked that the four tractor drivers and Honesto Garcia,
the manager of Biñan Development Co., Inc., be declared in contempt of court for having disregarded the
VASQUEZ, J., concurring:
restraining order issued by this Court on August 29, 1977, enjoining specifically Judge Vicente N. Cusi and
the provincial sheriff from enforcing the decision in the ejectment suit, Civil Case No. 3711 (pp. 46-47,
I concur with the very ably written main opinion. However, I wish to erase any possible erroneous
138- 141, Rollo).
impression that may be derived from the dispositive portion insofar as it declares that the judgment in the
ejectment cage may not be enforced against the petitioners who were not defendants in Civil Case No.
Garcia and the four drivers answered the motion. The incident was assigned for hearing to Judge Antonio
3711 and over whom the lower court did not acquire jurisdiction.
M. Martinez of the Court of First Instance of Davao. Judge Martinez found that the plowing was made at
the instance of Garcia who told the barrio captain, petitioner Lausan Ayog, a Bagobo, that he (Garcia)
The judgment in any case is binding and enforceable not only against the parties thereto but also against
could not wait anymore for the termination of this case.
"their successors in interest by title subsequent to the commencement of the action" (Sec. 49[b], Rule 39,
Rules of Court). We have previously held that the judgment in an ejectment case may be enforced not
The record shows that on April 30, 1979 or four months after the said incident, Emberador, in
only against the defendants therein but also against the members of their family, their relatives or privies
consideration of P3,500, as the value of the improvements on his land, executed a quitclaim in favor of
who derive their right of possession from the defendants (Ariem vs. Delos Angeles, 49 SCRA 343). A
the Crown Fruits and Cannery Corporation (Exh. 1, 2 and 3).
further clarification of the dispositive portion is apparently needed to exclude from the effect of the
judgment in the ejectment case only the petitioners who do not derive their right of possession from any
We hold that no contempt was committed. The temporary restraining order was not directed to Biñan of the defendants in the ejectment suit.
Development Co., Inc. its officers, agents or privies. Emberador was not named specifically in the trial
court's judgment as one of the occupants to be ejected.
Fernando, C.J., Teehankee, Melencio-Herrera, Plana, Makasiar and De Castro, JJ., concurs.

For the redress of whatever wrong or delict was committed against Emberador by reason of the
destruction of his improvements, his remedy is not in a contempt proceeding but in some appropriate
civil and criminal actions against the destroyer of the improvements.
In resume, we find that there is no merit in the instant prohibition action. The constitutional prohibition
relied upon by the petitioners as a ground to stop the execution of the judgment in the ejectment suit has
no retroactive application to that case and does not divest the trial court of jurisdiction to enforce that
judgment.
Footnotes
* According to respondent corporation, some of the adverse claimants or protestants were not
landless farmers but were well-educated persons belonging to the middle class. Thus, Elpidio Okay
was an elementary school principal. Vicente Rehoy was a landowner and barrio captain. Patricio
de Leon was a cashier and later assistant branch manager of the Philippine National Baank.
Ernesto Pañares was a high school teacher and later a college professor. Francisco Mateo was a
former college dean (p. 105, Rollo).

WHEREFORE, the petition is dismissed for lack of merit but with the clarification that the said judgment According to the 44 petitioners, they are tillers of the soil (p. 126, Rollo).
cannot be enforced against those petitioners herein who were not defendants in the ejectment case, Civil
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G.R. No. L-69997 September 30, 1987
UNGAY MALOBAGO MINES, INC., petitioner,
vs.
HON. INTERMEDIATE APPELLATE COURT, DIRECTOR OF LANDS, GREGORIA BOLANOS, AUREA ARAOJO,
GERVACIO ARAOJO, MARIA BERNAL, FELIX DETECIO, JESUS ASUNCION, MELENCIO ASUNCION and
BIENVENIDO ASUNCION, respondents.
GUTIERREZ, JR., J.:
Before us is a petition which seeks to set aside the decision of the then Intermediate Appellate Court
affirming the dismissal of the petitioner's action for annulment and cancellation of free patents granted to
the private respondents on the ground that the petitioner has no personality to file an action for
reversion, the lands involved being public In character.
On July 20, 1962, the President of the Philippines granted the following mining patents on mineral claims
located at Ungay Malobago, Rapu-Rapu Albay.
1. lode patent No. V-52 to John Canson, Jr., on mineral claim known as "Catanduandes;"
2. lode patent No. V-48 to petitioner, on mineral claims known as "Junior;"
3. lode patent No. V-53 to John Canson, Jr., on mineral claims known as "Oas;"
4. lode patent No. V - 46 to petitioner on mineral claim known as "Ester;"
5. lode patent No. V - 51 to Carlos Stilianopulos on mineral claim known as "Jovellar;"
6. lode patent No. V - 49 to petitioner, in mineral claim known as "Manila;"
7. lode patent No. V - 50 to Carlos Stilianopulos on mineral claim known as "Polangui;"
and
8. lode patent No. V - 47 to petitioner on mineral claim known as "Ligao;"(pp. 5-7,
Decision Annex 1, Petition)
Way back on October 30, 1959, John Canson, Jr. and Carlos Stilianopulos assigned their rights to their
mining claims in favor of the petitioner. The assignment of rights was recorded in the Office of the Mining
Recorder of Albay on December 2, 1959.
The aforestated mining patents, after their issuance on July 20, 1962, were all recorded in the Office of
the Mining Recorder of Albay on August 28, 1962 and transcribed on September 4, 1962 in the
Registration Book of the Registry of Deeds of Albay. Consequently, the Register of Deeds of Albay issued
the respective original certificates of titles pursuant to Section 122 of Act No. 496 in the names of John
Canson, Jr., Carlos Stilianopulos, and the petitioner.
Subsequently, or from 1968 to 1974, the following free patents were granted by the respondent Director
of Lands and the corresponding original certificates of titles were issued by the Register of Deeds of Albay:
1. Free Patent No. 458143 dated October 3, 1968 and corresponding Certificate of Title
No. VH-12195 to appellee Felix Detecio;
2. Free Patent No. 427824 dated November 21, 1968 and corresponding Certificate of
Title No. VH-12256 to appellee Melencio Asuncion;
3. Free Patent No. 433318 dated January 10, 1969 and corresponding Certificate of Title
No. VH-12198 to appellee Jesus Asuncion;
4. Free Patents No. 422847 dated November 11, 1968 and No. 421947 dated October
28, 1969 and corresponding Certificates of Title Nos. VH-12185 and 12186, respectively,
to appellee Maria Bernal;
5. Free Patent No. 408568 dated July 8, 1968 and corresponding Certificate of Title No.
VH-11591 to appellee Gregorio Bolanos; and
6. Free Patent No. 0663 dated March 25, 1974 and the corresponding Certificate of Title
No. VH-19333 to appellee Bienvenido Asuncion. (Rollo, pp. 200-201)
All of the above patents covered portions of the lots covered by the patents belonging to the petitioner.
The petitioner filed a complaint for annulment and cancellation of patents against the private
respondents and prayed that all the free patent titles issued in their favor for properties over which
original certificates of title had already been issued in its favor be declared null and void.
The Director of Lands, who was impleaded as a formal defendant, filed his answer alledging, among
others, that the petitioner has no personality to institute the cancellation proceedings inasmuch as the
government is the grantor and not the petitioner, and it should be the grantor who should institute the
cancellation proceedings.
On January 25, 1980, the trial court rendered a decision dismissing the complaint. It ruled that since the
disputed properties form part of disposable land of the public domain, the action for reversion should be
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instituted by the Solicitor General in the name of the Republic of the Philippines and that, therefore, the
petitioner lacks personality to institute the annulment proceedings.
The petitioner appealed to the then Intermediate Appellate Court.
On April 5, 1984, the appellate court affirmed the decision of the trial court. It ruled that the titles issued
to the petitioner cover mineral lands which belong to the public domain and that these cannot be the
subject of private ownership. According to the Court, under Section 101 of the Public Land Law, only the
Solicitor General or the officer acting in his stead has the authority to institute an action on behalf of the
Republic for the cancellation of the respondents' titles and for reversion of their homesteads to the
Government.
In this instant petition, the petitioner raises two issues: a) Whether or not the appellate court committed
an error of law when it ruled that the lands in question belong to the public domain; and b) whether or
not the appellate court erred in discussing the complaint on the ground that the petitioner had no
personality to institute the same.
With regard to the first issue, the petitioner maintains that since its mining claims were perfected prior to
November 15, 1935, the date when the 1935 Constitution took effect, the applicable law is the Philippine
Bill of 1902 and that under this Act, a valid location of a mining claim segregates the area from the public
domain. (Gold Creek Mining Corporation v. Rodriguez, 66 Phil. 259).
The Solicitor-General, on the other hand, argues that the petitioner's mining patents covered by Torrens
Titles were granted only in 1962 by the President of the Philippines, by authority of the Constitution of the
Philippines. Under the then Constitution, except for public agricultural lands, natural resources which
includes all mineral lands, shall not be alienated. (Art. XIII, Section 1, 1935 Constitution) Therefore, what
the mining patents issued in 1962 conveyed to petitioner was only the ownership of, and the right to
extract and utilize, the minerals within the area covered by the petitioner's Torrens Titles but not the
ownership of the land where the minerals are found.
We rule for the private respondents.
The petitioner has been beguiling, less than candid, and inexplicably silent as to material dates in the
presentation of its case. Nowhere in the records of this petition is there any mention of a date before
November 15, 1935 as to when essential acts regarding its mining claims were executed. It is silent as to
when the land was entered, measured, and plotted; when the legal posts and notices were put up; when
the claim was registered with the mining recorder; whether or not the annual amount of labor or
development, and other requirements under the Philippine Bill of 1902 were followed. These may have
been complied with but not necessarily before 1935.
A mere mention in the Torrens title that the provisions of the Philippine Bill of 1902 were followed is not
sufficient. The Philippine Bill provides the procedures for the perfection of mining claims but not the dates
when such procedures were undertaken by any prospector or claimant. The same procedures would have
to be followed even after the Jones Law of 1916 and the Constitution of 1935 were promulgated, but
subject to the restrictions of the fundamental law. The petitioner has failed to state if and when new
procedures, different from the 1902 procedures, were provided by law to give a little substance to its
case. The petitioner is completely and strangely silent about these vital aspects of its petition.
Petitioner has not established by clear and convincing evidence that the locations of its mining claims
were perfected prior to November 15,1935 when the Government of Commonwealth was inaugurated. In
fact neither the original complaint nor the amended one alleged the perfection of petitioner's mining
rights prior to November 15, 1935. All that petitioner offers as evidence of its claims were the original
certificates of titles covering mining patents which embodied a uniform "WHEREAS" clause stating that
the petitioner "has fully complied with all the conditions, requirements, and provisions of the Act of the
United States of Congress of July 1, 1902, as amended, ..." In the absence of proof that the petitioner's
claims were perfected prior to the 1935 Constitution, the provision of the latter with regard to inalienable
lands of the public domain will apply.
Article XIII, Section I of the 1935 Constitution provides:
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 the at of the grant. (Emphasis supplied)
Therefore, applying the aforequoted provision to the case at bar, we conclude that the issuance of the
lode patents on mineral claims by the President of the Philippines in 1962 in favor of the petitioner
granted to it only the right to extract or utilize the minerals which may be found on or under the surface
of the land. On the other hand, the issuance of the free patents by the respondent Director of Lands in
1979 in favor of the private respondents granted to them the ownership and the right to use the land for
agricultural purposes but excluding the ownership of, and the right to extract or utilize, the minerals
which may be found on or under the surface.
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There is no basis in the records for the petitioner's stand that it acquired the right to the mineral lands Fernan, Feliciano, Bidin and Cortes, JJ., concur.
prior to the effectivity of the 1935 Constitution, thus, making such acquisition outside its purview and
scope.

Every application for a concession of public land has to be viewed in the light of its peculiar circumstances.
(Director of Lands v. Funtilar 142 SCRA 57, 69).

In the case at bar, although the original certificates of titles of the petitioner were issued prior to the titles
of the private respondents, the former cannot prevail over the latter for the provisions of the Constitution
which governed at the time of their issuance prohibited the alienation of mineral lands of the public
domain.

In the case of Republic v. Animas (56 SCRA 499), this Court ruled that a grantee does not become the
owner of a land illegally included in the grant just because title has been issued in his favor:.

A patent is void at law if the officer who issued the patent had no authority to do so
(Knight v. Land Ass. 142 U.S. 161, 12 Sup. Ct., 258, 35L ED. 974; emphasis supplied). If a
person obtains a title under the Public Land Act which includes, by mistake or oversight,
lands which cannot be registered under the Torrens System, or when the Director of
Lands did not have jurisdiction over the same because it is a public forest, the grantee
does not, by virtue of said certificate of title alone, become the owner of the land
illegally included. (See Ledesma vs. Municipality of Iloilo, 49 Phil. 769)

Moreover, patents and land grants are construed favorably in favor of the Government, and most strongly
against the grantee. Any doubt as to the intention or extent of the grant, or the intention of the
Government, is to be resolved in its favor. (See Republic v. Court of Appeals, 73 SCRA 146, 156). Hence, as
earlier stated, in the absence of proof that the petitioner acquired the right of ownership over the mineral
lands prior to the 1935 Constitution, the titles issued in its favor must be construed as conveying only the
right to extract and utilize the minerals thereon.

The appellate court did not likewise err in concluding that the petitioner has no personality to institute
the action below for annulment and cancellation of patents. The mineral lands over which it has a right to
extract minerals remained part of the inalienable lands of the public domain and thus, only the Solicitor
General or the person acting in his stead can bring an action for reversion. (See Sumail v. Judge of the
Court of First Instance of Cotabato, et al., 96 Phil. 946; and Heirs of Tanak Pangawaran Patiwayan v.
Martinez, 142 SCRA 252).

WHEREFORE, the petition is hereby DISMISSED for lack of merit. The decision of the Intermediate
Appellate Court is AFFIRMED. Costs against the petitioner.

SO ORDERED.
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G.R. No. 137887 February 28, 2000
REPUBLIC OF THE PHILIPPINES, petitioner,
vs.
DAMIAN ERMITAÑO DE GUZMAN, DEOGRACIAS ERMITAÑO DE GUZMAN, ZENAIDA ERMITAÑO DE
GUZMAN, ALICIA ERMITAÑO DE GUZMAN, SALVADOR ERMITAÑO DE GUZMAN, DOMINGA ERMITAÑO,
NATIVIDAD ENCARNACION, MELBA E. TORRES, FLORA MANALO, SOCORRO DELA ROSA, JOSE
ERMITAÑO, ESMERANDO ERMITAÑO, TRICOM DEVELOPMENT CORPORATION and FILOMENO
ERMITAÑO, respondents.
YNARES-SANTIAGO, J.:
Before us is a Petition for Review on Certiorari of a decision of the Court of Appeals 1 affirming the
judgment of the Regional Trial Court of Tagaytay, Branch 18, in LRC Cases No. TG-362 and TG-396.2
The facts are simple:
Conflicting applications for confirmation of imperfect title were filed by Norma Almanzor and private
respondent Salvador De Guzman over parcels of land located in Silang, Cavite. After trial on the merits,
the lower court rendered judgment in favor of private respondent De Guzman, to wit —
WHEREFORE, judgment is hereby rendered by this Court as follows:
(1) In LRC Case No. TG-362, this Court hereby denies the application for registration of the
parcels of land mentioned therein by applicant Norma R. Almanzor for lack of factual and legal
bases;
(2) In LRC Case No. 396, this Court hereby approves the petition for registration and thus places
under the operation of Act 141, Act 946 and/or P.D. 1529, otherwise known as the Property
Registration Law, the land described in Plan Psu-67537-Amd-2 and containing an area of 308,638
square meters, as supported by its technical descriptions now forming parts of the records of
these cases, in addition to other proofs adduced in the names of petitioners Damian Ermitaño De
Guzman, Deogracias Ermitaño De Guzman, Zenaida Ermitaño De Guzman, Alicia Ermitaño De
Guzman and Salvador De Guzman, all married, of legal age and with residence and postal
addresses at Magallanes Street, Carmona, Cavite, subject to the claims of oppositors Dominga
Ermitaño, Natividad Encarnacion, Melba E. Torres, Flora Manalo, Socorro de la Rosa, Jose
Ermitaño and Esmeranso Ermitaño under an instrument entitled "Waiver of Rights with
Conformity" the terms and conditions of which are hereby ordered by this Court to be annotated
at the back of the certificates of title to be issued to the petitioners pursuant to the judgment of
this Court.
SO ORDERED.3
As earlier mentioned, on appeal to the Court of Appeals, said judgment was affirmed and the petition for
registration of private respondents over the subject parcels of land was approved.
Hence, the instant Petition, anchored upon the following assignments of error —
I
THE TRIAL COURT ERRED IN NOT FINDING THAT THE DE GUZMANS HAVE NOT SUBMITTED
PROOF OF THEIR FEE SIMPLE TITLE OR POSSESSION IN THE MANNER AND FOR THE LENGTH OF
TIME REQUIRED BY LAW TO JUSTIFY CONFIRMATION OF AN IMPERFECT TITLE.
II
THE TRIAL COURT ERRED IN NOT DECLARING THAT THE DE GUZMANS HAVE NOT OVERTHROWN
THE PRESUMPTION THAT THE LANDS ARE PORTIONS OF THE PUBLIC DOMAIN BELONGING TO
THE REPUBLIC OF THE PHILIPPINES.4
We find merit in the instant Petition.
It is not disputed that the subject parcels of land were released as agricultural land only in 1965 5 while the
petition for confirmation of imperfect title was filed by private respondents only in 1991. 6 Thus the period
of occupancy of the subject parcels of land from 1965 until the time the application was filed in 1991 was
only twenty six (26) years, four (4) years short of the required thirty (30) year period possession
requirement under Sec. 14, P.D. 29 andR.A. No. 6940.
In finding that private respondents' possession of the subject property complied with law, the Court of
Appeals reasoned out that —
(W)hile it is true that the land became alienable and disposable only in December, 1965,
however, records indicate that as early as 1928, Pedro Ermitaño, appellees' predecessor-in-
interest, was already in possession of the property, cultivating it and planting various crops
thereon. It follows that appellees' possession as of the time of the filing of the petition in 1991
when tacked to Pedro Ermitaño's possession is 63 years or more than the required 30 years
period of possession. The land, which is agricultural, has been converted to private property. 7
We disagree.
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The Court of Appeals' consideration of the period of possession prior to the time the subject land was
released as agricultural is in direct contravention of the pronouncement in Almeda vs. Court of
Appeals,8 to wit —
The Court of Appeals correctly ruled that the private respondents had not qualified for a grant
under Section 48(b) of the Public Land Act because their possession of the land while it was still
inalienable forest land, or before it was declared alienable and disposable land of the public
domain on January 13, 1968, could not ripen into private ownership, and should be excluded from
the computation of the 30-year open and continuous possession in concept of owner required
under Section 48(b) of Com. Act 141. It accords with our ruling in Director of Lands vs. Court of
Appeals, Ibarra Bishar, et al., 178 SCRA 708, that:
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 lands of the public domain, the
rules on confirmation of imperfect title do not apply (Amunategui vs. Director of
Forestry, 126 SCRA 69; Director of Lands vs. Court of Appeals, 129 SCRA 689; Director of
Lands vs. Court of Appeals, 133 SCRA 701; Republic vs. Court of Appeals, 148 SCRA 480;
Vallarta vs. Intermediate Appellate Court, 151 SCRA 679).
Thus possession of forest lands, however long, cannot ripen into private ownership
(Vamo vs. Government, 41 Phil. 161 [1920]; Adorable vs. Director of Forestry, 17 Phil.
410 [1960]). A parcel of forest land is within the exclusive jurisdiction of the Bureau of
Forestry and beyond the power and jurisdiction of the cadastral court to register under
the Torrens System (Republic vs. Court of Appeals, 89 SCRA 648; Republic vs. Vera, 120
SCRA 210 [1983]; Director of Lands vs. Court of Appeals, 129 SCRA 689 [1984]).
(emphasis ours)
So, too, is the Court of Appeals' reliance on the case of Director of Land Management vs. Court of
Appeals9misplaced. There, while the period of possession of the applicant's predecessor-in-interest was
tacked to his own possession to comply with the required thirty year period possession requirement, the
land involved therein was not forest land but alienable public land. On the other hand, in the case before
us, the property subject of private respondents' application was only declared alienable in 1965. Prior to
such date, the same was forest land incapable of private appropriation. It was not registrable and
possession thereof, no matter how lengthy, could not convert it into private property, (unless) and until
such lands were reclassified and considered disposable and alienable. 10
In summary, therefore, prior to its declaration as alienable land in 1965, any occupation or possession
thereon cannot be considered in the counting of the thirty year possession requirement. This is in accord
with the ruling inAlmeda vs. Court of Appeals, (supra), and because the rules on the confirmation of
imperfect titles do not apply unless and until the land classified as forest land is released in an official
proclamation to that effect so that it may form part of the disposable agricultural lands of the public
domain. 11
While we acknowledge the Court of Appeals' finding that private respondents and their predecessors-in-
interest have been in possession of the subject land for sixty three (63) years at the time of the
application of their petition, our hands are tied by the applicable laws and jurisprudence in giving practical
relief to them. The fact remains that from the time the subject land was declared alienable until the time
of their application, private respondents' occupation thereof was only twenty six (26) years. We cannot
consider their thirty seven (37) years of possession prior to the release of the land as alienable because
absent the fact of declassification prior to the possession and cultivation in good faith by petitioner, the
property occupied by him remained classified as forest or timberland,which he could not have acquired by
prescription. Further, jurisprudence is replete with cases which reiterate that forest lands or forest
reserves are not capable of private appropriation and possession thereof, however long, cannot convert
them into private property. Possession of the land by private respondents, whether spanning decades or
centuries, could never ripen into ownership. This Court is constrained to abide by the latin maxim "(d)ura
lex, sed lex". 12
WHEREFORE, the instant Petition is GRANTED and the February 26, 1998 decision of the Court of Appeals
in CA-G.R. CV No. 48785 as well as that of the Regional Trial Court of Cavite, Branch 38, in LRC Case No.
TG-396 are both REVERSED. Judgment is rendered dismissing LRC Case No. 396 for failure of the
applicants therein to comply with the thirty year occupancy and possessory requirements of law for
confirmation of imperfect title. No pronouncement as to costs.1âwphi1.nêt
SO ORDERED.
Davide, Jr., C.J., Puno, Kapunan and Pardo, JJ., concur.
Footnotes
1 CA-G.R. CV No. 48785, dated 26 February 1998; Petition, Annex "A"; Rollo, p. 24-38.
2 Dated 8 September 1994; Records, LRC Case No. TG-362, pp. 440-454.
3 Id., at p. 14; Rollo, p. 454.
4 Petition, pp. 7-8; Rollo, pp. 12-13.
5 See Exhibit "S-4"; Records, p. 98.
6 See Petition; Records, LRC Case No. TG-396, pp. 1-18.
7 See Note 1, at p. 10; Rollo, p. 33.
8 G.R. No. 85322, 196 SCRA 476, 480 [1991].
9 G.R. No. 94525, 205 SCRA 486 [1992].
10 Palomo vs. Court of Appeals, G.R. No. 95608, 266 SCRA 392, 401 [1997].
11 Ituralde vs. Falcasantos, G.R. No. 128017, 301 SCRA 293, 296 [1999], citing Sunbeam Convenience Foods,
Inc. vs. Court of Appeals, 181 SCRA 443, 448 [1990].
12 De la Cruz vs. Court of Appeals, G.R. No. 120652, 286 SCRA 230, 235 [1998].
 L A W O N N A T U R A L R E S O U R C E S a n d E N V I R O N M E N T A L L A W C a s e s a n d S p e c i a l L a w s | 86
G.R. No. 133250 November 11, 2003
FRANCISCO I. CHAVEZ, petitioner,
vs.
PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY DEVELOPMENT CORPORATION, respondents.
RESOLUTION
CARPIO, J.:
This Court is asked to legitimize a government contract that conveyed to a private entity 157.84 hectares
of reclaimed public lands along Roxas Boulevard in Metro Manila at the negotiated price of P1,200 per
square meter. However, published reports place the market price of land near that area at that time at a
high of P90,000 per square meter.1 The difference in price is a staggering P140.16 billion, equivalent to
the budget of the entire Judiciary for seventeen years and more than three times the Marcos Swiss
deposits that this Court forfeited in favor of the government.
Many worry to death that the private investors will lose their investments, at most not more than one-
half billion pesos in legitimate expenses,2 if this Court voids the contract. No one seems to worry about
the more than tens of billion pesos that the hapless Filipino people will lose if the contract is allowed to
stand. There are those who question these figures, but the questions arise only because the private entity
somehow managed to inveigle the government to sell the reclaimed lands without public bidding in
patent violation of the Government Auditing Code.
Fortunately for the Filipino people, two Senate Committees, the Senate Blue Ribbon Committee and the
Committee on Accountability of Public Officers, conducted extensive public hearings to determine the
actual market value of the public lands sold to the private entity. The Senate Committees established the
clear, indisputable and unalterable fact that the sale of the public lands is grossly and unconscionably
undervalued based on official documents submitted by the proper government agencies during the
Senate investigation. We quote the joint report of these two Senate Committees, Senate Committee
Report No. 560, as approved by the Senate in plenary session on 27 September 1997:3
The Consideration for the Property
PEA, under the JVA, obligated itself to convey title and possession over the Property, consisting
of approximately One Million Five Hundred Seventy Eight Thousand Four Hundred Forty One
(1,578,441) Square Meters for a total consideration of One Billion Eight Hundred Ninety Four
Million One Hundred Twenty Nine Thousand Two Hundred (P1,894,129,200.00) Pesos, or a price
of One Thousand Two Hundred (P1,200.00) Pesos per square meter.
According to the zonal valuation of the Bureau of Internal Revenue, the value of the Property is
Seven Thousand Eight Hundred Pesos (P7,800.00) per square meter. The Municipal Assessor of
Parañaque, Metro Manila, where the Property is located, pegs the market value of the
Property at Six Thousand Pesos (P6,000.00) per square meter. Based on these alone, the price
at which PEA agreed to convey the property is a pittance. And PEA cannot claim ignorance of
these valuations, at least not those of the Municipal Assessors’ office, since it has been trying to
convince the Office of the Municipal Assessor of Parañaque to reduce the valuation of various
reclaimed properties thereat in order for PEA to save on accrued real property taxes.
PEA’s justification for the purchase price are various appraisal reports, particularly the following:
(1) An appraisal by Vic T. Salinas Realty and Consultancy Services concluding that the
Property is worth P500.00 per square meter for the smallest island and P750.00 per
square meter for the two other islands, or a total of P1,170,000.00 as of 22 February
1995;
(2) An appraisal by Valencia Appraisal Corporation concluding that the Property is worth
P850 per square meter for Island I, P800 per square meter for Island II and P600 per
square meter for the smallest island, or a total of P1,289,732,000, also as of 22 February
1995; and
(3) An Appraisal by Asian Appraisal Company, Inc. (AACI), stating that the Property is
worth approximately P1,000 per square meter for Island I, P950 per square meter for
Island II and P600 per square meter for Island III, or a total of P1,518,805,000 as of 27
February 1995.
The credibility of the foregoing appraisals, however, are [sic] greatly impaired by a subsequent
appraisal report of AACI stating that the property is worth P4,500.00 per square meter as of 26
March 1996. Such discrepancies in the appraised value as appearing in two different reports by
the same appraisal company submitted within a span of one year render all such appraisal
reports unworthy of even the slightest consideration. Furthermore, the appraisal report
submitted by the Commission on Audit estimates the value of the Property to be
approximately P33,673,000,000.00, or P21,333.07 per square meter.
There were also other offers made for the property from other parties which indicate that the
Property has been undervalued by PEA. For instance, on 06 March 1995, Mr. Young D. See,
President of Saeil Heavy Industries Co., Ltd., (South Korea), offered to buy the property at
P1,400.00 and expressed its willingness to issue a stand-by letter of credit worth $10 million. PEA
did not consider this offer and instead finalized the JVA with AMARI. Other offers were made on
various dates by Aspac Management and Development Group Inc. (for P1,600 per square meter),
Universal Dragon Corporation (for P1,600 per square meter), Cleene Far East Manila
 L A W O N N A T U R A L R E S O U R C E S a n d E N V I R O N M E N T A L L A W C a s e s a n d S p e c i a l L a w s | 87

Incorporated and Hyosan Prime Construction Co. Ltd. which had prepared an Irrevocable Clean
Letter of Credit for P100,000,000.
In addition, AMARI agreed to pay huge commissions and bonuses to various persons, amounting
to P1,596,863,050.00 (P1,754,707,150.00 if the bonus is included), as will be discussed fully
below, which indicate that AMARI itself believed the market value to be much higher than the
agreed purchase price. If such commissions are added to the purchase price, AMARI’s acquisition
cost for the Property will add-up to P3,490,992,250.00 (excluding the bonus). If AMARI was
willing to pay such amount for the Property, why was PEA willing to sell for only
P1,894,129,200.00, making the Government stand to lose approximately P1,596,863,050.00?
government lands, is grossly and unconscionably undervalued. The authoritative appraisal, of course, is
that of the Commission on Audit which valued the 157.84 hectares at P21,333.07 per square meter or a
total of P33.673 billion. Thus, based on the official appraisal of the Commission on Audit, the
independent constitutional body that safeguards government assets, the actual loss to the Filipino
people is a shocking P31.779 billion.
This gargantuan monetary anomaly, aptly earning the epithet "Grandmother of All Scams," 4 is not the
major defect of this government contract. The major flaw is not even the P1.754 billion in
commissions the Senate Committees discovered the private entity paid to various persons to secure the
contract,5 described in Senate Report No. 560 as follows:

x x x A Letter-Agreement dated 09 June 1995 signed by Messrs. Premchai Karnasuta and Emmanuel Sy
for and in behalf of AMARI, on the one hand, and stockholders of AMARI namely, Mr. Chin San
Even if we simply assume that the market value of the Property is half of the market value fixed Cordova (a.k.a. Benito Co) and Mr. Chua Hun Siong (a.k.a. Frank Chua), on the other, sets forth
by the Municipal Assessors Office of Parañaque for lands along Roxas Boulevard, or P3,000.00 various payments AMARI paid or agreed to pay the aforesaid stockholders by way of fees for
per square meter, the Government now stands to lose approximately P2,841,193,800.00. But an "professional efforts and services in successfully negotiating and securing for AMARI the Joint
even better assumption would be that the value of the Property is P4,500.00 per square meter, Venture Agreement", as follows:
as per the AACI appraisal report dated 26 March 1996, since this is the valuation used to justify
the issuance of P4 billion worth of shares of stock of Centennial City Inc. (CCI) in exchange for Form of Payment Paid/Payable On Amount
4,800,000 AMARI shares with a total par value of only P480,000,000.00. With such valuation, the
Manager’s Checks 28 April 1995 P 400,000,000.00
Government’s loss will amount to P5,208,855,300.00.
Manager’s Checks Upon signing of letter 262,500,000.00
Clearly, the purchase price agreed to by PEA is way below the actual value of the Property, 10 Post Dated Checks (PDCs) 60 days from date of letter 127,000,000.00
thereby subjecting the Government to grave injury and enabling AMARI to enjoy tremendous
24 PDCs 31 Aug. ’95 to 31 Jan. ’98 150,000,000.00
benefit and advantage. (Emphasis supplied)
48 PDCs Monthly, over a 12-month pd. 357,363,050.00
The Senate Committee Report No. 560 attached the following official documents from the Bureau of from date of letter
Internal Revenue, the Municipal Assessor of Parañaque, Metro Manila, and the Commission on Audit: Cash bonus When sale of land begins not exceeding
157,844,100.00
1. Annex "M," Certified True Copy of BIR Zonal Valuations as certified by Antonio F.
Montemayor, Revenue District Officer. This official document fixed the market value of the Developed land from Project Upon completion of each Costing
157.84 hectares at P7,800 per square meter. phase
300,000,000.00
2. Annex "N," Certification of Soledad S. Medina-Cue, Municipal Assessor, Parañaque, dated 10 TOTAL P1,754,707,150.00
December 1996. This official document fixed the market value at P6,000 per square meter.
==============
3. Exhibit "1-Engr. Santiago," the Appraisal Report of the Commission on Audit. This official
document fixed the market value at P21,333.07 per square meter. Mr. Luis Benitez of SGV, the external auditors of AMARI, testified that said Letter-Agreement
was approved by the AMARI Board.6 (Emphasis supplied)
Whether based on the official appraisal of the BIR, the Municipal Assessor or the Commission on Audit,
the P1,200 per square meter purchase price, or a total of P1.894 billion for the 157.84 hectares of
 L A W O N N A T U R A L R E S O U R C E S a n d E N V I R O N M E N T A L L A W C a s e s a n d S p e c i a l L a w s | 88
The private entity that purchased the reclaimed lands for P1.894 billion expressly admitted before the
Senate Committees that it spent P1.754 billion in commissions to pay various individuals for "professional
efforts and services in successfully negotiating and securing" the contract. By any legal or moral
yardstick, the P1.754 billion in commissions obviously constitutes bribe money. Nonetheless, there are
those who insist that the billions in investments of the private entity deserve protection by this Court.
Should this Court establish a new doctrine by elevating grease money to the status of legitimate
investments deserving of protection by the law? Should this Court reward the patently illegal and grossly
unethical business practice of the private entity in securing the contract? Should we allow those with
hands dripping with dirty money equitable relief from this Court?
Despite these revolting anomalies unearthed by the Senate Committees, the fatal flaw of this contract is
that it glaringly violates provisions of the Constitution expressly prohibiting the alienation of lands of the
public domain.
Thus, we now come to the resolution of the second Motions for Reconsideration 7 filed by public
respondent Public Estates Authority ("PEA") and private respondent Amari Coastal Bay Development
Corporation ("Amari"). As correctly pointed out by petitioner Francisco I. Chavez in his Consolidated
Comment,8 the second Motions for Reconsideration raise no new issues.
However, the Supplement to "Separate Opinion, Concurring and Dissenting" of Justice Josue N. Bellosillo
brings to the Court’s attention the Resolutions of this Court on 3 February 1965 and 24 June 1966 in L-
21870 entitled"Manuel O. Ponce, et al. v. Hon. Amador Gomez, et al." and No. L-22669 entitled "Manuel
O. Ponce, et al. v. The City of Cebu, et al." ("Ponce Cases"). In effect, the Supplement to the Dissenting
Opinion claims that these two Resolutions serve as authority that a single private corporation like
Amari may acquire hundreds of hectares of submerged lands, as well as reclaimed submerged lands,
within Manila Bay under the Amended Joint Venture Agreement ("Amended JVA").
We find the cited Ponce Cases inapplicable to the instant case.
First, as Justice Bellosillo himself states in his supplement to his dissent, the Ponce Cases admit
that "submerged lands still belong to the National Government."9 The correct formulation, however, is
that submerged lands are owned by the State and are inalienable. Section 2, Article XII of the 1987
Constitution provides:
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. (Emphasis supplied)
Submerged lands, like the waters (sea or bay) above them, are part of the State’s inalienable natural
resources. Submerged lands are property of public dominion, absolutely inalienable and outside the
commerce of man.10This is also true with respect to foreshore lands. Any sale of submerged or foreshore
lands is void being contrary to the Constitution.11
This is why the Cebu City ordinance merely granted Essel, Inc. an "irrevocable option" to purchase the
foreshore lands after the reclamation and did not actually sell to Essel, Inc. the still to be reclaimed
foreshore lands. Clearly, in the Ponce Cases the option to purchase referred to reclaimed lands, and not
to foreshore lands which are inalienable. Reclaimed lands are no longer foreshore or submerged lands,
and thus may qualify as alienable agricultural lands of the public domain provided the requirements of
public land laws are met.
In the instant case, the bulk of the lands subject of the Amended JVA are still submerged lands even to
this very day, and therefore inalienable and outside the commerce of man. Of the 750 hectares subject of
the Amended JVA, 592.15 hectares or 78% of the total area are still submerged, permanently under the
waters of Manila Bay. Under the Amended JVA, the PEA conveyed to Amari the submerged lands even
before their actual reclamation, although the documentation of the deed of transfer and issuance of the
certificates of title would be made only after actual reclamation.
The Amended JVA states that the 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."12 The
Amended JVA further states that "the sharing of the Joint Venture Proceeds shall be based on the ratio of
thirty percent (30%) for PEA and seventy percent (70%) for AMARI."13 The Amended JVA also provides
that the PEA "hereby designates AMARI to perform PEA’s rights and privileges to reclaim, own and
develop the Reclamation Area."14 In short, under the Amended JVA the PEA contributed its rights,
privileges and ownership over the Reclamation Area to the Joint Venture which is 70% owned by Amari.
Moreover, the PEA delegated to Amari the right and privilege to reclaim the submerged lands.
The Amended JVA mandates that the PEA had "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."15 The Amended JVA also provides that "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."16
In the Ponce Cases, the City of Cebu retained ownership of the reclaimed foreshore lands and Essel, Inc.
only had an "irrevocable option" to purchase portions of the foreshore lands once actually reclaimed. In
sharp contrast, in the instant case ownership of the reclamation area, including the submerged lands, was
immediately transferred to the joint venture. Amari immediately acquired the absolute right to own 70%
percent of the reclamation area, with the deeds of transfer to be documented and the certificates of title
to be issued upon actual reclamation. Amari’s right to own the submerged lands is immediately effective
upon the approval of the Amended JVA and not merely an option to be exercised in the future if and
when the reclamation is actually realized. The submerged lands, being inalienable and outside the
commerce of man, could not be the subject of the commercial transactions specified in the Amended JVA.
 L A W O N N A T U R A L R E S O U R C E S a n d E N V I R O N M E N T A L L A W C a s e s a n d S p e c i a l L a w s | 89
Second, in the Ponce Cases the Cebu City ordinance granted Essel, Inc. an "irrevocable option" to
purchase from Cebu City not more than 70% of the reclaimed lands. The ownership of the reclaimed lands
remained with Cebu City until Essel, Inc. exercised its option to purchase. With the subsequent enactment
of the Government Auditing Code (Presidential Decree No. 1445) on 11 June 1978, any sale of
government land must be made only through public bidding. Thus, such an "irrevocable option" to
purchase government land would now be void being contrary to the requirement of public bidding
expressly required in Section 7917 of PD No. 1445. This requirement of public bidding is reiterated in
Section 37918 of the 1991 Local Government Code.19 Obviously, the ingenious reclamation scheme
adopted in the Cebu City ordinance can no longer be followed in view of the requirement of public
bidding in the sale of government lands. In the instant case, the Amended JVA is a negotiated contract
which clearly contravenes Section 79 of PD No. 1445.
Third, Republic Act No. 1899 authorized municipalities and chartered cities to reclaim foreshore lands.
The two Resolutions in the Ponce Cases upheld the Cebu City ordinance only with respect to foreshore
areas, and nullified the same with respect to submerged areas. Thus, the 27 June 1965 Resolution made
the injunction of the trial court against the City of Cebu "permanent insofar x x x as the area outside or
beyond the foreshore land proper is concerned."
As we held in the 1998 case of Republic Real Estate Corporation v. Court of Appeals,20 citing the Ponce
Cases, RA No. 1899 applies only to foreshore lands, not to submerged lands. In his concurring opinion
inRepublic Real Estate Corporation, Justice Reynato S. Puno stated that under Commonwealth Act No.
141, "foreshore and lands under water were not to be alienated and sold to private parties," and that
such lands "remained property of the State." Justice Puno emphasized that "Commonwealth Act No. 141
has remained in effect at present." The instant case involves principally submerged lands within Manila
Bay. On this score, the Ponce Cases, which were decided based on RA No. 1899, are not applicable to the
instant case.
Fourth, the Ponce Cases involve the authority of the City of Cebu to reclaim foreshore areas pursuant to a
general law, RA No. 1899. The City of Cebu is a public corporation and is qualified, under the 1935, 1973,
and 1987 Constitutions, to hold alienable or even inalienable lands of the public domain. There is no
dispute that a public corporation is not covered by the constitutional ban on acquisition of alienable
public lands. Both the 9 July 2002 Decision and the 6 May 2003 Resolution of this Court in the instant case
expressly recognize this.
Cebu City is an end user government agency, just like the Bases Conversion and Development Authority or
the Department of Foreign Affairs.21 Thus, Congress may by law transfer public lands to the City of Cebu
to be used for municipal purposes, which may be public or patrimonial. Lands thus acquired by the City of
Cebu for a public purpose may not be sold to private parties. However, lands so acquired by the City of
Cebu for a patrimonial purpose may be sold to private parties, including private corporations.
However, in the instant case the PEA is not an end user agency with respect to the reclaimed lands under
the Amended JVA. As we explained in the 6 May 2003 Resolution:
PEA is the central implementing agency tasked to undertake reclamation
projects nationwide. PEA took the place of the Department of Environment and Natural
Resources ("DENR" for brevity) as the government agency charged with leasing or selling all
reclaimed lands of the public domain. In the hands of PEA, which took over the leasing and
selling functions of DENR, reclaimed foreshore (or submerged lands) lands are public lands in
the same manner that these same lands would have been public lands in the hands of
DENR. (Emphasis supplied)
Our 9 July 2002 Decision explained the rationale for treating the PEA in the same manner as the DENR
with respect to reclaimed foreshore or submerged lands in this wise:
To allow vast areas of reclaimed lands of the public domain to be transferred to PEA as private
lands will sanction a gross violation of the constitutional ban on private corporations from
acquiring any kind of alienable land of the public domain. PEA will simply turn around, as PEA has
now done under the Amended JVA, and transfer several hundreds of hectares of these reclaimed
and still to be reclaimed lands to a single private corporation in only one transaction. This
scheme will effectively nullify the constitutional ban in Section 3, Article XII of the 1987
Constitution which was intended to diffuse equitably the ownership of alienable lands of the
public domain among Filipinos, now numbering over 80 million strong. (Emphasis supplied)
Finally, the Ponce Cases were decided under the 1935 Constitution which allowed private corporations to
acquire alienable lands of the public domain. However, the 1973 Constitution prohibited private
corporations from acquiring alienable lands of the public domain, and the 1987 Constitution reiterated
this prohibition. Obviously, the Ponce Cases cannot serve as authority for a private corporation to acquire
alienable public lands, much less submerged lands, since under the present Constitution a private
corporation like Amari is barred from acquiring alienable lands of the public domain.
Clearly, the facts in the Ponce Cases are different from the facts in the instant case. Moreover, the
governing constitutional and statutory provisions have changed since the Ponce Cases were disposed of in
1965 and 1966 through minute Resolutions of a divided (6 to 5) Court.
This Resolution does not prejudice any innocent third party purchaser of the reclaimed lands covered by
the Amended JVA. Neither the PEA nor Amari has sold any portion of the reclaimed lands to third parties.
Title to the reclaimed lands remains with the PEA. As we stated in our 9 July 2002 Decision:
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.
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As we held in our 9 July 2002 Decision, the Amended JVA "violates glaringly Sections 2 and 3, Article XII of Form of Payment Paid/Payable On Amount
the 1987 Constitution." In our 6 May 2003 Resolution, we DENIED with FINALITY respondents’ Motions Manager’s Checks 28 April 1995 P 400,000,000.00
for Reconsideration. Litigations must end some time. It is now time to write finis to this "Grandmother of
All Scams." Manager’s Checks Upon signing of letter 262,500,000.00
10 Post Dated Checks (PDCs) 60 days from date of letter 127,000,000.00
WHEREFORE, the second Motions for Reconsideration filed by Public Estates Authority and Amari Coastal 24 PDCs 31 Aug. ’95 to 31 Jan. ’98 150,000,000.00
Bay Development Corporation are DENIED for being prohibited pleadings. In any event, these Motions for 48 PDCs Monthly, over a 12-month pd. 357,363,050.00
Reconsideration have no merit. No further pleadings shall be allowed from any of the parties. from date of letter
Cash bonus When sale of land begins not exceeding
SO ORDERED.
157,844,100.00

Davide, Jr., C.J., Panganiban, Austria-Martinez, Carpio-Morales, and Callejo, Sr., JJ., concur. Developed land from Project Upon completion of each Costing
Bellosillo, J., voted to grant reconsideration, pls. see dissenting opinion. Phase 300,000,000.00
Puno, J., maintains previous qualified opinion. TOTAL P1,754,707,150.00
Vitug, J., pls. see separate(concurring) opinion.
==============
Quisumbing, J., voted to allow reconsideration, see separate opinion.
Mr. Luis Benitez of SGV, the external auditors of AMARI, testified that said Letter-Agreement was
Ynares-Santiago, Sandoval-Gutierrez, and Corona, JJ., maintains their dissent.
approved by the AMARI Board.
Azcuna, J., no part. On the first payment of P400 million, records show that P300 million was paid in manager’s
Tinga, J., see dissenting opinion. checks of Citibank-Makati, while the balance of P100 million was deposited to the account of the
two Chinese in a Hongkong bank. On the basis of a Memorandum Order dated April 28, 1995
Footnotes issued by Messrs. Karnasuta and Emmanuel Sy, and upon the instruction of Messrs. Chin San
1 See "The Grandmother of All Scams" by Sheila S. Coronel and Ellen Tordesillas, 18-20 March 1998, Cordova and Chua Hun Siong, 31 manager’s checks in the total amount of P300 million were
Philippine Center for Investigative Journalism. This report won the 1st Prize in the 1998 JVO Investigative issued by Citibank-Makati in favor of a Mr. George Triviño, a Dominican Republic national, broken
Journalism Awards. down as follows:
2 6 May 2003 Resolution, p. 13. 1) Twenty-nine (29) manager’s checks at P10 million each;
3 PEA’s Memorandum dated 4 August 1999 quoted extensively, in its Statement of Facts and the Case, the 2) One (1) manager’s check at P7 million; and,
Statement of Facts in Senate Committee Report No. 560 dated 16 September 1997. Moreover, the One (1) manager’s check at P3 million.
existence of this report is a matter of judicial notice pursuant to Section 1, Rule 129 of the Rules of Court All these checks were indorsed by Mr. Triviño. Mr. Sy could not satisfactorily answer why Mr.
which provides, "A court shall take judicial notice, without the introduction of evidence, of x x x the official Triviño was made payee of the Manager’s Checks when he had nothing to do with the
acts of the legislature." transactions. Neither could he provide information regarding the said Mr. Triviño.
4 9 July 2002 Decision, p. 4. Mr. Emmanuel Sy admitted signing several blank checks as special request from Messrs. Co and
5 Senate Committee Report No. 560, p. 48. Chua and issuing said checks as follows:
6 A more detailed discussion on this matter in Senate Report No. 560 reads as follows: 1) Ten (10) Manager’s checks dated 60 days from the June 9 letter amounting to P127
The Commissions million;
A Letter-Agreement dated 09 June 1995 signed by Messrs. Premchai Karnasuta and Emmanuel Sy 2) Twenty-four (24) blank checks amounting to P150 million dated from 31 August 1995
for and in behalf of AMARI, on the one hand, and stockholders of AMARI namely, Mr. Chin San up to 31 January 1998; and,
Cordova (a.k.a. Benito Co) and Mr. Chua Hun Siong (a.k.a. Frank Chua), on the other, sets forth 3) Forty (40) blank checks amounting to P357 million.
various payments AMARI paid or agreed to pay the aforesaid stockholders by way of fees for In this regard, the pertinent portion of the 9 June 1995 letter-agreement provides as follows:
"professional efforts and services in successfully negotiating and securing for AMARI the Joint "3. Upon signing of this letter-agreement AMARI shall (a) pay to you (in cash in the form
Venture Agreement", as follows: of Bank Manager’s Checks) the sum of Two Hundred Sixty Two Million Five Hundred
Thousand Pesos (Pesos 262,500,000) and (b) pay and deliver to you the following
checks:
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"3.1 Ten (10) checks dated sixty (60) days from date of this letter agreement in "Each monthly payment to consist of Four (4) checks, three (3) checks of
the total amount of One Hundred Twenty Seven Million Pesos (Pesos which shall each bear the amount of P7,250,000 and one (1) check of which
127,000,000); shall bear the amount of P8,000,000 for a total monthly amount of
"3.2 Twenty-Four (24) checks in the total amount of One Hundred Fifty P29,750,000. These monthly payment of four (4) checks each shall be dated
Million Pesos (Pesos 150,000,000) as follows: the last date of the thirteen, fourteen, fifteen, sixteen, seventeen, eighteen,
DUE DATE OF CHECK AMOUNT nineteen, twenty, twenty-one, twenty-two, twenty-three, and twenty-four
months from the date of this letter agreement. The last issued check
August 31, 1995 P 6,250,000 hereunder shall bear the sum of P8,363,050."
March 31, 1996 6,250,000 The Provisional Receipt shows that Mr. Chin San Cordova and Mr. Chua Hun Siong received the
amount of P896,863,050.00 as of 09 June 1995. Based on the submitted photocopies of the
April 30, 1996 6,250,000
returned checks issued by AMARI vis-a-vis item 3(b) of the quoted Letter-Agreement, the
May 31, 1996 6,250,000 following persons were made payees: Emmanuel Sy, Manuel Sy, Sy Pio Lato, International
June 30, 1996 6,250,000 Merchandising and Development Corporation, Golden Star Industrial Corporation, Chin San
Cordova, EY, and Wee Te Lato. Other payments were made payable to Cash (bearer instruments).
July 31, 1996 6,250,000 Each person was thus named payee to the following amounts:
August 31, 1996 6,250,000 1. Emmanuel Sy:
September 30, 1996 6,250,000 Citibank Check No. 000019 dated 10/31/96 P 6,250,000
October 31, 1996 6,250,000 2. Manuel Sy:
November 30, 1996 6,250,000 Citibank Check No. 000007 dated 8/8/95 12,700,000
December 31, 1996 6,250,000 3. Sy Pio Lato:
January 31, 1997 6,250,000 Citibank Check No. 000008 dated 8/8/95 12,700,000
February 28, 1997 6,250,000 000009 dated 8/8/95 12,700,000
March 31,1997 6,250,000 000010 dated 8/8/95 12,700,000
April 30, 1997 6,250,000 4. International Merchandising and Development Corporation:
May 31, 1997 6,250,000 Citibank Check No. 000013 dated 4/30/96 6,250,000
June 30, 1997 6,250,000 000014 dated 5/31/96 6,250,000
July 31, 1997 6,250,000 000015 dated 6/30/96 6,250,000
August 31, 1997 6,250,000 000016 dated 7/31/96 6,250,000
September 30, 1997 6,250,000 000045 dated 9/30/96 7,250,000
October 31, 1997 6,250,000 5. Golden Star Industrial Corporation:
November 30, 1997 6,250,000 Citibank Check No. 000018 dated 9/30/96 6,250,000
December 31, 1997 6,250,000 6. Chin San Cordova:
January 31, 1998 6,250,000 Citibank Check No. 000041 dated 8/31/96 7,250,000
Total P150,000,000 000043 dated 9/30/96 7,250,000
========== 7. EY:
"3.3 Forty Eight (48) checks in the total amount of Three Hundred Fifty Seven Citibank Check No. 000047 dated 10/31/96 7,250,000
Million Three Hundred Sixty Three Thousand Fifty Pesos (Pesos
357,363,050) payable over a period of twelve (12) months as follows: 000049 dated 10/31/96 7,250,000
8. Wee Te Lato:
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Citibank Check No. 000048 dated 10/31/96 7,250,000 Senator Drilon. Once or twice, a certain Ms. Polly Tragico accompanied Mr. Montano IV to
withdraw funds from Pilipinas Bank-Pavilion.
9. Bearer Instruments: CASH: 7 Both filed on 26 May 2003. On 6 June 2003 Amari filed a Supplement to its second Motion for

Citibank Check No. 000001 dated 8/8/95 12,700,000 Reconsideration.

8 Filed on 19 August 2003.
000002 dated 8/8/95 12,700,000 9 Decision dated 17 January 1964 of Judge Amador E. Gomez. Also quoted in Justice Josue N. Bellosillo’s
000003 dated 8/8/95 12,700,000 Supplement to Separate Opinion, Concurring and Dissenting.
10 Sections 2 and 3, Article XII of the 1987 Constitution.
000004 dated 8/8/95 12,700,000
11 Article 112 , Civil Code of the Philippines.
000005 dated 8/8/95 12,700,000 12 Section 3.2 (a), Amended JVA.
13 Section 3.3 (a), Amended JVA.
000006 dated 8/8/95 12,700,000
14 Section 2.2, Amended JVA.
000012 dated 3/31/96 6,250,000 15 Section 5.2 (c), Amended JVA.

000017 dated 8/31/96 6,250,000 16 Ibid.

000039 dated 8/31/96 7,250,000
000040 dated 8/31/96 7,250,000
000042 dated 8/31/95 8,000,000
000044 dated 9/30/96 7,250,000
000046 dated 9/30/96 7,250,000
000050 dated 10/31/96 8,000,000
10. Payee’s Name Not Legible:
Citibank Check No. 000011 dated 8/31/96 6,250,000
On the other hand, Ms. Aurora Montano, a cousin of Mr. Justiniano Montano IV, was asked by a
Mr. Ben Cuevo if she knew anybody from PEA, and she answered: "Yes, I know Mr. Justiniano
Montano IV." For this answer, and for introducing the AMARI representative to Mr. Montano, she
received P10 million in cash and P20 million in postdated manager’s checks in the office of Mr.
Benito Co and in the presence of, aside from Mr. Benito Co, Mr. Ben Cuevo and Mr. Frank Chua.
Ms. Montano, however, insisted that she actually received only P10 million.
Ms. Montano furthermore admitted that, through Mr. Ben Cuevo, she met Messrs. Chin San
Cordova and Chua Hun Siong in 1994 for this transaction.
In Executive Session, Mr. Ben Cuevo admitted to having encashed two checks at Pilipinas Bank,
worth P12.5 million. According to him, the two checks form part of the P150 million worth of
post-dated checks (PDCs), with a face value of P6.25 million per check, described in the Letter-
Agreement. Of this P150 million, Mr. Cuevo actually received five (5) PDCs worth P31 million, but
he was only able to encash 2 checks at P12.5 million.
Still in Executive Session, Mr. Ben Cuevo also admitted receiving a check worth P6.25 million
payable to his company, International Merchandising and Development Corporation. This was
deposited in his Current Account No. 604010562-A, and the amount was transferred by credit
memo to Mr. Montano IV’s account at Pilipinas Bank.
Mr. Montano IV admitted that he has an account with Pilipinas Bank, but invoked his
constitutional right against self-incrimination when asked if he received the amount of P6.25
million transferred to his account. The Pilipinas Bank Credit Advice dated May 6, 1996, marked as
Exhibit 1-Montano IV, indicating the transfer of the amount of P6.25 million was presented by
17 SECTION 79. Destruction or sale of unserviceable property. — 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 unsalable, it may be destroyed in their presence. If
found to be valuable, it may be sold at public auction to the highest bidder under the supervision of the
proper committee on awards or similar body in the presence of the auditor concerned or other duly
authorized representative of the Commission, after advertising by printed notice in the Official Gazette, or
for not less than three consecutive days in any newspaper of general circulation, or where the value of the
property does not warrant the expense of publication, by notices posted for a like period in at least three
public places in the locality where the property is to be sold. In the event that the public auction fails, the
property may be sold at a private sale at such price as may be fixed by the same committee or body
concerned and approved by the Commission.
18 SECTION 379. Property Disposal. — When property of any local government unit has become
unserviceable for any cause or is no longer needed, it shall upon application of the officer accountable
therefor, be inspected and appraised by the provincial, city or municipal auditor, as the case may be, or his
duly authorized representative or that of the Commission on Audit and, if found valueless or unusable, shall
be destroyed in the presence of the inspecting officer.
If found valuable, the same shall be sold at public auction to the highest bidder under the supervision of the
committee on awards and in the presence of the provincial, city or municipal auditor or his duly authorized
representative. Notice of the public auction shall be posted in at least three (3) publicly accessible and
conspicuous places, and if the acquisition cost exceeds One hundred thousand pesos (P100,000.00) in the
case of provinces and cities, and Fifty thousand pesos (P50,000.00) in the case of municipalities, notice of
auction shall be published at least two (2) times within a reasonable period in a newspaper of general
circulation in the locality.
19 Under Section 380 of the 1991 Local Government Code, local governments can sell real property through
negotiated sale only with the approval of the Commission on Audit. Under paragraph 2 (a) of COA Circular
No. 89-296, on "Sale Thru Negotiation," a negotiated sale may be resorted to only if "[T]here was a failure
of public auction." The Commission on Audit enforces the express requirement in Section 79 of the
Government Auditing Code that a negotiated sale is possible only after there is a failure of public auction.
20 359 Phil. 530 (1998).
21 Laurel v. Garcia, G.R. No. 92013, 25 July 1990, 187 SCRA 797.
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November 7, 1936
December 1, 1936
COMMONWEALTH ACT NO. 141*
AN ACT TO AMEND AND COMPILE THE LAWS RELATIVE TO LANDS OF THE PUBLIC DOMAIN
TITLE I
TITLE AND APPLICATION OF THE ACT, LANDS TO WHICH IT REFERS, AND CLASSIFICATION,
DELIMITATION, AND SURVEY — THEREOF FOR CONCESSION
CHAPTER I
Short Title of the Act, Lands to Which it Applies, and Officers Charged With Its Execution
SECTION 1. The short title of this Act shall be "The Public Land Act.
SECTION 2. The provisions of this Act shall apply to the lands of the public domain; but
timber and mineral lands shall be governed by special laws and nothing in this Act provided shall be
understood or construed to change or modify the administration and disposition of the lands
commonly called "friar lands'' and those which, being privately owned, have reverted to or become
the property of the Commonwealth of the Philippines, which administration and disposition shall be
governed by the laws at present in force or which may hereafter be enacted.
SECTION 3. The Secretary of Agriculture and Commerce shall be the executive officer
charged with carrying out the provisions of this Act through the Director of Lands, who shall act
under his immediate control.
SECTION 4. Subject to said control, the Director of Lands shall have direct executive control
of the survey, classification, lease, sale or any other form of concession or disposition and
management of the lands of the public domain, and his decisions as to questions of fact shall be
conclusive when approved by the Secretary of Agriculture and Commerce.
SECTION 5. The Director of Lands, with the approval of the Secretary of Agriculture and
Commerce shall prepare and issue such forms, instructions, rules, and regulations consistent with this
Act, as may be necessary and proper to carry into effect the provisions thereof and for the conduct of
proceedings arising under such provisions.
CHAPTER II
Classification, Delimitation, and Survey of Lands of the Public Domain, for the Concession Thereof
SECTION 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 a like manner transfer such lands from one class to another, for the
purposes of their administration and disposition.
SECTION 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.
SECTION 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 However, the President may, for reasons of public interest, declare lands of the
public domain open to disposition before the same have had their boundaries established or been
surveyed, or may, for the same reason, suspend their concession or disposition until they are again
declared open to concession or disposition by proclamation duly published or by Act of the National
Assembly.
SECTION 9. For the purpose of their administration and disposition, the lands of the public
domain alienable or open to disposition shall be classified, according to the use or purposes to which
such lands are destined, as follows:
(a) Agricultural
(b) Residential commercial industrial or for similar productive purposes
(c) Educational, charitable, or other similar purposes
(d) Reservations for town sites and for public and quasi-public uses.
 L A W O N N A T U R A L R E S O U R C E S a n d E N V I R O N M E N T A L L A W C a s e s a n d S p e c i a l L a w s | 94
The President, upon recommendation by the Secretary of Agriculture and Commerce, shall
from time to time make the classifications provided for in this section, and may, at any time and in a
similar manner, transfer lands from one class to another.
SECTION 10. The words "alienation, "'disposition, or "concession" as used in this Act, shall
mean any of the methods authorized by this Act for the acquisition, lease, use, or benefit of the lands
of the public domain other than timber or mineral lands.
TITLE II
Agricultural Public Lands
CHAPTER III
Forms of Concession of Agricultural Lands
SECTION 11. Public lands suitable for agricultural purposes can be disposed of only as
follows, and not otherwise:
(1) For homestead settlement
(2) By sale
(3) By lease
(4) By confirmation of imperfect or incomplete titles:
(a) By judicial legalization
(b) By administrative legalization (free patent).
SECTION 12. Any citizen of the Philippines over the age of eighteen years, or the head of a
family, who does not own more than twenty-four hectares of land in the Philippines or has not had
the benefit of any gratuitous allotment of more than twenty-four hectares of land since the
occupation of the Philippines by the United States, may enter a homestead of not exceeding twenty-
four hectares of agricultural land of the public domain.
SECTION 13. Upon the filing of an application for a homestead, the Director of Lands, if he
finds that the application should be approved, shall do so and authorize the applicant to take
possession of the land upon the payment of five pesos, Philippine currency, as entry fee. Within six
months from and after the date of the approval of the of the application, the applicant shall begin to
work the homestead, otherwise he shall lose his prior right to the land.
SECTION 14. No certificate shall be given or patent issued for the land applied for until at
least one-fifth of the land has been improved and cultivated. The period within which the land shall
be cultivated shall not be less than one or more than five years, from and after the date of the
approval of the application. The applicant shall, within the said period, notify the Director of Lands as
soon as he is ready to acquire the title. If at the date of such notice, the applicant shall prove to the
satisfaction of the Director of Lands, that he has resided continuously for at least one year in the
municipality in which the land is located, or in a municipality adjacent to the same, and has cultivated
at least one-fifth of the land continuously since the approval of the application, and shall make
affidavit that no part of said land has been alienated or encumbered, and that he has complied with
all the requirements of this Act, then, upon the payment of five pesos, as final fee, he shall be
entitled to a patent.
SECTION 15. At the option of the applicant, payment of the fees required in this chapter
may be made to the municipal treasurer of the locality, who, in turn, shall forward them to the
provincial treasurer. In case of delinquency of the applicant, the Director of Lands may, sixty days
after such delinquency has occurred, either cancel the application or grant an extension of time not
to exceed one hundred and twenty days for the payment of the sum due.
SECTION 16. If at any time before the expiration of the period allowed by law for the making
of final proof, it shall be proven to the satisfaction of the Director of Lands, after due notice to the
homesteader, that the land entered is under the law not subject to home-stead entry, or that the
homesteader has actually changed his residence, or voluntarily abandoned the land for more than six
months at any one time during the years of residence and occupation herein required, or has
otherwise failed to comply with the requirements of this Act, the Director of Lands may cancel the
entry.
SECTION 17. Before final proof shall be submitted by any person claiming to have complied
with the provisions of this chapter, due notice, as prescribed by the Secretary of Agriculture and
Commerce shall be given to the public of his intention to make such proof, stating therein the name
and address of the homesteader, the description of the land, with its boundaries and area, the names
of the witness by whom it is expected that the necessary facts will be established, and the time and
place at which, and the name of the officer before whom, such proof will be made.
SECTION 18. In case the homesteader shall suffer from mental alienation, or shall for any
other reason be incapacitated from exercising his rights personally, the person legally representing
him may offer and submit the final proof on behalf of such incapacitated person.
SECTION 19. Not more than one homestead entry shall be allowed to any one person, and
no person to whom a homestead patent has been issued by virtue of the provisions of this Act
regardless of the area of his original homestead, may again acquire a homestead; Provided, however,
That any previous homesteader who has been issued a patent for less than twenty-four hectares and
otherwise qualified to make a homestead entry, may be allowed another homestead which, together
with his previous homestead shall not exceed an area of twenty-four hectares.
 L A W O N N A T U R A L R E S O U R C E S a n d E N V I R O N M E N T A L L A W C a s e s a n d S p e c i a l L a w s | 95
SECTION 20. If at any time after the approval of the application and before the patent is
issued, the applicant shall prove to the satisfaction of the Director of Lands that he has complied with
all the requirements of the law, but cannot continue with his homestead, through no fault of his own,
and there is a bona fide purchaser for the rights and improvements of the applicant on the land, and
that the conveyance is not made for purposes of speculation, then the applicant, with the previous
approval of the Director of Lands may transfer his rights to the land and improvements to any person
legally qualified to apply for a homestead, and immediately after such transfer, the purchaser shall
file a homestead application for the land so acquired and shall succeed the original homesteader in
his rights and obligations beginning with the date of the approval of said application of the purchaser.
Any person who has so transferred his rights may not again apply for a new homestead. Every
transfer made without the previous approval of the Director of Lands shall be null and void and shall
result in the cancellation of the entry and the refusal of the patent.
SECTION 21. Any non-Christian Filipino who has not applied for a home-stead, desiring to
live upon or occupy land on any of the reservations set aside for the so-called "non-Christian tribes"
may request a permit of occupation for any tract of land of the public domain reserved for said non-
Christian tribes under this Act, the area of which shall not exceed four hectares. It shall be an
essential condition that the applicant for the permit cultivate and improve the land, and if such
cultivation has not been begun within six months from and after the date on which the permit was
received, the permit shall be cancelled. The permit shall be for a term of one year. If at the expiration
of this term or at any time prior thereto, the holder of the permit shall apply for a homestead under
the provisions of this chapter, including the portion for which a permit was granted to him, he shall
have the priority, otherwise the land shall be again open to disposition at the expiration of the
permit.
For each permit the sum of one peso shall be paid.
CHAPTER IV
Sale
SECTION 22. Any citizen of lawful age of the Philippines, and any such citizen not of lawful
age who is a head of a family, and any corporation or association of which at least sixty per centum of
the capital stock or of any interest in said capital stock belongs wholly to citizens of the Philippines,
and which is organized and constituted under the laws of Philippines, and corporate bodies organized
in the Philippines authorized under their charters to do so; may purchase any tract of public
agricultural land disposable under this Act, not to exceed one hundred and forty-four hectares in the
case of an individual and one thousand and twenty-four hectares in that of a corporation or
association, by proceeding as prescribed in this chapter: Provided, That partnerships shall be entitled
to purchase not to exceed one hundred and forty-four hectares for each member thereof. but the
total area so purchased shall in no case exceed the one thousand and twenty-four hectares
authorized in this section for associations and corporations.
SECTION 23. No person, corporation, association, or partnership other than those
mentioned in the last preceding section may acquire or own agricultural public land or land of any
other denomination or classification, which is at the time or was originally, really or presumptively, of
the public domain, or any permanent improvement thereon, or any real right on such land and
improvement: Provided, however, That persons, corporations, associations or partnerships which, at
the date upon which the Philippine Constitution took effect, held agricultural public lands or land of
any other denomination, that belonged originally, really or presumptively, to the public domain, or
permanent improvements on such lands, or a real right upon such lands and Constitution took
improvements, having acquired the same under the laws and regulations in force at the date of such
acquisition, shall be authorized to continue holding the same as if such persons, corporations,
associations, or partnerships were qualified under the last preceding section; but they shall not
encumber, convey, or alienate the same to persons, corporations, associations, or partnerships not
included in section twenty-two of this Act, except by reason of hereditary succession, duly legalized
and acknowledged by competent courts.
SECTION 24. Lands sold under the provisions of this chapter must be appraised in
accordance with section one hundred and sixteen of this Act. The Director of Lands shall announce
the sale thereof by publishing the proper notice once a week for six consecutive weeks in the Official
Gazette, and in two newspapers one published in Manila and the other published in the municipality
or in the province where the lands are located, or in a neighboring province, and the same notice
shall be posted on the bulletin board of the Bureau Of Lands in Manila, and in the most conspicuous
place in the provincial building and the municipal building of the province and municipality,
respectively, where the land is located, and, if practicable, on the land itself; but if the value of the
land does not exceed two hundred and forty pesos, the publication in the Official Gazette and
newspapers may be omitted. The notices shall be published one in English and the other in Spanish or
in the local dialect, and shall fix a date not earlier than sixty days after the date of the notice upon
which the land will be awarded to the highest bidder, or public bids will be called for, or other action
will be taken as provided in this chapter.
SECTION 25. Public agricultural lands which are not located within ten (10) kilometers from
the boundaries of the city proper in chartered cities or within five (5) kilometers from the municipal
hall or town occupants plaza of any municipality may be sold to actual occupants who do not own
any parcel of land or whose total land holdings do not exceed five hectares and who comply with the
minimum requirements of Commonwealth Act numbered one hundred forty-one, as amended, and
who have resided on the land applied for at least two years prior to the date of the application. cdt
All bids must be sealed and addressed to the Director of Lands and must have inclosed
therewith cash or certified check, treasury warrant, or post-office money order payable to the order
of the Director of Lands for ten per centum of the amount of the bid, which amount shall be retained
in case the bid is accepted as part payment of the purchase price: Provided, That no bid shall be
considered the amount of which is less than the appraised value of the land.
In addition to existing publication requirements in section twenty-four of Commonwealth
Act Numbered one hundred forty-one, as amended, notices and of applications shall be posted for a
 L A W O N N A T U R A L R E S O U R C E S a n d E N V I R O N M E N T A L L A W C a s e s a n d S p e c i a l L a w s | 96
period of not less than thirty days in at least three conspicuous places in the municipality where the
parcel of land is located, one of which shall be at the municipal building, and other, in the barrio
council building of the barrio where the land is located.
SECTION 26. Upon the opening of the bids, the land shall be awarded to the highest bidder.
If there are two or more equal bids which are higher than the others, and one of such equal bids is
that of the applicant, his bid shall be accepted. If, however, the bid of the applicant is not one of such
equal and higher bids, the Director of Lands shall at once submit the land for public bidding, and to
the person making the highest bid on such public auction the land shall be awarded. In any case, the
applicant shall always have the option of raising his bid to equal that of the highest bidder, and in this
case the land shall be awarded to him. No bid received at such public auction shall be finally accepted
until the bidder shall have deposited ten per centum of his bid, as required in Section twenty-five of
this Act. In case none of the tracts of land that are offered for sale or the purchase of which has been
applied for, has an area in excess of twenty-four hectares, the Director of Lands may delegate to the
District Land Officer concerned the power of receiving bids, holding the auction, and proceeding in
accordance with the provisions of this Act, but the District Land Officer shall submit his
recommendation to the Director of Lands, for the final decision of the latter in the case.
The District Land Officer shall accept and process any application for the purchase of public
lands not exceeding five hectares subject to the approval of the Director of Lands within sixty days
after receipt of the recommendation of said District Land Officer.
SECTION 27. The purchase price shall be paid as follows: The balance of the purchase price
after deducting the amount paid at the time of submitting the bid, may be paid in full upon the
making of the award, or in not more than ten equal annual installments from the date of the award.
SECTION 28. The purchaser shall have not less than one-fifth of the land broken and
cultivated within five years after the date of the award; and before any patent is issued, the
purchaser must show of occupancy, cultivation, and improvement of at least one-fifth of the land
applied for until the date on which final payment is made: Provided, however, That in case land
purchased is to be devoted to pasture, it shall be sufficient compliance with this condition if the
purchaser shall graze on the land as many heads of his cattle as will occupy at least one-half of the
entire area at the rate of one head per hectare.
SECTION 29. After title has been granted, the purchaser may not, within a period of ten
years from such cultivation or grant, convey or encumber or dispose said lands or rights thereon to
any person, corporation or association, without prejudice to any right or interest of the Government
in the land: Provided, That any sale and encumbrance made in violation of the provisions of this
section, shall be null and void and shall produce the effect of annulling the acquisition and reverting
the property and all rights thereto to the State, and all payments on the purchase price theretofore
made to the Government shall be forfeited.
SECTION 30. If at any time after the date of the award and before the issuance of patent, it
is proved to the satisfaction of the Director of Lands, after due notice to the purchaser, that the
purchaser has voluntarily abandoned the land for more than one year at any one time, or has
otherwise failed to comply with the requirements of the law, then the land shall revert to the State,
and all prior payments made by the purchaser and all improvements existing on the land shall be
forfeited.
SECTION 31. No person, corporation, association, or partnership shall be permitted, after
the approval of this Act, to acquire the title to or possess as owner any lands of the public domain if
such lands, added to other lands belonging to such person, corporation, association, or partnership
shall give a total area greater than area the acquisition of which by purchase is authorized under this
Act. Any excess in area over this maximum and all right, title, interest, claim or action held by any
person, corporation, association, or partnership resulting directly or indirectly in such excess shall
revert to the State.
This section shall, however, not be construed to prohibit any person, corporation,
association, or partnership authorized by this Act to require lands of the public domain from making
loans upon real necessary for the recovery of such loans; but in this case, as soon as the excess above
referred to occurs, such person, corporation, association, or partnership shall dispose of such lands
within five years, for the purpose of removing the excess mentioned. Upon the land in excess of the
limit there shall be paid, so long as the same is not disposed of, for the first year a surtax of fifty per
centum additional to the ordinary tax to which such property shall be subject, and for each
succeeding year fifty per centum shall be added to the last preceding annual tax rate, until the
property shall have been disposed of.
The person, corporation, association, or partnership owning the land in excess of the limit
established by this Act shall determine the portion of land to be segregated.
At the request of Secretary of Agriculture and Commerce, the Solicitor-General or the officer
acting in his stead shall institute the necessary proceedings in the proper court for the purpose of
determining the excess portion to be segregated, as well as the disposal of such portion in the
exclusive interest of the Government.
SECTION 32. This chapter shall be held to authorize only one purchase of the maximum
amount of land hereunder by the same person, corporation, association, or partnership; and no
corporation, association, or partnership, any member of which shall have received the benefits of this
chapter or of the next following chapter, either as an individual or as a member of any other
corporation, association, or partnership, shall purchase any other lands of the public domain under
this chapter. But any purchaser of public land, after having made the last payment upon and
cultivated at least one-fifth of the land purchased, if the same shall be less than the maximum
allowed by this Act, may purchase successively additional agricultural public land adjacent to or not
distant from the land first purchased, until the total area of such purchases shall reach the maximum
established in this chapter: Provided, That in making such additional purchase or purchases, the same
conditions shall be complied with as prescribed by this Act for the first purchase.
CHAPTER V
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Lease
SECTION 33. Any citizen of lawful age of the Philippines, and any corporation or association
of which at least sixty per centum of the capital stock or of any interest in said capital stock belongs
wholly to citizens of the Philippines, and which is organized and constituted under the laws of the
Philippines, may lease any tract of agricultural public land available for lease under the provisions of
this Act, not exceeding a total of one thousand and twenty-four hectares. If the land leased is
adapted to and be devoted for grazing purposes, an area not exceeding two thousand hectares may
be granted. No member, stockholder, of officer, representative, attorney, agent, employee or
bondholder of any corporation or association holding or controlling agricultural public land shall
apply, directly or indirectly, for agricultural public land except under the homestead and free patent
provisions of this Act: Provided, That no lease shall be permitted to interfere with any prior claim by
settlement or occupation, until the consent of the occupant or settler is first had, or until such claim
shall be legally extinguished, and no person, corporation, or association shall be permitted to lease
lands hereunder which are not reasonably necessary to carry on his business in case of an individual,
or the business for which it was lawfully created and which it may lawfully pursue in the Philippines, if
an association or corporation.
SECTION 34. A notice of the date and place of the auction of the right to lease the land shall
be published and announced in the same manner as that prescribed for the publication and
announcement of the notice of sale, in section twenty-four of this Act.
SECTION 35. All bids must be sealed and addressed to the Director of Lands and must have
enclosed therewith cash or a certified check, Treasury warrant, or post-office money order payable to
the order of the Director of Lands, for a sum equivalent to the rental for at least, the first three
months of the lease: Provided, That no bid shall be considered in which the proposed annual rental is
less than three per centum of the value of the land according to the appraisal made in conformity
with section one hundred and sixteen of this Act.
SECTION 36. The auction of the right to lease the land shall be conducted under the same
procedure as that prescribed for the auction sale of agricultural lands as described in section twenty-
six of this Act: Provided, That no bid shall be accepted until the bidder shall have deposited the rental
for at least the first three months of the lease.
SECTION 37. The annual rental of the land leased shall not be less than three per centum of
the value of the land, according to the appraisal and reappraisal made in accordance with section one
hundred sixteen of this Act; except for lands reclaimed by the Government, which shall not be less
than four per centum of the appraised and reappraised value of the land: Provided, That one-fourth
of the annual rental of these lands reclaimed prior to the approval of this Act shall accrue to the
construction and improvement portion of the Portworks Funds: And provided, further, That the
annual rental of not less than four per centum of the appraised and reappraised value of the lands
reclaimed using the Portworks Fund after the approval of this Act shall all accrue to the construction
and improvement portion of the Portworks Fund. But if the land leased is adapted to and be devoted
for granting purposes, the annual rental shall be not less than two per centum of-the appraised and
reappraised value thereof- Every contract of lease under the provisions of this chapter shall contain a
cause to the effect that are appraisal of the land leased shall be made every ten years from the date
of the approval of the lease, if the term of the same shall be in excess of ten years. In case the lessee
is not agreeable to the reappraisal and prefers to give up his contract of lease, he shall notify the
Director of Lands of his desire within the six months next preceding the date on which the reappraisal
takes effect, and in case his request is approved, the Director of Lands may, if the lessee should so
desire, proceed in accordance with section one hundred of this Act.
SECTION 38. Leases shall run for a period of not more than twenty-five years, but may be
renewed once for another period of not to exceed twenty-five years, in case the lessee shall have
made important improvements which, in the discretion of the Secretary of Agriculture and
Commerce justify a renewal. Upon the final expiration of the lease, all buildings and other permanent
improvements made by the lessee, his heirs, executors, administrators, successors, or assigns shall
become the property of the Government, and the land together with the said improvements shall be
disposed of in accordance with the provisions of chapter five of this Act.
SECTION 39. It shall be an inherent and essential condition of the lease that the lessee shall
have not less than one-third of the land broken and cultivated within five years after the date of the
approval of the lease: Provided, however, That in case the land leased is to be devoted to pasture, it
shall be sufficient compliance with this condition if the lessee shall graze on the land as many heads
of cattle as will occupy at least one-half of the entire area at the rate of one head per hectare.
SECTION 40. The lessee shall not assign, encumber, or sublet his rights without the consent
of the Secretary of Agriculture and Commerce, and the violation of this condition shall avoid the
contract: Provided, That assignment, encumbrance, or subletting for purposes of speculation shall not
be permitted in any case: Provided, further, That nothing contained in this section shall be
understood or construed to permit the assignment, encumbrance, or subletting of lands leased under
this Act, or under any previous Act, to persons, corporations, or associations which under this Act, are
not authorized to lease public lands.
SECTION 41. The lease of any lands under this chapter shall not confer the right to remove
or dispose of any valuable timber except as provided in the regulations of the Bureau of Forestry for
cutting timber upon such lands. Nor shall such lease confer the right to remove or dispose of stone,
oil, coal, salts. or other minerals, or medicinal mineral waters existing upon the same. The lease as to
the part of the land which shall be mineral may be canceled by the Secretary of Agriculture and
Commerce, after notice to the lessee, whenever the said part of the land is more valuable for
agricultural purposes.
The commission of waste or violation of the forestry regulations by the lessee shall work a
forfeiture of his last payment of rent and render him liable to immediate dispossession and suit for
damage.
SECTION 42. After having paid rent for at least the first two years of the lease, and having
complied with the requirements prescribed in section thirty nine, the lessee of agricultural public
land with an area than the maximum allowed by law, may lease successively additional agricultural
public land adjacent to or near the land originally leased until the total- area of such leases shall reach
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the maximum established in this chapter: Provided, That in making such additional lease, the same
conditions shall be complied with as prescribed by this Act for the first lease.
SECTION 43. During the life of the lease, any lessee who shall have complied with all the
conditions thereof and shall have the qualifications required by section twenty-two, shall have the
option of purchasing the land leased subject to the restrictions of chapter five of this Act.
CHAPTER VI
Free Patents
SECTION 44. Any natural-born citizen of the Philippines who is not the owner of more than
twenty-four hectares and who since July fourth, nineteen hundred and twenty-six 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 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 this provision of the Public Land Law
SECTION 45. The President of the Philippines (Prime Minister), upon recommendation of the
Secretary of Natural Resources, shall from time to time fix by proclamation the period which
applications for Proclamation free patents may be filed in the district, chartered city, of period
province, municipality or region specified in such proclamation, and upon the expiration of the period
so designated, unless the same be extended by the President (Prime Minister) all the land comprised
within such district, chartered city, province, municipality or region subject thereto under the
provisions of this chapter may be disposed of as agricultural public land without prejudice to the prior
right of the occupant and cultivator to acquire such land under this Act by means other than free
patent. The time to be fixed in the entire Archipelago for the filing of applications under this Chapter
shall not extend beyond December 31, 1987, except in the provinces of Agusan del Norte, Agusan del
Sur, Cotabato, South Cotabato, Bukidnon, Lanao del Norte, Lanao del Sur, Davao del Norte, Davao del
Sur, Davao Oriental, Sulu, Mt. Province, Benguet, Kalinga-Apayao, and Ifugao where the President of
the Philippines, upon recommendation of the Secretary of Natural Resources, shall determine or fix
the time beyond which the filing of applications under this Chapter shall not extend. The period fixed
for any district, chartered city, province, or municipality shall begin to run thirty days after the
publication of the proclamation in the Official Gazette and if available in one newspaper of general
circulation in the city, province or municipality concerned. A certified copy of said proclamation shall
be furnished by the Secretary of Natural Resources within 30 days counted from the date of the
presidential proclamation to the Director of Lands and to the provincial board, the municipal board or
city council and barangay council affected, and copies thereof shall be posted on the bulletin board of
the Bureau of Lands at Manila and at conspicuous places in the provincial building and at the
municipal building and barangay hall or meeting place. It shall moreover, be announced by
government radio whenever available, in each of the barrios of the municipality.
SECTION 46. If, after the filing of the application and the investigation, the Director of Lands
shall be satisfied of the truth of the allegations contained the application and that the applicant
comes within the provisions chapter, he shall cause a patent to issue to the applicant or his legal
successor for the tract so occupied and cultivated, provided its area does not exceed twenty-four
hectares: Provided, That no application shall be finally acted upon until notice thereof has been
published in the municipality and barrio in which the land is located and adverse claimants have had
an opportunity to present their claims.
CHAPTER VII
Judicial Confirmation of Imperfect or Incomplete Titles
SECTION 47. The persons specified in the next following section are hereby granted time,
not to extend beyond December 31, 1987 within which to take advantage of the benefit of this
chapter: Provided, That this extension shall apply only where the area applied for does not exceed
144 hectares. Provided, further, That the several periods of time designated by the President in
accordance with section forty-five of this Act shall apply also to the lands comprised in the provisions
of this chapter, but this section shall not be construed as prohibiting any of said persons from acting
under this chapter at any time prior to the period fixed by the President.
SECTION 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) Those who prior to the transfer of sovereignty from Spain to the prior United States
have applied for the purchase, composition or other form of grant of lands of the public
domain under the laws and royal decrees then in force and have instituted and prosecuted
the proceedings in connection therewith, but have with or without default upon their part,
or for any other cause, not received title therefor, if such applicants or grantees and their
heirs have occupied and cultivated said lands continuously since the filing of their
applications.
(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
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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.
SECTION 49. No person claiming title to lands of the public domain not possession of the
qualifications specified in the last preceding section may apply for the benefits of this chapter.
SECTION 50. Any person or persons, or their legal representatives or successors in right,
claiming any lands or interest in lands under the provisions of this chapter, must in every case present
an application to the proper Court of First Instance, praying that the validity of the alleged title or
claim be inquired into and that a certificate of title be issued to them under the provisions of the
Land Registration Act.
The application shall conform as nearly as may be in its material allegations to the
requirements of an application for registration under the Land Registration Act, and shall be
accompanied by a plan of the land and all documents evidencing a right on the part of the applicant
to the land claimed. The application shall also state the citizenship of the applicant and shall set forth
fully the nature of the claim and when based upon proceeding initiated under Spanish laws, it shall
specify as exactly as possible the date and form of application for purchase composition or other
form of grant, the extent of the compliance with the conditions required by the Spanish laws and
royal decrees for the acquisition of legal title, and if not fully complied with, the reason for such
noncompliance, together with a statement of the length of time such land or any portion thereof has
been actually occupied by the claimant or his predecessors in interest; the use made of the land, and
the nature of the inclosure, if any. The fees provided to be paid for the registration of lands under the
Land Registration Act shall be collected from applicants under this chapter.
SECTION 51. Applications for registration under this chapter shall be heard in the Court of
First Instance in the same manner and shall be subject to the same procedure as established in the
Land Registration Act for other applications, except that a notice of all such applications, together
with a plan of the lands claimed, shall be immediately forwarded to the Director of Lands, who may
appear as a party in such cases: Provided, That prior to the publication for hearing, all of the papers in
said case shall be transmitted papers by the clerk to the Solicitor General or officer acting in his stead,
in order that he may, if he deems it advisable for the interests of the Government, investigate all of
the facts alleged in the application or otherwise brought to his attention. The Solicitor-General shall
return such papers to the clerk as soon as practicable within three months.
The final decree of the court shall in every case be the basis for the original certificate of title
in favor of the person entitled to the property under the procedure prescribed in section forty-one of
the Land Registration Act.
SECTION 52. In cadastral proceedings, instead of an application, an answer or claim may be
filed with the same effect as in the procedure provided in the last preceding two sections.
SECTION 53. It shall be lawful for the Director of Lands, whenever in the opinion of the
President the public interests shall require it, to cause to be filed in the proper Court of First Instance,
through the Solicitor-General or the officer acting in his stead, a petition against the holder, claimant,
possessor, or occupant of any land who shall not have voluntarily come in under the provisions of this
chapter or of the Land Registration Act, stating in substance that the title of such holder, claimant,
possessor, or occupant is open to discussion; or that the boundaries of any such land which has not
been brought into court as aforesaid are open to question; or that it is advisable that the title to such
lands be settled and adjudicated, and praying that the title to any such land or the boundaries
thereof or the right to occupancy thereof be settled and adjudicated. The judicial proceedings under
this section shall be in accordance with the laws on adjudication of title in cadastral proceedings.
SECTION 54. If in the hearing of any application arising under this chapter the court shall
find that more than one person or claimant has an interest in the land, such conflicting interests shall
be adjudicated by the court and decree awarded in favor of the person or persons entitled to the land
according to the laws, but if none of said person is entitled to the land, or if the person who might be
entitled to the same lacks the qualifications required by this Act for acquiring agricultural land of the
public domain, the decision shall be in favor of the Government.
SECTION 55. Whenever, in any proceedings under this chapter to secure registration of an
incomplete or imperfect claim of title initiated prior to the transfer of sovereignty from Spain to the
United States, it shall appear that had such claims been prosecuted to completion under the laws
prevailing when instituted, and under the conditions of the grant then contemplated, the conveyance
of such land to the applicant would not have been gratuitous, but would have involved payment
therefor to the Government, then and in that event the court shall, after decreeing in whom title
should vest, further determine the amount to be paid as a condition for the registration of the land.
Such judgment shall be certified to the Director of Lands by the clerk of the court for collection of the
amount due from the person entitled to conveyance.
Upon payment to the Director of Lands of the price specified in the judgment, he shall so
certify to the proper Court of First Instance and said court shall forthwith order the registration of the
land in favor of the competent person entitled thereto. If said person shall fail to pay the amount of
money required by the decree within a reasonable time fixed in the same, the court shall order the
proceeding to stand dismissed and the title to the land shall then be in the State free from any claim
of the applicant.
SECTION 56. Whenever any judgment of confirmation or other decree of the court under
this chapter shall become final, the clerk of the court concerned shall certify that fact to the Director
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of Lands, with a certified copy of the decree of confirmation or judgment of the court and the plan
and technical description of the land involved in the decree or judgment of the court.
SECTION 57. No title or right to, or equity in, any lands of the public domain may hereafter
be acquired by prescription or by adverse possession or occupancy, or under or by virtue of any law
in effect prior to American occupation, except as expressly provided by laws enacted after said
occupation of the Philippines by the United States.
TITLE III
Lands for Residential, Commercial or Industrial Purposes and Other Similar Purposes
CHAPTER VIII
Classification and Concession of Public Lands Suitable for Residence, Commerce and Industry
SECTION 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 pro-visions of this chapter and not otherwise.
SECTION 59. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filing, 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.
SECTION 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. The area of the land 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 in no case exceed one hundred and forty-four
hectares: Provided, however, That this limitation shall not apply to grants, donations, 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: Provided, further, That any person, corporation, association or partnership disqualified
from purchasing public land for agricultural purposes under the provisions of this Act, may lease land
included under this title suitable for industrial or residential purposes, but the lease granted shall
only-be valid while such land is used for the purposes referred to.
SECTION 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 and Commerce. 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.
SECTION 62. The lands reclaimed by the Government by dredging, filling or otherwise shall
be surveyed and may, with the approval of the Secretary of Agriculture and Commerce, be divided by
the Director of Lands into lots and blocks, with the necessary streets and alley-ways between them,
and said Director shall give notice to the public by publication in the Official Gazette or by other
means, that the lots or blocks not needed for public purposes shall be leased for commercial or
industrial or other similar purposes.
SECTION 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 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, that the Government will lease or sell, as the case may be, the lots or blocks specified in
the advertisement, for the purpose stated in the notice and subject to the conditions specified in this
chapter.
SECTION 64. The leases executed under this chapter by the Secretary of Agriculture and
Commerce shall, among other conditions, contain the following:
(a) The rental shall not be less than three per centum of the appraised or reappraised
value of the land plus one per centum of the appraised or reappraised value of the
improvements, except for lands reclaimed by the Government which shall not be less than
four per centum of the appraised or reappraised value of the land plus two per centum of
the appraised or reappraised value of the improvements thereon: Provided, That twenty-
five per centum of the total annual rental on all lands reclaimed prior to the approval of
this Act and one per centum of the appraised or reappraised value of improvements shall
accrue to the construction and improvement portion of the Portworks Fund: And provided,
further,That the annual rental on lands reclaimed using the Portworks Fund together with
the fee due on account of the improvement thereon after the effectivity of this Act shall all
accrue to the construction and improvement portion of the Portworks Fund.
(b) The land rented and the improvements thereon shall be reappraised every ten years
if the term of the lease is in excess of that period.
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(c) The term of the lease shall be as prescribed by section thirty-eight of this Act.
(d) The lessee shall construct permanent improvements appropriate for the purpose for
which the lease is granted, shall commence the construction thereof within six months
from the date of the award of the right to lease the land, and shall complete the said
construction within eighteen months from said date.
(e) At the expiration of the lease or of any extension of the same, all improvements
made by the lessee, his heirs, executors, administrators, successors, or assigns shall
become the property of the Government.
(f) The regulation of all rates and fees charged to the public; and the annual submission
to the Government for approval of all tariffs of such rates and fees.
(g) The continuance of the easements of the coast police and other easements reserved
by existing law or by any laws hereafter enacted.
(h) Subjection to all easements and other rights acquired by the owners of lands
bordering upon the foreshore or marshy land.
The violation of one or any of the conditions specified in the contract shall give rise to the
rescission of said contract. The Secretary of Agriculture and Commerce may, however, subject to such
conditions as he may prescribe, waive the rescission arising from a violation of the conditions of
subsection (d), or extend the time within which the construction of the improvements shall be
commenced and completed.
SECTION 65. The sale of the lands comprised in classes (c) and (d) of section fifty-nine shall,
among others, comprise the following conditions:
(a) The purchaser shall make improvements of a permanent character appropriate for
the purpose for which the land is purchased, shall commence work thereon within six
months from the receipt of the order of award, and shall complete the construction of said
improvements within eighteen months from the date of such award; otherwise the
Secretary of Agriculture and Natural Resources may rescind the contract.
(b) The purchase price shall be paid in cash or in equal annual installments, not to
exceed ten.
The contract of sale may contain other conditions not inconsistent with the provisions of this
Act.
SECTION 66. The kind of improvements to be made by the lessee or the purchaser, and the
plans thereof, shall be subject to the approval of the Secretary of Public Works and Communications,
in case they are constructions or improvements which if by the Government, would properly have to
be executed under the supervision of the Bureau of Public Works.
SECTION 67. The lease or sale shall be made through oral bidding; and adjudication shall be
made to the highest bidder. However, where an applicant has made improvements on the land by
virtue of a permit issued to him by competent authority, the sale or lease shall be made by sealed
bidding as prescribed in section twenty-six of this Act, the provisions of which shall be applied
wherever applicable. If all or part of the lots remain unleased or unsold, the Director of Lands shall
from time to time announce in the Official Gazette or in any other newspapers of general circulation,
the lease or sale of those lots, if necessary
SECTION 68. The Secretary of Agricultural and Commerce may grant to qualified persons
temporary permission, upon payment of a reasonable charge, for the use of any portion of the lands
covered by this chapter for any lawful private purpose, subject to revocation at any time when, in his
judgment, the public interest shall require it.
TITLE IV
Lands for Educational, Charitable, and Other Similar Purposes
CHAPTER IX
Concession of Lands for Educational, Charitable, and Other Similar Purposes
SECTION 69. Whenever any province, municipality, or other branch or subdivision of the
Government shall need any portion of the land of the public domain open to concession for
educational, charitable or other similar purposes, the President, upon recommendation by the
Secretary of Agriculture and Commerce, may execute contracts in favor of the same. in the form of
donation, sale, lease, exchange, or any other form, under terms and conditions to be inserted in the
contract; but land so granted shall in no case be encumbered or alienated, except when the public
service requires their being leased or exchanged, with the approval of the President, for other lands
belonging to private parties, or if the National Assembly disposes otherwise.
SECTION 70. Any tract of public land of the class covered by this title maybe sold or leased
for the purpose of founding a cemetery, church, college, school, university, or other institutions for
educational, charitable or philanthropical purposes or scientific research, the area to be such as may
actually and reasonably be necessary to carry out such purpose, but not to exceed ninety-six hectares
in any case. The sale or lease shall be made subject to the same conditions as required for the sale
and lease of agricultural public land, but the Secretary of Agriculture and Commerce may waive the
conditions requiring cultivation. The Secretary of Agriculture and Commerce, if conveyance he sees
fit, may order the sale to be made without public auction, at a price to be fixed by said Secretary, or
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the lease to be granted without auction, at a rental to be fixed by him. In either case it shall be a
condition that the purchaser or lessee or their successors or assigns shall not sell transfer, encumber
or lease the land for the purposes of speculation or use it for any purpose other than that
contemplated in the application, and that the violation of this condition shall give rise to the
immediate rescission of the sale or lease, as the case may be, and to the forfeiture to the
Government of all existing improvements: Provided, That it shall in no case be sublet, encumbered or
resold under the conditions above set forth except with the approval of the Secretary of Agriculture
and Commerce.
TITLE V
Reservations
CHAPTER X
Town Site Reservations
SECTION 71. Whenever it shall be considered to be in the public interest to found a new
town. the Secretary of Agriculture and Commerce shall direct the Director of Lands to have a survey
made by his Bureau of the exterior boundaries of the site on which such town is to be established,
and upon the completion of the survey he shall send the same to said Secretary, with his
recommendations.
SECTION 72. The Secretary of Agriculture and Commerce, if he approves the
recommendations of the Director of Lands, shall submit the matter to the President to the end that
the latter may issue a proclamation reserving the land surveyed, or such part thereof as he may deem
proper, as a town site, and a certified copy of such proclamation shall be sent to the Director of Lands
and another to the register of deeds of the province in which the surveyed land lies.
SECTION 73. It shall then be the duty of the Director of Lands, after having recorded the
proclamation of the President and the survey accompanying the same, and having completed the
legal proceedings prescribed in chapter thirteen of this Act, to direct a subdivision in accordance with
the instructions of the Secretary of Agriculture and Commerce, if there shall be such instructions, and
if there shall not be any, then in the manner which may to the Director of Lands seem best adapted
to the convenience and interest of the public and the residents of the future town.
SECTION 74. The plat of the subdivision shall designate certain lots for commercial and
industrial uses and the remainder as residence lots, and shall also reserve and note the lots owned by
private individuals as evidenced by record titles, or possessed or claimed by them as private property.
Such lots, whether public or private, shall be numbered upon a general plan or system.
The plat prepared by the Director of Lands shall be submitted to the Secretary of Agriculture
and Commerce for consideration, modification, amendment, or approval.
SECTION 75. Unless the necessary reservations are made in the proclamation of the
President, the Director of Lands, with the approval of the Secretary of Agriculture and Commerce,
shall reserve out of the land by him to be subdivided lots of sufficient size and convenient situation
for public use, as well as the necessary avenues, streets, alleyways, parks, and squares. The avenues,
streets, alleys, parks, plazas, and lots shall be laid out on the plat as though the lands owned or
claimed by private persons were part of the public domain and part of the reservation, with a view to
the possible subsequent purchase or condemnation thereof, if deemed necessary by the proper
authorities.
SECTION 76. At any time after the subdivision has been made, the President may, in case
the public interest requires it, reserve for public purposes any lot or lots of the land so reserved and
not disposed of.
SECTION 77. If, in order to carry out the provisions of this chapter, it shall be necessary to
condemn private lands within the limits of the new town, the President shall direct the Solicitor-
General or officer acting in his stead to at once begin proceedings for condemnation, in accordance
with the provisions of existing law.
SECTION 78. When the plat of subdivision has been finally approved by the Secretary of
Agriculture and Commerce, the Director of Lands shall record the same in the records of his office
and shall forward a certified copy of such record to the register of deeds of the province in which the
land lies, to be by such register recorded in the records of his office
SECTION 79. All lots, except those claimed by or belonging to private parties and those
reserved for parks, buildings, and other public uses, shall be sold, after due notice, at public auction
to the highest bidder, after the approval and recording of the plat of subdivision as above provided,
but no bid shall be accepted that does not equal at least two-thirds of the appraised value, nor shall
bids be accepted from persons, corporations, associations, or partnerships not authorized to
purchase public lands for commercial, residential or industrial purposes under the provisions of this
Act. The provisions of sections twenty-six and sixty-five of this Act shall be observed in so far as they
are applicable. Lots for which satisfactory bids have not been received shall be again offered for sale,
under the same conditions as the first time, and if they then remain unsold, the Director of Lands
shall be authorized to sell them at private sale for not less than two-thirds of their appraised value.
SECTION 80. All funds derived from the sale of lots shall be covered into the Philippine
Treasury as part of the general funds.
SECTION 81. Not more than two residence lots and two lots for commercial and industrial
uses in any one town site shall be sold to any one person, corporation, or association without the
specific approval of the Secretary of Agriculture and Commerce.
SECTION 82. The Assembly shall have the power at any time to modify, alter, rescind,
repeal, annul, and cancel, with or without conditions, limitation, exceptions, or reservations, all and
any dispositions made by the executive branch of the Philippine Government by virtue of this
chapter, and the exercise of this power shall be understood as reserved in all cases, as an inherent
condition thereof.
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break, and prepare for cultivation the lands of said colony and establish the necessary irrigation
system and suitable roads and fences; but final disposition shall be made of the land in accordance
CHAPTER XI
with the provisions of this Act, subject, however, to such conditions as the National Assembly may
Reservations for Public and Semi-Public Purposes establish for the reimbursement of the expense incurred in putting such lands in condition for
cultivation: Provided, That the National Assembly may direct that such land so prepared for
SECTION 83. Upon the recommendation of the Secretary of Agriculture and Commerce, the
cultivation may be disposed of only by sale or lease.
President may designate by proclamation any tract or tracts of land of the public domain as
reservations for the use of the Commonwealth of the Philippines or of any of its branches, or of the
inhabitants thereof, in accordance with regulations prescribed for this purpose, or for quasi-public
CHAPTER XII
uses or purposes when the public interest requires it, including reservations for highways, rights of
way for railroads, hydraulic power sites, irrigation systems, communal pastures or leguas Provisions Common to Reservations
comunales, public parks, public quarries, public fishponds, workingmen's village and other
SECTION 86. A certified copy of every proclamation of the President issued under the
improvements for the public benefit.
provisions of this title shall be forwarded to the Director of Lands for record in his office, and a copy
SECTION 84. Upon recommendation of the Secretary of Agriculture and Commerce, the of this record shall be forwarded to the register of deeds of the province or city where the land lies.
President, may by proclamation, designate any tract or tracts of the public domain for the exclusive Upon receipt of such certified copy, the Director of Lands shall order the immediate survey of the
use of the non-Christian Filipinos, including in the reservation, in so far as practicable, the lands used proposed reservation if the land has not yet been surveyed, and as soon as the plat has been
or possessed by them, and granting to each member not already the owner, by title or gratuitous completed, he shall proceed in accordance with the next following section.
patent, of four or more hectares of land, the use and benefit only of a tract of land not to exceed four
SECTION 87. If all the lands included in the proclamation of the President are not registered
hectares for each male member over eighteen years of age or the head of a family. As soon as the
under the Land Registration Act, the Solicitor-General, if requested to do so by the Secretary of
Secretary of the Interior shall certify that the majority of the non-Christian inhabitants of any given
Agriculture and Commerce, shall proceed in accordance with the provision of section fifty-three of
reservation have advanced sufficiently in civilization, then the President may order that the lands of
this Act.
the public domain within such reservation be granted under the general provisions of this Act to the
said inhabitants, and the subdivision and distribution of said lands as above provided shall be taken SECTION 88. The tract or tracts of land reserved under the provisions of section eighty-three
into consideration in the final disposition of the same. But any non-Christian inhabitant may at any shall be non-alienable and shall not be subject to occupation, entry, sale, lease, or other disposition
time apply for the general benefits of this Act provided the Secretary of Agriculture and Commerce is until again declared alienable under the provisions of this Act or by proclamation of the President.
satisfied that such inhabitant is qualified to take advantage of the provisions of the same: Provided,
That all grants, deeds, patents and other instruments of conveyance of land or purporting to convey
or transfer rights of property, privileges, or easements appertaining to or growing out of lands, TITLE VI
granted by sultans, datus, or other chiefs of the so-called non-Christian tribes, without the authority
General Provisions
of the Spanish Government while the Philippines were under the sovereignty of Spain, or without the
consent of the United States Government or of the Philippine Government since the sovereignty over
the Archipelago was transferred from Spain to the United States, and all deeds and other documents
CHAPTER XIII
executed or issued or based upon the deeds, patents, and documents mentioned, are hereby
declared to be illegal, void, and of no effect. Applications: Procedure, Concession of Lands, and Legal Restrictions and Encumbrances
SECTION 85. Upon recommendation by the Secretary of Agriculture and Commerce, the SECTION 89. All applications filed under the provisions of this Act shall be addressed to the
President may, by proclamation designate any tract or tracts of land of the public domain for the Director of Lands.
establishment of agricultural colonies; and although the disposition of the lands to the colonists shall SECTION 90. Every application under the provisions of this Act shall be made under oath and
be made under the provisions of this Act, yet, while the Government shall have the supervision and shall set forth:
management of said colonies, the Secretary of Agriculture and Commerce may make the necessary
rules and regulations for the organization and internal administration of the same. The Secretary of
(a) The full name of applicant, his age, place of birth, citizenship, civil status, and post-
Agriculture and Commerce may also, under conditions to be established by the Assembly, turn over a
office address. In case the applicant is a corporation, association or copartnership, the
colony so reserved to any person or corporation, in order that such person or corporation may clear,
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application shall be accompanied with a certified copy of its articles of incorporation,
association or copartnership together with an affidavit of its President, manager, or other
responsible officer, giving the names of the stockholders or members, their citizenship, and
the number of shares subscribed by each.
(b) That the applicant has all the qualifications required by this Act in the case.
(c) That he has none of the disqualifications mentioned herein.
(d) That the application is made in good faith, for the actual purpose of using the land
for the object specified in the application and for no other purpose, and that the land is
suitable for the purpose to which it is to be devoted.
(e) That the application is made for the exclusive benefit of the application and not,
either directly or indirectly, for the benefit of any other person or persons, corporation,
association, or partnership.
(f) As accurate a description of the land as may be given, stating its nature the province,
municipality, barrio, and sitio where it is located, and its limits and boundaries, specifying
those having reference to accidents of the ground or permanent monuments, if any.
(g) Whether all or part of the land is occupied or cultivated or improved, and by whom,
giving his post-office address, and whether the land has been occupied or cultivated or
improved by the applicant or his ascendant, the name of the ascendant, the relationship
with him, the date and place of the death of the ascendant, the date when the possession
and cultivation began, and description of the improvements made, accompanying
satisfactory evidence of the relationship of the applicant with the ascendant, and of the
death of the latter and the descendants left by him, in case it is alleged that he occupied
and cultivated the land first; or whether there are indications of its having been occupied,
cultivated, or improved entirely or partially, and if so, in what such indications consist,
whether he has made investigations as to when and by whom such improvements were
made, and if so, how such investigations were made and what was the result thereof; or
whether the land is not occupied, improved, or cultivated either entirely or partially, and
there are no indications of it having ever been occupied, improved, or cultivated, and in
this case, what is the condition of the land.
(h) That the land applied for is neither timber nor mineral land and does not contain
guano or deposits of salts or coal.
(i) That the applicant agrees that a strip forty meters wide starting from the bank on
each side of any river or stream that may be found on the land applied for, shall be
demarcated and preserved as permanent timberland to be planted exclusively to trees of
known economic value, and that he shall not make any clearing thereon or utilize the same
for ordinary farming purposes even after patent shall have been issued to him or a contract
of lease shall have been executed in his favor. 68
SECTION 91. The statements made in the application shall be considered as essential
conditions and parts of any concession, title, or permit issued on the basis of such application, and
any false statements therein or omission of facts altering, changing, or modifying the consideration of
the facts set forth in such statements, and any subsequent modification, alteration, or change of the
material facts set forth in the application shall ipso facto produce the cancellation of the concession,
title, or permit granted. It shall be the duty of the Director of Lands, from time to time and whenever
he may deem it advisable, to make the necessary investigations for the purpose of ascertaining
whether the material facts set out in the application are true, or whether they continue to exist and
are maintained and preserved in good faith, and for the purposes of such investigation, the Director
of Lands is hereby empowered to issue subpoenas and subpoenas duces tecum and, if necessary, to
obtain compulsory process from the courts. In every investigation made in accordance with this
section, the existence of bad faith, fraud, concealment, or fraudulent and illegal modification of
essential facts shall be presumed if the grantee or possessor of the land shall refuse or fail to obey
asubpoena or subpoena duces tecum lawfully issued by the Director of Lands or his authorized
delegates or agents, or shall refuse or fail to give direct and specific answers to pertinent questions,
and on the basis of such presumption, an order of cancellation may issue without further
proceedings.
SECTION 92. Although the maximum area of public land that may be acquired is fixed, yet
the spirit of this Act is that the rule which must deter-mine the real area to be granted is the
beneficial use of the land. The concession or disposition shall be for less than the maximum area
authorized if, at the time of the issuance of the patent or of the concession or disposition, it shall
appear that the applicant is utilizing and is only able to utilize a smaller area, even though the
application is for a greater area. For the purposes of this section, the Director of Lands is authorized
to determine the area that may be granted to the applicant, and to deny or cancel or limit any
application for concession, purchase, or lease if convinced of the lack of means of the applicant for
using the land for the purpose for which he has requested it.
SECTION 93. Lands applied for under this Act shall conform to the legal subdivisions and
shall be contiguous if comprising more than one subdivision. If subdivisions have not been made on
the date of the application, the lands shall be rectangular in form so far as practicable, but it shall be
endeavored to make them conform to the legal subdivision as soon as the same has been made,
provided the interests of the applicant or grantee are protected; and the subdivision assigned to the
applicant or grantee shall, so far as practicable, include the land improved or cultivated. The
regulations to be issued for the execution of the provisions of this section shall take into account the
legal subdivision to be made by the Government and the inadvisability of granting the best land at a
given place to only one person. cd i
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SECTION 94. In case the legal subdivisions have already been made at the time of the filing
of the application, no charge shall be made for the survey; but if the legal subdivisions have not yet
been made, the cost of the survey shall be charged to the Government, except in the following cases:
(a) In purchases under chapters five and ten of this Act, the cost of the survey shall be
charged to the purchaser if the same is a corporation, association, or partnership; in other
purchases the purchases, whoever it be, shall pay the total cost of the survey.
(b) In leases, the cost of the survey shall be paid by the lessee; but at any time after the
first five years from the approval of the lease, and during Cost of the life of the same, the
lessee shall be entitled to the reimbursement of one-half of the cost of the survey, if he
shows to the satisfaction of the Director of Lands that he has occupied and improved a
sufficient area of the land or incurred sufficient expenses in connection therewith to
warrant such reimbursement.
SECTION 95. If before the delimitation and survey of a tract of public land the President shall
declare the same disposable or alienable and such land shall be actually occupied by a person other
than the applicant, the Director of Lands shall inform the occupant of his prior right to apply for the
land and shall give him one hundred and twenty days time in which to file the application or apply for
the concession by any of the forms of disposition authorized by this Act, if such occupant is qualified
to acquire a concession under this Act.
SECTION 96. As soon as any land of the public domain has been surveyed, delimited, and
classified, the President may, in the order issued by him declaring it open for disposition, designate a
term within which occupants with improvements but not entitled to free patents may apply for the
land occupied by them, if they have the qualifications required by this Act.
SECTION 97. If in the case of the two last preceding sections, the occupant or occupants
have not made application under any of the provisions of this Act at the expiration of the time limit
fixed, they shall lose any prior right to the land recognized by this Act, and the improvements on the
land, if any, shall be forfeited to the Government.
SECTION 98. All rights in and interest to, and the improvements and crops upon, land for
which an application has been denied or canceled or a patent or grant refused, or a contract or
concession rescinded or annulled, shall also be forfeited to the Government.
SECTION 99. The Secretary of Agriculture and Commerce may order such improvements and
crops to be appraised separately, for sale to the new applicant or grantee, or may declare such land
open only to sale or lease.
SECTION 100. In case the cancellation is due to delinquency on the part of the applicant or
grantee, the same shall be entitled to the reimbursement of the proceeds of the sale of the
improvements and crops, after deducting the total amount of his indebtedness to the Government
and the expense incurred by it in the sale of the improvements or crops and in the new concession of
the land.
SECTION 101. All actions for the reversion to the Government of lands of the public domain
or improvements thereon shall be instituted by the Solicitor-General or the officer acting in his stead,
in the proper courts, in the name of the Commonwealth of the Philippines.
SECTION 102. Any person, corporation, or association may file an objection under oath to
any application or concession under this Act, grounded on any reason sufficient under this Act for the
denial or cancellation of the application or the denial of the patent or grant. If, after the applicant or
grantee has been given suitable opportunity to be duly heard, the objection is found to be well
founded, the Director of Lands shall deny or cancel the application or deny patent or grant, and the
person objecting shall, if qualified, be granted a prior right of entry for a term of sixty days from the
date of the notice.
SECTION 103. All the proofs, affidavits, and oaths of any kind required or necessary under
this Act may be made before the justice of the peace 71 of the municipality in which the land lies, or
before the judge or clerk of the Court of First Instance of the province in which the land lies, or before
any justice of the peace or chargeable notary public of the province in which the land lies, or before
any officer or employee of the Bureau of Lands authorized by law to administer oaths.
The fees for the taking of final evidence before any of the officials herein-before mentioned
shall be as follows:
For each affidavit, fifty centavos.
For each deposition of the applicant or the witness, fifty centavos.
SECTION 104. Any owner of uncultivated agricultural land who knowingly permits
application for the same to be made to the Government and the land to be tilled and improved by a
bona fide grantee without protesting to the Bureau of Lands within one year after cultivation has
begun, shall lose all to the part of the land so cultivated and improved, unless he shall bring action in
the proper court before such action for recovery prescribes and obtains favorable judgment therein,
in which case the court shall, upon its decision becoming final, order the payment to the grantee,
within a reasonable period, of the indemnity fixed by said court for the cultivation and improvement.
SECTION 105. If at any time the applicant or grantee shall die before the issuance of the
patent or the final grant of the land, or during the life of the lease, or while the applicant or grantee
still has obligations pending towards the Government, in accordance with this Act, he shall be
succeeded in his rights and obligations with respect to the land applied for or granted or leased under
this Act by his heirs in law, who shall be entitled to have issued to them the patent or final concession
if they show that they have complied with the requirements therefor, and who shall be subrogated in
all his rights and obligations for the purposes of this Act.
SECTION 106. If at any time after the approval of the application and before the issuance of
a patent or the final concession of the land, or during the life of the lease, or at any time when the
applicant or grantee still has obligations pending with the Government, in accordance with this Act, it
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appears that the land applied for is necessary, in the public interest, for the protection of any source
of water or for any work for the public benefit that the Government wishes to undertake, the
Secretary of Agriculture and Commerce may order the cancellation of the application or the non
issuance of the patent or concession or the exclusion from the land applied for of such portion as
may be required, upon payment of the value of the improvements, if any.
SECTION 107. All patents or certificates for land granted under this Act shall be prepared in
the Bureau of Lands and shall be issued in the name of the Government of the Republic of the
Philippines under the signature of the President of the Philippines:Provided, however, That the
President of the Philippines may delegate to the Secretary of Agriculture and Natural
Resources74 and/or the Under secretary for Natural Resources 74 the power to sign patents or
certificates covering lands not exceeding one hundred forty-four hectares in area, and to the
Secretary of Agriculture and Natural Resources 75 the power to sign patents or certificates covering
lands exceeding one hundred forty-four hectares in area: Provided, further, That District Land Officers
in every province are hereby empowered to sign patents or certificates covering lands not exceeding
five hectares in area when the office of the District Land Officer is properly equipped to carry out the
purposes of this Act: Provided, That no applicant shall be permitted to split the area applied for by
him in excess of the area fixed in this section among his relatives within the sixth degree of
consanguinity or affinity excepting the applicant's married children who are actually occupying the
land: Provided, finally, That copies of said patents issued shall be furnished to the Bureau of Lands for
record purposes. No patent or certificate shall be issued by the District Land Officer unless the survey
of the land covered by such patent or certificate, whether made by the Bureau of Lands or by a
private surveyor, has been approved by the Director of Lands. The Director of Lands shall promptly
act upon all surveys submitted to him for approval and return the same to the District Land Officer
within ninety days after receipt of such surveys by his office. In case of disapproval, the Director of
Lands shall state the reasons therefor. Any person aggrieved by the decision or action of the District
Land Officer may, within thirty days from receipt of the copy of the said decision, appeal to the
Director of Lands. Such patents or certificates shall be effective only for the purposes defined in
Section one hundred and twenty-two of the land Registration Act, and actual conveyance of the land
shall be effected only as provided in said section.
All surveys pending approval by the Director of Lands at the time this Act takes effect shall
be acted upon by him within ninety days from the effectivity of this Act.
SECTION 108. No patent shall issue nor shall any concession or contract be finally approved
unless the land has been surveyed and an accurate plat made thereof by the Bureau of Lands.
SECTION 109. In no case shall any land be granted under the provisions of this Act when this
affects injuriously the use of any adjacent land or of the waters, rivers, creeks, foreshore, roads, or
roadsteads, or vest the grantee with other valuable rights that may be detrimental to the public
interest.
SECTION 110. Patents or certificates issued under the provisions of this Act shall not include
nor convey the title to any gold, silver, copper, iron, or other metals or minerals, or other substances
containing minerals, guano, gums, precious stones, coal, or coal oil contained in lands granted
thereunder. These shall remain to be property of the State.
SECTION 111. All persons receiving title to lands under the provisions of this Act shall hold
such lands subject to the provisions hereof and to the same public servitudes as exist upon lands
owned by private persons, including those with reference to the littoral of the sea and the banks of
navigable rivers or rivers upon which rafting may be done.
SECTION 112. Said land shall further be subject to a right-of-way not exceeding sixty (60)
meters in width for public highways, railroads, irrigation ditches, aqueducts, telegraph and telephone
lines and similar works as the Government or any public or quasi-public service or enterprise,
including mining or forest concessionaires, may reasonably require for carrying on their business,
with damages for the improvements only. 77
SECTION 113. The beneficial use of water shall be the basis, the measure, and the limit of all
rights thereto, and the patents herein granted shall be subject to the right of the Government to
make such rules and regulations for the use of water and the protection of the water supply, and for
other public purposes, as it may deem best for the public good. Whenever, by priority of possession,
rights to the use of water for mining, agricultural, manufacturing, or other purposes have vested and
accrued, and the same are recognized and acknowledged by the local customs, or by the laws and
decisions of the courts, the possessors and owners of such vested rights shall be maintained and
protected in the same, and all patents granted under this Act shall be subject to any vested and
accrued rights to ditches and reservoirs used in connection with such water rights as may have been
acquired in the manner above described prior to April eleven, eighteen hundred and ninety-nine.
SECTION 114. There is hereby reserved from the operation of all patents, certificates,
entries, and grants by the Government authorized under this Act the right to use for the purposes of
power any flow of water in any stream running through or by the land granted, the convertible power
from which at ordinary low water exceeds fifty horse power. Where the convertible power in any
stream running through or by land granted under the authority of this Act thus exceeds fifty
horsepower, and there is no means of using such power except by the occupation of a part of the
land granted under authority of this Act, then so much land as is reasonably necessary for the mill site
or site for the power house, and for a suitable dam and site for massing the water, is hereby excepted
from such grants, not exceeding four hectares, and a right of way to the nearest public highway from
the land thus excepted, and also a right of way for the construction and maintenance of such flumes,
aqueducts, wires, poles, o r order conduits as may be needed in conveying the water to the point
where its fall will yield the greatest power, or the power from the point of conversion to the point of
use, is reserved as a servitude or easement upon the land granted by authority of this
Act: Provided,however, That when the Government or any concessionaire of the Government shall
take possession of the land under this section which a grantee under this Act shall have paid for,
supposing it to be subject to grant under this Act, said grantee shall be entitled to indemnity from the
Government or the concessionaire, as the case may be, in the amount, if any, paid by him to the
Government for the land taken from him by virtue of this section: And provided, further, That with
respect to the flow of water, except for converting the same into power exceeding fifty horse power,
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said grantee shall be entitled to the same use of the water flowing through or along his land that
other private owners enjoy under the law, subject to the governmental regulation provided in the
previous section. Water power privileges in which the convertible power at ordinary low water shall
exceed fifty horse power shall be disposed of only upon terms established by an Act of the
Assembly concerning the use, lease or acquisition of such water privilege.
SECTION 115. All lands granted by virtue of this Act, including homesteads upon which final
proof has not been made or approved, shall, even though and while the title remains in the State, be
subject to the ordinary taxes, which shall be paid by the grantee or the applicant, beginning with the
year next following the one in which the homestead application has been filed, or the concession has
been approved, or the contract has been signed, as the case may be, on the basis of the value fixed in
such filing, approval or signing of the application, concession or contract.
SECTION 116. The appraisal or reappraisal of the lands or improvements subject to
concession or disposition under this Act shall be made by the Director of Lands, with the approval of
the Secretary of Agriculture and Commerce. The Director of Lands may request the assistance of the
provincial treasurer of the province in which the land lies or may appoint a committee for such
purpose in the province or in the municipality in which the land lies. In no case shall the appraisal or
reappraisal be less than the expense incurred or which may be incurred by the Government in
connection with the application or concession, nor shall any reappraisal be made with an increase of
more than one hundred per centum upon the appraisal or reappraisal next preceding.
SECTION 117. All sums due and payable to the Government under this Act, except
homestead fees, shall draw simple interest at the rate of four per centum per annum from and after
the date in which the debtor shall become delinquent.
SECTION 118. Except in favor of the Government or any of its branches, units, or
institutions, lands acquired under free patent or homestead provisions shall not be subject to
encumbrance or alienation from the date of the approval of the application and for a term of five
years from and after the date of issuance of the patent or grant, nor shall they become liable to the
satisfaction of any debt contracted prior to the expiration of said period, but the improvements or
crops on the land may be mortgaged or pledged to qualified persons, associations, or corporations.
No alienation, transfer, or conveyance of any homestead after five years and before twenty-
five years after issuance of title shall be valid without the approval of the Secretary of Agriculture and
Commerce, which approval shall not be denied except on constitutional and legal grounds.
SECTION 119. Every conveyance of land acquired under the free patent or homestead
provisions, when proper, shall be subject to repurchase by the applicant, his widow, or legal heirs,
within a period of five years from the date of the conveyance.
SECTION 120. Conveyance and encumbrance made by persons belonging to the so-called
"non-Christian Filipinos" or national cultural minorities, when proper, shall be valid if the person
making the conveyance or encumbrance is able to read and can understand the language in which
the instrument or conveyance or encumbrances is written. Conveyances and encumbrances made by
illiterate non-Christian or literate non-Christians where the instrument of conveyance or
encumbrance is in a language not understood by the said literate non-Christians shall not be valid
unless duly approved by the Chairman of the Commission on National Integration.
SECTION 121. Except with the consent of the grantee and the approval of the Secretary of
Natural Resources, and solely for commercial, industrial, educational, religious or charitable purposes
or for a right of way, no corporation, association, or partnership may acquire or have any right, title,
interest, or property right whatsoever to any land granted under the free patent, homestead, or
individual sale provisions of this Act or to any permanent improvement on such land.
The provisions of Section 124 of this Act to the contrary notwithstanding, any acquisition of
such land, rights thereto or improvements thereon by a corporation, association, or partnership prior
to the promulgation of this Decree for the purposes herein stated is deemed valid and binding;
Provided, That no final decision of reversion of such land to the State has been rendered by a court;
And Provided, further, That such acquisition is approved by the Secretary of Natural Resources within
six (6) months from the effectivity of this Decree.
SECTION 122. No land originally acquired in any manner under the provisions of this Act, nor
any permanent improvement on such land, shall encumbered, alienated, or transferred, except to
persons, corporations, associations, or partnerships who may acquire lands of the public domain
under this Act or to corporations organized in the Philippines authorized therefor by their charters.
Except in cases of hereditary succession, no land or any portion thereof originally acquired
under the free patent, homestead, or individual sale provisions of this Act, or any permanent
improvement on such land, shall be transferred or assigned to any individual, nor shall such land or
any permanent improvement thereon be leased to such individual, when the area of said land, added
to that of his own, shall exceed one hundred and forty-four hectares. Any transfer, assignment, or
lease made in violation hereof, shall be null and void.
SECTION 123. No land originally acquired in any manner under the pro-visions of any
previous Act, ordinance, royal order, royal decree, or any other provision of law formerly in force in
the Philippines with regard to public lands, terrenos baldios y realengos, or lands of any other
denomination that were actually or presumptively of the public domain, or by royal grant or in any
other form, nor any permanent improvement on such land, shall be encumbered, alienated, or
conveyed, except to persons, corporations or associations who may acquire land of the public domain
under this Act or to corporate bodies organized in the Philippines whose charters authorize them to
do so: Provided, however, That this prohibition shall not be applicable to the conveyance or
acquisition by reason of hereditary succession duly acknowledged and legalized by competent
courts; Provided,further, That in the event of the ownership of the lands and improvements
mentioned in this section and in the last preceding section being transferred by judicial decree to
persons, corporations or associations not legally capacitated to acquire the same under the
provisions of this Act, such persons, corporations, or associations shall be obliged to alienate said
lands or improvements to others so capacitated within the precise period of five years; otherwise,
such property shall revert to the Government.
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SECTION 124. Any acquisition, conveyance, alienation, transfer, or other contract made or
executed in violation of any of the provisions of sections one hundred and eighteen, one hundred and
twenty, one-one hundred and twenty-one, one hundred and twenty two, and one hundred and
twenty-three of this Act shall be unlawful and null and void from its execution and shall produce the
effect of annulling and cancelling the grant, title, patent, or permit originally issued, recognized or
confirmed, actually or presumptively, and cause the reversion of the property and its improvements
to the State.
SECTION 125. The provisions of sections twenty-two, twenty-three, thirty-three, one
hundred and twenty-two, and one hundred and twenty-three of this Act, and any other provision or
provisions restricting or tending to restrict the right of persons, corporations, or associations to
acquire, hold, lease, encumber, dispose of, or alienate land in the Philippines, or permanent
improvements thereon, or any interest therein, shall not be applied in cases in which the right to
acquire, hold or dispose of such land, permanent improvements thereon or interests therein in the
Philippines is recognized by existing treaties in favor of citizens or subjects of foreign nations and
corporations or associations organized and constituted by the same, which right, in so far as it exists
under such treaties, shall continue and subsist in the manner and to the extent stipulated in said
treaties, and only while these are in force, but not thereafter.
SECTION 126. All public auctions provided for in the foregoing chapters in the disposition of
public lands shall be held, wherever possible, in the province where the land is located, or, in the
office of the Bureau of Lands in Manila
CHAPTER XIV
Transitory Provisions
SECTION 127. During the existence and continuance of the Commonwealth and before the
Republic of the Philippines is finally established, citizens and corporations of the United States shall
enjoy the same rights granted to citizens and corporations of the Philippines under this Act.
SECTION 128. During the period specified in the next preceding section, the President of the
Philippines, upon receipt of the order of the President of the United States, shall, by proclamation,
designate such land as the latter may set aside for military, naval or other reservations for use of the
Government of the United States.
CHAPTER XV
Penal Provisions
SECTION 129. Any person who presents or causes to be presented, or cooperates in the
presentation of, any false application, declaration, or evidence, or makes or causes to be made or
cooperates in the making of a false affidavit in support of any petition, claim, or objection respecting
lands of the public domain, shall be deemed guilty of perjury and punished accordingly.
SECTION 130. Any person who voluntarily and maliciously prevents or hinders or attempts
to prevent or hinder the presentation of any application for public land under this Act, or who in any
manner attempts to execute or executes acts intended to dissuade or discourage, or aid to dissuade
or discourage, the acquisition of public lands, shall be deemed guilty of coercion and be punished
accordingly.
SECTION 131. Any person who sells forms issued and distributed gratuitously under this Act
or who, being an officer charged with distributing them, refuses or fails, without sufficient reason, to
furnish the same, shall be punished for each offense by a fine of not more than one hundred pesos or
by imprisonment for not more than three months, or both, in the discretion of the court.
SECTION 132. Any person, corporation, association or partnership which, not being qualified
or no longer authorized to apply for public land under the provisions of this Act, files or induces or
knowingly permits another person, corporation, association or partnership to file an application in his
or its behalf or for his or its interest, benefit or advantage, shall be punished by a fine of not less than
two hundred nor more than five thousand pesos or by imprisonment for not less than two months
nor more than five years, or both, in the discretion of the court; and the application shall be
cancelled.
SECTION 133. Any person who, without having the qualifications required by this Act, shall
by deceit or fraud acquire or attempt to acquire lands of the public domain or other real property or
any right, title or interest, or property right of any class to the same, and any person aiding and
abetting him therein or serving as a means or tool therefor, shall, upon conviction, be punished by a
fine of not more than five thousands pesos, or by the imprisonment for not more than five years, or
both, in the discretion of the court.
TITLE VII
Final Provisions
CHAPTER XVI
Effectiveness of this Act
SECTION 134. If, for any reason, any section or provision of this Act is challenged in a
competent court and is held to be unconstitutional, none of the other sections or provisions thereof
shall be affected thereby and such other sections and provisions shall continue to govern as if the
section or provisions so annulled, disapproved, or repealed had never been incorporated in this Act,
and in lieu of the section or provision so annulled, disapproved, or repealed, the provisions of law on
the subject thereof in force prior to the approval of this Act shall govern until the Assembly shall
otherwise provide in the premises.
SECTION 135. All laws and regulations, or parts thereof, inconsistent with the provisions of
this Act, are hereby repealed.
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SECTION 136. This Act shall take effect on December first, nineteen hundred and thirty-six
unless the President shall, in the proclamation announcing its effectiveness, designate a prior date, in
which case this Act shall take effect on the date so designated.
Approved: November 7, 1936
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Republic Act No. 8371 October 29, 1997
AN ACT TO RECOGNIZE, PROTECT AND PROMOTE THE RIGHTS OF INDIGENOUS CULTURAL
COMMUNITIES/INDIGENOUS PEOPLE, CREATING A NATIONAL COMMISSION OF INDIGENOUS PEOPLE,
ESTABLISHING IMPLEMENTING MECHANISMS, APPROPRIATING FUNDS THEREFOR, AND FOR OTHER
PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled::
CHAPTER
GENERAL PROVISIONS
Section 1. Short Title. - This Act shall be known as "The Indigenous Peoples Rights Act of 1997."
Section 2. Declaration of State Policies. - The State shall recognize and promote all the rights of
Indigenous Cultural Communities/Indigenous Peoples (ICCs/IPs) hereunder enumerated within the
framework of the Constitution:
a) The State shall recognize and promote the rights of ICCs/IPs within the framework of national
unity and development;
b)The State shall protect the rights of ICCs/IPs to their ancestral domains to ensure their
economic, social and cultural well being and shall recognize the applicability of customary laws
governing property rights or relations in determining the ownership and extent of ancestral
domain;
c) The State shall recognize, respect and protect the rights of ICCs/IPs to preserve and develop
their cultures, traditions and institutions. It shall consider these rights in the formulation of
national laws and policies;
d) The State shall guarantee that members of the ICCs/IPs regardless of sex, shall equally enjoy
the full measure of human rights and freedoms without distinctions or discriminations;
e) The State shall take measures, with the participation of the ICCs/IPs concerned, to protect
their rights and guarantee respect for their cultural integrity, and to ensure that members of the
ICCs/IPs benefit on an equal footing from the rights and opportunities which national laws and
regulations grant to other members of the population and
f) The State recognizes its obligations to respond to the strong expression of the ICCs/IPs for
cultural integrity by assuring maximum ICC/IP participation in the direction of education, health,
as well as other services of ICCs/IPs, in order to render such services more responsive to the
needs and desires of these communities.
Towards these ends, the State shall institute and establish the necessary mechanisms to enforce and
guarantee the realization of these rights, taking into consideration their customs, traditions, values,
beliefs, their rights to their ancestral domains.
CHAPTER II
DEFINITION OF TERMS
I
Section 3. Definition of Terms. - For purposes of this Act, the following terms shall mean:
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, 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 land, 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 their 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;
c) Certificate of Ancestral Domain Title - refers to a title formally recognizing the rights of
possession and ownership of ICCs/IPs over their ancestral domains identified and delineated in
accordance with this law;
d) Certificate of Ancestral Lands Title - refers to a title formally recognizing the rights of ICCs/IPs
over their ancestral lands;
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e) Communal Claims - refer to claims on land, resources and rights thereon, belonging to the
whole community within a defined territory
f) Customary Laws - refer to a body of written and/or unwritten rules, usages, customs and
practices traditionally and continually recognized, accepted and observed by respective ICCs/IPs;
g) Free and Prior Informed Consent - as used in this Act shall mean the consensus of all members
of the ICCs/IPs to; be determined in accordance with their respective customary laws and
practices, free from any external manipulation, interference and coercion, and obtained after
fully disclosing the intent and scope of the activity, in a language an process understandable to
the community;
h) Indigenous Cultural Communities/Indigenous Peoples - refer to a group of people or
homogenous societies identified by self-ascription and ascription by other, 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 customs,
tradition and other distinctive cultural traits, or who have, through resistance to political, social
and cultural inroads of colonization, non-indigenous religions and culture, 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;
i) Indigenous Political Structure - refer to organizational and cultural leadership systems,
institutions, relationships, patterns and processed for decision-making and participation,
identified by ICCs/IPs such as, but not limited to, Council of Elders, Council of Timuays, Bodong
Holder, or any other tribunal or body of similar nature;
j) Individual Claims - refer to claims on land and rights thereon which have been devolved to
individuals, families and clans including, but not limited to, residential lots, rice terraces or
paddies and tree lots;
k) National Commission on Indigenous Peoples (NCIP) - refers to the office created under this Act,
which shall be under the Office of the President, and which shall be the primary government
agency responsible for the formulation and implementation of policies, plans and programs to
recognize, protect and promote the rights of ICCs/IPs;
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 thus indisputably presumed to have been held that way since before the Spanish
Conquest;
m) Nongovernment Organization - refers to a private, nonprofit voluntary organization that has
been organized primarily for the delivery of various services to the ICCs/IPs and has an
established track record for effectiveness and acceptability in the community where it serves;
n) People's Organization - refers to a private, nonprofit voluntary organization of members of an
ICC/IP which is accepted as representative of such ICCs/IPs;
o) Sustainable Traditional Resource Rights - refer to the rights of ICCs/IPs to sustainably
use,manage, protect and conserve a) land, air, water, and minerals; b) plants, animals and other
organisms; c) collecting, fishing and hunting grounds; d) sacred sites; and e) other areas of
economic, ceremonial and aesthetic value in accordance with their indigenous knowledge,
beliefs, systems and practices; and
p) Time Immemorial - refers to a period of time when as far back as memory can go, certain
ICCs/IPs are known to have occupied, possessed in the concept of owner, and utilized a defined
territory devolved to them, by operation of customary law or inherited from their ancestors, in
accordance with their customs and traditions.
CHAPTER III
RIGHTS TO ANCESTRAL DOMAINS
Section 4. Concept of Ancestral Lands/Domains. - Ancestral lands/domains shall include such concepts of
territories which cover not only the physical environment but the total environment including the spiritual
and cultural bonds to the area which the ICCs/IPs possess, occupy and use and to which they have claims
of ownership.
Section 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 ICC's/IP's
private but community property which belongs to all generations and therefore cannot be sold, disposed
or destroyed. It likewise covers sustainable traditional resource rights.
Section 6. Composition of Ancestral Lands/Domains. - Ancestral lands and domains shall consist of all
areas generally belonging to ICCs/IPs as referred under Sec. 3, items (a) and (b) of this Act.
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Section 7. Rights to Ancestral Domains. - The rights of ownership and possession of ICCs/IPs t their e. Right to Regulate Entry of Migrants. - Right to regulate the entry of migrant settlers and
ancestral domains shall be recognized and protected. Such rights shall include: organizations into the domains;

a. Rights of Ownership.- The right to claim ownership over lands, bodies of water traditionally f. Right to Safe and Clean Air and Water. - For this purpose, the ICCs/IPs shall have access to
and actually occupied by ICCs/IPs, sacred places, traditional hunting and fishing grounds, and all integrated systems for the management of their inland waters and air space;
improvements made by them at any time within the domains;
g. Right to Claim Parts of Reservations. - The right to claim parts of the ancestral domains which
b. Right to Develop Lands and Natural Resources. - Subject to Section 56 hereof, right to develop, have been reserved for various purposes, except those reserved and intended for common and
control and use lands and territories traditionally occupied, owned, or used; to manage and public welfare and service; 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 h. Right to Resolve Conflict. - Right to resolve land conflicts in accordance with customary laws of
resources found therein; the right to negotiate the terms and conditions for the exploration of the area where the land is located, and only in default thereof shall the complaints be submitted
natural resources in the areas for the purpose of ensuring ecological, environmental protection to amicable settlement and to the Courts of Justice whenever necessary.
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, Section 8. Rights to Ancestral Lands. - The right of ownership and possession of the ICCs/IPs, to their
government or private, that will affect or impact upon the ancestral domains and to receive just ancestral lands shall be recognized and protected.
and fair compensation for any damages which they sustain as a result of the project; and the
right to effective measures by the government to prevent any interfere with, alienation and
a. Right to transfer land/property. - Such right shall include the right to transfer land or property
encroachment upon these rights;
rights to/among members of the same ICCs/IPs, subject to customary laws and traditions of the
community concerned.
c. Right to Stay in the Territories- The right to stay in the territory and not be removed therefrom.
No ICCs/IPs will be relocated without their free and prior informed consent, nor through any
b. Right to Redemption. - In cases where it is shown that the transfer of land/property rights by
means other than eminent domain. Where relocation is considered necessary as an exceptional
virtue of any agreement or devise, to a non-member of the concerned ICCs/IPs is tainted by the
measure, such relocation shall take place only with the free and prior informed consent of the
vitiated consent of the ICCs/IPs,or is transferred for an unconscionable consideration or price,
ICCs/IPs concerned and whenever possible, they shall be guaranteed the right to return to their
the transferor ICC/IP shall have the right to redeem the same within a period not exceeding
ancestral domains, as soon as the grounds for relocation cease to exist. When such return is not
fifteen (15) years from the date of transfer.
possible, as determined by agreement or through appropriate procedures, ICCs/IPs shall be
provided in all possible cases with lands of quality and legal status at least equal to that of the
Section 9. Responsibilities of ICCs/IPs to their Ancestral Domains. - ICCs/IPs occupying a duly certified
land previously occupied by them, suitable to provide for their present needs and future
ancestral domain shall have the following responsibilities:
development. Persons thus relocated shall likewise be fully compensated for any resulting loss or
injury;
a. Maintain Ecological Balance- To preserve, restore, and maintain a balanced ecology in the
ancestral domain by protecting the flora and fauna, watershed areas, and other reserves;
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 system: Provided, That the displaced ICCs/IPs shall have the b. Restore Denuded Areas- To actively initiate, undertake and participate in the reforestation of
right to return to their abandoned lands until such time that the normalcy and safety of such denuded areas and other development programs and projects subject to just and reasonable
lands shall be determined: Provided, further, That should their ancestral domain cease to exist remuneration; and
and normalcy and safety of the previous settlements are not possible, displaced ICCs/IPs shall
enjoy security of tenure over lands to which they have been resettled: Provided, furthermore, c. Observe Laws- To observe and comply with the provisions of this Act and the rules and
That basic services and livelihood shall be provided to them to ensure that their needs are regulations for its effective implementation.
adequately addressed:
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Section 10. Unauthorized and Unlawful Intrusion. - Unauthorized and unlawful intrusion upon, or use of
any portion of the ancestral domain, or any violation of the rights herein before enumerated, shall be
punishable under this law. Furthermore, the Government shall take measures to prevent non-ICCs/IPs
from taking advantage of the ICCs/IPs customs or lack of understanding of laws to secure ownership,
possession of land belonging to said ICCs/IPs.
Section 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 (CADT), which shall recognize the
title of the concerned ICCs/IPs over the territories identified and delineated.
Section 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 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 the 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.
CHAPTER IV
RIGHT TO SELF-GOVERNANCE AND EMPOWERMENT
Section 13. Self-Governance. - The State recognizes the inherent right of ICCs/IPs to self-governance and
self-determination and respects the integrity of their values, practices and institutions. Consequently, the
State shall guarantee the right of ICCs/IPs to freely pursue their economic, social and cultural
development.
Section 14. Support for Autonomous Regions. - The State shall continue to strengthen and support the
autonomous regions created under the Constitution as they may require or need. The State shall likewise
encourage other ICCs/IPs not included or outside Muslim Mindanao and the Cordillera to use the form
and content of their ways of life as may be compatible with the fundamental rights defined in the
Constitution of the Republic of the Philippines and other internationally recognized human rights.
Section 15. Justice System, Conflict Resolution Institutions and Peace Building Processes. - The ICCs/IPs
shall have the right to use their own commonly accepted justice systems, conflict resolution institutions,
peace building processes or mechanisms and other customary laws and practices within their respective
communities and as may be compatible with the national legal system and with internationally recognized
human rights.
Section 16. Right to Participate in Decision -Making. - ICCs/IPs have the right to participate fully, if they
so choose, at all levels of decision-making in matters which may affect their rights, lives and destinies
through procedures determined by them as well as to maintain and develop their own indigenous political
structures. Consequently, the State shall ensure that the ICCs/IPs shall be given mandatory representation
in policy-making bodies and other local legislative councils.
Section 17. Right to Determine and Decide Priorities for Development. - The ICCs/IPs shall have the right
to determine and decide their own priorities for development affecting their lives, beliefs, institutions,
spiritual well-being, and the lands they own, occupy or use. They shall participate in the
formulation,implementation and evaluation of policies, plans and programs for national, regional and
local development which may directly affect them.
Section 18. Tribal Barangays. - The ICCs/IPs living in contiguous areas or communities where they form
the predominant population but which are located in municipalities, provinces or cities where they do not
constitute the majority of the population, may form or constitute a separate barangay in accordance with
the Local Government Code on the creation of tribal barangays.
Section 19. Role of Peoples Organizations. - The State shall recognize and respect the role of independent
ICCs/IPs organizations to enable the ICCs/IPs to pursue and protect their legitimate and collective
interests and aspirations through peaceful and lawful means.
Section 20. Means for Development /Empowerment of ICCs/IPs. - The Government shall establish the
means for the full development/empowerment of the ICCs/IPs own institutions and initiatives and, where
necessary, provide the resources needed therefor.
CHAPTER V
SOCIAL JUSTICE AND HUMAN RIGHTS
Section 21. Equal Protection and Non-discrimination of ICCs/IPs. - Consistent with the equal protection
clause of the Constitution of the Republic of the Philippines, the Charter of the United Nations, the
Universal Declaration of Human Rights including the Convention on the Elimination of Discrimination
Against Women and International Human Rights Law, the State shall, with due recognition of their distinct
characteristics and identity, accord to the members of the ICCs/IPs the rights, protections and privileges
enjoyed by the rest of the citizenry. It shall extend to them the same employment rights, opportunities,
basic services, educational and other rights and privileges available to every member of the society.
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Accordingly, the State shall likewise ensure that the employment of any form of force of coersion against
ICCs/IPs shall be dealt with by law.
The State shall ensure that the fundamental human rights and freedoms as enshrined in the Constitution
and relevant international instruments are guaranteed also to indigenous women. Towards this end, no
provision in this Act shall be interpreted so as to result in the diminution of rights and privileges already
recognized and accorded to women under existing laws of general application.
Section 22. Rights during Armed Conflict. - ICCs/IPs have the right to special protection and security in
periods of armed conflict. The State shall observe international standards, in particular, the Fourth
Geneva Convention of 1949, for the protection of civilian populations in circumstances of emergency and
armed conflict, and shall not recruit members of the ICCs/IPs against their will into armed forces, and in
particular, for the use against other ICCs/IPs; not recruit children of ICCs/IPs into the armed forces under
any circumstance; nor force indigenous individuals to abandon their lands, territories and means of
subsistence, or relocate them in special centers for military purposes under any discriminatory condition.
Section 23. Freedom from Discrimination and Right to Equal Opportunity and Treatment. - It shall be the
right of the ICCs/IPs to be free from any form of discrimination, with respect to recruitment and
conditions of employment, such that they may enjoy equal opportunities as other occupationally-related
benefits, informed of their rights under existing labor legislation and of means available to them for
redress, not subject to any coercive recruitment systems, including bonded labor and other forms of debt
servitude; and equal treatment in employment for men and women, including the protection from sexual
harassment.
Towards this end, the State shall within the framework of national laws and regulations, and in
cooperation with the ICCs/IPs concerned, adopt special measures to ensure the effective protection with
regard to the recruitment and conditions of employment of persons belonging to these communities, to
the extent that they are not effectively protected by the laws applicable to workers in general.
ICCs/IPs shall have the right to association and freedom for all trade union activities and the right to
conclude collective bargaining agreements with employers' conditions. They shall likewise have the right
not to be subject to working conditions hazardous to their health, particularly through exposure to
pesticides and other toxic substances.
Section 24. Unlawful Acts Pertaining to Employment. - It shall be unlawful for any person:
a. To discriminate against any ICC/IP with respect to the terms and conditions of employment on
account of their descent. Equal remuneration shall be paid to ICC/IP and non-ICC/IP for work of
equal value; and
b. To deny any ICC/IP employee any right or benefit herein provided for or to discharge them for
the purpose of preventing them from enjoying any of the rights or benefits provided under this
Act.
Section 25. Basic Services. - The ICC/IP have the right to special measures for the immediate, effective
and continuing improvement of their economic and social conditions, including in the areas of
employment, vocational training and retraining, housing, sanitation, health and social security. Particular
attention shall be paid to the rights and special needs of indigenous women, elderly, youth, children and
differently-abled persons. Accordingly, the State shall guarantee the right of ICCs/IPs to government 's
basic services which shall include, but not limited to water and electrical facilities, education, health and
infrastructure.
Section 26. Women. - ICC/IP women shall enjoy equal rights and opportunities with men, as regards the
social, economic, political and cultural spheres of life. The participation of indigenous women in the
decision-making process in all levels, as well as in the development of society, shall be given due respect
and recognition.
The State shall provide full access to education, maternal and child care, health and nutrition, and housing
services to indigenous women. Vocational, technical, professional and other forms of training shall be
provided to enable these women to fully participate in all aspects of social life. As far as possible, the
State shall ensure that indigenous women have access to all services in their own languages.
Section 27. Children and Youth. - The State shall recognize the vital role of the children and youth of
ICCs/IPs in nation-building and shall promote and protect their physical, moral, spiritual, moral, spiritual,
intellectual and social well-being. Towards this end, the State shall support all government programs
intended for the development and rearing of the children and youth of ICCs/IPs for civic efficiency and
establish such mechanisms as may be necessary for the protection of the rights of the indigenous children
and youth.
Section 28. Integrated System of Education. - The State shall, through the NCIP, provide a complete,
adequate and integrated system of education, relevant to the needs of the children and Young people of
ICCs/IPs.
CHAPTER VI
CULTURAL INTEGRITY
Section 29. Protection of Indigenous Culture, traditions and institutions. - The state shall respect,
recognize and protect the right of the ICCs/IPs to preserve and protect their culture, traditions and
institutions. It shall consider these rights in the formulation of national plans and policies.
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Section 30. Educational Systems. - The State shall provide equal access to various cultural opportunities
to the ICCs/IPs through the educational system, public or cultural entities, scholarships, grants and other
incentives without prejudice to their right to establish and control their educational systems and
institutions by providing education in their own language, in a manner appropriate to their cultural
methods of teaching and learning. Indigenous children/youth shall have the right to all levels and forms of
education of the State.
Section 31. Recognition of Cultural Diversity. - The State shall endeavor to have the dignity and diversity
of the cultures, traditions, histories and aspirations of the ICCs/IPs appropriately reflected in all forms of
education, public information and cultural-educational exchange. Consequently, the State shall take
effective measures, in consultation with ICCs/IPs concerned, to eliminate prejudice and discrimination and
to promote tolerance, understanding and good relations among ICCs/IPs and all segments of society.
Furthermore, the Government shall take effective measures to ensure that State-owned media duly
reflect indigenous cultural diversity. The State shall likewise ensure the participation of appropriate
indigenous leaders in schools, communities and international cooperative undertakings like festivals,
conferences, seminars and workshops to promote and enhance their distinctive heritage and values.
Section 32. Community Intellectual Rights. - ICCs/IPs have the right to practice and revitalize their own
cultural traditions and customs. The State shall preserve, protect and develop the past, present and future
manifestations of their cultures as well as the right to the restitution of cultural, intellectual, religious, and
spiritual property taken without their free and prior informed consent or in violation of their laws,
traditions and customs.
Section 33. Rights to Religious, Cultural Sites and Ceremonies. - ICCs/IPs shall have the right to manifest,
practice, develop teach their spiritual and religious traditions, customs and ceremonies; the right to
maintain, protect and have access to their religious and cultural sites; the right to use and control of
ceremonial object; and the right to the repatriation of human remains. Accordingly, the State shall take
effective measures, in cooperation with the burial sites, be preserved, respected and protected. To
achieve this purpose, it shall be unlawful to:
a. Explore, excavate or make diggings on archeological sites of the ICCs/IPs for the purpose of
obtaining materials of cultural values without the free and prior informed consent of the
community concerned; and
b. Deface, remove or otherwise destroy artifacts which are of great importance to the ICCs/IPs
for the preservation of their cultural heritage.
Section 34. Right to Indigenous Knowledge Systems and Practices and to Develop own Sciences and
Technologies. - ICCs/IPs are entitled to the recognition of the full ownership and control and protection of
their cultural and intellectual rights. They shall have the right to special measures to control, develop and
protect their sciences, technologies and cultural manifestations, including human and other genetic
resources, seeds, including derivatives of these resources, traditional medicines and health practices, vital
medicinal plants, animals and minerals, indigenous knowledge systems and practices, knowledge of the
properties of fauna and flora, oral traditions, literature, designs, and visual and performing arts.
Section 35. Access to Biological and Genetic Resources. - Access to biological and genetic resources and
to indigenous knowledge related to the conservation, utilization and enhancement of these resources,
shall be allowed within ancestral lands and domains of the ICCs/IPs only with a free and prior informed
consent of such communities, obtained in accordance with customary laws of the concerned community.
Section 36. Sustainable Agro-Technical Development. - The State shall recognize the right of ICCs/IPs to a
sustainable agro-technological development and shall formulate and implement programs of action for its
effective implementation. The State shall likewise promote the bio-genetic and resource management
systems among the ICCs/IPs and shall encourage cooperation among government agencies to ensure the
successful sustainable development of ICCs/IPs.
Section 37. Funds for Archeological and Historical Sites. - The ICCs/IPs shall have the right to receive from
the national government all funds especially earmarked or allocated for the management and
preservation of their archeological and historical sites and artifacts with the financial and technical
support of the national government agencies.
CHAPTER VII
NATIONAL COMMISSION ON INDIGENOUS PEOPLES (NCIP)
Section 38. National Commission on Indigenous Cultural Communities /Indigenous Peoples (NCCP). - to
carry out the policies herein set forth, there shall be created the National Commission on ICCs/IPs (NCIP),
which shall be the primary government agency responsible for the formulation and implementation of
policies, plans and programs to promote and protect the rights and well-being of the ICCs/IPs and the
recognition of their ancestral domains as well as their rights thereto.
Section 39. Mandate. - The NCIP shall protect and promote the interest and well-being of the ICCs/IPs
with due regard to their beliefs, customs, traditions and institutions.
Section 40. Composition. - The NCIP shall be an independent agency under the Office of the President and
shall be composed of seven (7) Commissioners belonging to ICCs/IPs, one (1) of whom shall be the
Chairperson. The Commissioners shall be appointed by the President of the Philippines from a list of
recommendees submitted by authentic ICCs/IPs: Provided, That the seven (7) Commissioners shall be
appointed specifically from each of the following 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:
Provided, That at least two (2) of the seven (7) Commissioners shall be women.
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Section 41. Qualifications, Tenure, Compensation. - The Chairperson and the six (6) Commissioners must
be natural born Filipino citizens, bonafide members of ICCs/IPs as certified by his/her tribe, experienced in
ethnic affairs and who have worked for at least ten (10) years with an ICC/IP community and/or any
government agency involved in ICC/IP, at least 35 years of age at the time of appointment, and must be of
proven honesty and integrity: Provided, That at least two (2) of the seven (7) Commissioners shall be the
members of the Philippine Bar: Provided, further, That the members of the NCIP shall hold office for a
period of three (3) years, and may be subject to re-appointment for another term: Provided, furthermore,
That no person shall serve for more than two (2) terms. Appointment to any vacancy shall only be for the
unexpired term of the predecessor and in no case shall a member be appointed or designated in a
temporary or acting capacity: Provided, finally, That the Chairperson and the Commissioners shall be
entitled to compensation in accordance with the Salary Standardization Law.
Section 42. Removal from Office. - Any member of the NCIP may be removed from office by the
President, on his own initiative or upon recommendation by any indigenous community, before the
expiration of his term for cause and after complying with due process requirement of law.
Section 43. Appointment of Commissioners. - The President shall appoint the seven (7) Commissioners of
the NCIP within ninety (90) days from the effectivity of this Act.
Section 44. Powers and Functions. - To accomplish its mandate, the NCIP shall have the following powers,
jurisdiction and function:
a) To serve as the primary government agency through which ICCs/IPs can seek government
assistance and as the medium, thorough which such assistance may be extended;
b) To review and assess the conditions of ICCs/IPs including existing laws and policies pertinent
thereto and to propose relevant laws and policies to address their role in national development;
c) To formulate and implement policies, plans, programs and projects for the economic, social
and cultural development of the ICCs/IPs and to monitor the implementation thereof;
d) To request and engage the services and support of experts from other agencies of government
or employ private experts and consultants as may be required in the pursuit of its objectives;
e) To issue certificate of ancestral land/domain title;
f) Subject to existing laws, to enter into contracts, agreements, or arrangement, with
government or private agencies or entities as may be necessary to attain the objectives of this
Act, and subject to the approval of the President, to obtain loans from government lending
institutions and other lending institutions to finance its programs;
g) To negotiate for funds and to accept grants, donations, gifts and/or properties in whatever
form and from whatever source, local and international, subject to the approval of the President
of the Philippines, for the benefit of ICCs/IPs and administer the same in accordance with the
terms thereof; or in the absence of any condition, in such manner consistent with the interest of
ICCs/IPs as well as existing laws;
h) To coordinate development programs and projects for the advancement of the ICCs/IPs and to
oversee the proper implementation thereof;
i) To convene periodic conventions or assemblies of IPs to review, assess as well as propose
policies or plans;
j) To advise the President of the Philippines on all matters relating to the ICCs/IPs and to submit
within sixty (60) days after the close of each calendar year, a report of its operations and
achievements;
k) To submit to Congress appropriate legislative proposals intended to carry out the policies
under this Act;
l) To prepare and submit the appropriate budget to the Office of the President;
m) To issue appropriate certification as a pre-condition to the grant of permit, lease, grant, or
any other similar authority for the disposition, utilization, management and appropriation by any
private individual, corporate entity or any government agency, corporation or subdivision
thereof on any part or portion of the ancestral domain taking into consideration the consensus
approval of the ICCs/IPs concerned;
n) To decide all appeals from the decisions and acts of all the various offices within the
Commission:
o) To promulgate the necessary rules and regulations for the implementation of this Act;
p) To exercise such other powers and functions as may be directed by the President of the
Republic of the Philippines; and
q) To represent the Philippine ICCs/IPs in all international conferences and conventions dealing
with indigenous peoples and other related concerns.
Section 45. Accessibility and Transparency. - Subject to such limitations as may be provided by law or by
rules and regulations promulgated pursuant thereto, all official records, documents and papers pertaining
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to official acts, transactions or decisions, as well as research data used as basis for policy development of
the Commission shall be made accessible to the public.
Section 46. Officers within the NCIP. - The NCIP shall have the following offices which shall be responsible
for the implementation of the policies herein after provided:
a. Ancestral Domains Office - The Ancestral Domain Office shall be responsible for the
identification, delineation and recognition of ancestral land/domains. It shall also be responsible
for the management of ancestral lands/domains in accordance with the master plans as well as
the implementation of the ancestral domain rights of the ICCs/IPs as provided in Chapter III of
this Act. It shall also issue, upon the free and prior informed consent of the ICCs/IPs concerned,
certification prior to the grant of any license, lease or permit for the exploitation of natural
resources affecting the interests of ICCs/IPs in protecting the territorial integrity of all ancestral
domains. It shall likewise perform such other functions as the Commission may deem
appropriate and necessary;
b. Office on Policy, Planning and Research - The Office on Policy, Planning and Research shall be
responsible for the formulation of appropriate policies and programs for ICCs/IPs such as, but not
limited to, the development of a Five-Year Master Plan for the ICCs/IPs. Such plan shall undergo a
process such that every five years, the Commission shall endeavor to assess the plan and make
ramifications in accordance with the changing situations. The Office shall also undertake the
documentation of customary law and shall establish and maintain a Research Center that would
serve as a depository of ethnographic information for monitoring, evaluation and policy
formulation. It shall assist the legislative branch of the national government in the formulation of
appropriate legislation benefiting ICCs/IPs.
c. Office of Education, Culture and Health - The Office on Culture, Education and Health shall be
responsible for the effective implementation of the education, cultural and related rights as
provided in this Act. It shall assist, promote and support community schools, both formal and
non-formal, for the benefit of the local indigenous community, especially in areas where existing
educational facilities are not accessible to members of the indigenous group. It shall administer
all scholarship programs and other educational rights intended for ICC/IP beneficiaries in
coordination with the Department of Education, Culture and Sports and the Commission on
Higher Education. It shall undertake, within the limits of available appropriation, a special
program which includes language and vocational training, public health and family assistance
program and related subjects.
It shall also identify ICCs/IPs with potential training in the health profession and encourage and
assist them to enroll in schools of medicine, nursing, physical therapy and other allied courses
pertaining to the health profession.
Towards this end, the NCIP shall deploy a representative in each of the said offices who shall
personally perform the foregoing task and who shall receive complaints from the ICCs/IPs and
compel action from appropriate agency. It shall also monitor the activities of the National
Museum and other similar government agencies generally intended to manage and preserve
historical and archeological artifacts of the ICCs /IPs and shall be responsible for the
implementation of such other functions as the NCIP may deem appropriate and necessary;
d. Office on Socio-Economic Services and Special Concerns - The Office on Socio-Economic
Services and Special Concerns shall serve as the Office through which the NCIP shall coordinate
with pertinent government agencies specially charged with the implementation of various basic
socio-economic services, policies, plans and programs affecting the ICCs/IPs to ensure that the
same are properly and directly enjoyed by them. It shall also be responsible for such other
functions as the NCIP may deem appropriate and necessary;
e. Office of Empowerment and Human Rights - The Office of Empowerment and Human Rights
shall ensure that indigenous socio- political, cultural and economic rights are respected and
recognized. It shall ensure that capacity building mechanisms are instituted and ICCs/IPs are
afforded every opportunity, if they so choose, to participate in all level decision-making. It shall
likewise ensure that the basic human rights, and such other rights as the NCIP may determine,
subject to existing laws, rules and regulations are protected and promoted;
f. Administrative Office - The Administrative Office shall provide the NCIP with economical,
efficient and effective services pertaining to personnel, finance, records, equipment, security,
supplies, and related services. It shall also administer the Ancestral Domains Fund; and
g. Legal Affairs Office - There shall be a Legal Affairs Office which shall advice the NCIP on all legal
matters concerning ICCs/IPs and which shall be responsible for providing ICCs/IPs with legal
assistance in litigation involving community interest. It shall conduct preliminary investigation on
the basis of complaints filed by the ICCs/IPs against a natural or juridical person believed to have
violated ICCs/IPs rights. On the basis of its findings, it shall initiate the filing of appropriate legal
or administrative action to the NCIP.
Section 47. Other Offices. - The NCIP shall have the power to create additional offices as it may deem
necessary subject to existing rules and regulations.
Section 48. Regional and Field Offices. - Existing regional and field offices shall remain to function under
the strengthened organizational structure of the NCIP. Other field office shall be created wherever
appropriate and the staffing pattern thereof shall be determined by the NCIP: Provided, That in provinces
where there are ICCs/IPs but without field offices, the NCIP shall establish field offices in said provinces.
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Section 49. Office of the Executive Director. - The NCIP shall create the Office of the Executive Director
which shall serve as its secretariat. The office shall be headed by an Executive Director who shall be
appointed by the President of the Republic of the Philippines upon the recommendation of the NCIP on a
permanent basis. The staffing pattern of the office shall be determined by the NCIP subject to existing
rules and regulations.
Section 50. Consultative Body. - A body consisting of the traditional leaders, elders and representatives
from the women and youth sectors of the different ICCs/IPs shall be constituted by the NCIP from the
time to time to advise it on matters relating to the problems, aspirations and interests of the ICCs/IPs.
CHAPTER VIII
DELINEATION AND RECOGNITION OF ANCESTRAL DOMAINS
Section 51. Delineation and Recognition of Ancestral Domains. - Self-delineation shall be guiding
principle in the identification and delineation of ancestral domains. As such, the ICCs/IPs concerned shall
have a decisive role in all the activities pertinent thereto. The Sworn Statement of the Elders as to the
Scope of the territories and agreements/pacts made with neighboring ICCs/IPs, if any, will be essential to
the determination of these traditional territories. The Government shall take the necessary steps to
identify lands which the ICCs/IPs concerned traditionally occupy and guarantee effective protection of
their rights of ownership and possession thereto. Measures shall be taken in appropriate cases to
safeguard the rights of the ICCs/IPs concerned to land which may no longer be exclusively occupied by
them, but to which they have traditionally had access for their subsistence and traditional activities,
particularly of ICCs/IPs who are still nomadic and/or shifting cultivators.
Section 52. Delineation Process. - The identification and delineation of ancestral domains shall be done in
accordance with the following procedures:
a. Ancestral Domains Delineated Prior to this Act - The provisions hereunder shall not apply to
ancestral domains/lands already delineated according to DENR Administrative Order No. 2, series
of 1993, nor to ancestral lands and domains delineated under any other community/ancestral
domain program prior to the enactment of his law. ICCs/IPs enactment of this law shall have the
right to apply for the issuance of a Certificate of Ancestral Domain Title (CADT) over the area
without going through the process outlined hereunder;
b. Petition for Delineation - The process of delineating a specific perimeter may be initiated by
the NCIP with the consent of the ICC/IP concerned, or through a Petition for Delineation filed
with the NCIP, by a majority of the members of the ICCs/IPs;
c. Delineation Paper - The official delineation of ancestral domain boundaries including census of
all community members therein, shall be immediately undertaken by the Ancestral Domains
Office upon filing of the application by the ICCs/IPs concerned. Delineation will be done in
coordination with the community concerned and shall at all times include genuine involvement
and participation by the members of the communities concerned;
d. Proof required - Proof of Ancestral Domain Claims shall include the testimony of elders or
community under oath, and other documents directly or indirectly attesting to the possession or
occupation of the area since time immemorial by such ICCs/IPs in the concept of owners which
shall be any one (1) of the following authentic documents:
1. Written accounts of the ICCs/IPs customs and traditions;
2. Written accounts of the ICCs/IPs political structure and institution;
3. Pictures showing long term occupation such as those of old improvements, burial
grounds, sacred places and old villages;
4. Historical accounts, including pacts and agreements concerning boundaries entered
into by the ICCs/IPs concerned with other ICCs/IPs;
5. Survey plans and sketch maps;
6. Anthropological data;
7. Genealogical surveys;
8. Pictures and descriptive histories of traditional communal forests and hunting
grounds;
9. Pictures and descriptive histories of traditional landmarks such as mountains, rivers,
creeks, ridges, hills, terraces and the like; and
10. Write-ups of names and places derived from the native dialect of the community.
e. Preparation of Maps - On the basis of such investigation and the findings of fact based
thereon, the Ancestral Domains Office of the NCIP shall prepare a perimeter map, complete with
technical descriptions, and a description of the natural features and landmarks embraced
therein;
f. Report of Investigation and Other Documents - A complete copy of the preliminary census and
a report of investigation, shall be prepared by the Ancestral Domains Office of the NCIP;
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g. Notice and Publication - A copy of each document, including a translation in the native
language of the ICCs/IPs concerned shall be posted in a prominent place therein for at least
fifteen (15) days. A copy of the document shall also be posted at the local, provincial and regional
offices of the NCIP, and shall be published in a newspaper of general circulation once a week for
two (2) consecutive weeks to allow other claimants to file opposition thereto within fifteen (15)
days from the date of such publication: Provided, That in areas where no such newspaper exists,
broadcasting in a radio station will be a valid substitute: Provided, further, That mere posting
shall be deemed sufficient if both newspaper and radio station are not available;
h. Endorsement to NCIP - Within fifteen (15) days from publication, and of the inspection process,
the Ancestral Domains Office shall prepare a report to the NCIP endorsing a favorable action
upon a claim that is deemed to have sufficient proof. However, if the proof is deemed
insufficient, the Ancestral Domains Office shall require the submission of additional evidence:
Provided, That the Ancestral Domains Office shall reject any claim that is deemed patently false
or fraudulent after inspection and verification: Provided, further, That in case of rejection, the
Ancestral Domains Office shall give the applicant due notice, copy furnished all concerned,
containing the grounds for denial. The denial shall be appealable to the NCIP: Provided,
furthermore, That in cases where there are conflicting claims, the Ancestral Domains Office shall
cause the contending parties to meet and assist them in coming up with a preliminary resolution
of the conflict, without prejudice to its full adjudication according to the selection below.
i. Turnover of Areas Within Ancestral Domains Managed by Other Government Agencies - The
Chairperson of the NCIP shall certify that the area covered is an ancestral domain. The
secretaries of the Department of Agrarian Reform, Department of Environment and Natural
Resources, Department of the Interior and Local Government, and Department of Justice, the
Commissioner of the National Development Corporation, and any other government agency
claiming jurisdiction over the area shall be notified thereof. Such notification shall terminate any
legal basis for the jurisdiction previously claimed;
j. Issuance of CADT - ICCs/IPs whose ancestral domains have been officially delineated and
determined by the NCIP shall be issued a CADT in the name of the community concerned,
containing a list of all those identified in the census; and
k. Registration of CADTs - The NCIP shall register issued certificates of ancestral domain titles and
certificates of ancestral lands titles before the Register of Deeds in the place where the property
is situated.
Section 53. Identification, Delineation and Certification of Ancestral Lands. -
a. The allocation of lands within any ancestral domain to individual or indigenous corporate
(family or clan) claimants shall be left to the ICCs/IPs concerned to decide in accordance with
customs and traditions;
b. Individual and indigenous corporate claimants of ancestral lands which are not within
ancestral domains, may have their claims officially established by filing applications for the
identification and delineation of their claims with the Ancestral Domains Office. An individual or
recognized head of a family or clan may file such application in his behalf or in behalf of his family
or clan, respectively;
c. Proofs of such claims shall accompany the application form which shall include the testimony
under oath of elders of the community and other documents directly or indirectly attesting to
the possession or occupation of the areas since time immemorial by the individual or corporate
claimants in the concept of owners which shall be any of the authentic documents enumerated
under Sec. 52 (d) of this act, including tax declarations and proofs of payment of taxes;
d. The Ancestral Domains Office may require from each ancestral claimant the submission of
such other documents, Sworn Statements and the like, which in its opinion, may shed light on
the veracity of the contents of the application/claim;
e. Upon receipt of the applications for delineation and recognition of ancestral land claims, the
Ancestral Domains Office shall cause the publication of the application and a copy of each
document submitted including a translation in the native language of the ICCs/IPs concerned in a
prominent place therein for at least fifteen (15) days. A copy of the document shall also be
posted at the local, provincial, and regional offices of the NCIP and shall be published in a
newspaper of general circulation once a week for two (2) consecutive weeks to allow other
claimants to file opposition thereto within fifteen (15) days from the date of such publication:
Provided, That in areas where no such newspaper exists, broadcasting in a radio station will be a
valid substitute: Provided, further, That mere posting shall be deemed sufficient if both
newspapers and radio station are not available
f. Fifteen (15) days after such publication, the Ancestral Domains Office shall investigate and
inspect each application, and if found to be meritorious, shall cause a parcellary survey of the
area being claimed. The Ancestral Domains office shall reject any claim that is deemed patently
false or fraudulent after inspection and verification. In case of rejection, the Ancestral Domains
office shall give the applicant due notice, copy furnished all concerned, containing the grounds
for denial. The denial shall be appealable to the NCIP. In case of conflicting claims among
individual or indigenous corporate claimants, the Ancestral domains Office shall cause the
contending parties to meet and assist them in coming up with a preliminary resolution of the
conflict, without prejudice to its full adjudication according to Sec. 62 of this Act. In all
proceedings for the identification or delineation of the ancestral domains as herein provided, the
Director of Lands shall represent the interest of the Republic of the Philippines; and
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g. The Ancestral Domains Office shall prepare and submit a report on each and every application
surveyed and delineated to the NCIP, which shall, in turn, evaluate or corporate (family or clan)
claimant over ancestral lands.
Section 54. Fraudulent Claims. - The Ancestral Domains Office may, upon written request from the
ICCs/IPs, review existing claims which have been fraudulently acquired by any person or community. Any
claim found to be fraudulently acquired by, and issued to, any person or community may be cancelled by
the NCIP after due notice and hearing of all parties concerned.
Section 55. Communal Rights. - Subject to Section 56 hereof, areas within the ancestral domains,
whether delineated or not, shall be presumed to be communally held: Provide, That communal rights
under this Act shall not be construed as co-ownership as provided in Republic Act. No. 386, otherwise
known as the New Civil Code.
Section 56. Existing Property Rights Regimes. - Property rights within the ancestral domains already
existing and/or vested upon effectivity of this Act, shall be recognized and respected.
Section 57. Natural Resources within Ancestral Domains. - The ICCs/IPs shall have the priority rights in
the harvesting, 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 all extractions shall be used to facilitate the development
and improvement of the ancestral domains.
Section 58. Environmental Consideration. - Ancestral domains or portion thereof, which are found
necessary for critical watersheds, mangroves wildlife sanctuaries, wilderness, protected areas, forest
cover, or reforestation as determined by the appropriate agencies with the full participation of the
ICCs/IPs concerned shall be maintained, managed and developed for such purposes. The ICCs/IPs
concerned shall be given the responsibility to maintain, develop, protect and conserve such areas with the
full and effective assistance of the government agencies. Should the ICCs/IPs decide to transfer the
responsibility over the areas, said decision must be made in writing. The consent of the ICCs/IPs should be
arrived at in accordance with its customary laws without prejudice to the basic requirement of the
existing laws on free and prior informed consent: Provided, That the transfer shall be temporary and will
ultimately revert to the ICCs/IPs in accordance with a program for technology transfer: Provided, further,
That no ICCs/IPs shall be displaced or relocated for the purpose enumerated under this section without
the written consent of the specific persons authorized to give consent.
Section 59. Certification Precondition. - all department 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 certificate shall only be issued after a field-based
investigation is conducted by the Ancestral Domain Office of the area concerned: Provided, That no
certificate 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 pending application 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.
Section 60. Exemption from Taxes. - All lands certified to be ancestral domains shall be exempt from real
property taxes, specially levies, and other forms of exaction except such portion of the ancestral domains
as are actually used for large-scale agriculture, commercial forest plantation and residential purposes and
upon titling by other by private person: Provided, that all exactions shall be used to facilitate the
development and improvement of the ancestral domains.
Section 61. Temporary Requisition Powers. - Prior to the establishment of an institutional surveying
capacity whereby it can effectively fulfill its mandate, but in no case beyond three (3) years after its
creation, the NCIP is hereby authorized to request the Department of Environment and Natural Resources
(DENR) survey teams as well as other equally capable private survey teams, through a Memorandum of
Agreement (MOA), to delineate ancestral domain perimeters. The DENR Secretary shall accommodate any
such request within one (1) month of its issuance: Provided, That the Memorandum of Agreement shall
stipulate, among others, a provision for technology transfer to the NCIP.
Section 62. Resolution of Conflicts. - In cases of conflicting interest, where there are adverse claims within
the ancestral domains as delineated in the survey plan, and which cannot be resolved, the NCIP shall hear
and decide, after notice to the proper parties, the disputes arising from the delineation of such ancestral
domains: Provided, That if the dispute is between and/or among ICCs/IPs regarding the traditional
boundaries of their respective ancestral domains, customary process shall be followed. The NCIP shall
promulgate the necessary rules and regulations to carry out its adjudicatory functions: Provided, further,
That in any decision, order, award or ruling of the NCIP on any ancestral domain dispute or on any matter
pertaining to the application, implementation, enforcement and interpretation of this Act may be brought
for Petition for Review to the Court of Appeals within fifteen (15) days from receipt of a copy thereof.
Section 63. Applicable Laws. - Customary laws, traditions and practices of the ICCs/IPs of the land where
the conflict arises shall be applied first with respect to property rights, claims and ownerships, hereditary
succession and settlement of land disputes. Any doubt or ambiguity in the application of laws shall be
resolved in favor of the ICCs/IPs.
Section 64. Remedial Measures. - Expropriation may be resorted to in the resolution of conflicts of
interest following the principle of the "common good". The NCIP shall take appropriate legal action for the
cancellation of officially documented titles which were acquired illegally: Provided, That such procedure
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shall ensure that the rights of possessors in good faith shall be respected: Provided, further, That the
action for cancellation shall be initiated within two (2) years from the effectivity of this Act: Provided,
finally, That the action for reconveyance shall be a period of ten (10) years in accordance with existing
laws.
CHAPTER
JURISDICTION AND PROCEDURES FOR ENFORCEMENT OF RIGHTS
Section 65. Primary of Customary Laws and Practices. - When disputes involve ICCs/IPs, customary laws
and practices shall be used to resolve the dispute.
Section 66. Jurisdiction of the NCIP. - The NCIP, through its regional offices, shall have jurisdiction over all
claims and disputes involving rights of ICCs/IPs; Provided, however, That no such dispute shall be brought
to the NCIP unless the parties have exhausted all remedies provided under their customary laws. For this
purpose, a certification shall be issued by the Council of Elders/Leaders who participated in the attempt to
settle the dispute that the same has not been resolved, which certification shall be a condition precedent
to the filing of a petition with the NCIP.
Section 67. Appeals to the Court of Appeals. - Decisions of the NCIP shall be appealable to the Court of
Appeals by way of a petition for review.
Section 68. Execution of Decisions, Awards, Orders. - Upon expiration of the period here provided and no
appeal is perfected by any of the contending parties, the Hearing Officer of the NCIP, on its own initiative
or upon motion by the prevailing party, shall issue a writ of execution requiring the sheriff or the proper
officer to execute final decisions, orders or awards of the Regional Hearing Officer of the NCIP.
Section 69. Quasi-Judicial Powers of the NCIP. - The NCIP shall have the power and authority:
a. To promulgate rules and regulations governing the hearing and disposition of cases filed
before it as well as those pertaining to its internal functions and such rules and regulations as
may be necessary to carry out the purposes of this Act;
b. To administer oaths, summon the parties to a controversy, issue subpoenas requiring the
attendance and testimony of witnesses or the production of such books, papers, contracts,
records, agreements and other document of similar nature as may be material to a just
determination of the matter under investigation or hearing conducted in pursuance of this Act;
c. To hold any person in contempt, directly or indirectly, and impose appropriate penalties
therefor; and
d. To enjoin any or all acts involving or arising from any case pending therefore it which, if not
restrained forthwith, may cause grave or irreparable damage to any of the parties to the case or
seriously affect social or economic activity.
Section 70. No restraining Order or Preliminary Injunction. - No inferior court of the Philippines shall
IX have the jurisdiction to issue any restraining order or writ of preliminary injunction against the NCIP or
any of its duly authorized or designated offices in any case, dispute or controversy to, or interpretation of
this Act and other pertinent laws relating to ICCs/IPs and ancestral domains.
CHAPTER X
ANCESTRAL DOMAINS FUND
Section 71. Ancestral Domains Fund. - There is hereby created a special fund, to be known as the
Ancestral Domains Fund, an initial amount of the One Hundred thirty million pesos(P130,000,000) to
cover compensation for expropriated lands, delineation and development of ancestral domains. An
amount of Fifty million pesos (P50,000,000) shall be sourced from the gross income of the Philippine
Charity Sweepstakes Office (PCSO) from its lotto operation, Ten millions pesos (P10,000,000) from the
gross receipts of the travel tax of the preceding year, the fund of the Social Reform Council intended for
survey and delineation of ancestral lands/domains, and such other source as the government may be
deem appropriate. Thereafter such amount shall be included in the annual General Appropriations Act.
Foreign as well as local funds which are made available for the ICCs/IPs through the government of the
Philippines shall be coursed through the NCIP. The NCIP may also solicit and receive donations,
endowments shall be exempted from income or gift taxes and all other taxes, charges or fees imposed by
the government or any political subdivision or instrumentality thereof.
CHAPTER XI
PENALTIES
Section 72. Punishable Acts and Applicable Penalties. - Any person who commits violation of any of the
provisions of this Act, such as, but not limited to, authorized and/or unlawful intrusion upon any ancestral
lands or domains as stated in Sec. 10, Chapter III, or shall commit any of the prohibited acts mentioned in
Sections 21 and 24, Chapter V, Section 33, Chapter VI hereof, shall be punished in accordance with the
customary laws of the ICCs/IPs concerned: Provided, That no such penalty shall be cruel, degrading or
inhuman punishment: Provided, further, That neither shall the death penalty or excessive fines be
imposed. This provision shall be without prejudice to the right of any ICCs/IPs to avail of the protection of
existing laws. In which case, any person who violates any provision of this Act shall, upon conviction, be
punished by imprisonment of not less than nine (9) months but not more than twelve (12) years or a fine
not less than One hundred thousand pesos (P100,000) nor more than Five hundred thousand pesos
(P500,000) or both such fine and imprisonment upon the discretion of the court. In addition, he shall be
obliged to pay to the ICCs/IPs concerned whatever damage may have been suffered by the latter as a
consequence of the unlawful act.
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Section 73. Persons Subject to Punishment. - If the offender is a juridical person, all officers such as, but
not limited to, its president, manager, or head of office responsible for their unlawful act shall be
criminally liable therefor, in addition to the cancellation of certificates of their registration and/or license:
Provided, That if the offender is a public official, the penalty shall include perpetual disqualification to
hold public office.
CHAPTER XII
MERGER OF THE OFFICE FOR NORTHERN CULTURAL COMMUNITIES (ONCC) AND THE OFFICE FOR
SOUTHERN CULTURAL COMMUNITIES (OSCC)
Section 74. Merger of ONCC/OSCC. - The Office for Northern Cultural Communities (ONCC) and the Office
of Southern Cultural Communities (OSCC), created under Executive Order Nos. 122-B and 122-C
respectively, are hereby merged as organic offices of the NCIP and shall continue to function under a
revitalized and strengthened structures to achieve the objectives of the NCIP: Provided, That the positions
of Regional Directors and below, are hereby phased-out upon the effectivity of this Act: Provided, further,
That officials and employees of the phased-out offices who may be qualified may apply for reappointment
with the NCIP and may be given prior rights in the filing up of the newly created positions of NCIP, subject
to the qualifications set by the Placement Committee: Provided, furthermore, That in the case where an
indigenous person and a non-indigenous person with similar qualifications apply for the same position,
priority shall be given to the former. Officers and employees who are to be phased-out as a result of the
merger of their offices shall be entitled to gratuity a rate equivalent to one and a half (1 1/2) months
salary for every year of continuous and satisfactory service rendered or the equivalent nearest fraction
thereof favorable to them on the basis of the highest salary received. If they are already entitled to
retirement benefits or the gratuity herein provided. Officers and employees who may be reinstated shall
refund such retirement benefits or gratuity received: Provided, finally That absorbed personnel must still
meet the qualifications and standards set by the Civil Service and the Placement Committee herein
created.
Section 75. Transition Period. - The ONCC/OSCC shall have a period of six (6) months from the effectivity
of this Act within which to wind up its affairs and to conduct audit of its finances.
Section 76. Transfer of Assets/Properties. - All real and personal properties which are vested in, or
belonging to, the merged offices as aforestated shall be transferred to the NCIP without further need of
conveyance, transfer or assignment and shall be held for the same purpose as they were held by the
former offices: Provided, That all contracts, records and documents shall be transferred to the NCIP. All
agreements and contracts entered into by the merged offices shall remain in full force and effect unless
otherwise terminated, modified or amended by the NCIP.
Section 77. Placement Committee. - Subject to rules on government reorganization, a Placement
Committee shall be created by the NCIP, in coordination with the Civil Service Commission, which shall
assist in the judicious selection and placement of personnel in order that the best qualified and most
deserving persons shall be appointed in the reorganized agency. The placement Committee shall be
composed of seven (7) commissioners and an ICCs/IPs representative from each of the first and second
level employees association in the Offices for Northern and Southern Cultural Communities (ONCC/OSCC),
nongovernment organizations (NGOs) who have served the community for at least five (5) years and
peoples organizations (POs) with at least five (5) years of existence. They shall be guided by the criteria of
retention and appointment to be prepared by the consultative body and by the pertinent provisions of
the civil service law.
CHAPTER XIII
FINAL PROVISIONS
Section 78. Special Provision. - The City of Baguio shall remain to be governed by its Chapter and all lands
proclaimed as part of its townsite reservation shall remain as such until otherwise reclassified by
appropriate legislation: Provided, That prior land rights and titles recognized and/or required through any
judicial, administrative or other processes before the effectivity of this Act shall remain valid: Provided,
further, That this provision shall not apply to any territory which becomes part of the City of Baguio after
the effectivity of this Act.
Section 79. Appropriations. - The amount necessary to finance the initial implementation of this Act shall
be charged against the current year's appropriation of the ONCC and the OSCC. Thereafter, such sums as
may be necessary for its continued implementation shall be included in the annual General
Appropriations Act.
Section 80. Implementing Rules and Regulations. - Within sixty (60) days immediately after appointment,
the NCIP shall issue the necessary rules and regulations, in consultation with the Committees on National
Cultural Communities of the House of Representatives and the Senate, for the effective implementation
of this Act.
Section 81. Saving Clause. - This Act will not in any manner adversely affect the rights and benefits of the
ICCs/IPs under other conventions, recommendations, international treaties, national laws, awards,
customs and agreements.
Section 82. Separability Clause. - In case any provision of this Act or any portion thereof is declared
unconstitutional by a competent court, other provisions shall not be affected thereby.
Section 83. Repealing Clause. - Presidential Decree NO. 410, Executive Order Nos. 122-B and 122-C, and
all other laws, decrees, orders, rules and regulations or parts thereof inconsistent with this Act are hereby
repealed or modified accordingly.
Section 84. Effectivity. - This Act shall take effect fifteen days (15) days upon its publication in the Official
Gazette or in any two (2) newspapers of general circulation.
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Approved: 29 October 1997.